Volcan Compañía Minera A : Financial Statements - 2023 3Q

Volcan Compañía Minera S.A.A. and Subsidiaries

Consolidated interim financial information (unaudited) as of

September 30, 2023 and 2022

Volcan Compañía Minera S.A.A. and Subsidiaries

Consolidated Statement of Financial Position

As of September 30, 2023 (unaudited) and as of December 31, 2022 (audited)

		September 30,		December 31,
	Note	2023	2022
		US$(000)		US$(000)
Assets
Current Assets
Cash and cash equivalents	4	54,587	73,600
Accounts receivable Trade, net		16,089	19,191
Accounts receivable from related entities		5,293	9,395
Other accounts receivable		79,340	65,389
Other financial assets	6	4,503	-
Inventories, net	5	50,318	57,093
Total current assets		210,130	224,668
Non-current Assets
Other accounts receivable		35,457	34,262
Financial investments		184,246	186,505
Property, plant and equipment, net	7	766,996	812,912
Assets by right of use	8	19,621	11,385
Mining exploration and evaluation cost, net	9	697,161	699,938
Inventories, net	5	5,774	6,218
Total non-current assets		1,709,255	1,751,220
Total assets		1,919,385	1,975,888
Liabilities and Net Stockholders' Equity
Current Liabilities
Overdrafts		2,478	198
Financial obligations	10	98,698	34,697
Trade accounts payable		222,861	251,239
Accounts payable to subsidiaries and affiliates		9,381	7,833
Other accounts payable		63,704	67,036
Deferred income		21		-
Total current liabilities		397,143	361,003
Non-current Liabilities
Financial obligations	10	705,275	776,771
Other accounts payable		-	3,200
Provision for closing of mining units and communities		288,466	292,895
Deferred income tax liability	11	127,083	136,277
Provision for contingencies		35,551	30,389
Deferred income		603	-
Total non-current liabilities		1,156,978	1,239,532
Total liabilities		1,554,121	1,600,535
Equity
Issued capital	12	906,683	1,134,300
Treasury stock		(60,934)	(60,934)
Other capital reserves		(173,234)	(173,234)
Capital reserve		9,709	10,695
Unrealized gains (loss)		(8,583)	(9,436)
Retained earnings		(308,377)	(526,038)
Total net stockholders' equity		365,264	375,353
Total liabilities and net stockholders' equity, net		1,919,385	1,975,888

The accompanying notes are an integral part of this statement.

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Volcan Compañía Minera S.A.A. and Subsidiaries

Consolidated Income Statement (unaudited)

For the period from January 1, to September 30, 2023 and 2022

	For the period from July	For the cumulative period
	from January 1
	1 to September 30	to September 30
	2023	2022	2023	2022
	US$(000)	US$(000)	US$(000)	US$(000)
Sales, Note 13	229,836	222,788	664,255	715,405
Cost of Sales, Note 14	(184,330)	(191,579)	(547,135)	(563,576)
Gross Income	45,506	31,209	117,120	151,829
Operating income (expenses)
Administrative expenses	(12,622)	(17,937)	(44,350)	(46,231)
Selling expenses	(6,788)	(6,527)	(21,312)	(17,855)
Other income	19,106	11,459	45,953	37,589
Other expenses	(13,439)	(34,797)	(49,784)	(75,335)
	(13,743)	(47,802)	(69,493)	(101,832)
Operating income	31,763	(16,593)	47,627	49,997
Financial income (expenses)
Financial income, Note 15	226	2,055	3,833	11,144
Financial expenses, Note 15	(18,564)	(13,529)	(52,686)	(41,615)
Exchange difference, net	(1,630)	(620)	(703)	(1,277)
Total other income (expenses), net	(19,968)	(12,094)	(49,556)	(31,748)
Income before income tax	11,795	(28,687)	(1,929)	18,249
Income tax, Note 11 (b)	(11,697)	(1,708)	(9,017)	(22,723)
Net income	98	(30,395)	(10,946)	(4,474)
Net earnings per share	0.000	(0.008)	(0.003)	(0.001)
Weighted average of outstanding shares (in	3,857,594	3,857,594	3,857,594	3,857,594
thousands)
Basic and diluted (loss) earnings per share	0.000	(0.008)	(0.003)	(0.001)

The accompanying notes are an integral part of this statement.

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Volcan Compañía Minera S.A.A. and Subsidiaries

Consolidated Statement of Comprehensive Income (unaudited)

For the period from January 1 to September 30, 2023 and 2022

	For the cumulative	For the cumulative period
	period from July 1 to	from January 1 to
	September 30	September 30
	2023	2022	2023	2022
	US$(000)	US$(000)	US$(000)	US$(000)
Net income	98	(30,395)	(10,946)	(4,474)
Others comprehensive income (loss):
Net change in gains (losses) unrealized on derivate instruments	(1,948)	(1,733)	1,210	(4,604)
and Financial investments
Income tax	575	511	(357)	1,358
Other comprehesive income (loss) net of income tax	(1,373)	(1,222)	853	(3,246)
Total comprehesive income	(1,275)	(31,617)	(10,093)	(7,720)

The accompanying notes are an integral part of this statement.

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Volcan Compañía Minera S.A.A. and Subsidiaries

Statement of changes in the Net Stockholders' Equity (unaudited)

For the period from January 1 to September 30, 2023 and 2022

	Capital Issued		Treasury stock		Other capital		Capital		Unrealized			Retained		Total
			reserves		reserve		gains (loss)			earnings
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)			US$(000)		US$(000)
Balances as of January 1, 2022	1,134,300	(60,934)	10,695	(173,234)	(9,504)	(444,656)	456,667
	-	-	-	-	-	-	-
Results integrals
Net Income of year	-	-	-	-	-	(4,474)	(4,474)
Other results integrals of year	-	-	-	-	(3,246)	-	(3,246)
Total results integrals of year	-		-		-		-		(3,246)		(4,474)		(7,720)
Others	-	-	-	-	-	-	-
Balances as of September 30, 2022	1,134,300	(60,934)	10,695	(173,234)	(12,750)	(449,130)	448,947
Balances as of January 1, 2023	1,134,300	(60,934)	10,695	(173,234)	(9,436)	(526,038)	375,353
Results integrals
Net loss of year	-	-	-	-	-	(10,946)	(10,946)
Other results integrals of year	-	-	-	-	853	-	853
Total results integrals of year	-		-		-		-		853		(10,946)		(10,093)
Capital reduction	(227,620)	-	(986)	-	-	228,606	-
Others	3	-	-	-	-	1	4
Balances as of September 30, 2023	906,683	(60,934)	9,709	(173,234)	(8,583)	(308,377)	365,264

The accompanying notes are an integral part of this statement.

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Volcan Compañía Minera S.A.A. and Subsidiaries

Consolidated Cash Flows Statement (unaudited)

For the period from January 1 to September 30, 2023 and 2022

	September 30,	September 30,
Note	2023	2022
	US$(000)	US$(000)
Operating activities
Collection of sales proceeds	783,284	848,601
Refund of the credit balance in favor of the exporter and taxes	17,936	27,793
Payments to suppliers and third parties	(531,583)	(581,268)
Payments to workers	(89,011)	(78,438)
Income tax payments	(15,784)	(16,725)
Royalties	(2,986)	(13,365)

Cash flows from operating activities, net		162,695	186,598
Investing activities
Payments corresponding to:
Disbursements for the acquisition of mining rights, property,
plant and equipment	7	(54,170)	(84,776)
Disbursements for exploration and development activities	9	(66,046)	(64,083)
Cash flows (used in) investment activities, net		(120,216)	(148,859)
Financing activities
Collection corresponding to:
Obtaining financial obligations		-	413,703
Payments corresponding to:
Amortization of overdrafts and other financial liabilities	10	(20,018)	(537,288)
Premium payments and bond repurchase expenses		2,281	(414)
Interest payment	10	(43,755)	(39,093)
Cash flows (used in) from financing activities, net		(61,492)	(163,092)
Increase (Decrease) in cash and cash equivalents for the period		(19,013)	(125,353)
Cash and cash equivalents at the beginning of the period		73,600	231,187
Cash and cash equivalents at the end of the period	4	54,587	105,834
Transactions that do not generate cash flows:
Acquisition of assets under financial lease		1,241	15,204
Vehicle Leases	8	11,744	6,412

The accompanying notes are an integral part of this statement

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Volcan Compañía Minera S.A.A. and Subsidiaries

Notes to the consolidated interim financial statements (unaudited)

As of September 30, 2023 and December 31, 2022

1. Identification and economic activity

1. Identification -
   Volcan Compañía Minera S.A.A. (hereinafter "the Company") is a subsidiary of Glencore AG, which is a subsidiary of Glencore Plc., a company domiciled in Switzerland, hereinafter the Parent, owner of 63% of common class A voting shares and an economic interest of 23%, excluding treasury shares. The Company was incorporated on February 1, 1998 in Lima, Peru.
   The shares comprising the capital stock of the Company are listed in the Stock Exchange of Lima.
   The Company is mainly engaged in the exploration and operation of mining claims and the extraction, concentration, treatment and commercialization of polymetallic minerals. The economic activity of Subsidiaries is explained in paragraph (c). The Company and Subsidiaries engaged in the mining sector operate the mining units of Yauli, Animon, Alpamarca, Cerro and Oxidos in the departments of Cerro de Pasco, Junín and Lima. The Subsidiaries engaged in the electric power generation business operate in the department of Lima.
   Volcan carries out its activities in the following units: Ticilio, Mahr Tunel, Carahuacra, San Cristobal, Andaychagua and Carapongo, these are located on Central Highway No. 168, department of Junin.
   In the Subsidiaries, its concentrator plants are mainly located at Animon No. 44, province of Huayllay, department of Cerro de Pasco and on the Lima KM highway. 174, province of Santa Barbara de Carhuacayan, department of Junín.
   The Company's Management addresses and supervises all operations of the economic group.
   The legal domicile, where the administrative offices of the Company are located, is Av. Manuel Olguin No. 375, Santiago de Surco, Lima.

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1. Basis of preparation:
   The Company's separate financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
   In accordance with current International Financial Reporting Standards (IFRS), there is no obligation to prepare separate financial statements; but in Peru, companies have the obligation to prepare them in accordance with current legal regulations. Due to this, the Company has prepared separate financial statements in accordance with IAS 27, Separate Financial Statements. These financial statements are made public within the term established by the Superintendence of the Securities Market (SMV).
2. Approval of consolidated financial statements -
   The consolidated financial statements as of September 30, 2023 were approved by the Company's Management on October 31, 2023. The consolidated financial statements as of December 31, 2022 were approved by the Shareholders´s Meeting on March 31, 2023.
3. The consolidated financial statements include the financial statements from the following subsidiaries:

	Direct and indirect interest in
	ownership
Consolidated Subsidiaries and economic activity	September 30,	December 31,	Domicile
2023	2022
	%	%
Mining exploration and operation:
Compañía Minera Chungar S.A.C.	100.00	100.00	Perú
Óxidos de Pasco S.A.C.	100.00	100.00	Perú
Empresa Administradora de Cerro S.A.C.	100.00	100.00	Perú
Empresa Explotadora de Vinchos Ltda. S.A.C.	100.00	100.00	Perú
Minera Aurífera Toruna S.A.C. (1)	80.00	80.00	Perú
Electric power generation:
Hidroeléctrica Huanchor S.A.	100.00	100.00	Perú
Empresa de Generación Eléctrica Rio Baños S.A.C. (2)	100.00	100.00	Perú
Compañía Hidroeléctrica Tingo S.A. (3)	100.00	100.00	Perú
Investments in general:
Roquel Global S.A.C.	100.00	100.00	Perú
Compañía Industrial Limitada de Huacho S.A.	96.41	96.41	Perú
Empresa Minera Paragsha S.A.C.	100.00	100.00	Perú

1. These are, in turn, subsidiaries of Empresa Minera Paragsha S.A.C.
2. This is, in turn, a subsidiary of Hidroeléctrica Huanchor S.A.
3. This is, in turn, a subsidiary of Compañía Minera Chungar S.A.C.

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Compañía Minera Chungar S.A.C.

This company has two mining units, Animon and Alpamarca, located in the department of Pasco and is engaged in the exploration, development and operation of mineral deposits, basically with zinc, copper and lead contents. The useful life determined based on the reserves and resources of its mining units of Animon and Alpamarca is 19 years until 2037 (unaudited).

Óxidos de Pasco S.A.C.

This entity is now engaged in the treatment of oxidized minerals at a leach pad.

Empresa Administradora de Cerro S.A.C.

This company is engaged in the exploration, development and operation of mineral deposits, basically with zinc and lead contents. Now, the Subsidiary processes stockpiles since its mining operations have been stopped. This company develops its activities in its mining unit Cerro.

Empresa Explotadora de Vinchos Ltda. S.A.C.

This company does not perform operations since 2015 because Management decided to redirect its mining activities in other Subsidiaries of the Company. As from 2019, Management decided to conduct explorations to reconsider the potential of its deposit and then develop and operate it provided it is viable and profitable; otherwise, it will enter into a simple reorganization process in the short term and will be absorbed by an operating subsidiary of the Company in order to search for synergies for the development of its projects.

Empresa Minera Paragsha S.A.C.

This company was incorporated for exploration, operation, assignment and mining usufruct; however, its main activity is now the purchase and sale of investments in equity instruments. This company has shares of the Company and Cementos Polpaico S.A.

Management considers that they will continue receiving financial support from the Company due to its strategic importance.

Minera Aurífera Toruna S.A.C.

These companies were incorporated for the exploration, development and operation of mineral deposits and their main activity is the exploration of their mining concessions through the financing of the Company and Subsidiaries.

The Company's Management is reevaluating potential projects or the option of a simple reorganization in order to search for synergies for the development of their projects.

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Hidroeléctrica Huanchor S.A.C.

The Company is mainly engaged in the sale of energy through the operation and maintenance of generating plants of electrical transmission systems. To do this, it has the 19,632 MW Huanchor Hydroelectric Power Plant and the 1.2 MW Tamboraque Mini Hydroelectric Power Plant, both located in the district of San Mateo, province of Huarochirí, Lima.

Empresa de Generación Energética Rio Baños S.A.C.

This company is engaged in electric power generation and has the hydroelectric power plants of Baños V and Rucuy. The hydroelectric power plant of Rucuy has stopped its operations since March 2017 as a consequence of El Niño phenomenon, which caused issues in the penstock and the transmission line. The Rucuy hydroelectric plant restarted its operations in the first half of 2019.

Compañía Hidroeléctrica Tingo S.A.

This company is engaged in the operation and maintenance of gen-sets and electrical energy transmission systems. It has the hydroelectric power plant of Tingo of 1.24 MW and 82 km of transmission lines of 22.9 and 50 kv.

Roquel Global S.A.C.

This company is engaged in real estate development in order to perform port and logistics activities in relation to the Chancay Port. The pre-investment stage will commence in 2019. The financial statements of this subsidiary are presented consolidated with those of the Company since 2017.

Compañía Industrial Limitada de Huacho S.A.

This company is mainly engaged in real estate activities. The financial statements of this subsidiary are presented consolidated with those of the Company since 2017.

1. Fusion -
   The General Meeting of shareholders of Compañía Minera Chungar S.A.C. and Óxidos de Pasco S.A.C. approved the merger by absorption project of Minera San Sebastian AMC S.R.L. and Compañía Minera Vichaycocha S.A.C., and Remediadora Ambiental S.A.C., respectively on November 30, 2022.
   The effective date of the merger was December 1, 2022.
   The equity block absorbed by Compañía Minera Chungar S.A.C. is made up of:

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