Company Quick10K Filing
Southern Copper
Price34.49 EPS2
Shares773 P/E17
MCap26,664 P/FCF19
Net Debt6,296 EBIT2,304
TEV32,960 TEV/EBIT14
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-04
10-K 2019-12-31 Filed 2020-02-28
10-Q 2019-09-30 Filed 2019-10-28
10-Q 2019-06-30 Filed 2019-07-26
10-Q 2019-03-31 Filed 2019-04-29
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-10-31
10-Q 2018-06-30 Filed 2018-07-30
10-Q 2018-03-31 Filed 2018-05-02
10-K 2017-12-31 Filed 2018-03-01
10-Q 2017-09-30 Filed 2017-11-06
10-Q 2017-06-30 Filed 2017-08-02
10-Q 2017-03-31 Filed 2017-05-08
10-K 2016-12-31 Filed 2017-03-01
10-Q 2016-09-30 Filed 2016-11-08
10-Q 2016-06-30 Filed 2016-08-01
10-Q 2016-03-31 Filed 2016-05-02
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-07-31
10-Q 2015-03-31 Filed 2015-04-30
10-K 2014-12-31 Filed 2015-03-02
10-Q 2014-09-30 Filed 2014-10-31
10-Q 2014-06-30 Filed 2014-08-05
10-Q 2014-03-31 Filed 2014-05-06
10-K 2013-12-31 Filed 2014-02-27
10-Q 2013-09-30 Filed 2013-10-30
10-Q 2013-06-30 Filed 2013-08-05
10-Q 2013-03-31 Filed 2013-04-30
10-K 2012-12-31 Filed 2013-02-28
10-Q 2012-09-30 Filed 2012-10-25
10-Q 2012-06-30 Filed 2012-08-03
10-Q 2012-03-31 Filed 2012-05-02
10-K 2011-12-31 Filed 2012-02-27
10-Q 2011-09-30 Filed 2011-11-09
10-Q 2011-06-30 Filed 2011-08-08
10-Q 2011-03-31 Filed 2011-05-06
10-Q 2010-06-30 Filed 2010-08-03
10-Q 2010-03-31 Filed 2010-05-04
10-K 2009-12-31 Filed 2010-02-26
8-K 2020-04-24
8-K 2020-02-25
8-K 2019-10-31
8-K 2019-10-23
8-K 2019-09-19
8-K 2019-08-12
8-K 2019-07-23
8-K 2019-07-18
8-K 2019-07-09
8-K 2019-04-29
8-K 2019-04-25
8-K 2019-04-11
8-K 2019-02-11
8-K 2019-02-11
8-K 2018-10-24
8-K 2018-10-18
8-K 2018-07-24
8-K 2018-07-18
8-K 2018-04-26
8-K 2018-04-25
8-K 2018-03-01
8-K 2018-02-21
8-K 2018-02-02

SCCO 10Q Quarterly Report

Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 1 - Description of The Business:
Note 2 - Summary of Significant Accounting Policies:
Note 3 - Short - Term Investments:
Note 4 - Inventories:
Note 5 - Income Taxes:
Note 6 - Related Party Transactions:
Note 7 - Leases:
Note 8 - Asset Retirement Obligation:
Note 9 - Benefit Plans:
Note 10 - Commitments and Contingencies:
Note 11 - Stockholders'Equity:
Note 12 - Fair Value Measurement:
Note 13 - Revenue:
Note 14 - Segment and Related Information:
Note 15 - Subsequent Events:
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings:
Item 1A. Risk Factors:
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds:
Item 4. Mine Safety Disclosures:
Item 6. Exhibits
Part II - Other Information
EX-15 scco-20200331xex15.htm
EX-31.1 scco-20200331xex31d1.htm
EX-31.2 scco-20200331xex31d2.htm
EX-32.1 scco-20200331xex32d1.htm
EX-32.2 scco-20200331xex32d2.htm

Southern Copper Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
2016128402012201420172020
Assets, Equity
1.91.51.10.80.40.02012201420172020
Rev, G Profit, Net Income
1.81.30.80.2-0.3-0.82012201420172020
Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from        to        

Commission File Number: 1-14066

Graphic

SOUTHERN COPPER CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

    

13-3849074

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1440 East Missouri Avenue Suite 160 Phoenix, AZ

85014

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (602) 264-1375

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common stock, par value $0.01 per share

SCCO

New York Stock Exchange

Lima Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

As of April 30, 2020 there were outstanding 773,058,869 shares of Southern Copper Corporation common stock, par value $0.01 per share.

Table of Contents

Southern Copper Corporation (“SCC”)

INDEX TO FORM 10-Q

    

    

Page No.

Part I. Financial Information:

Item. 1

Condensed Consolidated Financial Statements (Unaudited)

3

Condensed Consolidated Statements of Earnings for the three months ended March 31, 2020 and 2019

3

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019

4

Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019

5

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019

6

Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2020 and 2019

7

Notes to Condensed Consolidated Financial Statements

8-34

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

35-51

Item 3.

Quantitative and Qualitative Disclosure about Market Risk

51-53

Item 4.

Controls and procedures

53

Report of Independent Registered Public Accounting Firm

54

Part II. Other Information:

55

Item 1.

Legal Proceedings

55

Item 1A.

Risk Factors

55

Item 2.

Unregistered Sale of Equity Securities and Use of Proceeds

55

Item 4.

Mine Safety Disclosures

56

Item 6.

Exhibits

57-58

List of Exhibits

59-61

Signatures

62

2

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

Three Months Ended

March 31, 

    

2020

    

2019

(in millions, except for per share amounts)

Net sales (including sales to related parties, see note 6)

$

1,719.7

$

1,753.4

Operating cost and expenses:

Cost of sales (exclusive of depreciation, amortization and depletion shown separately below)

 

955.8

 

844.1

Selling, general and administrative

 

29.1

 

28.5

Depreciation, amortization and depletion

 

192.9

 

181.6

Exploration

 

8.6

 

5.5

Total operating costs and expenses

 

1,186.4

 

1,059.7

Operating income

 

533.3

 

693.7

Interest expense

 

(101.9)

 

(90.1)

Capitalized interest

 

5.1

 

12.3

Other income (expense)

 

(7.4)

 

5.4

Interest income

 

7.8

 

3.7

Income before income taxes

 

436.9

 

625.0

Income taxes (including royalty taxes, see Note 5)

 

221.7

 

237.9

Net income before equity earnings of affiliate

 

215.2

 

387.1

Equity earnings (loss) of affiliate, net of income tax

 

1.0

 

2.1

Net income

 

216.2

 

389.2

Less: Net income attributable to the non-controlling interest

 

1.4

 

1.0

Net income attributable to SCC

$

214.8

$

388.2

Per common share amounts attributable to SCC:

Net earnings-basic and diluted

$

0.28

$

0.50

Weighted average shares outstanding-basic and diluted

 

773.1

 

773.0

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents

Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended

March 31, 

    

2020

    

2019

(in millions)

Net income and comprehensive income

$

216.2

$

389.2

Comprehensive income attributable to the non-controlling interest

 

1.4

 

1.0

Comprehensive income attributable to SCC

$

214.8

$

388.2

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents

Southern Copper Corporation

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31, 

December 31, 

    

2020

    

2019

(in millions)

ASSETS

Current assets:

Cash and cash equivalents

$

2,051.6

$

1,925.1

Short-term investments

 

40.7

 

80.7

Accounts receivable trade

 

709.7

 

832.9

Accounts receivable other (including related parties 2020- $35.3 and 2019 - $30)

 

80.0

 

78.9

Inventories

 

1,079.4

 

1,068.5

Prepaid taxes

157.9

172.4

Other current assets

 

20.4

 

26.2

Total current assets

 

4,139.7

 

4,184.7

Property and mine development, net

 

9,288.7

 

9,371.0

Ore stockpiles on leach pads

 

1,149.0

 

1,230.3

Intangible assets, net

 

148.5

 

148.4

Related parties receivable

59.0

59.5

Right-of-use assets

 

1,029.6

 

1,046.4

Deferred income tax

 

195.8

 

183.9

Equity method investment

 

112.9

 

111.9

Other non-current assets

 

88.9

 

71.3

Total assets

$

16,212.1

$

16,407.4

LIABILITIES

Current liabilities:

Current portion of long-term debt

$

400.0

$

399.8

Accounts payable (including related parties 2020- $81.6 and 2019- $86.4)

597.8

598.3

Accrued income taxes

 

16.5

 

116.3

Accrued workers’ participation

 

130.3

 

174.9

Accrued interest

 

140.9

 

96.0

Lease liabilities current

69.4

68.6

Other accrued liabilities

 

32.3

 

22.6

Total current liabilities

 

1,387.2

 

1,476.5

Long-term debt

 

6,541.8

 

6,541.0

Lease liabilities

960.1

977.8

Deferred income taxes

 

183.2

 

178.3

Non-current taxes payable

0.7

Other liabilities and reserves

 

111.1

 

112.6

Asset retirement obligation

 

265.5

 

262.3

Total non-current liabilities

 

8,061.7

 

8,072.7

Commitments and contingencies (Note 10)

STOCKHOLDERS’ EQUITY (NOTE 11)

Common stock par value $0.01; shares authorized, 2020 and 2019–2,000; shares issued, 2020 and 2019–884.6

 

8.8

 

8.8

Additional paid-in capital

 

3,410.5

 

3,424.9

Retained earnings

 

6,341.2

 

6,435.6

Accumulated other comprehensive income

 

(10.1)

 

(10.1)

Treasury stock, at cost, common shares

 

(3,034.2)

 

(3,048.9)

Total Southern Copper Corporation stockholders’ equity

 

6,716.2

 

6,810.3

Non-controlling interest

 

47.0

 

47.9

Total equity

 

6,763.2

 

6,858.2

Total liabilities and equity

$

16,212.1

$

16,407.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

    

Three Months Ended

    

March 31, 

(in millions)

2020

2019

OPERATING ACTIVITIES

Net income

$

216.2

$

389.2

Adjustments to reconcile net earnings to net cash provided from operating activities:

Depreciation, amortization and depletion

 

192.9

 

181.6

Equity earnings of affiliate, net of dividends received

 

(1.0)

(1.1)

(Gain) loss on foreign currency transaction effect

 

(28.0)

2.3

Provision for deferred income taxes

 

7.5

38.9

Other, net

 

6.9

3.6

Change in operating assets and liabilities:

Decrease (increase) in accounts receivable

 

123.2

(54.2)

Decrease (increase) in inventories

 

70.4

(7.5)

(Decrease) in accounts payable and accrued liabilities

 

(102.4)

(132.9)

(Increase) in other operating assets and liabilities

 

(10.6)

(48.6)

Net cash provided by operating activities

 

475.1

 

371.3

INVESTING ACTIVITIES

Capital expenditures

 

(101.0)

 

(173.1)

Proceeds from sale (purchase) of short-term investments, net

 

40.0

 

0.3

Other

 

0.4

Net cash used in investing activities

 

(60.6)

 

(172.8)

FINANCING ACTIVITIES

Cash dividends paid to common stockholders

 

(309.2)

 

(309.2)

SCC shareholder derivative lawsuit — received from AMC

36.5

SCC shareholder derivative lawsuit — dividend paid

(36.5)

Other, net

 

(2.2)

 

(0.1)

Net cash used in financing activities

 

(311.4)

 

(309.3)

Effect of exchange rate changes on cash and cash equivalents

 

23.4

 

3.2

Increase (decrease) in cash and cash equivalents

 

126.5

 

(107.6)

Cash and cash equivalents, at beginning of year

 

1,925.1

 

844.6

Cash and cash equivalents, at end of year

$

2,051.6

$

737.0

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

    

Three Months Ended

March 31, 

(in millions)

2020

2019

TOTAL EQUITY, beginning of period

$

6,858.2

$

6,612.8

STOCKHOLDERS’ EQUITY, beginning of period

 

6,810.3

 

6,567.4

CAPITAL STOCK:

Balance at beginning and end of period:

 

8.8

 

8.8

ADDITIONAL PAID-IN CAPITAL:

Balance at beginning of period

 

3,424.9

 

3,393.7

Other activity of the period

 

(14.4)

 

6.7

Balance at end of period

 

3,410.5

 

3,400.4

TREASURY STOCK:

Southern Copper common shares

Balance at beginning and end of the period

 

(2,767.9)

 

(2,768.3)

Parent Company common shares

Balance at beginning of period

 

(281.0)

 

(251.3)

Other activity, including dividend, interest and foreign currency transaction effect

 

14.7

 

(6.4)

Balance at end of period

 

(266.3)

 

(257.7)

Treasury stock balance at end of period

 

(3,034.2)

 

(3,026.0)

RETAINED EARNINGS:

Balance at beginning of period

 

6,435.6

 

6,186.9

Net earnings

 

214.8

 

388.2

Dividends declared and paid, common stock, per share, 2020- $0.4, 2019– $0.4

 

(309.2)

 

(309.2)

SCC shareholder derivative lawsuit — received from AMC

36.5

SCC shareholder derivative lawsuit — dividend paid

(36.5)

Other activity of the period

(0.2)

Balance at end of period

 

6,341.2

 

6,265.7

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):

Balance at beginning and end of period

 

(10.1)

 

(2.4)

STOCKHOLDERS’ EQUITY, end of period

 

6,716.2

 

6,646.5

NON-CONTROLLING INTEREST, beginning of period

 

47.9

 

45.4

Net earnings

 

1.4

 

1.0

Distributions paid

 

(2.3)

 

(0.1)

NON-CONTROLLING INTEREST, end of period

 

47.0

 

46.3

TOTAL EQUITY, end of period

$

6,763.2

$

6,692.8

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Southern Copper Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1— DESCRIPTION OF THE BUSINESS:

The Company is a majority-owned, indirect subsidiary of Grupo Mexico S.A.B. de C.V. (“Grupo Mexico”). At March 31, 2020, Grupo Mexico through its wholly-owned subsidiary Americas Mining Corporation (“AMC”) owned 88.9% of the Company’s capital stock. The condensed consolidated financial statements presented herein consist of the accounts of Southern Copper Corporation (“Southern Copper”, "SCC" or the “Company”), a Delaware corporation, and its subsidiaries. The Company is an integrated producer of copper and other minerals, and operates mining, smelting and refining facilities in Peru and Mexico. The Company conducts its primary operations in Peru through a registered branch (the "Peruvian Branch" or “Branch” or “SPCC Peru Branch”). The Peruvian Branch is not a corporation separate from the Company. The Company's Mexican operations are conducted through subsidiaries. The Company also conducts exploration activities in Argentina, Chile, Ecuador, Mexico and Peru.

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to state fairly the Company’s financial position as of March 31, 2020 and the results of operations, comprehensive income, cash flows and changes in equity for the three months ended March 31, 2020 and 2019. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year. The December 31, 2019 balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements at December 31, 2019 and notes included in the Company’s 2019 annual report on Form 10-K.

COVID – 19 PANDEMIC

Since the World Health Organization (“WHO”) declared the COVID-19 virus outbreak as a global pandemic, all the countries where the Company operates and conducts exploration activities, as well as the countries where its main customers and suppliers are located have published health and safety rules and restrictions on individuals and business activities.

As of March 31, 2020, the Company‘s production facilities in Mexico and Peru were working at approximately 90% of their production capacity. The Company has developed a rigorous COVID-19 emergency protocol and approximately 40% of the workforce in Mexico, or 6,333 employees, were working on site under strict safety measures. The remaining workforce of 8,751 employees were working from home, including all individuals at high risk due to age and/or prior medical conditions. For the Peruvian operations, approximately 39% of the workforce, or 3,499 employees were working on site under strict safety measures, while the remaining 5,468 employees were working from home, due to the same reasons explained above. These employees numbers include the Company´s personnel and contractors.

The Company’s exploration activities in Argentina, Ecuador and Chile were also reduced and their drilling teams are on stand-by.

The financial reporting process and the information required to prepare the Company’s financial statements suffered no interruption and the financial statements were prepared without restrictions or difficulties.

The Company has activated its Corporate Crisis Committee as well as its Crisis Committees in Mexico and Peru to closely monitor the impact of the pandemic as well as to analyze and solve any issues that may arise without delay. As of March 31, 2020, there were no major delays in the supply of materials and services critical for the operations and sales. Also, shipments and collections have had no known major delays.

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After completing the first stage of its capital programs at Buenavista in Mexico and Toquepala in Peru, the Company currently does not have major capital expenditures commitments (see Note 10 - Commitments and Contingencies). The Company paid the first tranche of its 2010 bonds of $400 million on April 15, 2020. The Company has no other major debt maturity until 2022.

At March 31, 2020 the Company has performed a qualitative analysis and has not identified any indicator of impairment. As the Company reported on its 2019 Annual report on Form 10-K, the results of its impairment sensitivity analysis showed projected discounted cash flows in excess of the carrying amounts of long lived assets by margins ranging from 1.2 to 4.8 times such carrying amount. This analysis included a stress test using a copper price assumption of $2.00 per pound and a molybdenum price assumption of $4.00 per pound. (Please see, Management´s Discussion and Analysis, Critical Policies and Estimates, Asset Impairments on the 2019 Form 10-K).

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13: “Financial Instruments – Credit Losses (Topic 326)”. This amendment includes disclosure requirements that are both quantitative and qualitative in nature. This amendment affects loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The main purpose of these disclosures is to (1) enable financial statement users to understand the credit risk inherent in a reporting entity’s portfolio, (2) understand how management monitors credit risk,

(3) provide insight as to how management develops estimates of expected credit losses, and (4) disclose the changes in these estimates during the reporting period. This ASU was adopted on January 1, 2020.

Prior to adopting this ASU, the Company applied an impairment methodology for accounts receivable arising from revenue transactions within the scope of ASC 606 that is consistent with the provision matrix model contemplated in the new standard. In addition, the new disclosure requirements do not apply to such trade receivables because the collection periods in all cases are less than one year. The Company’s accounts receivable from related parties under common control are excluded from the scope of this ASU. Accordingly, the adoption of this ASU did not have a material impact on the Company’s financial statements or related disclosures.

Long-term inventory-Ore stockpiles on leach pads:

On January 1, 2020, the Company aligned its capitalization method for its Peruvian and Mexican operations to capitalize based on the allocation of copper content recoverable between ore and leach material. In addition, the inventory consumption is now valued at the average unit cost, instead of the declining percentages of recovery method used previously. As a result of these changes, the value of capitalized material decreased by $48.8 million and the consumption increased by $10.3 million.

Management has evaluated ASC 250-10 and considered appropriate guidance to conclude that the above mentioned classified as a change in accounting estimate and therefore should affect accounting books prospectively. Management believes that this new method will result in a more appropriate value of this material.

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NOTE 3 — SHORT-TERM INVESTMENTS:

Short-term investments were as follows ($ in millions):

At March 31, 

At December 31, 

    

2020

    

2019

Trading securities

$

40.1

$

80.0

Weighted average interest rate

 

1.9

%  

 

2.0

%

Available-for-sale

$

0.6

$

0.7

Weighted average interest rate

 

0.7

%  

 

0.7

%

Total

$

40.7

$

80.7

Trading securities consist of bonds issued by public companies and are publicly traded. Each financial instrument is independent of the others. The Company has the intention to sell these bonds in the short-term.

Available-for-sale investments consist of securities issued by public companies. Each security is independent of the others and at March 31, 2020 and December 31, 2019, included corporate bonds and asset and mortgage backed obligations. As of March 31, 2020 and December 31, 2019, gross unrealized gains and losses on available-for-sale securities were not material.

Related to these investments the Company earned interest, which was recorded as interest income in the condensed consolidated statement of earnings. Also, the Company redeemed some of these securities and recognized gains (losses) due to changes in fair value, which were recorded as other income (expense) in the condensed consolidated statement of earnings.

The following table summarizes the activity of these investments by category (in millions):

Three months ended

 

March 31, 

    

2020

    

2019

 

Trading:

Interest earned

$

0.7

$

0.1

Unrealized gain (loss) at the end of the period

$

(*)

$

(0.1)

Available-for-sale:

Interest earned

 

(*)

(*)  

Investment redeemed

$

0.1

$

(*) Less than $0.1 million.

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NOTE 4 — INVENTORIES:

Inventories were as follows:

At March 31, 

At December 31, 

(in millions)

    

2020

    

2019

Inventory, current:

Metals at average cost:

Finished goods

$

82.1

$

87.2

Work-in-process

 

263.8

 

259.7

Ore stockpiles on leach pads  

385.1

358.4

Supplies at average cost

 

348.4

 

363.2

Total current inventory

$

1,079.4

$

1,068.5

Inventory, long-term:

Ore stockpiles on leach pads

$

1,149.0

$

1,230.3

During the three months ended March 31, 2020 and 2019, total leaching costs capitalized as non-current inventory of ore stockpiles on leach pads amounted to $50.7 million and $122.3 million, respectively. Leaching inventories recognized in cost of sales amounted to $105.9 million and $94.1 million for the three months March 31, 2020 and 2019, respectively.

NOTE 5 — INCOME TAXES:

The income tax provision and the effective income tax rate for the first quarter of 2020 and 2019 consisted of ($ in millions):

    

2020

    

2019

Statutory income tax provision

$

207.4

$

214.7

Peruvian royalty

 

2.0

 

0.4

Mexican royalty

 

8.1

 

16.7

Peruvian special mining tax

 

4.2

 

6.1

Total income tax provision

$

221.7

$

237.9

Effective income tax rate

50.8

%

38.1

%

These provisions include income taxes for Peru, Mexico and the United States. In addition, the Mexican royalty, the Peruvian royalty and the Peruvian special mining tax are included in the income tax provision. The increase in the 2020 effective income tax rate from the same period in 2019 was primarily attributed to a movement in exchange gains and losses from the devaluation of the Mexican peso and the Peruvian sol versus the U.S. dollar.

Peruvian royalty and special mining tax: The Company has accrued $9.3 million and $6.0 million of royalty charge in the first quarter of 2020 and 2019, respectively, of which $2.0 million and $0.4 million were included in income taxes in 2020 and 2019, respectively.

The Company has accrued $4.2 million and $6.1 million of special mining tax as part of the income tax provision for the first quarter of 2020 and 2019, respectively.

Mexican mining royalty: The Company has accrued $8.1 million and $16.7 million of royalty taxes as part of the income tax provision for the first quarter of 2020 and 2019, respectively.

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Accounting for uncertainty in income taxes: In the first quarter of 2020, there were no changes in the Company’s uncertain tax positions.

NOTE 6 — RELATED PARTY TRANSACTIONS:

The Company has entered into certain transactions in the ordinary course of business with parties that are controlling shareholders or their affiliates. These transactions include the lease of office space, air and railroad transportation, construction services, energy supply, and other products and services related to mining and refining. The Company lends and borrows funds among affiliates for acquisitions and other corporate purposes. These financial transactions bear interest and are subject to review and approval by senior management, as are all related party transactions. It is the Company’s policy that the Audit Committee of the Board of Directors shall review all related party transactions. The Company is prohibited from entering or continuing a material related party transaction that has not been reviewed and approved or ratified by the Audit Committee.

Receivable and payable balances with related parties are shown below (in millions):

At March 31, 

At December 31, 

    

2020

    

2019

Related parties receivable current:

Grupo Mexico and affiliates:

Asarco LLC

$

15.9

$

10.8

AMMINCO Apoyo Administrativo, S.A. de C.V. (“AMMINCO”)

 

 

0.1

Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates

 

0.3

 

0.3

Grupo Mexico

 

2.7

 

2.7

Mexico Generadora de Energia S. de R.L. ("MGE")

15.5

15.3

Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates

0.2

0.2

Related to the controlling group:

Boutique Bowling de Mexico, S.A. de C.V.