Property, plant, equipment and development costs

12 Months Ended

Dec. 31, 2024

Property, plant, equipment and development costs

Property, plant, equipment and development costs

11. Property, plant, equipment and development costs

(a)

Below is presented the movement:


		Balance as of												Balance as of												Balance as of
		January 1,								Changes in		Reclassifications		December 31,								Changes in		Reclassifications		December 31,
		2023		Additions		Disposals		Sales		estimations		and transfers		2023		Additions		Disposals		Sales		estimations		and transfers		2024
		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Cost:
Lands		18,765		—		—		—		—		—		18,765		—		—		—		—		—		18,765
Mining concessions		111,590		—		—		—		—		(34,023)		77,567		—		—		(3)		—		(7)		77,557
Development costs		904,683		89,127		(8)		—		—		—		993,802		101,876		—		—		—		1,782		1,097,460
Buildings, constructions and other		1,353,782		—		—		(5,193)		—		27,011		1,375,600		—		—		(313)		—		79,815		1,455,102
Machinery and equipment		874,015		1		(233)		—		—		15,428		889,211		—		(1,466)		(10,567)		—		24,904		902,082
Transportation units		5,657		—		(89)		(761)		—		723		5,530		—		(68)		(483)		—		113		5,092
Furniture and fixtures		11,071		2		(6)		—		—		464		11,531		—		—		(1)		—		1,166		12,696
Units in transit		15,686		36,452		—		—		—		—		52,138		33,521		—		—		—		247		85,906
Work in progress		91,468		139,610		(1,326)		—		—		(43,629)		186,123		242,841		(7,496)		—		—		(100,177)		321,291
Stripping activity asset		190,156		8,953		—		—		—		—		199,109		—		—		—		—		1		199,110
Right-of-use asset (e)		30,944		1,929		—		—		1,055		—		33,928		—		—		—		7,842		(7,842)		33,928
Mine closure costs		310,513		—		—		—		11,879		—		322,392		—		—		—		73,090		(2)		395,480
		3,918,330		276,074		(1,662)		(5,954)		12,934		(34,026)		4,165,696		378,238		(9,030)		(11,367)		80,932		—		4,604,469
Accumulated depreciation and amortization:
Development costs		388,488		23,802		—		—		—		—		412,290		33,236		—		—		—		7,461		452,987
Buildings, construction and other		823,918		55,919		—		—		—		—		879,837		67,469		—		(313)		—		(7,124)		939,869
Machinery and equipment		744,649		37,510		(223)		(4,792)		—		—		777,144		31,398		(938)		(10,541)		—		6,602		803,665
Transportation units		5,172		300		(85)		(744)		—		—		4,643		249		(41)		(483)		—		(141)		4,227
Furniture and fixtures		10,221		457		(6)		—		—		—		10,672		501		—		(1)		—		(303)		10,869
Stripping activity asset		153,928		51,124		—		—		—		—		205,052		—		—		—		—		(5,942)		199,110
Right-of-use asset (e)		18,184		3,988		—		—		—		—		22,172		5,737		—		—		—		(553)		27,356
Mine closure costs		232,030		15,016		—		—		—		—		247,046		18,826		—		—		—		—		265,872
		2,376,590		188,116		(314)		(5,536)		—		—		2,558,856		157,416		(979)		(11,338)		—		—		2,703,955
Provision for impairment of long-lived assets:
Mine closure costs		2,206		—		—		—		—		—		2,206		—		—		—		—		—		2,206
Development costs		3,488		—		—		—		—		—		3,488		—		—		—		—		(3)		3,485
Property, plant and other		851		—		—		—		—		—		851		—		—		—		—		3		854
Machinery and equipment		—		—		—		—		—		—		—		4,184		—		—		—		—		4,184
		6,545		—		—		—		—		—		6,545		4,184		—		—		—		—		10,729

Net cost		1,535,195												1,600,295												1,889,785

(b)

Impairment of long-lived assets

As of December 31, 2024, the Group identified impairment indicators in its mining units Tambomayo, Orcopampa, and La Zanja. The Company assessed and concluded that there is no impairment as a result of the recoverable amount analysis based on the value in use.

As of December 31, 2023, the Group identified impairment indicators in its mining units Uchucchacua, Julcani, Tambomayo, El Brocal, La Zanja, and Río Seco. The Group assessed and concluded that there were no impairment as a result of the recoverable amount analysis based on the value in use.

As of December 31, 2022, the Group identified impairment indicators in its mining units Orcopampa, Uchucchacua, La Zanja, and Río Seco. The Group assessed and concluded that there were no impairment as a result of the recoverable amount analysis based on the value in use in the units of Orcopampa, Uchucchacua, and La Zanja. On the other hand, the Group recognized a recovery for impairment of long-lived assets totaling US$19.9 million in the Río Seco CGU.

Key assumptions

The determination of value in use is most sensitive to the following key assumptions:

-

Production volumes

-

Commodity prices

-

Discount rate

-

Residual value

Production volumes: Estimated production volumes are based on detailed life-of-mine plans and consider development plans for the mines agreed by management as part of planning process. Production volumes are dependent on several variables, such as: the recoverable quantities; the production profile; the cost of the development of the infrastructure necessary to extract the reserves; the production costs; the contractual duration of mining rights; and the selling price of the commodities extracted.

As each producing mining unit has specific reserve characteristics and economic circumstances, the cash flows of the mines are computed using appropriate individual economic models and key assumptions established by management. The production profiles used were consistent with the reserves and resource volumes approved as part of the Group’s process for the estimation of proven and probable reserves and resource estimates.

Commodity prices: Forecast commodity prices are based on management’s estimates and are derived from forward price curves and long-term views of global supply and demand, building on experience of the industry and consistent with external sources. These prices were adjusted to arrive at appropriate consistent price assumptions for the different qualities and type of commodities, or, where appropriate, contracted prices were applied. These prices are reviewed at least annually.

Estimated prices for the current and long-term periods that have been used to estimate future cash flows are as follows:

As of December 31, 2024 -


		2025		2026-2028
		US$		US$

Gold		2,000 /Oz		2,304 /Oz
Silver		26.00 /Oz		30.00 /Oz
Copper		8,900 /MT		10,175 /MT
Zinc		2,500 /MT		2,721 /MT
Lead		1,900 /MT		2,185 /MT

As of December 31, 2023 -


		2024		2024-2027
		US$		US$

Gold		1,900 /Oz		2,036 /Oz
Silver		23.00 /Oz		27.00 /Oz
Copper		8,500 /MT		10,822 /MT
Zinc		2,600 /MT		3,071 /MT
Lead		2,050 /MT		2,449 /MT

As of December 31, 2022 -


		2024		2024-2026
		US$		US$

Gold		1,750 /Oz		1,735 /Oz
Silver		21.00 /Oz		23.17 /Oz
Copper		7,900 /MT		9,625 /MT
Zinc		3,000 /MT		2,648 /MT
Lead		1,900 /MT		2,181 /MT

(*)OZ= Ounces, MT = Metric Ton.

Discount rate:

In calculating the value in use, as of December 31, 2024, 2023 and 2022 the following discount rates were applied to the cash flows:


		2024		2023		2022
		%		%		%

Uchucchacua		N/A		12.04		12.52
Tambomayo		12.73		12.04		N/A
Julcani		N/A		12.04		N/A
Orcopampa		12.73		N/A		12.52
El Brocal		15.66		14.78		16.58
Rio Seco		N/A		15.06		16.34
La Zanja		15.18		14.18		14.08

These discount rates are derived from the Group’s pre-tax weighted average cost of capital (WACC), with appropriate adjustments made to reflect the risks specific to the CGU. The WACC considers both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is based on its interest-bearing borrowings the Group is obliged to service. The Beta factors are evaluated annually based on publicly available market data.

Residual value: As part of its financial projections to determine the recoverable amount, the Group has estimated and included the value of long-lived assets that could be sold independently at the end of the life of the mine. The estimation of the residual value is carried out by an independent appraiser each year, according to paragraph 53(a) of IAS 36.

(c)

The book value of assets held under finance leases, and assets within the trust equity amounted to US$240.3 million as of December 31, 2024 (US$231.6 million as of December 31, 2023) and is presented within various items of “Property, plant, equipment and development cost” caption. During the years 2024 and 2023, there were no acquisitions of assets under finance lease contracts. The leased assets have been pledged as collateral for the corresponding operations.

(d)

During 2024, 2023 and 2022, no borrowing costs were capitalized.

(e)

Right-of-use assets

The net assets for right-of-use assets maintained by the Group correspond to the following:


		2024		2023
		US$(000)		US$(000)

Buildings		5,150		9,236
Transportation units		1,340		1,117
Machinery and equipment		82		1,403

		6,572		11,756

During 2024, there were no additions nor disposals (additions of US$1.9 million and no disposals were made during 2023).

(f)

Below is the distribution of depreciation expenses of the year:


		2024		2023		2022
		US$(000)		US$(000)		US$(000)

Cost of sales of goods		149,954		164,543		147,032
Unabsorbed cost due to production stoppage		8		10,420		14,877
Cost of sales of services		2,783		9,037		8,153
Administrative expenses		1,758		2,065		1,886
Property, plant, equipment and development costs		2,400		1,799		1,039
Exploration in non-operating areas		163		98		101
Selling expenses		198		103		93
Other, net		152		51		49
Discontinued operations, note 1(e)		—		—		9

		157,416		188,116		173,239

Sociedad Minera Cerro Verde S.A.A.

Property, plant, equipment and development costs

Property, plant, equipment and development costs

7. Property, plant and equipment, net

Property, plant and equipment consist of owned and leased assets (right-of-use assets), and cost and accumulated depreciation accounts as of December 31, 2024 and 2023, are shown below:


						Adjustments										Adjustments
		January 1,				and changes in		Disposals				December 31,				and changes in		Disposals				December 31,
		2023		Additions		estimates		and/or sales		Transfers		2023		Additions		estimates		and/or sales		Transfers		2024
		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Cost
Land		33,202		—		—		—		360		33,562		—		—		—		—		33,562
Buildings and other constructions		2,608,449		—		—		(35,964)		100,777		2,673,262		—		716		(3,901)		11,132		2,681,209
Machinery and equipment		5,197,630		—		—		(49,382)		194,037		5,342,285		—		(716)		(77,827)		226,320		5,490,062
Transportation units		36,377		—		—		(133)		4,388		40,632		—		—		(306)		5,449		45,775
Furniture and fixtures		572		—		—		—		—		572		—		—		—		—		572
Other equipment		36,222		—		—		—		182		36,404		—		—		(436)		273		36,241
Construction in progress and in-transit units (a)		184,265		302,302		(2,164)		—		(299,335)		185,068		358,684		—		—		(243,174)		300,578
Stripping activity asset (see note 2(i))		1,464,027		344,054		—		—		—		1,808,081		312,608		—		—		—		2,120,689
Asset retirement costs (see note 11(c))		168,484		—		40,425		—		—		208,909		—		(36,885)		—		—		172,024
Right-of-use assets (b)		97,356		3,946		—		(1,114)		(409)		99,779		1,478		—		(1,410)		—		99,847
		9,826,584		650,302		38,261		(86,593)		—		10,428,554		672,770		(36,885)		(83,880)		—		10,980,559

Accumulated depreciation
Buildings and other constructions (c)		595,921		74,690		19,912		(32,418)		—		658,105		75,268		418		(3,889)		—		729,902
Machinery and equipment		2,787,467		290,691		—		(46,980)		123		3,031,301		293,826		(418)		(77,224)		—		3,247,485
Transportation units		20,787		2,514		—		(120)		—		23,181		3,159		—		(261)		—		26,079
Furniture and fixtures		572		—		—		—		—		572		—		—		—		—		572
Other equipment		27,168		3,118		—		—		—		30,286		3,088		—		(436)		—		32,938
Stripping activity asset		925,757		133,810		—		—		—		1,059,567		191,070		—		—		—		1,250,637
Asset retirement costs		41,684		5,464		—		—		—		47,148		5,441		—		—		—		52,589
Right-of-use assets (b)		39,851		11,117		—		(1,114)		(123)		49,731		11,152		—		(1,342)		—		59,541
		4,439,207		521,404		19,912		(80,632)		—		4,899,891		583,004		—		(83,152)		—		5,399,743

Net cost		5,387,377										5,528,663										5,580,816

(a)

As of December 31, 2024, additions to construction in progress and in-transit units primarily relate to (i) mine support equipment (US$109.3 million), (ii) projects associated with the construction of new in-pit crusher and improvements to existing crushers (US$71.8 million), (iii) tailings dam projects (US$74.2 million), (iv) projects associated with the capitalization of main components of the mine’s heavy equipment (US$49.9 million), (v) belt replacement projects (US$10.8 million) and (vi) expansion of a leach pad (US$7.9 million).

As of December 31, 2023, additions to construction in progress and in-transit units primarily relate to (i) mine support equipment (US$80.2 million), (ii) tailings dam projects (US$52.5 million), (iii) projects associated with the capitalization of main components of the mine’s heavy equipment (US$42.9 million), (iv) expansion of a leach pad (US$36.1 million), and (v) a direct flotation reactor technology project (US$21.8 million).

(b)Set out below are the carrying amounts of right-of-use assets recognized and the movements as of December 31, 2024 and 2023:


		December 31,								December 31,						December 31,
		2023		Additions		Disposals		Transfers		2023		Additions		Disposals		2024
		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)
Cost
Land		10,491		—		—		—		10,491		59		—		10,550
Buildings and other constructions		56,521		2,283		(591)		—		58,213		741		(873)		58,081
Machinery and equipment		30,344		1,663		(523)		(409)		31,075		678		(537)		31,216
		97,356		3,946		(1,114)		(409)		99,779		1,478		(1,410)		99,847

Accumulated depreciation
Land		6,213		1,661		—		—		7,874		1,673		—		9,547
Buildings and other constructions		21,750		6,205		(591)		—		27,364		6,210		(804)		32,770
Machinery and equipment		11,888		3,251		(523)		(123)		14,493		3,269		(538)		17,224
		39,851		11,117		(1,114)		(123)		49,731		11,152		(1,342)		59,541

Net cost		57,505								50,048						40,306

(c) In 2023, adjustments primarily relate to the depreciation of assets whose depreciation method was changed from UOP to straight-line basis.