Mexico-based Fresnillo plc (LON:FRES) will take an US$8mln hit to profits after aligning tax treatment across its underground mining operations.
The blue chip decided it was “in the company’s best interests” to treat all its mines in accordance with an agreement made last year with Mexican tax authorities as the law does not explicitly address this subject.
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Fresnillo has therefore volunteered to apply the same criteria retrospectively for the years 2014 to 2018.
The total amended tax bill of US$55.3mln includes a principal amount of US$39.6mln of income tax and mining rights that are reclassified from deferred to current taxes so have no impact on the income statement, plus will be offset in future years by deducting depreciation from the tax base. The remainder is US$15.7mln of interest and surcharges.
Of total payment to the Mexican tax man, US$33.1mln has been covered by cash and the remainder covered against tax receivables, which will be recorded in the half-year results to 30 June 2019.
Fresnillo shares were down 3% to 847.4p on Monday morning.