It is the policy of Compañía Minera del Pacífico S.A. that the following operations are carried out without the requirements and procedures demanded by Article 147 of Chapter XVI of the Corporations Law, but subject to the courses of action indicated for each case and provided the purpose of the respective operations is in the corporate interests and meets the price, terms and conditions prevailing in the market at the time agreed:
a) Operations with the authorization of the General Manager
The general manager may authorize those operations with related parties that are not of a large amount. It is understood that a large amount shall be any act or contract that exceeds 1% of the corporate equity, provided the act or contract exceeds the equivalent of 2,000 Unidades de Fomento and, in every event, when more than 20,000 Unidades de Fomento. It is understood that one operation includes those made over a period of 12 consecutive months by one or more similar or complementary acts in which there is an identity of parties, including related parties, or object.
In addition to the prior authorization of the general manager, the operations under this heading should be reported immediately to the board after execution.
b) Operations with the authorization of the Board
Subject to the prior authorization of the board, operations may be carried out with related parties which are ordinary and habitual in the corporate business. These are common operations that occur regularly in the ordinary course of the company’s business, whether the act or contract is carried out instantaneously or successively. For these purposes, and notwithstanding other elements of judgment, their similarity should be taken into account with other operations that the Company has previously carried out ordinarily and recurrently with the same or other related parties or with non-related third parties.
As examples, the following operations are included under this heading:
- The sale and trading of minerals in any state, whether or not of its own production, directly or indirectly through buyer agents and/or traders;
- The purchase and sale of inputs, fuels, energy, raw materials, supplies, machinery, equipment and spares in the ordinary course of the Company’s business;
- The contracting or provision of geological and mining research, engineering, mechanical and industrial maintenance, construction and earth movement services;
- The contracting of services related to the Company’s administration, whether management, support and supervision of the administration, assistance in the preparation of activity and transport plans, advice in matters like sales and marketing, environmental and sustainability, human resources, processing, data storage and managements and telecommunications, energy, supplies of strategic inputs, insurance, finance, accounting, data processing, administration, legal, public relations, corporate and tax matters, performance control, project development, technology, investment planning and budgets, analysis and negotiation of financial matters and the corresponding agreements, plus any other service that is accessory or complementary to the above; and
- The making of financial transactions with related parties in trading current accounts carried out for the management and optimization of cash flows.
In every case, the operation should be approved by the board (excluding directors who might be involved, not being considered as such those representing the parent company), for which it will state whether it meets the conditions established in this agreement . The approvals should also be made known to the board of CAP S.A. by the chairman of the Company, notwithstanding being reported as material information, if that were the case.
c) Operations without prior special authorization:
The regular representatives of the Company may carry out operations with subsidiaries when the counterparty is a legal entity in which the Company, directly or indirectly holds at least 95% of the share capital.
Erick Weber Paulus
Approved by the board of Compañía Minera del Pacífico S.A. at its meeting No.384 held on July 9, 2010.