1. Identification and business activity

(a) Identification -

Compañía de Minas Buenaventura S.A.A. (hereafter “the Company” or “Buenaventura”) is a publicly traded corporation incorporated in Peru in 1953. The Company stock is traded on the Lima and New York Stock Exchanges through American Depositary Receipts (ADRs), which represent the Company’s shares deposited in the Bank of New York. The Company’s legal domicile is at Las Begonias Street N°415, San Isidro, Lima, Peru. The Company is the ultimate controlling party.

(b) Business activity -

The Company and its subsidiaries (hereinafter “the Group") are principally engaged in the exploration, mining, concentration, smelting and marketing of polymetallic ores and metals.

The Company operates directly four operating mining units in Peru (Uchucchacua, Orcopampa, Julcani and Tambomayo), two discontinued mining units (Poracota and Shila-Paula), and one mining unit under development stage (San Gabriel). In addition, the Company has a controlling interest in (i) Sociedad Minera El Brocal S.A.A. (hereinafter “El Brocal”), which operates the Colquijirca mining unit; (ii) Minera La Zanja S.R.L. (hereinafter “La Zanja”), which operates La Zanja mining unit; (iii) El Molle Verde S.A.C. (hereinafter “Molle Verde”) which operates Trapiche, a mining unit at the development stage; and (iv) other entities dedicated to energy generation and transmission services, and other activities. All these activities are carried out in Peru. In addition, the Group has a non-significant subsidiary in Mexico related to exploration activities.

Temporary suspension of production at the Uchucchacua mining unit -The Uchucchacua mining unit has presented operational problems that were aggravated by the COVID-19 pandemic (delays in the preparation and exploration of the mine), which forced the Company to reduce the production estimates announced for the years 2020 and 2021. For this reason, on October 15, 2021 Buenaventura requested that the Ministry of Energy and Mines, approve the temporary suspension of activities at its Uchucchacua mine, specifically those related to mining exploitation activities.

The Company's management has estimated that the temporary suspension at the Uchucchacua mining unit will not significantly affect the cash flows originally estimated for the years 2021 and 2022 and, on the contrary, it will allow all the efforts of the operations team to be focused on implementing measures aimed at achieving efficiencies and reducing the cost of operations by the time it is decided to restart. The Company's management evaluated and concluded that there is no impairment of the assets of the Uchucchacua mining unit as a result of the analysis of the recoverable amount based on its value in use, as the temporary stoppage has not significantly affected the value in use.

During the temporary suspension of production, measures will be implemented that will aim to achieve greater operational efficiency, focused on the new strategy for the period 2021 - 2023 focused on exploration activities, re-engineering or redesign of the mine, and on the development of the Yumpag project. Additionally, during the period of temporary suspension of production, the Company will focus on improving the relationship with local communities and will continue with the work related to environmental commitments, such as monitoring, water treatment, waste collection, progressive mine closure, among others.

As a result, the industrial activities in the subsidiary Procesadora Industrial Río Seco S.A. (which receives raw materials from the Uchucchacua mining unit) are suspended until the restart of Uchucchacua’s operations. As of December 31, 2021, the Group had recognized an impairment in this subsidiary; see detail in note 11(b).

(c) Approval of consolidated financial statements -

The consolidated financial statements as of December 31, 2021 were approved and authorized for issue by the Board of Directors on April 28, 2022 and were approved for issuance in the Group’s annual report on form 20-F by the Group’s Chief Executive Officer and Chief Financial Officer on May 13, 2022; and subsequent events have been considered through May 13, 2022 (See note 37).

(d) The consolidated financial statements include the financial statements of the following companies:


	Country of
	incorporation	Ownership as of December 31,
	and business	2021		2020
		Direct	Indirect	Direct	Indirect
		%	%	%	%
Mining activities:
Compañía de Minas Buenaventura S.A.A. (*)	Peru	100.00	—	100.00	—
Compañía Minera Condesa S.A.	Peru	100.00	—	100.00	—
Compañía Minera Colquirrumi S.A.	Peru	100.00	—	100.00	—
Sociedad Minera El Brocal S.A.A (**)	Peru	3.19	58.24	3.19	58.24
Inversiones Colquijirca S.A. (**)	Peru	89.76	10.24	89.76	10.24
S.M.R.L. Chaupiloma Dos de Cajamarca	Peru	20.00	40.00	20.00	40.00
Minera La Zanja S.R.L.	Peru	53.06	—	53.06	—
Minera Julcani S.A. de C.V.	Mexico	99.80	0.20	99.80	0.20
Compañía de Minas Buenaventura Chile Ltda. (***)	Chile	—	—	90.00	10.00
El Molle Verde S.A.C.	Peru	99.98	0.02	99.98	0.02
Apu Coropuna S.R.L.	Peru	70.00	—	70.00	—
Cerro Hablador S.A.C.	Peru	99.00	1.00	99.00	1.00
Minera Azola S.A.C.	Peru	99.00	1.00	99.00	1.00

Energy generation and transmission services:
Consorcio Energético de Huancavelica S.A.	Peru	100.00	—	100.00	—
Empresa de Generación Huanza S.A.	Peru	—	100.00	—	100.00

Insurance brokerage:
Contacto Corredores de Seguros S.A.	Peru	99.98	0.02	99.98	0.02
Contacto Risk Consulting S.A. (liquidated (****))	Peru	—	—	—	98.00

Industrial activities:
Procesadora Industrial Río Seco S.A.	Peru	100.00	—	100.00	—

(*) Includes four operating mining units in Peru (Uchucchacua, Orcopampa, Julcani and Tambomayo), two discontinued mining units (Poracota and Shila-Paula), and one mining unit under development stage (San Gabriel).

(**) As of December 31, 2021 and 2020, the participation of the Company in the voting rights of El Brocal is 61.43 %. Inversiones Colquijirca S.A. (hereafter “Colquijirca”), the Group’s subsidiary (100 % as of December 31, 2021 and 2020), has an interest in El Brocal’s capital stock, through which the Company holds an indirect participation in El Brocal of 58.24% as of December 31, 2021 and 2020.

(***) On January 21, 2021, the Company sold 100% of its shares of Compañía de Minas Buenaventura Chile Ltda., which were presented as financial investments as of December 31, 2020. The sales price was US$30,000 which has been fully collected.

(****) During December 2021, the liquidation of this subsidiary was made.

(e) Discontinued operations

During December 2021, Buenaventura management classified its investment in Minera Yanacocha S.R.L (hereinafter "Yanacocha") as held for sale, the amount of which as of December 31, 2021 was a liability of US$264,838,000.

According to IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, the Group's management determined that its operation in Yanacocha qualified to be recognized as a discontinued operation, and reclassified the effects recorded in the income statement to the caption "Net loss from discontinued operations attributable to equity holders of the parent” for the comparative years 2020 and 2019.

On February 7, 2022, Buenaventura entered into binding agreements with Newmont Corporation (hereinafter “Newmont”) to sell its total interest in Yanacocha, see detail in note 10(b).

During 2021 Yanacocha recorded a loss in the result of the year amounting to US$967.7 million, due primarily to the provision for the closure of mines of the Conga mining project for US$1,253 million (US$546.8 million attributable to the participation of Buenaventura).


	2021	2020	2019
	US$(000)	US$(000)	US$(000)
Statements of profit or loss for the years ended December 31:
Sales of goods	529,817	620,162	739,302

Other comprehensive income (loss)	(643)	(123)	1,246

Net loss	(967,682)	(165,449)	(95,257)

Share in results	(422,394)	(72,219)	(41,580)

During 2020, the Group sold its Mallay mining unit classified as discontinued during 2019 under IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. The sales price was US$10 million (US$8.5 million plus Value added tax) with a related cost of US$3.6 million net of income from the reversal of provision for mining unit closure of

US$5.1 million. As of December 31, 2021, the buyer has refinanced the first installment that was due in December 2021. The Company expects to collect it the balance in 2022.

For the years ended December 31, 2021, 2020 and 2019, the mining units with discontinued operations were Yanacocha, Mallay, Poracota and Shila-Paula are presented below:


	2021	2020	2019
	US$(000)	US$(000)	US$(000)

Sales	—	(1)	97
Cost of sales	—	—	(2)
Gross profit (loss)	—	(1)	95

Operating income (expenses), net
Discontinued operation of Yanacocha	(422,394)	(72,219)	(41,580)
Changes in provision for closure of mining units, note 15(b)	(3,021)	(58)	(1,912)
Reversal (provision) of contingent and others	(2,136)	13	(134)
Changes in environmental liabilities provision	(1,014)	—	—
Administrative expenses	(335)	(1,117)	(8,009)
Depreciation and amortization, note 11(h)	(14)	(2,126)	(39)
Income from sale of development costs, property, plant and equipment (sale of Mallay mining unit)	—	7,976	—
Reversal of provision for closure of mining unit (sale of Mallay mining unit), note 15(b)	—	5,093	—
Reversal of provision for impairment of value of inventory (sale of Mallay mining unit), note 8(c)	—	1,220	—
Income from sale of supplies (sale of Mallay mining unit)	—	606	—
Cost of sale of development costs, property, plant and equipment, note 11(a)	—	(3,099)	(44)
Cost of sale of supplies (sale of Mallay mining unit)	—	(1,711)	—
Impairment of value of inventory, note 8(c)	—	(377)	(320)
Others, net	(79)	(846)	117

Total operating expenses, net	(428,993)	(66,645)	(51,921)

Operating loss	(428,993)	(66,646)	(51,826)
Finance costs, note 15(b)	(25)	(176)	(266)
Net gain (loss) from currency exchange difference	—	12	(2)
Loss before income tax	(429,018)	(66,810)	(52,094)
Income tax	41,414	—	—

Loss from discontinued operations	(387,604)	(66,810)	(52,094)

The net cash flows used by the mining units with discontinued operations are presented below:


	2021	2020	2019
	US$(000)	US$(000)	US$(000)

Operating activities	—	—	(2)
Investing activities	—	—	—
Decrease in cash and cash equivalents for the year	—	—	(2)

(f) COVID-19 (Corona Virus Disease 2019) in Peru

The Group’s operations are subject to risks related to outbreaks of infectious diseases. For example, the recent outbreak of coronavirus COVID-19. Since March 15, 2020, and by means of Supreme Decree No. 044-2020, the Peruvian State declared a State of National Emergency and mandatory social isolation for an initial period of fifteen calendar days, with subsequent extensions. During the initial phase, constitutional rights related to personal freedom and security, inviolability of the home and freedom of assembly were restricted, except for the provision and access to certain services

and essential goods, such as those related to financial institutions, insurance and pensions, as well as complementary and related services. Operations at a national level have now resumed according to a phase plan issued by the Peruvian State.

In March, April, May and June 2020, direct operations of the Group were limited to those that are critical to ensuring the functionality of the mine pumping systems, water treatment plants, energy supply, hydroelectric substations, health services and overall minimum safety conditions, administrative supervision, security conditions, including filling and general support, among others. The production stoppage dates were as follows:

Phase 1 (initiated on May 16, 2020)

●

Tambomayo

●

Uchucchacua

●

El Brocal (Tajo Norte and Marcapunta)

Phase 2 (initiated on June 16, 2020)

●

Orcopampa

●

Julcani

●

La Zanja

Considering that the start of the quarantine began in the second half of March, the Group's mining units have operated below the planned volume for 2020, which is reflected in the variation in sales. In 2020, the Group's unabsorbed cost due to production stoppage amounted to a total amount of US$27.8 million (net of intercompany eliminations), see note 22.

Depreciation and amortization incurred during the production stoppage amounts to US$10.8 million for the year 2020, which is included in “Depreciation and amortization” caption in the consolidated statements of profit or loss.

In January 2021, in response to the significant increase in the number of infections, the number of deaths and the saturation of the health system, the Peruvian Government decreed compulsory social immobilization in ten regions of the country, with the exception of some sectors such as agriculture, energy, hydrocarbons, mining, construction, etc., thus it did not affect the Company's operations. This second confinement phase, had an initial period of fifteen days from January 31, being extended by 14 days until February 28, 2021. As of March 1, 2021 and for an initial period of 14 days (which continued to be renewed throughout 2021 and into 2022), new measures have been applied to mitigate the COVID-19 pandemic in the country.

The ultimate severity of the Coronavirus outbreak is uncertain at this time and therefore the Group cannot predict the possible impact on the world, the Peruvian economy, the international financial markets, or ultimately on the Group’s financial condition. However, as part of the business continuity and progress of operations, the Group has been executing its business plan, which expects that sales levels will continue to increase in the short and medium term, considering normal regularization of operations, the current commercial landscape and increase in metal prices.

Identification and business activity

Identification and business activity

1. Identification and business activity

(a)

Identification -

Sociedad Minera Cerro Verde S.A.A. (the Company) was incorporated in Peru on August 20, 1993, as a result of the privatization process of certain mining units carried out by the Peruvian State in that year. The Company’s shares began being listed on the Lima Stock Exchange on November 14, 2000.

Through its subsidiary Cyprus Climax Metals Company, Freeport Minerals Corporation (FMC), a wholly owned subsidiary of Freeport-McMoRan Inc. (Freeport), owns 53.56% of the voting shares of the Company, SMM Cerro Verde Netherlands B.V. (SMM Cerro Verde), a subsidiary of Sumitomo Metal Mining Company Ltd. (Sumitomo), owns 21.00%, Compañía de Minas Buenaventura S.A.A. (Buenaventura) owns 19.58%, and other stakeholders own the remaining 5.86%.

The Company’s legal address is Jacinto Ibañez Street N°315 - Parque Industrial, Arequipa in the city of Arequipa and the ore deposit is located 20 miles southwest of that city (Asiento Minero Cerro Verde S/N Uchumayo – Arequipa).

(b)

Business activity -

The Company’s activities are regulated by the Peruvian General Mining Law and comprise the extraction, production and sale of copper cathodes, copper concentrate and molybdenum concentrate.

Cerro Verde’s operation consists of an open-pit copper mine, with a processing capacity of 548,500 metric ton-per-day that includes (i) concentrator facilities with a 409,500 metric ton-per-day permitted capacity (361,500 metric ton-per-day before the expansion approved by the Ministry of Energy and Mines during 2018), (ii) solution extraction and electrowinning (SX/EW) leaching facilities with leach copper production derived from a 39,000 metric ton-per-day crushed leach facility and (iii) a run-of-mine (ROM) leach system with a capacity of 100,000 metric ton-per-day. This SX/EW leaching operation has a production capacity of approximately 200 million pounds of copper per year. The leaching and flotation process carried out at these plants are part of the benefit concession “Planta de Beneficio Cerro Verde.”

(c)

COVID-19 outbreak in Peru -

On March 15, 2020, the Peruvian government issued a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19. The order was initially for fifteen days but was subsequently extended for different periods through March 31, 2022.

During the year 2021, Cerro Verde milling rates at concentrator plants averaged 380,300 metric tons per day. Subject to ongoing monitoring of COVID-19 protocols, Cerro Verde is targeting milling rates to increase to approximately 400,000 metric tons of ore per day during 2022 . During 2020, Cerro Verde temporarily went into a state of care and maintenance and adjusted its operations to prioritize critical activities , in order to comply with government requirements. As a result, the Company revised its operating plans (milling rates at concentrator plants averaged 331,600 metric tons per day). A summary of the impacts and charges associated with COVID-19 are detailed in Note 15(b).

Cerro Verde continues to update its Plan for the Surveillance, Prevention and Control of COVID-19 at work. The implementation of these prevention, early detection and response measures and actions helps to control the risk of spread and health impacts caused by the COVID-19 pandemic during the development of operational activities.

(d)

Financial statements approval –

The financial statements for the year ended December 31, 2021 were approved by Company’s Management on May 13, 2022 and the subsequent events have been considered through those dates.

The financial statements for the year ended December 31, 2020, were approved at the Board of Directors’ Meetings on April 29, 2021.