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MANAGEMENT’S DISCUSSION AND ANALYSIS
DRIVING GROWTH FROM WITHIN
Tax Contingencies (expressed in $’000’s)
The Company has been assessed taxes and related interest and penalties, in Peru by SUNAT, for tax years 2010, 2011,
and 2012, in the amounts of $1,161, $740, and $110, respectively, for a total of $2,011. The Company is currently
appealing the assessments and believes the appeals with be ruled in favor of the Company. Subsequent to December
31, 2014, the Company has provided as a guarantee by way of letter bond in the amount of $776.
Other Contingencies
The Company is subject to various investigations, claims, legal, labor and tax proceedings covering matters that arise in
the ordinary course of business activities. Each of these matters is subject to various uncertainties and it is possible
that some of these matters may be resolved unfavorably for the Company. Certain conditions may exist as of the date
the financial statements are issued that which may result in a loss to the Company. In the opinion of management, none
of these matters are expected to have a material effect on the results of operations or financial conditions of the Company.
Guarantees and Indemnifications (expressed in $’000’s)
The Company may provide guarantees and indemnifications in conjunction with transactions in the normal course of
operations. These are recorded as liabilities when reasonable estimates of the obligations can be made. Indemnifications
that the Company has provided include the obligation to indemnify the following:
•
directors and officers of the Company and its subsidiaries for potential liability while acting as a director or
officer of the Company, together with various expenses associated with defending and settling such suits or
actions due to association with the Company; and,
•
certain vendors of an acquired company for obligations that may or may not have been known at the date of the
transaction.
The dollar value of guarantees and indemnifications cannot be reasonably estimated.
The Caylloma Mine closure plan was approved in November 2009 with total closure costs of $3,587 of which $1,756 is
subject to annual collateral in the form of a letter of guarantee, to be awarded each year in increments of $146 over 12
years based on the estimated life of the mine. In March 2013 the closure plan was updated with total closure costs of
$7,996 of which $4,167 is subject to annual collateral in the form of a letter of guarantee.
Scotiabank Peru, a third party, has established a bank letter of guarantee on behalf of Bateas in favor of the Peruvian
mining regulatory agency in compliance with local regulation and to collateralize Bateas’ mine closure plan, in the amount
of $1,842 (2013: $1,204). This bank letter of guarantee expires on December 31, 2015.
Scotiabank Peru, a third party, has established a bank letter of guarantee on behalf of Bateas in favor of the Peruvian
Energy and Mining Ministry to collateralize Bateas’s regulatory compliance with the electric transmission line project, in
the amount of $3 (2013: $3). This bank letter of guarantee expires on December 6, 2015
Scotiabank Peru, a third party, has established a bank letter of guarantee, for office rental, on behalf of Bateas in favor
of Centro Empresarial Nuevo Mundo S.A.C., in the amount of $58. This bank letter of guarantee expires on July 18,
2015.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements or commitments that are expected to have a current or
future effect on the financial condition, results of operations, liquidity, capital expenditures, or capital resources that are
material to investors, other than those disclosed in this MD&A and the consolidated financial statements and the related
notes.
