Financial Statements

MINERA SPENCE S.A.

Santiago, Chile
As of December 31, 2023 and 2022
 EY Chile Tel: +56 (2) 2676 1000
Avda. Presidente www.eychile.cl
Riesco 5435, piso 4,
Santiago

Report of the Independent Auditor

To Shareholders and Directors

Minera Spence S.A.

Opinion

We have audited the financial statements of Minera Spence S.A., which include the statements of
financial position as of December 31, 2023 and 2022 and the corresponding statements of
comprehensive income, changes in equity and cash flows for the years then ended and the
corresponding notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the
financial position of Minera Spence S.A. as of December 31, 2023 and 2022 and the results of its
operations and cash flows for the years then ended in accordance with International Financial
Reporting Standards.

Basis for the opinion

We conduct our audits in accordance with Generally Accepted Auditing Standards in Chile. Our
responsibilities under these standards are described below in the paragraphs under the section
"Auditor's Responsibilities for the Audit of the Financial Statements" of this report. In accordance with
the relevant ethical requirements for our audits of the financial statements, we are required to be
independent of Minera Spence S.A. and to comply with other ethical responsibilities in accordance
with such requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide us with a basis for our audit opinion.

Management's Responsibilities for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in
accordance with International Financial Reporting Standards. This responsibility includes the design,
implementation and maintenance of appropriate internal control for the preparation and fair
presentation of financial statements that are free from material misrepresentations, whether due to
fraud or error.
In preparing the financial statements, management is required to evaluate whether there are facts or
circumstances that, taken as a whole, give rise to substantial doubt as to the ability of Minera Spence
S.A. to continue as a going concern for at least twelve months following the end of the reporting
period, but not limited to that period.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance that the financial statements, as a whole, are free
from material misrepresentations, due to fraud or error, and to issue an auditor's report that includes
our opinion. Reasonable assurance is a high, but not absolute, level of assurance and, therefore,
does not guarantee that an audit conducted in accordance with Generally Accepted Auditing
Standards in Chile will always detect a material misrepresentation where it exists. The risk of failing
to detect a significant misrepresentation due to fraud is greater than the risk of failing to detect a
significant misrepresentation due to error, as fraud may involve collusion, misrepresentation,
misrepresentation, or disregard of controls by the Administration. An incorrect representation is
considered material if, individually or in the aggregate, it could influence a reasonable user's
judgment based on these financial statements.

As part of an audit conducted in accordance with Generally Accepted Auditing Standards in Chile, we
will:

- We exercise our professional judgment and maintain our professional skepticism throughout
the audit.

- We identify and evaluate the risks of material misstatements of the financial statements,
whether due to fraud or error, and design and perform audit procedures in response to such
risks. Such procedures include the examination, on an evidence-based basis, of the evidence
with respect to the amounts and disclosures in the financial statements.

- We obtain an understanding of the internal control relevant to an audit in order to design audit
procedures that are appropriate in the circumstances, but without the purpose of expressing an
opinion on the effectiveness of the internal control of Minera Spence S.A. Accordingly, we do
not express such an opinion.

- We evaluate the appropriateness of the accounting policies used and the reasonableness of
the significant accounting estimates made by management, as well as evaluate the
appropriateness of the overall presentation of the financial statements.

- We conclude whether, in our opinion, there are facts or circumstances that, taken as a whole,
give rise to substantial doubt about the ability of Minera Spence S.A. to continue as a going
concern for a reasonable period of time.
We are required to communicate to those responsible for Corporate Governance, among other
matters, the planned timing and scope of the audit and the significant findings of the audit, including
any significant deficiencies and material weaknesses of internal control that we identify during our
audit.

Santiago, Chile
April 25, 2024
 Financial Statements

MINERA SPENCE S.A.

As of December 31, 2023 and 2022

Index

Financial Statements

Statement of Financial Position ................................................................................................ 1

Statement of Profit or Loss and other Comprehensive Income................................................. 3
Statement of Changes in Equity ............................................................................................... 4
Statement of Cash Flows (Indirect Method).............................................................................. 5
Notes to the Financial Statements............................................................................................ 6

Note 1 - Reporting Entity.......................................................................................................... 6

Note 2 - Basis of Preparation ................................................................................................... 7

a) Statement of compliance................................................................................................. 7
b) Basis of measurement .................................................................................................... 7
c) Functional and presentation currency ............................................................................. 7
d) Use of estimates and judgements ................................................................................... 7
e) New and amended accounting standards and interpretations ......................................... 11

Note 3 - Material Accounting Policy Information ....................................................................... 18

a) Foreign currency transactions ......................................................................................... 18

b) Derivative and non-derivative financial instruments......................................................... 18
c) Trade and other payables ............................................................................................... 20
d) Trade receivables ........................................................................................................... 20
e) Term deposits ................................................................................................................. 20
f) Cash and cash equivalents ............................................................................................. 20
g) Property, plant and equipment ........................................................................................ 20
h) Leases ............................................................................................................................ 22
i) Overburden removal costs .............................................................................................. 24
j) Inventories ...................................................................................................................... 25
k) Impairment of assets....................................................................................................... 26
l) Provisions ....................................................................................................................... 28
m) Revenue ......................................................................................................................... 30
n) Exploration and evaluation .............................................................................................. 31
o) Development expenditure ............................................................................................... 31
p) Income tax and deferred taxes........................................................................................ 31
q) Finance income and finance costs .................................................................................. 32
r) Mineral reserves ............................................................................................................. 33
 Financial Statements

MINERA SPENCE S.A.

As of December 31, 2023 and 2022

Index

Note 4 - Financial Risk Management ....................................................................................... 33

Note 5 - Revenue..................................................................................................................... 43
Note 6 - Other Income/(Expenses)........................................................................................... 44
Note 7 - Net Finance Income/(Costs) ....................................................................................... 44
Note 8 - Income Tax Expense and Deferred Taxes.................................................................. 44
Note 9 - Property, Plant and Equipment ................................................................................... 48
Note 10 - Inventories................................................................................................................ 49
Note 11 - Trade and Other Receivables ................................................................................... 50
Note 12 - Other Assets............................................................................................................. 50
Note 13 - Cash and Cash Equivalents...................................................................................... 51
Note 14 - Provisions................................................................................................................. 51
Note 15 - Trade and Other Payables........................................................................................ 54
Note 16 - Balances and Transactions with related parties ........................................................ 55
Note 17 - Paid-in Capital .......................................................................................................... 59
Note 18 - Expenses, Excluding Net Finance Costs .................................................................. 59
Note 19 - Employee Payroll and Benefits ................................................................................. 60
Note 20 - Commitments ........................................................................................................... 60
Note 21 - Dividend Paid ........................................................................................................... 62
Note 22 - Interest-Bearing Liabilities ........................................................................................ 62
Note 23 - Contingencies........................................................................................................... 63
Note 24 - Subsequent Events .................................................................................................. 63

US$ ‘000 or ThUS$: Amounts expressed in Thousands of United States dollars

Ch$: Amounts expressed in Chilean pesos
 Financial Statements

MINERA SPENCE S.A.

As of December 31, 2023 and 2022

 MINERA SPENCE S.A.

Statement of Financial Position

As of December 31,

2023 2022
Note US$'000 US$'000

ASSETS

Current Assets

Cash and cash equivalents (13) 63,198 62,400

Trade and other receivables (11) 230,065 236,805
Trade and other receivables due from related parties (16 a) 20,501 1,025
Other financial assets due from related parties (16 a) 2,030,947 1,752,940
Inventories (10) 831,127 782,745
Current tax assets (8 a) 59,139 215,258
Other assets (12) 6,778 6,981
Total current assets 3,241,755 3,058,154

Non-Current Assets

Inventories (10) 152,337 182,758

Property, plant and equipment (9) 4,041,147 3,679,503
Right of use of assets (9) 663,959 721,914
Intangible assets 1,286 -
Total non-current assets 4,858,729 4,584,175
Total Assets 8,100,484 7,642,329

The accompanying notes 1 to 24 are an integral part of these financial statements

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 MINERA SPENCE S.A.

Statement of Financial Position

As of December 31,

2023 2022
LIABILITIES AND EQUITY Note US$'000 US$'000

Liabilities

Current Liabilities

Trade and other payables (15) 224,536 246,810

Trade and other payables due to related parties (16 b) 26,108 39,204
Interest-bearing liabilities (22) 25,896 67,144
Provisions (14 a) 34,683 28,476
Provision for mine closure and site restoration (14 b) 1,837 1,573
Total current liabilities 313,060 383,207

Non-Current Liabilities

Interest-bearing liabilities (22) 679,389 690,644

Deferred tax liabilities (8 b) 488,699 326,668
Provisions (14 a) 55,352 37,044
Provision for mine closure and site restoration (14 b) 182,850 150,941
Total non-current liabilities 1,406,290 1,205,297
Total liabilities 1,719,350 1,588,504
Net assets 6,381,134 6,053,825

Equity

Paid-in capital (17) 347,024 347,024

Reserves (556) 4,614
Retained earnings 6,034,666 5,702,187
Total Equity 6,381,134 6,053,825

The accompanying notes 1 to 24 are an integral part of these financial statements

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 MINERA SPENCE S.A.

Statement of Profit or Loss and Other Comprehensive Income

For the years ended December 31,

2023 2022
Note US$'000 US$'000

Revenue (5) 2,200,463 1,934,948

Cost, excluding net finance costs (18) (1,741,593) (1,600,231)
Profit from operations 458,870 334,717

Other income/(expenses) (6) 2,981 (276)

Finance expenses (7) (78,040) (63,601)
Finance income (7) 109,584 22,456
Foreign currency gains (7) 2,035 4,066
Profit before taxes 495,430 297,362

Income tax expenses (8) (162,951) (86,109)

Profit for the year 332,479 211,253

Other Comprehensive Income

Actuarial (loss)/gain (14 a) (7,082) 4,710

Related tax (8 d) 1,912 (1,272)
Items that will not be subsequently reclassified
to profit or loss for the year (5,170) 3,438
Total other comprehensive (loss)/income (5,170) 3,438
Total comprehensive income 327,309 214,691

The accompanying notes 1 to 24 are an integral part of these financial statements

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 MINERA SPENCE S.A.

Statement of Changes in Equity

As of December 31, 2023 and 2022

Paid-in Reserves Retained Total

Capital Earnings Equity
US$'000 US$'000 US$'000 US$'000

Balance as of 1 January 2023 347,024 4,614 5,702,187 6,053,825

Other comprehensive loss - (5,170) - (5,170)
Profit for the year - - 332,479 332,479
Total comprehensive (loss)/income - (5,170) 332,479 327,309
Balance as of 31 December 2023 347,024 (556) 6,034,666 6,381,134

Balance as of 1 January 2022 347,024 1,176 5,537,501 5,885,701

Other comprehensive income - 3,438 - 3,438
Profit for the year - - 211,253 211,253
Dividends/Distributions - - (46,567) (46,567)
Total comprehensive income - 3,438 164,686 168,124
Balance as of 31 December 2022 347,024 4,614 5,702,187 6,053,825

The accompanying notes 1 to 24 are an integral part of these financial statements

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 MINERA SPENCE S.A.

Statement of Cash Flows

For the years ended December 31,

2023 2022
Indirect Method Note US$'000 US$'000

Cash Flows Provided by/(Used in) Operating Activities

Profit before taxation 495,430 297,362

Adjustments for:
Depreciation and amortisation expense (9) 381,977 458,173
Net finance (income)/cost (7) (33,579) 37,079
Other 44,829 48,260
Changes in assets and liabilities:
Trade and other receivables 6,805 (33,820)
Inventories (17,961) (238,680)
Trade and other payables (27,089) 21,591
Provisions and other liabilities 15,227 11,709
Cash from operating activities 865,639 601,674

Interest received 109,584 21,511

Interest paid (75,385) (72,841)
Income taxes refund 167,514 19,789
Net income tax and royalty-related taxation paid (10,404) (40,593)
Net cash from operating activities 1,056,948 529,540

Net Cash from Investing Activities

Acquisition of property, plant and equipment (722,813) (619,735)

Proceeds from disposals of property, plant and equipment - 604
Net cash from in investing activities (722,813) (619,131)

Net Cash (Used in)/from Financing Activities

(Payment for)/proceeds from intercompany financing (304,814) 201,468

Lease repayments (29,712) (22,730)
Dividends paid (21) - (46,567)
Net cash (used in)/from financing activities (334,526) 132,171

Net (Decrease)/Increase in Cash and Cash Equivalents (391) 42,580

Cash and Cash Equivalent at the Beginning of
the Period 62,400 15,789
Effects of Movements in Exchange Rates on Cash
Held 1,189 4,031
Cash and Cash Equivalents at the End of the Period 63,198 62,400

The accompanying notes 1 to 24 are an integral part of these financial statements

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 1 - Reporting Entity

Minera Spence S.A. (“the Company”) was incorporated via a public deed on November 21, 1979 as a
limited liability partnership. Its legal address is located at Cerro El Plomo N°6000, 18th floor in the city
of Las Condes, Santiago, Chile and has the Taxpayer ID No 86.542.100-1. Subsequently, according
to public deed dated March 10, 1983, it became a closely held corporation. The Company´s primary
activity is the exploration, development and exploitation of its only mining project called “Spence”.

On March 8, 2005, an Extraordinary Shareholders’ Meeting agreed to modify the by-laws and change
the Company’s name from “Compañia Minera Riochilex S.A.” to “Minera Spence S.A.”.

The Company, located in Region II of Chile, commenced the extraction and sale of minerals on January
1, 2007.

The Company produces copper concentrates and copper cathodes through its open-pit mining
operation. Cathode and concentrates treatment plants are located at the mine site. Concentrate is
filtered and the treatment of minerals for the copper cathode production includes heap leaching, solvent
extraction and electro winning, both materials are transported by train to the port facility in Mejillones
where is shipped to customers.

As of December 31, 2023 and 2022 the composition of the Company’s ownership is as follows:

Ownership % Ownership %
2023 2022

Rio Algom Limited 99.9 99.9

Rio Algom Exploration Inc 0.1 0.1
Total 100.0 100.0

On 31 January 2022, BHP Group has unified its corporate structure under its existing Australian parent
company, BHP Group Limited to realise simplification and enhanced strategic flexibility. With this
unified structure, BHP Group Limited is now the Ultimate Holding Company of Minera Spence. The
unification transaction has no impact on the net assets of Minera Spence.

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation

a) Statement of compliance

The financial statements as of December 31, 2023 and 2022 have been prepared in accordance
with International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB). The Company has adopted new accounting pronouncement and
amendments effective on January 1, 2023.

The financial statements were approved by the Board of Directors on April 25th, 2024.

b) Basis of measurement

These financial statements have been prepared on the historical cost basis except for the
valuation of certain financial assets and liabilities, which are measured at fair value.

c) Functional and presentation currency

The Company maintains its official accounting records in United States dollars (USD), which is
the Company’s functional currency. All financial information presented in dollars has been
rounded to the nearest thousand unit (US$’000). Transactions in other currencies are recorded
at actual rates of the transaction date. Year-end balances in foreign currencies are translated
into USD at the applicable closing exchange rate.

d) Use of estimates and judgements

The preparation of the financial statements in accordance with IFRS requires management to
make a number of judgments, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results could differ from those estimates.

Relevant estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimates are revised and in any
future period affected.

Information on such criteria and estimates are included in the following notes:

- Note 2 (d) iii) – Impairment of assets

- Note 2 (d) iv) – Provision for mine closure and site restoration
- Note 2 (d) v) – Basis of copper price estimates
- Note 3 (g) (ii) – Asset useful lives
- Note 14 – Employee benefits and Provision for mine closure and site restoration

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

d) Use of estimates and judgements (continued)

Key areas where estimates and judgments are used are the following:
i) The capitalisation of property, plant and equipment and project costs

Mineral property development costs are capitalised as part of property, plant and
equipment in the period in which they are incurred, to the extent that the project is
considered to be economically viable. Management reviews capitalised amounts to ensure
that the treatment of such expenditure is reasonable, in particular, with respect to a project’s
commercial viability. Typically, a project is considered to be commercially viable when it
has completed its viability study and the commencement of a viability stage has been
approved.

ii) Useful lives of property, plant and equipment and mineral reserves estimates

Mining property, including capitalised finance costs, are depreciated proportionally to the
volume of ore extracted during the period, compared with total proven reserves and
probable reserves at the beginning of the year. Several uncertainties exist inherent to the
estimates of ore reserves and applicable assumptions may change when new information
becomes available.

This includes assumptions on ore grade estimates, cut-off grade, recovery rates,
commodity prices, exchange rates, production costs, capital investments, processing and
rehabilitation costs and discount rates. Because economic assumptions used to estimate
reserves may change from one period to another and additional geological data is
generated during the course of operations, reserve estimates may change from one period
to another.

Changes in reported reserves may affect the Company's financial performance and
financial position in a number of ways, including the following:

- Recoverable amounts of assets may be affected by changes in estimated future cash

flows.
- Depreciation and amortisation expense recognised for the period may change for
depreciation and amortisation determined on a units of production basis or when the
useful lives of assets changes.
- Stripping costs capitalised in the statement of financial position or recognised in the
statement of profit or loss and other comprehensive income may change due to
changes in the stripping cost ratios or units of production that are the basis for
depreciation.
- The provision for restoration and rehabilitation may change where changes in
estimated reserves affect expectations on the time or cost of such activities.
- The carrying amount of deferred tax assets may change due to changes in estimates
of the probability of recovering tax benefits.

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

d) Use of estimates and judgements (continued)

iii) Impairment of assets

The Company reviews the carrying amount of property, plant and equipment to determine
whether there is objective evidence that such assets may be impaired. This requires
determination of recoverable amount of the relevant asset. In determining the recoverable
amount of assets, in the absence of quoted market prices, estimates are made using the
present value of future post-tax cash flows. These estimates require significant
management judgement and are subject to risk and uncertainty that may be beyond the
control of the Company; hence, there is a possibility that changes in circumstances will
materially alter projections, which may impact the recoverable amount of assets at each
reporting date. The estimates are made from the perspective of a market participant and
include prices, future production volumes, operating costs, tax attributes and discount
rates.

iv) Provisions for restoration and rehabilitation costs

Closure and rehabilitation provisions are initially recognised when an environmental

disturbance first occurs. The individual site provision is an estimate of the expected value
of future cash flows required to rehabilitate the relevant site using current restoration
standards and techniques and taking into account risks and uncertainties. Individual site
provisions are discounted to their present value using currency specific discount rates
aligned to the estimated timing of cash outflows. Final dismantling and rehabilitation costs
are uncertain and cost estimates may change as a result of many factors, including
changes in legal requirements, the development of new restoration techniques or
experience in other mine sites.

The expected timing and extension of expenses may also change, e.g., as a result of
changes in reserves or mineral processing levels. Consequently, there might be significant
adjustments to the provisions established that would affect future financial performance.

v) Basis of copper price estimates

Inventory net realisable value adjustments are calculated based on the estimated selling
price less the estimated costs of completion and sale. Any write-down of inventories to net
realisable value is recognised as an expense in the period in which the write-down occurs.

In addition, for certain purchase and sales contracts, the contract price is determined on a
provisional basis at the date of sale/purchase and adjustments to the sale/purchase price
subsequently occur based on movements in quoted market or contractual prices up to the
date of final pricing.

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

d) Use of estimates and judgements (continued)

v) Basis of copper price estimates (continued)

The estimated copper price used for the inventory net realisable value assessment and for
provisional pricing adjustments are based on an estimated forward price curve. This
forward curve is based on the forecasted market price from the last day of the month.

Subsequent changes to the market price on eventual sale of inventory or finalisation of

provisionally priced contracts will affect the adjustment recognised.

vi) Copper leach inventories

The valuation of inventory (work in progress) for the leaching process requires estimating
of recoverable copper. This estimation involves determining volumes to be recovered from
accumulations of mined ore and the period of recovery. This estimate is calculated by
engineers using available industry, engineering and scientific data.

Actual volumes of copper recovered during the leaching process may therefore differ to the
estimated copper recovery used in the valuation of inventory work in progress. In addition,
any subsequent changes to the methods used in extracting copper through the leaching
process may affect the copper recovery assumptions resulting in a change in the inventory
work in progress volumes and weighted average unit costs.

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

e) New and amended accounting standards and interpretations

The Company applied certain standards, interpretations and amendments for the first time, which
are effective for annual periods beginning on or after January 1, 2023. The Company has not
early adopted any other standard, interpretation or amendment that has been issued but is not
yet effective.

The standards, interpretations and amendments to IFRS that went into effect as of the date of
the financial statements, as well as their nature and impact, are detailed below:

Amendments Date of Mandatory

Application

IFRS 17 Insurance Contracts January 1, 2023

IAS 8 Definition of Accounting Estimates January 1, 2023
IAS 1 Disclosure of Accounting Policies January 1, 2023
IAS 12 Deferred Tax related Assets and Liabilities arising from
a Single Transaction January 1, 2023
IAS 12 International Tax Reform - Pilar Two Model Rules
January 1, 2023

IFRS 17 Insurance Contracts

In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting
standard for insurance contracts covering recognition and measurement, presentation and
disclosure. IFRS 17 replaces IFRS 4 Insurance Contracts. In June 2020, the IASB issued
amendments to IFRS 17. These amendments included changing the effective date to 2023.

IFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-
insurance), regardless of the type of entities that issue them, as well as to certain guarantees
and financial instruments with discretionary participation features. A few scope exceptions apply.

The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that
is more useful and consistent for insurers.

IFRS 17 is effective for reporting periods starting on or after 1 January 2023, with comparative
figures required. Early application is permitted, provided the entity also applies IFRS 9 Financial
Instruments on or before the date it first applies IFRS 17.

The amendment is applicable for the first time in 2023, however, it did not have an impact on the
Company’s financial statements.

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

e) New and amended accounting standards and interpretations (continued)

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors - Definition of

Accounting Estimates

In February 2021, the Board issued amendments to IAS 8, in which it introduces a new definition
of ‘accounting estimates’. The amendments clarify the distinction between changes in accounting
estimates and changes in accounting policies and the correction of errors. Also, they clarify how
entities use measurement techniques and inputs to develop accounting estimates.

The amended standard clarifies that the effects on an accounting estimate of a change in an
input or a change in a measurement technique are changes in accounting estimates if they do
not result from the correction of prior period errors. The previous definition of a change in
accounting estimate specified that changes in accounting estimates may result from new
information or new developments. Therefore, such changes are not corrections of errors.

The amendment is applicable for the first time in 2023, however, it did not have an impact on the
Company’s financial statements.

IAS 1 Presentation of Financial Statements - Disclosure of Accounting Policies

In February 2021, the Board issued amendments to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2 Making Materiality Judgements (the PS), in which it provides
guidance and examples to help entities apply materiality judgements to accounting policy
disclosures.

The amendments aim to help entities provide accounting policy disclosures that are more useful
by:

- Replacing the requirement for entities to disclose their ‘significant accounting policies’ with
a requirement to disclose ‘material accounting policy information’; and
- Adding guidance on how entities apply the concept of materiality in making decisions about
accounting policy disclosures.

In assessing the materiality of accounting policy information, entities need to consider both the
size of the transactions, other events or conditions and their nature.

The amendment is applicable for the first time in 2023, however, it did not have an impact on the
Company’s financial statements.

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

e) New and amended accounting standards and interpretations (continued)

IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction

In May 2021, the Board issued amendments to IAS 12 Income Taxes, which narrow the scope
of the initial recognition exception under IAS 12, so that it no longer applies to transactions that
give rise to equal taxable and deductible temporary differences.

Under the amendments, the initial recognition exception does not apply to transactions that, on
initial recognition, give rise to equal taxable and deductible temporary differences.

Nevertheless, it is possible that under certain circumstances (e.g.: entity not benefiting from the
tax deductions) the resulting deferred tax assets and liabilities are not equal. In such cases, which
the Board expects to occur infrequently, an entity would need to account for the difference
between the deferred tax asset and liability in profit or loss.

An entity should apply the amendments to transactions that occur on or after the beginning of
the earliest comparative period presented. The amendment is applicable for the first time in 2023,
however, it did not have an impact on the Company’s financial statements.

IAS 12 International Tax Reform – Pillar Two Model Rules

In May 2023, the Board issued amendments to IAS 12, which introduce a mandatory exception
in IAS 12 from recognising and disclosing deferred tax assets and liabilities related to Pillar Two
income taxes.

The amendments clarify that IAS 12 applies to income taxes arising from tax law enacted or
substantively enacted to implement the Pillar Two Model Rules published by the Organisation for
Economic Cooperation and Development (OECD), including tax law that implements qualified
domestic minimum top-up taxes. Such tax legislation, and the income taxes arising from it, are
referred to as ‘Pillar Two legislation’ and ‘Pillar Two income taxes’, respectively.

The amendments require an entity to disclose that it has applied the exception to recognising
and disclosing information about deferred tax assets and liabilities related to Pillar Two income
taxes.

The amendment is applicable for the first time in 2023, however, it did not have an impact on the
Company’s financial statements.

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

e) New and amended accounting standards and interpretations (continued)

The standards and interpretations, as well as the amendments to IFRS, which have been issued,
but have not yet entered into force as of the date of these financial statements, are detailed
below. The Company has not applied these standards in advance:

Amendments Date of Mandatory

Application

IAS 1 Classification of Liabilities as Current or Non-current and

Non-current Liabilities with Covenants January 1, 2024
IFRS 16 Lease Liability in a Sale and Leaseback January 1, 2024
IAS 7 e Disclosures: Supplier Finance Arrangements
IFRS 7 January 1, 2024
IAS 21 Lack of exchangeability January 1, 2024
IFRS 10 e Consolidated Financial Statements – Sale or Contribution
IAS 28 of Assets between an Investor and its Associate or Joint
Venture To be defined.

IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or

Non-current and Non-current Liabilities with Covenants

In January 2020 and October 2022, the Board issued amendments to IAS 1 to specify the
requirements for classifying liabilities as current or non-current. The amendments clarify:

- What is meant by a right to defer settlement

- That a right to defer settlement must exist at the end of the reporting period
- That classification is unaffected by the likelihood that an entity will exercise its deferral right
- That only if an embedded derivative in a convertible liability is itself an equity instrument
would the terms of a liability not impact its classification
- Disclosures

The amendments must be applied retrospectively. Early application is permitted and must be
disclosed. However, an entity that applies the 2020 amendments early is also required to apply
the 2022 amendments, and vice versa.

The Company will evaluate the impact of the above amendment once they come into effect.

IFRS 16 Lease Liability in a Sale and Leaseback

The amendment to IFRS 16 Leases specifies the requirements that a seller-lessee uses in
measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-
lessee does not recognise any amount of the gain or loss that relates to the right of use it retains.

14
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

e) New and amended accounting standards and interpretations (continued)

IFRS 16 Lease Liability in a Sale and Leaseback (continued)

After the commencement date in a sale and leaseback transaction, the seller-lessee applies
paragraphs 29 to 35 of IFRS 16 to the right-of-use asset arising from the leaseback and
paragraphs 36 to 46 of IFRS 16 to the lease liability arising from the leaseback. In applying
paragraphs 36 to 46, the seller-lessee determines ‘lease payments’ or ‘revised lease payments’
in such a way that the seller-lessee would not recognise any amount of the gain or loss that
relates to the right of use retained by the seller-lessee. Applying these requirements does not
prevent the seller-lessee from recognising, in profit or loss, any gain or loss relating to the partial
or full termination of a lease, as required by paragraph 46(a) of IFRS 16.

The amendment does not prescribe specific measurement requirements for lease liabilities
arising from a leaseback. The initial measurement of the lease liability arising from a leaseback
may result in a seller-lessee determining ‘lease payments’ that are different from the general
definition of lease payments in Appendix A of IFRS 16. The seller-lessee will need to develop
and apply an accounting policy in accordance with IAS 8 that results in information that is relevant
and reliable.

A seller-lessee applies the amendment to annual reporting periods beginning on or after 1

January 2024. Earlier application is permitted and that fact must be disclosed.

A seller-lessee applies the amendment retrospectively in accordance with IAS 8 to sale and
leaseback transactions entered into after the date of initial application (i.e., the amendment does
not apply to sale and leaseback transactions entered into prior to the date of initial application).
The date of initial application is the beginning of the annual reporting period in which an entity
first applied IFRS 16.

The Company will evaluate the impact of the above amendment once they come into effect.

IAS 7 e IFRS 7 – Disclosures: Supplier Finance Arrangements

In May 2023, the Board issued amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial Instruments: Disclosures.

The amendments specify disclosure requirements to enhance the current requirements, which
are intended to assist users of financial statements in understanding the effects of supplier
finance arrangements on an entity’s liabilities, cash flows and exposure to liquidity risk.

The amendments clarify the characteristics of supplier finance arrangements. In these

arrangements, one or more finance providers pay amounts an entity owes to its suppliers. The
entity agrees to settle those amounts with the finance providers according to the terms and
conditions of the arrangements, either at the same date or at a later date than that on which the
finance providers pay the entity’s suppliers.
15
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

e) New and amended accounting standards and interpretations (continued)

IAS 7 e IFRS 7 – Disclosures: Supplier Finance Arrangements (continued)

The amendments require an entity to provide information about the impact of supplier finance
arrangements on liabilities and cash flows, including terms and conditions of those
arrangements, quantitative information on liabilities related to those arrangements as at the
beginning and end of the reporting period and the type and effect of non-cash changes in the
carrying amounts of those arrangements. The information on those arrangements is required to
be aggregated unless the individual arrangements have dissimilar or unique terms and
conditions. In the context of quantitative liquidity risk disclosures required by IFRS 7, supplier
finance arrangements are included as an example of other factors that might be relevant to
disclose.

The amendments will be effective for annual reporting periods beginning on or after 1 January
2024. Early adoption is permitted, but will need to be disclosed.

The amendments provide some transition reliefs regarding comparative and quantitative
information as at the beginning of the annual reporting period and interim disclosures.

The Company will evaluate the impact of the above amendment once they come into effect.

IAS 21 The Effects of Changes in Foreign Exchange Rates – Lack of exchangeability

The amendment to IAS 21 specifies how an entity should assess whether a currency is
exchangeable and how it should determine a spot exchange rate when exchangeability is lacking.

A currency is considered to be exchangeable into another currency when an entity is able to

obtain the other currency within a time frame that allows for a normal administrative delay and
through a market or exchange mechanism in which an exchange transaction would create
enforceable rights and obligations.

If a currency is not exchangeable into another currency, an entity is required to estimate the spot
exchange rate at the measurement date. An entity’s objective in estimating the spot exchange
rate is to reflect the rate at which an orderly exchange transaction would take place at the
measurement date between market participants under prevailing economic conditions. The
amendments note that an entity can use an observable exchange rate without adjustment or
another estimation technique.

When an entity estimates a spot exchange rate because a currency is not exchangeable into
another currency, it discloses information that enables users of its financial statements to
understand how the currency not being exchangeable into the other currency affects, or is
expected to affect, the entity’s financial performance, financial position and cash flows.

The amendments will be effective for annual reporting periods beginning on or after 1 January
2025. Early adoption is permitted, but will need to be disclosed.

16
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 2 - Basis of Preparation (continued)

e) New and amended accounting standards and interpretations (continued)

IAS 21 The Effects of Changes in Foreign Exchange Rates – Lack of exchangeability

(continued)

When applying the amendments, an entity cannot restate comparative information.

The Company will evaluate the impact of the above amendment once they come into effect.

IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and

Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture

In December 2015, the IASB decided to defer the effective date of the amendments until such
time as it has finalised any amendments that result from its research project on the equity method.

The amendments address the conflict between IFRS 10 Consolidated Financial Statements and
IAS 28 Investments in Associates and Joint Ventures in dealing with the loss of control of a
subsidiary that is sold or contributed to an associate or joint venture.

The amendments clarify that a full gain or loss is recognised when a transfer to an associate or
joint venture involves a business as defined in IFRS 3 Business combinations. Any gain or loss
resulting from the sale or contribution of assets that does not constitute a business, however, is
recognised only to the extent of unrelated investors’ interests in the associate or joint venture.

The amendments must be applied prospectively. Early application is permitted and must be
disclosed.

The Company will evaluate the impacts of the amendments once they come into effect.

17
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information

a) Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency of the Company at
exchange rates on the transaction date. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated to the functional currency at the closing exchange
rate at the reporting date. Foreign exchange gains or losses resulting from translation are
recognised in the income statement, except for foreign exchange gains or losses on foreign
currency provisions for site closure and rehabilitation costs (which are capitalised in property,
plant and equipment for operating sites). Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange rate at the date of the
transaction.

b) Derivative and non-derivative financial instruments

Derivative instruments

The Company accounts for derivatives in accordance with IFRS 9 Financial Instruments. It does
not apply hedge accounting. Derivative instruments are recorded on the statement of financial
position at their respective fair value.

Derivatives, including those embedded in other contractual arrangements but separated for
accounting purposes because they are not clearly and closely related to the host contract, are
initially recognised at fair value on the date the contract is entered into. Subsequent to initial
recognition, derivative financial instruments are measured at fair value. The gain or loss arising
from changes in the fair value of the new measurement is recognised immediately in the
statement of profit or loss and other comprehensive income.

Under the terms of the sales agreements, the final price to be received will depend on the prices
fixed for copper by independent metal exchanges, including the London Metal Exchange (LME)
during future quotation periods applicable to each shipment, resulting in the price recognised
with a one-month time lag for cathodes and three to four-month time lag for concentrates, for all
tonnes of copper shipped in a given calendar year.

Non-derivative instruments

i) Non-derivative financial assets

The Company initially recognises financial assets at amortised cost on the date that they
originate. All other financial assets are recognised initially on the trade date at which the
Company becomes a party to the contractual arrangements.

Cash and cash equivalents comprise cash balances and deposits with original maturities
of three months or less.

18
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

b) Derivative and non-derivative financial instruments (continued)

Non-derivative instruments (continued)

i) Non-derivative financial assets (continued)

The Company derecognises a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual cash flows on the
financial asset in a transaction in which substantially all the risks and rewards of ownership
of the financial asset are substantially transferred. Any interest in transferred financial
assets that are created or retained by the Company are recognised as a separate asset or
liability.
Financial assets and liabilities are offset with the net amount presented in the statement of
financial position when, and only when, the Company has a legal right to offset the amounts
and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
ii) Non-derivative financial liabilities

Financial liabilities (including liabilities designated at fair value through profit or loss) are
recognised initially on the trade date at which the Company becomes a party to the
contractual arrangements.
The Company derecognises a financial liability when its contractual obligations are
discharged, cancelled, or expire.

Fair value and classification

Derivatives - The fair value of forward sales contracts is based on their quoted market price. Such
fair value reflects the credit risk of the instrument and includes the adjustments of the Group’s
and counterparty’s credit risk, where applicable.
The fair value hierarchy categorises the inputs to valuation techniques into three levels of fair
value that are defined as follows:
Level 1

quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2

inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3

inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
19
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

c) Trade and other payables

Such financial liabilities are recognised initially at fair value. Subsequent to initial recognition
these financial liabilities are measured at amortised cost using capitalised interest rate method.
Items presented in the statement of financial position as current liabilities have a maturity less
than 12 months.

d) Trade receivables

As of December 31, 2023 and 2022 trade receivables include provisional priced invoices for
copper cathode and concentrates shipments delivered but pending final price confirmation by
December 31 of each period. These invoices are based on the Company’s weight and assays,
which are subject to review and final agreements with customers. Under the terms of sales
agreements, the final price to be received will also depend on the prices fixed for copper by
independent metal exchanges, including the London Metal Exchange (LME) during future
quotation periods applicable to each shipment. As of December 31, 2023 and 2022, sales under
provisional priced invoicing agreements have been valued on forward prices. The Company has
not recorded any portfolio impairment loss, given that management considers that all trade
receivables and notes receivable are recoverable.

e) Term deposits

Term deposits include principal invested plus interest accrued and is presented within financing
activities in the Statement of Cash Flows.

f) Cash and cash equivalents

Where applicable, cash and cash equivalents include term deposits and investments in notes
with repurchase agreements expiring in less than 90 days from their issuance date.

g) Property, plant and equipment

i) Recognition and measurement

Property, plant and equipment are recorded at acquisition cost, which includes capitalised
interest incurred during the construction and development period when the qualifying
assets is material, less accumulated depreciation and impairment losses.

The cost of assets includes expenditures, which are directly attributable to the acquisition
of the asset. The cost of self-constructed assets includes the cost of materials, direct labour
and any other cost directly attributable to bringing the asset to working conditions, as well
as the dismantling, retirement or rehabilitation costs for the site where these assets are
located.

20
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

g) Property, plant and equipment (continued)

i) Recognition and measurement (continued)

The cost of replacing in part of an item of property, plant and equipment is recognised at
its carrying amount provided that there are future economic benefits and its cost can be
measured reliably. Maintenance costs for property, plant and equipment are recognised in
profit or loss when incurred.

When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by
comparing the proceeds from disposal with the carrying amount of the property, plant and
equipment, and is recognised net within other income in profit or loss.

Software acquired which is directly related to the operation of related equipment is

capitalised as part of that equipment.

Asset useful lives

The majority of tangible assets are depreciated based on the units of production method
over the mine’s useful life, determined based on mineral reserves.

The Company’s management annually reviews the basis used for the calculation of the
mine's useful life. Changes in estimated useful life will prospectively affect asset
depreciation rates and carrying amount.

ii) Depreciation of property, plant and equipment

The carrying amounts for property, plant and equipment (including initial and any
subsequent capital expenditure) are depreciated to their estimated residual value over the
estimated useful lives of the specific assets or the estimate life of the mine.

Estimates of residual values and useful lives are reassessed annually and any change in
estimate is taken into account in the determination of remaining depreciation charges.

Depreciation commences on the date of commissioning which is when assets are ready
for use. Land is not subject to depreciation.

Changes in estimates are accounted for over the estimated remaining economic life or the
remaining commercial reserves of the mine as applicable.

Depreciation and amortisation of property, plant and equipment for the years ended
December 31, 2023 and 2022 is included in the cost of production of inventories.
21
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

g) Property, plant and equipment (continued)

ii) Depreciation of property, plant and equipment

Expenditures relate to replacements and improvements are capitalised when the asset’s
standard of performance is significantly enhanced or the expenditure represents a
replacement of a component of an overall tangible fixed asset that has been separately
depreciated.

The major categories of property, plant and equipment are depreciated on a unit of
production and/or straight-line basis using estimated lives indicated below:

Category Buildings Plant and equipment Other Mineral Assets

Typical depreciation methodology Straight Line Straight Line Units of production

Depreciation rate Based on the rate of
25-50 years 3-30 years depletion of reserves

h) Leases

The Company assesses all arrangements at contract inception if they are, or contain, a lease.
That is, if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration. The Company is not a lessor in any transactions, it is only a
lessee.

a) Company as a lessee

The Company applies a single recognition and measurement approach for all leases,
except for short-term leases and low-value leases. The Company recognises lease
liabilities to make lease payments and right-of-use assets representing the right to use the
underlying assets.

i) Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease
(i.e., the date when the underlying asset is available for use).

22
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

h) Leases (continued)

a) Company as a lessee (continued)

i) Right-of-use assets (continued)

Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognised, initial direct
costs incurred, and lease payments made at or before the commencement date less
any lease incentives received.

Right of use assets are typically depreciated on a straight-line basis, over the lesser
of the lease term or the asset’s useful life, unless the Company expects to purchase
the asset, in which case the right of use asset is depreciated over its useful life, as
follows:

- Mining equipment 3 to 7 years.

- Motor vehicles and buildings 3 to 5 years.
- Plant equipment up to 35 years.

ii) Lease liabilities

At the commencement date of the lease, the Company recognises lease liabilities
measured at the present value of lease payments to be made over the lease term.
The lease payments include fixed payments (and, in some instances, in- substance
fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Company and payments of penalties for
terminating the lease, if the lease term reflects the Company exercising the option to
terminate. Variable lease payments that do not depend on an index or a rate are
recognised as expenses (unless they are incurred to produce inventories) in the
period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses its incremental
borrowing rate at the lease commencement date where the interest rate implicit in
the lease is not readily determinable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest and reduced for the
lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term, a change in the
lease payments (e.g., changes to future payments resulting from a change in an
index or rate used to determine such lease payments) or a change in the assessment
of an option to purchase the underlying asset.
23
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

h) Leases (continued)

a) Company as a lessee (continued)

iii) Short-term leases and leases of low-value leases

The Company applies the short-term lease recognition exemption to its short-term
leases of equipment (i.e., those leases that have a lease term of 12 months or less
from the commencement date and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption to leases of office equipment
that are considered to be low value. Lease payments on short-term leases and leases
of low-value assets are recognised as expense on a straight-line basis over the lease
term.

i) Overburden removal costs

Under IFRIC 20, the stripping activity related to inventory is accounted for in accordance with
IAS 2 "Inventories" and the stripping activity that improves access to the ore body is accounted
for as an existing asset.

The Company's accounting policy establishes that development stripping can be generated at
any time during the life of the mine and an asset will be recognised as the cost of overburden, to
the extent that it represents significant changes in the future mine production capacity, e.g.:

- Activities representing significant changes in the volume of material that can be extracted
or variations in the cost of extraction methods.
- Activities that strengthen or maintain production capacity of a mine where resources have
been depleted.
- Activities resulting in the deferral of production activities recognised in the mine plan as a
disruption of production activities. These activities will not be frequent and will replace or
restore the economic benefits used in prior periods.

Production stripping corresponds to stripping (overburden removal) during the production stages
that begin at the time in which the mineral is extracted from the component.

Based on Management’s analysis, each phase of a surface mine has been identified as a
component of the ore body, which is in line with the manner in which the Company plans and
performs its mining activities. The Company recognises a stripping activity asset that is, stripping
activities as a component of property, plant and equipment if and only if the following three criteria
are met:

- it is probable that the future economic benefit (improved access to the ore body) associated
with the stripping activity will flow to the entity;
- the entity can identify the component of the ore body for which access has been improved;
and.

24
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

i) Overburden removal costs (continued)

- the costs relating to the stripping activity associated with that component can be measured
reliably.

Stripping costs incurred during the development stages of a mine are treated as mine
development expenses and capitalised as other mineral assets. Capitalisation of development
stripping costs ceases at the time that saleable material begins to be extracted from the mine.

Mine development is depreciated based on the units-of-production method based on the

estimated ore reserves for the relevant component at the beginning of the year.

Post production mine development costs are recognised as follows:

- When the actual stripping ore ratio of overburden (overburden/fine copper) is greater than
the stripping ore ratio established for the phase’s estimated useful life, postproduction
stripping costs are capitalised as part of other mineral assets.
- When the actual stripping ore ratio of overburden is lower than the phase estimated useful
life stripping ore ratio, costs are recognised in profit or loss as operating costs.

Assets capitalised for overburden removal will be subsequently amortised on a units of

production basis over the remaining reserves from the related phase identified.

j) Inventories

The cost of inventories includes expenditure incurred for the acquisition of inventories, production
expenses or conversion costs and other costs incurred for the transportation to their current
location and condition. In the case of finished product and work-in-progress inventories, cost
includes an appropriate share of production overheads based on normal operating capacity.

Inventories are stated at cost, according to the following methods:

- Finished products and work-in-progress: stated at average monthly production cost, which
includes depreciation of production related property, plant and equipment.
- Materials and spare parts for consumption: stated at average acquisition cost.

Inventories are stated at the lower of average cost and net estimated realisable value. The copper
cathode and concentrate inventory net realisable value is the price according to the LME less
estimated costs and expenses to sell.

Inventories classified as non-current consist of warehouse and inventory in the leach pad that
are not expected to be utilised or sold within 12 months after the reporting date.

25
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

k) Impairment of assets
Financial assets (including receivables)

A provision for expected credit losses is recognised for all financial assets held at amortised cost,
loan commitments and financial guarantees not measured at fair value through profit or loss and
lease receivables.

As permitted by IFRS 9, the Company applies the ‘simplified approach’ to trade receivable
balances and the general approach’ to all other financial assets. The general approach
incorporates a review for any significant increase in counterparty credit risk since inception. The
review includes assumptions about the risk of default and expected loss rates. For trade
receivables, the assessment takes into account the use of credit enhancements, for example,
letters of credit.

In calculating the provision, the Company uses historical trends of the probability of default, timing
of recoveries and the amount of loss incurred, adjusted for management’s judgment as to
whether current economic and credit conditions are such that the actual losses are likely to be
greater or less than suggested by historical trends.

A provision with respect to a financial asset measured at amortised cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows
discounted at the effective interest rate. Losses are recognised in profit or loss and presented in
an allowance account against receivables. Interest on the impaired asset continues to be
recognised through the unwinding of the discount. When a subsequent event causes the amount
of impairment loss to decrease, the decrease in impairment loss is reversed through profit or
loss.

Non-financial assets

The carrying amounts of the Company’s non-financial assets, other than inventories and deferred
tax assets are reviewed at least annually to determine whether there is any indication of
impairment. If any indication of impairment exists, the asset’s recoverable amount is estimated.
If the carrying amount of the asset exceeds its recoverable amount, the asset is impaired and an
impairment loss is charged to the income statement so as to reduce the carrying amount in the
balance sheet to its recoverable amount.

The Company conducts an internal review of asset values which is used as a source of
information to assess whether there are any indicators of impairment. External factors such as
changes in expected future processes, commodity price, costs and other market factors are also
monitored to assess for indicators of impairment.

The recoverable amount is the greater of its value in use and its fair value less direct costs to
sell.

26
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

k) Impairment of assets (continued)

Non-financial assets (continued)

The fair value is determined as the amount that would be obtained from the sale of the asset in
an arm’s length transaction between knowledgeable and willing parties. Fair value for mineral
assets is generally determined as the present value of the estimated future cash flows expected
to arise from the continued use of the asset, including any expansion projects, and its eventual
disposal, using assumptions that an independent market participant may take into account.

These cash flows are discounted by an appropriate post-tax discount rate to arrive at a net
present value of the asset. Value in use is determined as the present value of the estimated
future cash flows expected to arise from the continued use of the asset by the Company in its
present form and its eventual disposal. Value in use is determined by applying assumptions
specific to the Company’s continued use and cannot take into account future development.

These assumptions are different to those used in calculating fair value less cost of disposal
(FVLCD) and consequently the Value in use (VIU) calculation is likely to give a different result
(usually lower) to a FVLCD calculation.

In testing for indicators of impairment and performing impairment calculations, assets are
considered as collective groups and referred to as cash generating units (CGU). Cash generating
units are the smallest identifiable group of assets that generate cash inflows that are largely
independent of the cash inflows from other assets or groups of assets.

An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.

The impairment assessments are based on a range of estimates and assumptions, including:

Estimates/assumptions Basis

Future production Proved and probable reserves and, in certain

cases, expansion projects.
Commodity price Forward market and contract prices, and longer-
term price protocol estimates.
Exchange rates Current (forward) market exchange rates.
Discount rates Cost of capital risk adjusted for the risk specific to
the asset.

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 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

l) Provisions

A provision is recognised if, as a result of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation.

i) Mine closure and site restoration and rehabilitation

The mining, extraction and processing activities of the Company normally give rise to
obligations for site closure or rehabilitation. Closure and rehabilitation works can include
facility decommissioning and dismantling; removal or treatment of waste materials; site and
land rehabilitation.

The extent of work required and the associated costs are dependent on the requirements
of relevant authorities and the Company’s environmental policies. Provisions for the cost
of the closure and rehabilitation program are recognised at the time that environmental
disturbance occurs.

When the extent of disturbance increases over the life of an operation, the provision is
increased accordingly.

Costs included in the provision encompass all closure and rehabilitation activity expected
to occur progressively over the life of the operation and at the time of closure in connection
with disturbances at the reporting date.

Routine operating costs that may impact the ultimate closure and rehabilitation activities,
such as waste material handling conducted as an integral part of a mining or production
process, are not included in the provision.

Costs arising from unforeseen circumstances, such as the contamination caused by

unplanned discharges, are recognised as an expense and liability when the event gives
rise to an obligation which is probable and capable of reliable estimation.

Expenditure may occur before and after closure and can continue for an extended period
of time depending on closure and rehabilitation requirements. The majority of the
expenditure is expected to be settled within a period of 67 years from the reporting date.

Closure and rehabilitation provisions are measured at the expected value of future cash
flows, discounted to their present value and determined according to the probability of
alternative estimates of cash flows for the Company. Significant judgments and estimates
are involved in forming expectations of future activities and the amount and timing of the
associated cash flows. Those expectations are formed based on existing environmental
and regulatory requirements or, if more stringent, Company environmental policies which
give rise to a constructive obligation.

28
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

l) Provisions (continued)

i) Mine closure and site restoration and rehabilitation (continued)

When provisions for closure and rehabilitation are initially recognised, the corresponding
cost is capitalised as an asset, representing part of the cost of acquiring the future
economic benefits of the operation. The capitalised cost of closure and rehabilitation
activities is recognised in property, plant and equipment and depreciated based on the
useful life of the mine.

The amount of the provision is progressively increased over time in accordance with the
effects of unwinding the discounting, generating an expense that is recognised in finance
costs.

Closure and rehabilitation provisions are also adjusted for changes in estimates. Those
adjustments are accounted for as a change in the corresponding capitalised cost. Changes
to the capitalised cost result in an adjustment to future depreciation and financial charges.
Adjustments to the estimated amount and timing of future closure and rehabilitation cash
flows are a normal occurrence in light of the significant judgments and estimates involved.

Factors influencing those changes include:

- Additional disturbance during the period;

- Revisions to estimated reserves, resources and lives of operations;
- Developments in technology;
- Regulatory requirements and environmental management strategies;
- Changes in the estimated costs of anticipated activities, including the effects of
inflation and movements in foreign exchange rates; and
- Movements in interest rates affecting the discount rate applied.

ii) Provision for post-retirement employee benefits

Severance indemnity payments - The Company has an agreement with its employees
which establishes the payment of severance indemnities on termination of employment.
This is calculated on the basis of one month per year of service and is subject to a maximum
limit in the amount of years of service. The Company records a provision based on the best
estimate of the severance indemnity that the Company has to pay. Actuarial gains and
losses are recognised directly in other comprehensive income and classified according to
the nature of the transaction.

29
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

m) Revenue

The Company generates revenue from the production and sale of copper cathodes and
concentrates. Revenue is recognised when control of the promised goods or services pass to
the customer. In most instances, control passes when the goods are delivered to a destination
specified by the customer, which is typically on board the customer’s appointed vessel. The
amount of revenue recognised reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services.

A significant proportion of the Company’s goods are sold on Cost, Insurance and Freight (CIF)
Incoterms, where the Company is required to provide freight and shipping services after the date
at which the goods have transferred to the customer. The Company has a separate performance
obligation for freight and shipping services.

Contracts in place between the Company and its customers include a range of terms and pricing
mechanisms. Where the Company’s sales are provisionally priced, the final price depends on
future index prices. Final prices are normally determined between 30 to 120 days after delivery
of the goods. The amount of revenue initially recognised is based on the relevant forward market
price. Adjustments between the provisional and final price are accounted for under IFRS 9
Financial Instruments and recognised in revenue. Provisional pricing adjustments are separately
disclosed in the notes to the financial statements as other revenue.

Revenue excludes any applicable sales taxes and royalties.

Revenue from the sale of significant by-products is included within revenue. Where a by-product
is not significant, revenue is credited against costs.

A receivable is recognised when the goods are delivered, as this is the point in time when the
consideration is unconditional. Cash received before control of the promised goods or services
passes to the customer is recognised as deferred income. The Company does not have any
contracts where the period between the transfer of the promised goods or services and payment
by the customer is expected to exceed one year. As a consequence, the Company does not
adjust any of the transaction prices for the time value of money.

30
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

n) Exploration and evaluation

Exploration and evaluation activity involves the search for mineral and water resources, the
determination of technical feasibility and the assessment of commercial feasibility of an identified
resource. Exploration and evaluation activity includes:

- Researching and analysing historical exploration data.

- Gathering exploration data through topographical, geochemical and geophysical studies.
- Exploratory drilling, trenching and sampling.
- Determining and examining the volume and grade of the resource.
- Surveying transportation and infrastructure requirements.
- Conducting market and financial feasibility studies.

Administration costs that are not directly attributable to a specific exploration area are recognised
in profit or loss as incurred. Licence costs paid in connection with a right to explore in an existing
exploration area are capitalised and amortised over the term of the permit. Exploration and
evaluation expenditure (including amortisation of capitalised licence costs) is recognised in profit
or loss as incurred, except where the existence of a commercially viable mineral deposit has
been established.

Cash flows associated with exploration and evaluation expenses which have been disbursed are
classified under operating activities in the statement of cash flows.

o) Development expenditure

When proven reserves are determined and development is sanctioned, capitalised exploration
and evaluation expenditure is reclassified as ‘assets under construction’, and is disclosed as a
component of property, plant and equipment. All subsequent development expenditure is
capitalised and classified as ‘assets under construction’.

On completion of development, all assets included in ‘assets under construction’ are reclassified
as either ‘plant and equipment’ or ‘other mineral assets’ in case of deferred stripping and
depreciation commences.

p) Income tax and deferred taxes

Income tax expense consists of current and deferred income taxes. Current tax is the expected
tax payable or receivable on the taxable income or loss for the year using rates enacted or
substantively enacted at the year end and includes any adjustment to tax payable in respect of
previous years.

31
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

p) Income tax and deferred taxes (continued)

Deferred income taxes are provided using the balance sheet method, providing for the tax effect
of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The amount of deferred tax
recognised is based on the expected manner and timing of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at
period end.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits
will be available against which the asset can be utilised. Deferred tax assets are reviewed at
each reporting date and adjusted to the extent that it is no longer probable that the related tax
benefit will be realised.

Specific tax on mining activity is treated as taxation arrangements when they have the
characteristics of a tax. This is considered to be the case when they are imposed under
governmental authority and the amount payable is calculated considering the revenue derived
(net of any allowable deductions) after the adjustment for items comprising temporary
differences. For Chile specific tax on mining activity, current and deferred tax is determined on
the same basis as described above for other forms of taxation. Obligations arising from the
specific tax on mining activities arrangements that do not satisfy these criteria are recognised as
current liabilities and included in expenses.

q) Finance income and finance costs

Finance income comprises interest income on funds invested which is recognised as it accrues
in profit or loss.

Finance costs comprise interest expense on borrowings, unwinding of discounting on provisions,

impairment losses recognised on financial assets. Borrowing costs that are not directly
attributable to the acquisition, construction or production of a qualifying asset are recognised in
profit or loss and other comprehensive income.

In general, finance costs are recognised as and when accrued except when they refer to the
financing of the construction or development of qualifying assets which require a substantial
period to be ready for their intended use. Qualifying assets are material assets that require a
substantial period of time to be ready for their intended use in the future. Capitalised expenditures
(before the impact of taxes) for the period are determined by applying the interest rate applicable
to loans outstanding during the period for average capitalised expenditure for qualifying assets
during the period.

32
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 3 - Material Accounting Policy Information (continued)

r) Mineral reserves

Reserves are estimates of the amount of product that can be economically and legally extracted
from the Company’s properties. In order to calculate reserves, estimates and assumptions are
required about a range of geological, technical an economic factors including quantities, grades,
production techniques, recovery rates, production cost, transport cost, commodity demand,
commodity prices and exchange rates.

Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies
or fields to be determined by analysing geological data such as drilling samples. This process
may require complex and difficult geological judgments and calculations to interpret.

Note 4 - Financial Risk Management

The Company is exposed to the following financial risks:

- Credit risk
- Liquidity risk
- Market risk

Risk management framework

The Management of Minera Spence S.A. is responsible for supervising the risk management
framework. The Board of Directors is responsible for developing and monitoring the Company’s risk
management policies.

The Company has risk policies focused on identifying and analysing risks to which it is exposed, setting
limits and risk controls to monitor risks and compliance. Risk management policies and systems are
reviewed on a regular basis to ensure that they reflect changes in market conditions and the Company’s
activities.

The Company, through its management standards and procedures, has developed a disciplined and
constructive control environment in which all employees understand their roles and obligations.

a) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument
or customer contract, leading to a financial loss. The Company is exposed to credit risk from its
operating activities (primarily from customer receivables) and from its financing activities,
including deposits with banks and financial institution.

33
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

a) Credit risk (continued)

i) Trade and other receivables and other financial asset due from related parties

Trade receivables generally have terms of less than 30 days. Credit risk can arise from the
non-performance by counterparties of their contractual financial obligations towards the
company. The majority of sales year-on-year are from a relatively small group of customers,
which increases the Company’s exposure to concentration of credit risk. However, to
manage credit risk, the company maintains procedures and policies to mitigate this risk
including, but not limited to, the application for credit approvals, granting and renewal of
counterparty limits, proactive monitoring of exposures against these limits and
requirements triggering secured payment terms. As part of these processes, the credit
exposures with all counterparties are regularly monitored and assessed.

The credit quality of the Company’s customers is reviewed and the solvency of each debtor
and their ability to pay on the receivable is considered in assessing receivables for
impairment.

Receivables are deemed to be past due or impaired in accordance with the Company´s
terms and conditions. These terms and conditions are determined on a case-by-case basis
with reference to the customer’s credit quality, payment performance and prevailing market
conditions.

The balances of the trade receivables as of December 31, 2023 and 2022 include the
provisional invoices issued for copper concentrate and copper cathode shipments. Such
invoices are based on the weight measured by the Company and on the tests subject to
review and final agreement by the customers. According to the terms and conditions of the
sales contracts, the final price received will also be dependent on the copper prices quoted
on independent metal exchanges, including the LME, during the future quoting periods
applicable to each delivery. As of December 31, 2023 and 2022, provisional invoicing
agreement sales have been valued according to the future prices.

There is also an embedded derivative regarding refining treatment price participation

clauses (included in certain contracts) in the concentrate mineral sales contracts which
does not qualify for hedge accounting.

The carrying amount of financial assets in the accounting records represents the maximum
credit exposure.

34
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

a) Credit risk (continued)

i) Trade and other receivables and other financial asset due from related parties (continued)

Trade and other Receivables and other

Financial Assets due from Related Parties 2023 2022
US$'000 US$'000

Other financial assets due from related parties 2,030,947 1,752,940

Trade and other receivables and trade and other
receivables due from related parties 250,566 237,830
Total 2,281,513 1,990,770

As of December 31, 2023 and 2022, no credit loss provision was considered necessary for
balances due from related parties.

The maximum exposure to credit risk for trade and other receivable and trade and other
receivables due from related parties at the date of this report by geographical location was
as follows and as of the date of these financial statements, these receivables have been
received in their entirety:

2023 2022
US$'000 US$'000

Asia 135,154 235,500

South America 37,520 423
North America 957 144
Europe 76,893 1,700
Australia 42 63
Total 250,566 237,830

35
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

a) Credit risk (continued)

i) Trade and other receivables and other financial asset due from related parties (continued)

The concentration of customers based on total revenue for the ten main customers as of
December 31, 2023 and 31, 2022 was as follows:

2023
% (*)

Macquarie Bank Limited 31.51%

Yunnan Copper H.K Limited 20.26%
Sci Copper (Guangzhou) Co., Ltd 8.48%
Daye Nonferrous Metals Co., Ltd 6.77%
Yixing Yida Copper Co., Ltd. 6.75%
China Copper International Trading Group Co., Ltd 4.70%
Complejo Industrial Molynor S.A. 4.09%
Guangxi Jinchuan Nonferrous Metals Co., Ltd 3.88%
Xiamen C&D Inc. 1.86%
Zhejiang Jiangtong Fuye Heding Copper Co., Ltd 1.82%

2022
% (*)

Daye Nonferrous Metals Co., Ltd 27.18%

Zhejiang Jiangtong Fuye Heding 13.10%
Sci Copper (Guangzhou) Co., Ltd 11.41%
Yunnan Copper H.K Limited 8.97%
Shaanxi Dongling Material Company 8.91%
Ask Resources Limited 8.46%
Awin Resource International Pte. 8.11%
Macquarie Bank Limited 5.50%
Panasonic Operational Excellence 2.68%
Guangxi Jinchuan Nonferrous Metals Co., Ltd 2.45%

(*) Management considers that low credit risk is associated for the revenue generated from these
customers.

36
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

a) Credit risk (continued)

Loss due to impairment of trade receivables

As of December 31, 2023 and 2022, no allowance provision for the impairment of trade
receivables has been recorded based on the analysis under the IFRS 9 (see note 3(k)). All trade
receivables are not past due except for ThUS$255 (ThUS$74 as of December 31, 2022).

b) Liquidity risk

The Company’s liquidity risk arises from the possibility that it may not be able to settle or meet
its obligations as they fall due and is managed as part of the overall BHP Group’s portfolio risk
management strategy. Operational and capital requirements are considered in the management
of liquidity risk, in conjunction with short-term and long-term forecast information.

Recognising the cyclical volatility of operating cash flows, BHP’s Group Treasury has defined
minimum target cash and liquidity buffers to be maintained to mitigate liquidity risk and support
operations through the cycle.

There were no defaults on the Company’s liabilities during the period.

As of December 31, 2023 and 2022, short term payable amounts are as follows:

Carrying Contractual 6 Months or

Amount Cashflow Less
US$'000 US$'000 US$'000

2023

Trade and other payables 224,536 224,536 224,536

Trade payables due to related parties 26,108 26,108 26,108
Total 250,644 250,644 250,644

2022

Trade and other payables 246,810 246,810 246,810

Trade payables due to related parties 39,204 39,204 39,204
Total 286,014 286,014 286,014

37
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

c) Market risk

Market risk is the risk that changes in market prices; e.g., market interest rates, commodity prices
and foreign exchange rates will affect the Company's income or the value of its holdings of
financial instruments.

The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return.

i) Commodity price risk

Contracts for the sale and physical delivery of commodities are executed whenever
possible on a pricing basis intended to achieve a relevant index target. While the Company
has succeeded in transitioning substantially all of the Company commodity production
sales to market-based index pricing terms, derivative commodity contracts may from time
to time be used to align realised prices with the relevant index. Contracts for the physical
delivery of commodities are not typically financial instruments and are carried in the
balance sheet at cost (typically at US$ nil); they are therefore excluded from the fair value
and sensitivity analysis. Accordingly, the financial instrument exposures set out below do
not represent all of the commodity price risks managed according to the Company’s
objectives. Movements in the fair value of contracts included are offset by movements in
the fair value of the physical contracts; however, only the former movement is recognised
in the Company’s income statement prior to settlement. The risk associated with
commodity prices is managed as part of the portfolio risk management strategy.

Provisionally priced commodity sales and purchases contracts

Provisionally priced sales or purchases volumes are those for which price finalisation,
referenced to the relevant index, is outstanding at the reporting date. Provisional pricing
mechanisms embedded within these sales and purchases arrangements have the
character of a commodity derivative and are carried at fair value through profit and loss as
part of trade receivables or trade payables. The Company’s exposure at 31 December
2023 to the impact of movements in commodity prices upon provisionally invoiced sales
and purchases volumes was predominately around copper.

The Company’s exposure as of December 31, 2023 and 2022 to the impact of movements
in the commodity markets:

38
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

c) Market risk (continued)

i) Commodity price risk (continued)

Copper Units of
Exposure 2023 2022
Net Impact on Net Exposure Impact on Equity
Exposure Equity and Copper Sold and Profit of 10%,
Copper Profit of 10%, Movement in
Sold Movement in Market Price
Market Price (Post-Tax)
(Post-Tax)
‘000 ‘000
tonnes US$'000 tonnes US$'000

Total 75.70 46,042 60.03 35,966

ii) Foreign currency risk

The US dollar is the functional currency of the Company’s operations and, as a result, at
currency exposures arises from transactions and balances in currencies other than the US
dollar. The Company’s potential currency exposure comprises transactional exposure in
respect of non-functional currency monetary items and expenditure.

Monetary items, including financial assets and liabilities, denominated in currencies other
than the functional currency of the Company are periodically restated to US dollar
equivalents, and the associated gain or loss is recorded in the statement of profit or loss
and other comprehensive income.

39
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

c) Market risk (continued)

ii) Foreign currency risk (continued)

The following table shows the foreign currency risk on the net assets and liabilities of the
Company’s operations denominated in currencies other than the functional currency of the
operations as of December 31, 2023 and 2022:

Assets and Liabilities Denominated in Net Financial Net Financial

Currencies other than the Functional Assets/(Liabilities) Assets/(Liabilities)
Currency 2023 2022
US$'000 US$'000
Cash and cash equivalents 32,898 21,483
Trade and other receivables 4,989 3,315
Trade and other payables (64,024) (53,124)
Employee benefits (55,208) (37,900)
Provision for mine closure and site restoration (103,115) (111,284)
Leases (69,866) (81,410)
Net exposure (254,326) (258,920)

Sensitivity analysis

The Company’s exposure to currency risk is minimal. The following exchange rates were
used during the year:

Average Exchange Exchange Rate at the

Rate Date of the Financial
Statements
2023 2022 2023 2022

USD/CLP 839.07 870.53 877.12 855.86

40
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

c) Market risk (continued)

ii) Foreign currency risk (continued)

The principal non-functional currency to which the Company is exposed is the Chilean peso
(“Ch”). Based on the Company's net assets and liabilities, as of December 31, 2023 and
2022, and the strengthening/weakening of the United States dollar against this currency as
shown in the table below, holding other inputs constant, could affect post-tax profit and
equity as follows:

Currency Movement 2023 2022

Profit/ Equity Profit/ Equity
(Loss) (Loss)
After Tax After Tax
US$'000 US$'000 US$'000 US$'000

Variance of +Ch$10 2,093 2,093 2,186 2,186

Variance of -Ch$10 (2,141) (2,141) (2,237) (2,237)

41
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

c) Market risk (continued)

iii) Interest rate risk

The Company is not exposed to significant changes in interest rates as it does not have
significant variable interest rate instruments as of December 31, 2023 and 2022.

d) Fair value

Financial Assets and Liabilities Notes IFRS 9 Classification 2023 2022

US$’000 US$’000

Fair value hierarchy (1)

Other financial assets due from related parties (2) (16 a) Amortised cost 2,030,947 1,752,940
Total other financial assets 2,030,947 1,752,940

Cash and cash equivalents (13) Amortised cost 63,198 62,400

Trade and other receivables (3) (11) Amortised cost 116,841 152,086
Trade and other receivables due from related (16 a) Amortised cost
parties 20,501 1,025
Provisionally priced trade receivables (11) Fair value through profit
or loss 46,927 34,536
Total financial assets 2,278,414 2,002,987
Non-financial assets 5,822,070 5,639,342
Total assets 8,100,484 7,642,329

Trade and other payables (4) (15) Amortised cost 224,536 246,216
Trade and other payables due to related parties (16 b) Amortised cost 26,108 39,204
Interest bearing liabilities - Lease liabilities (22) Amortised cost 705,285 757,788
Total financial liabilities 955,929 1,043,208
Non-financial liabilities 763,421 545,296
Total liabilities 1,719,350 1,588,504

(1) All of the Company’s financial assets and financial liabilities recognised at fair value were valued using market observable
inputs categorised as Level 2.
(2) Includes investments held by BHP Finance B.V. which are restricted and not available for general use by the Company.
(3) Excludes value-added taxes of ThUS$66,297 (31 December 2022: ThUS$50,183) included in other receivables.
(4) Excludes value-added taxes of ThUS$nil (31 December 2022: ThUS$594) included in other payables.

42
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 4 - Financial Risk Management (continued)

Risk management framework (continued)

e) Capital management

Management’s policy is to maintain a strong capital basis in order to preserve reliance by

creditors and the market and to support future development of the business. Monitoring is
performed through the establishment of annual economic indicators based on the benefit before
interest and taxes and the unit cost of operation, which are monitored on a regular basis.

There were no changes in the Company’s policy for managing capital throughout the year. The
Company is not subject to external capital requirements.

Note 5 - Revenue

As of December 31, 2023 and 2022, revenue consist of the following:

2023 2022
US$'000 US$'000

Cathodes

Revenue from contracts with customers 932,027 998,514

Other (losses)/revenue (*) (89) 22,818
Total Cathodes 931,938 1,021,332

Concentrate

Revenue from contracts with customers 1,204,067 843,432

Other revenue* 10,542 52,659
Total Concentrate 1,214,609 896,091

Molybdenum

Revenue from contracts with customers 42,118 22,614

Other revenue/(losses) (*) 11,798 (5,089)
Total Molybdenum 53,916 17,525
Total Revenue 2,200,463 1,934,948

(*) Other revenue/(losses) is related to the effect of the adjustment in price for provisional invoices issued during the
reporting period.

43
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 6 - Other Income/(Expenses)

As of December 31, 2023 and 2022, Other Income and Expenses consist of the following:

Other Income and Expenses 2023 2022

US$'000 US$'000

Loss on sales of property, plant and equipment - (703)

Disposal of property, plant and equipment (551) -
Other income (*) 3,532 427
Total other income/(expenses) 2,981 (276)

(*) Other income is generally income earned from transactions outside the course of the Company's ordinary activities
such as the sale of scrap, mining equipment and spare parts.

Note 7 - Net Finance Income/(Costs)

As of December 31, 2023 and 2022, net finance costs consist of the following:

Net Finance income/(Costs) 2023 2022

US$'000 US$'000

Interest income 109,584 21,511

Other finance income - 945
Total finance income 109,584 22,456

Discounting on provision for mine closure and site restoration (20,830) (12,117)
Other finance costs (168) (349)
Discounting on provision for post-retirement employment benefits (2,131) (1,774)
Interest costs - related parties (6,902) -
Interest on leases (48,009) (49,361)
Total finance costs (78,040) (63,601)

Foreign currency gain for the year 2,035 4,066

Total foreign currency gain 2,035 4,066
Total net finance income/(costs) 33,579 (37,079)

Note 8 - Income Tax Expense and Deferred Taxes

The Company’s tax earnings are subject to a corporate income tax rate of 27.00%. In addition, from
January 1, 2013, the Company is not subject to the payment of the specific tax on mining operations
(royalty) and subject to a total tax burden of 42% as a result of the application of DL600 on protection
of foreign investment.

44
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 8 - Income Tax Expense and Deferred Taxes (continued)

As of December 31, 2023 and 2022, the analysis, detail and movements in current and deferred income
taxes recorded in accordance with Note 3(p) are as follows:

Income Tax Expense 2023 2022

US$'000 US$'000

Income tax expense (2,099) -

Deferred tax liability re-measurement Law 21.591 (a) 30,208 -
Deferred income tax (income)/expense for the period 134,256 85,350
Prior year adjustments 586 759
Total charge to profit or loss for income tax 162,951 86,109

(a) Mainly explained by the recognition of long-term deferred taxes associated with the publication of the new Mining
Royalty Law (Law 21.591).

Law N° 21.591 Mining Royalty

On August 10, 2023, Law N°. 21,591 on Mining Royalty (the "Law") was published in the Official
Gazette, which introduces a new Mining Royalty in Chile, replacing the current Mining Tax. The Law
considers two components: Ad Valorem and royalty on margins. The latter is calculated based on a
progressive rate, ranging from 8% to 26%, applied on the adjusted taxable mining operational profits.

As of December 31, 2023 and 2022, taxes recoverable/(payable) consist of the following:

a) Taxes recoverable/(payable)
2023 2022
US$'000 US$'000

Monthly tax instalments - 29,335

Foreign tax credits and training expenses (SENCE) 10,124 2,148
Prior Years Tax Recoverables (CY2021-2022) 172,830 158,215
Prior year Tax Recoverables (Amendment) 41,077 41,077
Refund CY2021 y 2022 (167,514) (19,789)
Other 2,622 4,272
Total tax recoverable, net 59,139 215,258

45
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 8 - Income Tax Expense and Deferred Taxes (continued)

b) Deferred tax assets and liabilities recognised

Temporary Differences 2023 2022

US$’000 US$’000

Property, plant and equipment (663,641) (618,249)

Inventories (30,281) (36,413)
Leases 12,251 11,711
Other assets - (3,185)
Other provisions and liabilities 24,984 15,033
Provision for mine closure and site restoration 49,865 41,179
Tax 118,123 263,256
Deferred tax liabilities, net (488,699) (326,668)

c) Changes in deferred taxes

As of December 31, 2023 and 2022, movements in deferred tax assets and liabilities are as
follows:

Balance as of Recognised in Other Balance as of

January 1, Profit and Loss Adjustment December 31,
2023 Recognised in 2023
Equity
US$'000 US$'000 US$'000 US$'000

Property, plant and equipment (618,249) (45,392) - (663,641)

Inventories (36,413) 6,132 - (30,281)
Leases 11,711 540 - 12,251
Other assets (3,185) 3,185 - -
Other provisions and liabilities 15,033 8,039 1,912 24,984
Provision for mine closure and site
restoration 41,179 8,686 - 49,865
Tax Loss 263,256 (145,133) - 118,123
Deferred tax liability, net (326,668) (163,943) 1,912 (488,699)

46
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 8 - Income Tax Expense and Deferred Taxes (continued)

c) Changes in deferred taxes (continued)

As of December 31, 2023 and 2022, the reconciliation of the tax rate is as follows:

Reconciliation of Effective Tax Rate 2023 2022

US$’000 US$’000

Profit for the period 332,479 211,253

Income tax expense 162,951 86,109
Profit before taxes 495,430 297,362
Current tax expense (133,766) (80,288)
Prior year adjustment (586) (759)
Other reconciled items (a) 1,609 (5,062)
Deferred tax liability re-measurement Law 21.591 (30,208) -
Total charge to profit or loss (162,951) (86,109)
Corporate tax rate 27.0% 27.0%
Prior year adjustment 0.12% 0.26%
Other differences rate (0.32)% 1.70%
Deferred tax liability re-measurement Law 21.591 6.09% -
Total effective tax rate 32.89% 28.96%

(a) Mainly explained by the recognition of a long-term deferred tax of ThUS$30,208 due to the new Mining
Royalties Law No. 21.591.

d) Income tax recognised in other comprehensive income

Income tax (charge)/credit relating to items that will not be reclassified to the profit or loss as of
December 31, 2023 is ThUS$1,912 (2022: ThUS$(1,272)) related to actuarial losses calculated
on post-retirement employee benefits.

47
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 9 - Property, Plant and Equipment

As of December 31, 2023 and 2022, changes in property, plant and equipment measured in
accordance with Note 3(g), (h) and (i) are as follows:

2023 Assets Under Land and Plant and Other Right of Total
Construction Buildings Equipment Mineral Use
Assets Assets
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

Cost

Opening balance as of January 1 463,304 227,226 5,365,586 983,907 809,350 7,849,373

Additions 588,457 - 12,282 126,947 9,198 736,884
Transfers (a) (233,313) 28,330 204,983 (20,427) - (20,427)
Disposal - - (43,719) - - (43,719)
Other - - - - (30,240) (30,240)
Balance as of December 31 818,448 255,556 5,539,132 1,090,427 788,308 8,491,871

Accumulated Depreciation

Opening balance as of January 1 - (155,017) (2,379,076) (826,427) (87,436) (3,447,956)

Depreciation expense - (13,672) (325,132) (6,260) (36,913) (381,977)
Transfers - - - - - -
Disposal - - 43,168 - - 43,168
Balance as of December 31 - (168,689) (2,661,040) (832,687) (124,349) (3,786,765)
Net ending balance as of December 31 818,448 86,867 2,878,092 257,740 663,959 4,705,106

2022 Assets Under Land and Plant and Other Right of Total
Construction Buildings Equipment Mineral Use
Assets Assets
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

Cost

Opening balance as of January 1 332,937 216,642 4,985,655 927,810 816,927 7,279,971

Additions 511,285 - 10,111 78,118 12,308 611,822
Transfers (a) (380,918) 10,584 370,334 (22,021) - (22,021)
Disposal - - (514) - (19,885) (20,399)
Balance as of December 31 463,304 227,226 5,365,586 983,907 809,350 7,849,373

Accumulated Depreciation

Opening balance as of January 1 - (142,076) (2,052,690) (745,742) (69,025) (3,009,533)

Depreciation expense - (12,941) (326,428) (80,685) (38,119) (458,173)
Transfers - - - - - -
Disposal - - 42 - 19,708 19,750
Balance as of December 31 - (155,017) (2,379,076) (826,427) (87,436) (3,447,956)
Net ending balance as of December 31 463,304 72,209 2,986,510 157,480 721,914 4,401,417

During the periods ended December 31, 2023 and 2022 the Company recognised nil impairment.

48
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 9 - Property, Plant and Equipment (continued)

As of December 31, 2023, the majority of the capitalised fixed assets are related with the ripios dump
capacity project (ThUS$110) which is designed to extend the dump storage capacity and enable the
operational continuity of the leaching process through to year 2027, the mine equipment acquisition
project (ThUS$56) which consists of the purchase of mining trucks to renew the existing truck fleet and
the Spence stacking bridge project (ThUS$41) which will extend the life of the material stacking
operation process enabling the planned production levels.

For the period ended December 31, 2023, the amount related to capital spares that are not being used
is ThUS$33,482 (ThUS$17,826 in the period ended December 31 2022).

During this same period, the Company has ThUS$309,794 in property plant and equipment that are
totally depreciated and are still in use (ThUS$275,464 at December 31, 2022). During the years ended
December 31, 2023 and 2022, the Company does not have pledged assets.

During the year ended December 31, 2023, the Company reached the Commercial Operating Date for
its lease of the Desalination Plant and this resulted in an amendment of the payment scheduled with
an impact to the Right of Use asset of ThUS$30,240.

(a) Transfers of Other Mining Assets of ThUS$20,427 during 2023 (ThUS$22,021in 2022) correspond
to the depletion of the production stripping costs. Refer to Note 18 Costs, Excluding Net Finance Costs.

Note 10 - Inventories

As of December 31, 2023 and 2022, inventories measured as described in Note 3(j) consist of the
following:

2023 2022
US$'000 US$'000

Work-in-progress (a) 603,556 546,964

Finished products (a) 95,637 132,925
Materials and spare parts 141,876 107,431
Obsolescence (9,942) (4,575)
Total inventories current 831,127 782,745

Work-in-progress (b) 47,514 106,792

Materials and spare parts 104,823 75,966
Total inventories non-current 152,337 182,758

(a) During 2023 and 2022, there were no inventories that were written down to their net realisable value (NRV).
(b) Work-in-progress, non-current are not expected to be utilised or sold within 12 months after the reporting date.

49
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 11 - Trade and Other Receivables

As of December 31, 2023 and 2022, Trade and other receivables measured as described in Note 3(d)
consist of the following:

2023 2022
US$'000 US$'000

a) Trade receivables

Trade receivables 109,472 146,826

Price adjustment for provisional priced sales 46,927 34,536
Total 156,399 181,362

b) Other receivables

Recoverable taxes (VAT credits) 66,297 50,183

Loans to employees (*) 3,561 1,059
Other receivables 3,808 4,201
Total 73,666 55,443
Trade and other receivables 230,065 236,805

(*) Loans to employees mainly relate to the housing for employees program and benefits from collective bargaining
agreements.

Note 12 - Other Assets

As of December 31, 2023 and 2022, other assets consist of the following:

2023 2022
US$'000 US$'000

Prepayments 6,778 6,981

Total 6,778 6,981

50
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 13 - Cash and Cash Equivalents

As of December 31, 2023 and 2022, cash and cash equivalents recorded as described in Note 3(f)
consist of the following:

2023 2022
US$'000 US$'000
Cash at bank:
Cash in CLP 32,898 21,483
Cash in USD 30,300 40,917
Total 63,198 62,400

There are no term deposits or investments over 90 days.

There are no restrictions on any cash and cash equivalents.

Note 14 - Provisions

a) Provisions, current and non-current

As of December 31, 2023 and 2022, provisions consist of the following:

Current Provisions 2023 2022

US$'000 US$'000

Employee benefits (a) 33,315 20,566

Others 1,368 7,910
Total 34,683 28,476

Non-Current Provisions 2023 2022

US$'000 US$'000

Employee benefits (b) 55,352 37,044

Total 55,352 37,044

Changes in employee benefits and other provisions measured as described in Note 3(l) are as follows:

(a) The expenditure associated with total employee benefits will occur in a pattern consistent with when employees
choose to exercise their entitlement to benefits.

(b) Expenses associated with severance indemnity payments expose the Company to judgement and estimates
used in the actuarial calculation, such as longevity, currency and interest rates.

The methodology used to determine the provision for all the employees adhered to collective bargaining
agreements has considered turnover rates and the mortality table RV-2014 issued by the Financial Market
Commission (CMF) to calculate the reserves of pension life insurance in Chile, in accordance with the
accumulated benefit valuation or accrued benefit cost method.

Using such method, the Company establishes the amount of benefits related to total severance indemnity
payments that should be paid to the employee or employee's family (in the event of the death of the employee),
considering the current salary and years of service accumulated at the date of the valuation, either because
of voluntary redundancy, dismissal or death. Subsequently, the present cost of the cost forecasted using this
method is calculated annually.

51
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 14 - Provisions (continued)

a) Provisions, current and non-current (continued)

2023 Provision Accrued Post- Legal and Total

for Vacations Retirement other
Incentives Employee Provisions
and Benefits
Bonuses
US$'000 US$'000 US$'000 US$'000 US$'000

Opening balance as of January 1 15,050 8,989 33,571 7,910 65,520

Debit/(credit) for the period:
Increases/(decreases) 18,198 2,762 19,579 (6,542) 33,997
Actuarial losses taken to equity - - 7,082 - 7,082
Discounting - - 2,131 - 2,131
Effect of foreign currency translation
differences (454) (216) (3,035) - -3,705
(Payments)/receipts (14,973) (1,432) 1,415 - -14,990
Ending balance as of December 31 17,821 10,103 60,743 1,368 90,035

Actuarial assumptions

The main actuarial assumptions used in the valuation of the employee benefits at the reporting
date of the financial statements are as follows:

2023 2022

Mortality table RV-2014 RV-2014

Actual annual interest rate 5.18% 6.73%
Retirement age for women 60 years 60 years
Retirement age for men 65 years 65 years

Sensitive analysis

Changes reasonably possible in relevant actuarial assumptions at the reporting date, to the
extent that the other assumptions remain constant, would have affected the post-retirement
employee benefits by the amounts included in the table below.

Change in Discount Rate 2023 2022

Increase Decrease Increase Decrease
of 1% of 1% of 1% of 1%

Increase / (Decrease) in the post-

retirement employee benefits provision
(Effect in thousands of US$) (7,268) 6,412 (5,055) 4,220

52
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 14 - Provisions (continued)

b) Mine closure and site restoration

As of December 31, 2023 and 2022, changes in the provision for mine closure and restoration
measured as described in Note 3(l), are as follows:

Opening Increase/ Discounting Closing

Balance (Decrease) in Unwind Balance
01.01.2023 Estimate (a) 12.31.2023
US$'000 US$'000 US$'000 US$'000

Current

Provision for mine

closure and site
restoration 1,573 264 - 1,837
Total 1,573 264 - 1,837

Non-Current

Provision for mine

closure and site
restoration 150,941 11,079 20,830 182,850
Total 150,941 11,079 20,830 182,850

Opening Increase/ Discounting Closing

Balance (Decrease) in Unwind Balance
01.01.2022 Estimate (a) 12.31.2022
US$'000 US$'000 US$'000 US$'000

Current

Provision for mine

closure and site
restoration 254 1,297 22 1,573
Total 254 1,297 22 1,573

Non-Current
Provision for mine
closure and site
restoration 130,033 8,792 12,116 150,941
Total 130,033 8,792 12,116 150,941

(a) Includes impact from the changes in foreign exchange rate and payments during the period.

53
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 14 - Provisions (continued)

b) Mine closure and site restoration (continued)

The total undiscounted amount of restoration and rehabilitation activities is ThUS$532,118 as

of December 31, 2023 (ThUS$409,139 as of December 31, 2022). No significant payments are
expected to be required over the next five years.

In accordance with Law 20.551, which regulates the closure of mine site or facilities in Chile,
the Company is obligated to deliver to the regulating authority a commitment (in the form of
financial instruments that can be used as guarantees) that it will comply with its closure and
rehabilitation obligations in a future period. The Company’s closure obligations are based on
its submitted closure plan.

Note 15 - Trade and Other Payables

As of December 31, 2023 and 2022, trade and other payables consist of the following:

2023 2022
US$'000 US$'000

Trade payables (suppliers) 213,235 240,167

Other payables 11,301 6,643
Total 224,536 246,810

54
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 16 - Balances and Transactions with related parties

a) Trade and other receivables due from related parties

As of December 31, 2023 and 2022, trade receivables and other financial asset due from related
parties are detailed as follows:

Company Taxpayer ID Country Relationship Currency Transactions December December

Description 2023 2022
US$'000 US$'000

BHP Group Limited Foreign Australia Common Miscellaneous

owners US$ services - 63
BHP Group Operations Pty Ltd Foreign Australia Common Miscellaneous
owners US$ services 43 -
BHP Shared Services Malaysia Foreign Malaysia Common Miscellaneous
Sdn Bhd owners US$ services - 50
BHP Shared Services Foreign Philippines Common Miscellaneous
Philippines Inc. owners US$ services 65 41
BHP Minerals Service company Foreign USA Common Miscellaneous
owners US$ services 26 25
BHP Billiton Marketing Asia Pte Foreign Singapore Common Miscellaneous
Ltd. owners US$ services 157 174
Compania Minera Cerro 94.621.000-5 Chile Common Sales of cathodes
Colorado owners US$ and other - 11
Minera Escondida Limitada. 79.587.210-8 Chile Common Sales of cathodes
owners US$ and other 15 58
BHP Chile Inc 86.160.300-8 Chile Common Miscellaneous
owners US$ services 20,178 344
Tamakaya 76.349.223-0 Chile Common Gas sale
owners US$ - 195
Operation Services Chile SpA 77.708.148-9 Chile Common Miscellaneous
owners US$ services 17 -
BHP Billiton Freight Singapore Foreign Singapore Common Miscellaneous
Pte Ltd owners US$ services - 64
Total trade and other receivables due from related parties 20,501 1,025

Company Taxpayer ID Country Relationship Currency Transactions December December

Description 2023 2022
US$'000 US$'000

BHP Billiton Finance B.V. (*) Foreign Netherlands Common Term deposit
owners US$ 2,030,947 1,752,940
Total trade and other receivables due from related parties 2,030,947 1,752,940

(*) Interest receivable on the term deposit has been set at 90 day average compounded SOFR + 79.00 basis points for ThUS$300,000 and SOFR - 24 basis points
for ThUS$1,730,947.

55
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 16 - Balances and Transactions with related parties (continued)

b) Trade and other payables due to related parties

As of December 31, 2023 and 2022, trade payables due to related parties are detailed as follows:

Company Taxpayer ID Country Relationship Currency Transactions December December

Description 2023 2022
US$'000 US$'000

BHP Group Limited Foreign Australia Common Miscellaneous

owners US$ services 277 392
BHP Group Operation Pty Ltd Foreign Australia Common Miscellaneous
owners US$ services 1,902 2,267
BHP International Services Ltd Foreign England Common Miscellaneous
owners US$ services 22 105
BHP Billiton Shared Services Foreign Malaysia Common Miscellaneous
Malaysia Sdn. Bhd. owners US$ services 93 -
BHP Billiton Olympic Dam Foreign Australia Common Miscellaneous
Corporation Pty Ltd. owners US$ services 16 38
BHP Minerals Service company Foreign USA Common Miscellaneous
Parent US$ services 87 195
BHP Billiton Marketing Asia Pte Foreign Singapore Common Miscellaneous
Ltd. Parent US$ services 363 429
Compania Minera Cerro Colorado 94.621.000-5 Chile Common Purchase of
owners cathodes and other
US$ consumables 3,666 81
Minera Escondida Limitada. 79.587.210-8 Chile Common Purchase of
Parent cathodes and other
US$ consumables 20 13
BHP Chile Inc (Chile Branch). 86.160.300-8 Chile Common Miscellaneous
Parent US$ services 11,623 13,074
BHP Chile Inversiones Ltda. 77.950.280-5 Chile Common Miscellaneous
owners US$ services 6,831 20,166
Tamakaya 76.349.223-0 Chile Common Miscellaneous
owners US$ services 852 487
BHP Billiton Marketing AG Foreign Singapore Common Miscellaneous
owners US$ services 183 320
BHP Iron Ore Pty Ltd Foreign Australia Common Miscellaneous
Parent US$ services 20 46
BHP Investments Canada Inc Foreign Canada Common Miscellaneous
Parent US$ services 9 -
BHP Billiton Freight Singapore Foreign Singapore Common Miscellaneous
Pte Ltd owners US$ services 144 1,591
Total trade payables due to related parties 26,108 39,204

As of the date of these financial statements, no guarantees have been provided or received
for trade receivables due from and/or payables due to related parties, no unrecoverable
amounts exist and accordingly, no impairment allowance has been recognised. Transactions
with related parties were performed under normal operating conditions.

56
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 16 - Balances and Transactions with related parties (continued)

c) Main transactions with related parties

As of December 31, 2023 and 2022, the main transactions with related parties are detailed as
follows, continued:

Company Taxpayer ID Country Relationship Currency Transaction 2023 2022

description Transaction Effect on Transaction Effect on
Amount Profit or Amount Profit or Loss
Loss (Debit)/Credit
(Debit)/Credit
US$'000 US$'000 US$'000 US$'000

BHP Billiton Chile 77.950.280-5 Chile Common Purchase of

Inversiones Ltda. owners US$ sulphuric acid 82,228 (82,228) 102,972 (102,972)
BHP Billiton Freight Foreign Singapore Common Freight
Singapore owners US$ 35,113 (35,113) 45,007 (45,007)
BHP Billiton Marketing Foreign Singapore Common Commission on
AG owners US$ sales 1,882 (1,882) 1,768 (1,768)
Compania Minera Cerro 94.621.000-5 Chile Common Purchase of
Colorado Ltda. owners US$ cathodes 4,446 (4,446) 6,957 (6,957)
BHP Billiton Group Foreign Australia Common Miscellaneous
Operations Pty Ltd owners US$ services 21,317 (21,317) 16,076 (16,076)
BHP Billiton International Foreign England Common Miscellaneous
Serv. owners US$ services 218 (218) 114 (114)
BHP Group Limited Foreign Australia Common Miscellaneous
owners US$ services 5,904 (5,904) 4,878 (4,878)
BHP Billiton Marketing Foreign Singapore Common Miscellaneous
Asia Pte Ltd. owners US$ services 4,508 (4,508) 2,846 (2,846)
BHP Minerals Service Foreign USA Common Miscellaneous
Company owners US$ services 702 (702) 416 (416)
BHP Billiton Shared Foreign Malaysia Common Miscellaneous
Services Malaysia Sdn. owners services
Bhd. US$ 1,260 (1,260) 1,341 (1,341)
BHP Billiton Shared Foreign Philippines Common Miscellaneous
Services Philipines Inc. owners US$ services 1,036 (1,036) 1,005 (1,005)
BHP Chile Inc. 86.160.300-8 Chile Common Recovery of
owners US$ expenses 97,952 (97,952) 83,695 (83,695)
Broken Hill Proprietary Foreign Australia Common Miscellaneous
owners US$ services - - 421 (421)
Minera Escondida 79.587.210-8 Chile Common Miscellaneous
Limitada. owners US$ services 9,011 (9,011) 293 (293)
Tamakaya Energía SpA 76.349.223-0 Chile Common Miscellaneous
owners US$ services 3,450 (3,450) 21,754 (21,754)
BHP Billiton Finance Foreign Netherlands Common Annual corporate
B.V. owners US$ guarantee fee 1,529 (1,529) 2,627 (2,627)
Rio Algom Limited Foreign Canada Common Miscellaneous
owners US$ services 83 (83) 93 (93)
Rio Algom Limited Foreign Canada Common Dividend
owners US$ payment - - 46,520 -
Rio Algom Exploration Foreign Canada Common Dividend
owners US$ payment - - 47 -
BHP Billiton Canada Inc Foreign Canada Common Miscellaneous
owners US$ services 9 (9) 20 (20)
BHP Billiton Iron Ore Pty Foreign Australia Common Miscellaneous
Ltd owners US$ services 299 (299) 348 (348)
BHP Mitsui Coal Pty Foreign Australia Common Miscellaneous
owners US$ services 36 (36) 24 (24)
BHP Billiton Marketing Foreign Singapore Common Miscellaneous
AG owners US$ services - - 52 (52)
Woodside Energy Foreign USA Common Miscellaneous
Deepwater Inc owners US$ services - - 40 40
OS MCAP Pty Ltd Foreign Australia Common Miscellaneous
owners US$ services 28 (28) 60 60
BHP Billiton Holding Ltd Foreign Australia Common Miscellaneous
owners US$ services 13,318 (13,318) 14,798 (14,798)

57
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 16 - Balances and Transactions with related parties (continued)

c) Main transactions with related parties (continued)

Company Taxpayer ID Country Relationship Currency Transaction 2023 2022
description Transaction Effect on Transaction Effect on
Amount Profit or Loss Amount Profit or Loss
(Debit)/Credit (Debit)/Credit
US$'000 US$'000 US$'000 US$'000

Operation Services Chile 77.708.148-9 Chile Common Miscellaneous

SpA owners US$ income 65 65 - -
BHP MetCoal Holdings Foreign Australia Common Miscellaneous
Pty Ltd owners US$ income 8 8 - -
BHP Investments Foreign Canada Common Miscellaneous
Canada Inc owners US$ services 48 (48) - -
BHP Olympic Dam Foreign Australia Common Miscellaneous
Corporation Pty Ltd owners US$ income 19 19 - -

58
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 17 - Paid-in Capital

As of December 31, 2023 and 2022, the detail of the company's owners and their ownership are as
follows:

Subscribed and Fully-Paid 01.01.2023 Shares 12.31.2023 01.01.2022 Shares 12.31.2022

Shares Number of Issues Number of Number of Issues Number of
ordinary Ordinary Ordinary Ordinary
shares Shares Shares Shares

Rio Algom Limited 3,466,774 - 3,466,774 3,466,774 - 3,466,774

Rio Algom Exploration Inc 3,470 - 3,470 3,470 - 3,470
Total 3,470,244 - 3,470,244 3,470,244 - 3,470,244

As of December 31 2023 and 2022, subscribed and fully-paid share capital comprises 3,470,244
common shares with a par value of ThUS$347,024.

Note 18 - Expenses, Excluding Net Finance Costs

As of December 31, 2023 and 2022, expenses consist of the following:

2023 2022
US$'000 US$'000

Movements in finished product inventories and work-in-progress 39,974 (184,923)

Raw materials and consumables 558,757 642,125
Employee payroll and benefits 170,615 121,890
Outsourcing services (including transportation) 414,061 384,277
Net foreign currency translation (gain)/loss (8,044) 20,728
Depreciation and amortisation 381,977 458,173
Doubtful allowance on trade and other receivables 13 46
Deferred stripping depletion 20,427 22,021
Other operating costs 163,813 135,894
Total expenses 1,741,593 1,600,231

59
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 19 - Employee Payroll and Benefits

Payroll and employee benefits included in cost of sales consists of the following:

2023 2022
US$'000 US$'000

Employee payroll and salaries 169,020 121,115

Share-based payment awards for employees 1,595 775
Total employee payroll and benefits 170,615 121,890

Total number of employees as of December 31, 2023 is 1,749 (1,563 as of December 31, 2022).

Increase in employee payroll and salaries due to higher number of employees and bonus paid for the
year 2023.

In 2023, compensation for some key management personnel was paid by a related entity of the
Company as the key management personnel were not directly employed by the Company.
Accordingly, these costs have not been included as compensation.

Compensation for key management personnel

Payroll and employee benefits of key management personnel consist of the following:

2023 2022
US$'000 US$'000

Payroll and bonuses (short-term employee benefits) 4,481 3,187

Total compensation of key management personnel 4,481 3,187

Compensation of key management personnel in relation to share based payments of ThUS$194 as of

December 31, 2023 (ThUS$20 as of December 31, 2022) was transferred from the parent Company.

Note 20 - Commitments

As of December 31, 2023 and 2022, the estimated cash flows from purchases consist of the following:

2023 2022
US$'000 US$'000

Expiring over the next 12 months 1,146,045 1,189,840

Expiring between 1 and 2 years 397,971 695,791
Expiring between 2 and 3 years 245,703 416,601
Expiring between 3 and 4 years 155,472 305,383
Expiring between 4 and 5 years 105,799 260,888
Greater than 5 years 512,338 1,939,995
Total cash flows committed 2,563,328 4,808,498

60
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 20 - Commitments (continued)

As of December 31, 2023 and 2022, the estimated cash flows from leases consist of the following:

2023 2022
US$'000 US$'000

Expiring over the next 12 months 83,347 86,325

Expiring between 1 and 2 years 80,736 81,764
Expiring between 2 and 3 years 79,229 79,176
Expiring between 3 and 4 years 75,921 78,390
Expiring between 4 and 5 years 75,381 74,982
Greater than 5 years 890,040 953,371
Total cash flows committed 1,284,654 1,354,008

Lease agreements are primarily due to contracts for desalination plant, port and rail services for the
Spence Growth Option (SGO).

Guarantees

The Company is a guarantor and co-debtor in the lease agreement entered into between BHP
Chile Inc. (related company) and Banco Santander Chile, for a property located at Av. Cerro el
Plomo 6000, Santiago de Chile. The lease agreement has an option to purchase all furniture and
fittings and its maximum value is US$11 million and a maximum period of 60 months.

i) Guarantees granted

The guarantees granted by the company as of December 31, 2023 amounted to

ThUS$89,878, which mainly relate to bank guarantee required by National Service of Geology
and Mining (Sernageomin) for closure of mining works to comply with the requirements
established in Law N ° 20.551.

ii) Guarantees received

The guarantees received as of December 31, 2023 amounted to ThUS$40,621 which are
intended to ensure compliance of the conditions agreed with the suppliers.

61
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 21 - Dividend Paid

Owners Ownership December

% 2023
US$'000

Rio Algom Limited 99.90% -

Rio Algom Exploration Inc 0.10% -
Total dividend 100% -

Owners Ownership December

% 2022
US$'000

Rio Algom Limited 99.90% 46,520

Rio Algom Exploration Inc 0.10% 47
Total dividend 100% 46,567

Date of Resolution for Payment of Dividends Date of Payment Total

of Dividend US$'000

18th January 2022 31st January 2022 9,570

10th March 2022 36,997
Total 46,567

Note 22 - Interest-Bearing Liabilities

2023 2022
US$'000 US$'000
Current

Leases 25,896 67,144

Total interest-bearing liabilities, current 25,896 67,144

Non-Current

Leases 679,389 690,644

Total interest-bearing liabilities, non-current 679,389 690,644

62
 MINERA SPENCE S.A.

Notes to the Financial Statements

As of December 31, 2023 and 2022

Note 23 - Contingencies

As of December 31, 2023, the Company has not recognised any material contingent liabilities or
disclosed any material contingent assets that are probable of occurring.

Note 24 - Subsequent Events

During the period between January 1, 2024 and the date of issuance of these financial statements,
no significant events have occurred that require adjustment to the financial statements.

63