About EDGAR Online | Login
 
Enter your Email for a Free Trial:
The following is an excerpt from a 20-F SEC Filing, filed by BUENAVENTURA MINING CO INC on 6/6/2006.
Next Section Next Section Previous Section Previous Section
BUENAVENTURA MINING CO INC - 20-F - 20060606 - LEGAL_PROCEEDINGS

Legal Proceedings

Choropampa. In June 2000, a transport contractor of Yanacocha spilled approximately 151 kilograms of elemental mercury near the town of Choropampa, Peru, which is located 53 miles southwest of the Yanacocha mine. Elemental mercury is a by-product of gold mining and was sold to a Lima firm for use in medical instruments and industrial applications. A comprehensive health and environmental remediation program was undertaken by Yanacocha in response to the incident. In August 2000, Yanacocha paid under protest a fine of 1,740,000 Nuevos Soles (approximately US$0.5 million) to the Peruvian government. Yanacocha entered into settlement agreements with a number of individuals impacted by the incident. In addition, Yanacocha has entered into agreements with the three communities impacted by this incident to provide a variety of public works as compensation for the disruption and inconvenience caused by the incident.

Yanacocha, various wholly-owned subsidiaries of Newmont and other defendants have been named in lawsuits filed by over 1,000 Peruvian citizens in the Denver District Court of the State of Colorado in connection with the elemental mercury spill. This action seeks compensatory and punitive damages based on claims associated with the elemental mercury spill incident. In February 2005, Yanacocha and the other named defendants filed an answer in the Denver District Court of the State of Colorado.

Additional lawsuits relating to the Choropampa mercury spill incident were filed against Yanacocha in two local courts of Cajamarca, Peru, in May 2002 by over 900 Peruvian citizens. A significant number of the plaintiffs in these lawsuits have previously entered into settlement agreements with Yanacocha. In December 2003, the Superior Court in Cajamarca granted a resolution upholding the validity of certain challenged settlement agreements. This ruling has been appealed to the Peruvian Supreme Court, where it remains stayed pending further judicial action. In 2005, Yanacocha entered into settlement agreements with approximately 350 additional plaintiffs.

Neither we nor Yanacocha can reasonably predict the final outcome of any of the above-described lawsuits.

Cerro Quilish. In 2000, the Provincial Municipality of Cajamarca enacted an ordinance declaring the Cerro Quilish deposit and its watershed to be a reserved and protected natural area. Yanacocha challenged this ordinance on the grounds that, under Peruvian law, local governments lack authority to create such areas. In 2003, the Constitutional Tribunal held that because Yanacocha had acquired the mining concessions in the Cerro Quilish area many years prior to the adoption of the contested ordinance, its rights were not impacted by the ordinance. On May 8, 2003, the Constitutional Tribunal reaffirmed its ruling in this matter.

In July 2004, Yanacocha obtained the approval of its EA by the MEM, and was granted an exploration permit for Cerro Quilish. Although exploration activities began in July 2004, exploration activities were suspended on September 2, 2004 due to public opposition, which included a sustained blockade of the road between the City of Cajamarca and the mine site. Yanacocha suspended all drilling activities at Cerro Quilish and, at the request of Yanacocha, the Cerro Quilish drilling permit was revoked in November 2004. Yanacocha has reclassified the Cerro Quilish gold deposit from proven and probable reserves to NRMs as of December 2004 .

Other than the legal proceedings described above, Yanacocha is involved in certain legal proceedings arising in the normal course of its business, none of which individually or in the aggregate is material to Yanacocha or its operations. For information regarding the legal proceedings relating to the ownership of Yanacocha's equity, see "-The Company-History".

Management of Yanacocha

Executive Committee

Pursuant to the Yanacocha By-Laws, Yanacocha's Executive Committee consists of six members, all of whom are appointed by the partners of Yanacocha. Wayne W. Murdy, Chairman and Chief Executive Officer of Newmont Mining Corporation has been appointed Chairman of Yanacocha's Executive Committee and Alberto Benavides de la Quintana, our Chairman of the Board and Chief Executive Officer, has been appointed as the Vice Chairman of Yanacocha's Executive Committee. The Vice Chairman has the power to preside over the meetings of Yanacocha's Executive Committee in the Chairman's absence. The members of the Executive Committee are elected for a three-year term but may continue in their positions until the next election takes place and the newly elected members accept their positions. Alternate members are elected in the same manner as members and can act in the place of members with all of their authority when a member is unavailable, except that an alternate member may not act as either Chairman or Vice Chairman of Yanacocha's Executive Committee. The Chairman has the right to cast the deciding vote in the event of a deadlock among Yanacocha's Executive Committee.

General Manager/Management Agreement

The Yanacocha By-Laws provide that the Yanacocha Partners' Meeting has the power to appoint and remove the Manager of Yanacocha; the Executive Committee has the power to appoint and remove other officers of Yanacocha, determine their duties and compensation and grant and revoke powers of attorney. Newmont Peru was named as Yanacocha's Manager according to a publicly filed deed, and it continues to hold that position. Newmont Peru's duties as Manager are defined in the Management Contract, or Management Contract, dated February 28, 1992, as amended, between Yanacocha and Newmont Peru. Pursuant to the Management Contract, Newmont Peru is responsible for managing, conducting and controlling the day-to-day operations of Yanacocha and keeping Yanacocha's Executive Committee informed of all operations through the delivery of various written reports. The Management Contract was amended as of December 19, 2000. The amendment extends the term of the Management Contract for a period of 20 years starting at the date of amendment and provides that it may be extended for additional terms of 20 years upon request by Newmont Peru. Newmont Peru, however, may cancel the Management Contract by giving six months' prior notice to Yanacocha. The Management Contract will be deemed terminated if, due to reasons attributable to the bad management of Yanacocha, except for reasons beyond its control, Newmont Peru is unable to substantially complete the agreed work programs. In exchange for its services as Manager, Newmont Peru receives remuneration of US$2 per ounce of gold production and its equivalent for copper production paid on a quarterly basis, which amount is expected to cover the overhead and administrative expenses for the management of the operations. Also, Newmont Peru may charge Yanacocha for the salaries of employees of Newmont Peru or its affiliates who are directly involved in the operation of Yanacocha. In 2005, Yanacocha accrued fees of US$6.7 million owed to Newmont Peru and its affiliates under the Management Contract.

Control Over Major Corporate Events

See "-By-Laws of Yanacocha" above for a description of certain provisions of Peruvian law and of the Yanacocha By-Laws relating to control over major corporate events.

Preemptive Rights and Rights of First Refusal

See "-By-Laws of Yanacocha" above for a description of certain provisions of Peruvian law and of the Yanacocha By-Laws relating to preemptive rights and rights of first refusal.

Property, Plants and Equipment

Our Property

Introduction

We operate four mines (Julcani, Recuperada, Uchucchacua and Orcopampa) and have controlling interests in three mining companies which have controlling interests in the Ishihuinca, Antapite, Shila-Paula and Colquijirca mines. We also own an electric power transmission company, an engineering services consulting company and have minority interests in several other mining companies including a significant ownership interest in Yanacocha and Cerro Verde. See "-The Company-Organizational Structure" and "-Intermediate Holding Companies, Subsidiaries and Equity Participations". Set forth below is a map of our principal mining operations as of December 31, 2005:

Effective March 2001, we temporarily suspended operations and decided to discontinue exploration efforts at the Recuperada mine and, as a result, all activity at the mine was temporarily suspended. In April 2004, we elected to resume exploration efforts at the Esperanza vein of the Recuperada mine due to an increase in the price of metals. In February 2006, the exploitation process in the Recuperada Mine resumed due to the significant increase in the price of metals and reserves in the Experanza, Camucha and Teresita veins. Until March 30, 2002, we held, indirectly through Condesa and Cedimin, a 100 percent interest in Minera Huallanca. On such date, we transferred this interest to BHL-Perú S.A.C. through the sale of all of our shares in Minera Huallanca for US$2 million. As of January 2, 2003, Minera Shila S.A.C. merged with and into Cedimin. As a result of the merger, our interest in Cedimin increased from 0.0009 percent before the merger to 44.83 percent after the merger, and Condesa's interest in Cedimin decreased from 99.9991 percent before the merger to 55.17 percent after the merger. In addition, on October 22, 2004, Cedimin acquired a 100 percent equity interest in Mineras Aureas, which had a 49 percent interest in Minera Paula. As a result of this acquisition, Minera Paula became wholly owned by us. As of December 31, 2004, Mineras Aureas and Minera Paula merged with and into Cedimin and are no longer separate legal entities.

Our mining operations are located throughout Peru. Our Julcani mine is located in the province of Angaraes in the department of Huancavelica, approximately 500 kilometers southeast of the city of Lima. Our Uchucchacua mine is located in the province of Oyón in the department of Lima, approximately 265 kilometers northeast of the city of Lima. Our Orcopampa mine is located in the province of Castilla in the department of Arequipa, approximately 1,350 kilometers southeast of the city of Lima. Our Recuperada mine is located in the province of Huancavelica, in the department of Huancavelica, approximately 500 kilometers southeast of the city of Lima. The Ishihuinca mine, which is operated by one of our majority-owned subsidiaries, is located in the province of Caravelí in the department of Arequipa, approximately 780 kilometers southeast of the city of Lima. The Antapite mine, which is operated by one of our majority-owned subsidiaries, is located in the province of Huaytara in the department of Huancavelica, approximately 434 kilometers southeast of the city of Lima. The Shila mine, which is operated by one of our wholly owned subsidiaries, is located in the province of Castilla in the department of Arequipa, approximately 1,350 kilometers southeast of the city of Lima and 100 kilometers south of our Orcopampa mine. The Paula mine, which is operated by one of our wholly owned subsidiaries, is located in the province of Castilla, approximately 1,400 kilometers southeast of the city of Lima and 140 kilometers south of the Orcopampa mine, and as of January 1, 2005, Paula's operating data has been consolidated with Shila's operating data. The Colquijirca mine, which is operated by one of our majority-owned subsidiaries, is located approximately 285 kilometers east of Lima and 10 kilometers south of the city of Cerro de Pasco. The Yanacocha mine, in which we have a 43.65 percent interest, is located in the province and department of Cajamarca, approximately 900 kilometers north of Lima. The Cerro Verde mine, in which we have a 18.5 percent interest, is located in the department of Arequipa.

Operating Properties

Orcopampa

The Orcopampa mine is wholly owned and operated by us. We lease the rights to the mining concessions of Orcopampa from a group of private investors. This lease, which was renewed in September 2003 and expires in 2043, stipulates a payment from us equal to 10 percent of production value, subject to certain conditions. Operations started in the Orcopampa mine in 1965. In 2005, we made lease payments of S/.27.5 million. We operated Orcopampa as a silver mine until the late 1990s, when we also began to mine gold-bearing veins. In December 1996, Orcopampa S.A., then owner and operator of the Orcopampa mine, merged into us. As a result of the merger, Orcopampa S.A. assigned, and we assumed, the right to the mining concessions of Orcopampa. At December 31, 2005, the net total fixed assets of Orcopampa were approximately S/.112.8 million (US$34.2 million).

The Orcopampa mine is located in the province of Castilla in the department of Arequipa, approximately 1,350 kilometers southeast of the city of Lima at an altitude of between 3,800 and 4,500 meters above sea level. Access is by a 192-kilometer unpaved public road, which connects to the Pan American highway, and by airstrip.

Mining at Orcopampa is conducted underground using the mechanized cut-and-fill method. Ore is processed at a mill located at Orcopampa. Until February 2004, the mill had a rated capacity of 1,200 DST per day and utilized both bulk flotation and gravity concentration processes.

Until February 2004, flotation concentrates were exported to different smelters around the world, while gravity concentrates continued to be treated at Los Volcanes, a small cyanidation plant located next to the Orcopampa mill which has been in operation since 1989. Until the end of 2001, Los Volcanes produced gold/silver electrolytic precipitates which were smelted and refined in Lima and then sold to Johnson Matthey. During the second half of 2001, we installed a Merrill-Crowe circuit and a smelter which began operations in December of that year, allowing us to produce doré bars from the gold and silver precipitate produced in the cyanidation plant of Los Volcanes.

Positive results of exploration conducted in the Nazareno and Prometida veins, changes in the characteristics of the ore and results from metallurgical tests performed in 2002 have suggested the replacement of the flotation process with direct cyanidation of the ore. In January 2003, we initiated construction of a cyanidation circuit which commenced operations on a continuous basis in March 2004 and therefore eliminated the production of flotation concentrates. The cyanidation circuit includes a 70 foot thickener from which a gold rich solution is obtained and sent to the Merrill Crowe unit for gold precipitation, six agitator tanks to which cyanide and activated carbon are added (Carbon in Leach process), and a carbon desorption circuit which includes an electrolytic cell for the recovery of gold and silver as precipitate. The Electrolytic and Merrill Crowe precipitates are smelted into doré bars prior to shipment.

Electric power is generated and supplied by a 3,900 kw hydroelectric plant and power line, connected to the Peruvian national electricity grid on September 12, 2002, owned by us and, when water is scarce, it can be provided by a 3,976 kw diesel generator. Water for operations at Orcopampa is obtained from a lake and three rivers.

In 2005 we continued exploration activities in the Nazareno vein, and 43 drill holes explored in the western and eastern section of the vein confirm that economically viable mineralization extends over that area. Another 13 drill holes explored in the eastern part of the Prometida vein indicate good ore shoots in both the Prometida and Nazareno veins. In addition, the exploration of the Prometida and Nazareno veins has led to the discovery of new mineral reserves and, in 2005, mineral reserves increased 16.6 percent in gold content reaching 1,137,215 DST of mineral with a minimum grade of 0.68 ounces of gold per short ton and 0.27 percent ounces of silver per short ton with a metallic content of 773,306 ounces of gold. To facilitate ventilation and access to the eastern region of Prometida, where ongoing reserve measurement and estimation efforts are being carried out , we finished construction of the "Mario" ramp. In addition, we have commenced construction of three additional ramps to facilitate access to ore reserves and resources at the 3,590 and 3,990 levels.

Set forth below are certain unaudited operating data for the periods shown for Orcopampa, calculated on the basis of 100 percent of the mine's production.

 

Year Ending December 31, (1)

 

2001

2002

2003

2004

2005

Mining Operations:

 

 

 

 

 

Ore mined (ST)

349,350

350,951

393,210

431,241

461,091

Average gold grade (oz./t)

0.451

0.527

0.504

0.518

0.530

Average silver grade (oz./t)

0.63

0.13

0.20

0.34

0.30

Average copper grade

0.013%

-

-

-

-

Production:

 

 

 

 

 

Gold (oz.)

145,910

160,017

180,725

211,388

233,182

Silver (oz.)

156,600

28,378

63,135

97,359

86,080

Copper (ST)

40

-

-

-

-

Recovery rate (gold) (%)

92.6

86.5

86.5

93.7

95.4

Recovery rate (silver) (%)

70.9

62.2

77.3

64.9

63.1

________

  1. Incorporates losses for mining dilution and recovery.

The increase in 2001, 2002 and 2003 gold production was mainly due to our exploration activities in the Nazareno vein and the exploration of the Prometida, Prosperidad and Lucy Piso veins. In 2004, the increase in gold production is primarily due to a considerable increase in the recovery of gold.

The increase in gold production in 2005 compared to the previous year was due to a 6.96 percent increase in total run of mine ore treated at the plant, a slightly higher grade of gold in the feed and a 17 percent increase in gold recovery.

Uchucchacua

The Uchucchacua mine is wholly owned and operated by us. Operations started in 1975, and Uchucchacua is currently our largest producer of silver. At December 31, 2005, the net total fixed assets of Uchucchacua were approximately S/.84.0 million (US$25.4 million).

Uchucchacua is located in the province of Oyón in the department of Lima, approximately 265 kilometers northeast of the city of Lima at an altitude of between 4,000 and 5,000 meters above sea level. Access is by an unpaved road, 145 kilometers in length, which connects to the Pan American highway.

Mining at Uchucchacua is conducted underground utilizing cut-and-fill stopping, shrinkage stopping, and sublevel stopping methods. Ore is processed at a mill located at Uchucchacua. The mill, which has a rated capacity of 2,300 DST per day and which had a 97.1 percent utilization rate in 2005, utilizes differential flotation to obtain a lead-silver concentrate and a zinc concentrate.

Electric power is generated by a 3,400 kw hydroelectric plant that we own and by a 3,025 kw diesel generator. We utilize a power line connecting Uchucchacua to the Peruvian national electricity grid and has electrical distribution facilities within the Uchucchacua mine. Water for operations at Uchucchacua is obtained from three lakes.

In 2001, we started construction to deepen the Luz shaft for the purpose of improving the extraction and transportation infrastructure of the mine. Construction continued in 2002 and we commenced operation of the Luz shaft in July 2003. During 2003, we completed the construction of a new 1.7 kilometer drainage tunnel, the Patón tunnel, which measures 4.5 kilometers from a point close to Lake Patón up to the main shaft and serves to explore the veins of the Plomopampa and Casualidad zones. On December 6, 2003, the Patón tunnel was connected to the Carmen mine. In addition to facilitating drainage, the Patón tunnel also improves ventilation and the output of hydroelectric power, reducing electric energy purchased from the national grid for pumping and ventilation by 7.2 MWH, electric energy generation by 1.6 MWH and decreasing the use of fuel-driven generator sets at peak hours. The implementation of the tunnel results in an annual savings of US$1 million.

At the end of 2003, we commenced evaluating the possibility of recovering the silver values still contained in the final tails produced in the concentrator plants. Metallurgical investigations indicated that an additional five to eight percent of the silver value could be recovered by a cyanide leach of a silver bearing pyrite concentrate previously obtained by flotation of the final tails. Further metallurgical evaluations performed during 2004 indicated that cyanide leaching is very effective when applied to a bulk zinc-silver concentrate obtained by flotation of the lead-silver final tails flotation circuit. After cyanidation, a zinc concentrate may still be produced from the cyanidation residue. Due to encouraging results in the last quarter of 2004, we commenced engineering studies and the construction of a 300 metric tons per day cyandiation circuit, which is expected to commence operations by June 2006. During the third quarter of 2005, samples of an oxide ore located in the upper levels of the mine were tested for cyanidation and indicated that the silver contained in this ore can be successfully leached by cyanidation. Based on these results, we have decided to install a crushing and grinding circuit for the comminution of the oxide ore and new leaching tanks and filters. The oxide circuit is expected to commence operations by July 2006.

Set forth below are certain unaudited operating data for the periods shown for Uchucchacua, calculated on the basis of 100 percent of the mine's production.

 

Year Ending December 31, (1)

 

2001

2002

2003

2004

2005

Mining Operations:

 

 

 

 

 

Ore mined (ST)

743,290

744,690

747,190

795,036

813,220

Average silver grade (oz./t)

17.47

16.94

17.20

16.79

16.93

Average zinc grade (%)

1.61

1.53

1.40

1.48

1.39

Average lead grade (%)

1.20

1.19

1.09

1.13

1.12

Production:

 

 

 

 

 

Silver (oz.)

9,780,260

9,387,091

9,575,605

9,832,393

10,213,794

Zinc (ST)

7,789

7,759

6,216

7,477

6,553

Lead (ST)

8,010

7,718

7,218

8,042

8,067

Recovery rate (silver) (%)

75.3

74.4

74.4

73.67

74.20

________

(1) Incorporates losses for mining dilution and recovery.

The increase in silver production in 2005 was mainly due to a 2.3 percent increase in the amount of ore treated and an 0.53 percent increase silver recovery.

Julcani

The Julcani mine is wholly owned and operated by us. We acquired Julcani in 1953 as our first operating mine. In November 1999, due to the depletion of gold and silver reserves, we were forced to suspend production in Julcani and carry out exploration activities only. In 2000, we started to carry out the actions required by the Environmental Shutdown Plan, or Plan de Cierre Ambiental , and undertook only limited efforts primarily in the Herminia zone in 2001. As a result, ore mined in the Herminia zone was primarily milled to produce copper and lead concentrates until 2003. In 2003, we initiated an exploration program in the Acchilla area. In 2004, we continued the exploration and initiated exploitation of ore with positive results. At December 31, 2005, total estimated ore reserves were 168,585 DST with 21.95 ounces of silver and 1.60 percent of lead per short ton. At December 31, 2005, the net total fixed assets of Julcani were approximately S/.0.9 million (US$0.3 million).

Julcani is located in the province of Angaraes in the department of Huancavelica, approximately 500 kilometers southeast of Lima at an altitude of between 4,200 and 5,000 meters above sea level. Access is by a 195 kilometer unpaved public road, which connects to a paved public road, and by airstrip.

Run of mine ore is processed in a concentrator plant located 50 meters from the mine entrance. The ore is crushed and ground, and bulk flotation is used thereafter to obtain a silver-gold-lead concentrate. The plant has a rated capacity of 300 DST per day and had a 69.5 percent utilization rate in 2005.

Electric power is generated by three Conenhua hydroelectric plants. Power generation capacity from these plants is 800 kw (Huapa), 1,200 kw (Tucsipampa) and 760 kw (Ingenio), respectively. We also rely on the Peruvian national electricity grid through Electro Perú, Peru's national electric utility, for its remaining electrical power. Water for operations of Julcani is obtained from a creek, two springs and a lake.

Set forth below are certain unaudited operating data for the periods shown for Julcani, calculated on the basis of 100 percent of the mine's production.

 

Year Ending December 31, (1)

 

2001

2002

2003

2004

2005

Mining Operations:

 

 

 

 

 

Ore mined (ST)

38,500

61,500

37,650

58,900

73,700

Average gold grade (oz./t)

0.019

0.021

0.016

0.002

0.002

Average silver grade (oz./t)

20.2

15.28

15.33

18.50

18.80

Average lead grade

0.44

0.49

0.83

1.68

2.02

Average copper grade (%)

0.60

0.51

0.40

0.17

0.13

Production:

 

 

 

 

 

Gold (oz.)

452

820

415

59

40

Silver (oz.)

715,216

833,481

526,516

1,019,743

1,302,596

Lead (ST)

132

77

225

854

1,308

Copper (ST)

191

271

104

83

82

Recovery rate (gold) (%)

61.8

63.5

68.9

50.7

35.8

Recovery rate (silver) (%)

92.0

88.7

91.2

93.7

94.0

________

(1) Incorporates losses for mining dilution and recovery.

The significant increase in silver production in 2005 was mainly due to a 25.1 percent increase in run of mine ore treated in the plant and a slightly higher grade of silver in the feed of 0.3 ounces of silver per short ton.

Colquijirca

The Colquijirca mine is wholly owned by El Brocal. El Brocal was formed in 1956 and is engaged in the extraction, concentration and sale of concentrates of polymetallic minerals, mainly zinc, lead and silver. As of December 31, 2002, we held a 59.02 percent interest in Inversiones Colquijirca and a 32.83 percent interest in El Brocal's mining properties. Other unrelated mining investors hold the balance of the share capital of Inversiones Colquijirca. In January 2003, El Brocal conducted a US$1 million capital increase to finance the exploration of the Marcapunta deposit, reduction of the arsenic content and enhancement of the gold content of the deposit's copper resources. We participated in this capital share increase by exercising its and Teck Cominco's interest in El Brocal, through each of their interests in Inversiones Colquijirca, to invest approximately S/.1,500,000. As a result, our interest in Inversiones Colquijirca increased from 59.02 percent to 59.90 percent.

In addition, as a result of the stock dividends, which in the aggregate were equivalent to S/.2.9 million, distributed by us in November 2002 in the form of El Brocal shares, Sociedad Minera El Brocal S.A.A. became a sociedad anónima abierta (open stock company) in 2003. At December 31, 2005, the net total fixed assets of El Brocal were approximately S/.55.5 million (US$16.2 million).

The Colquijirca mine is located 285 kilometers east of the city of Lima and 10 kilometers south of the city of Cerro de Pasco. El Brocal produces zinc and lead/silver concentrates. The Colquijirca mine consists of three important polymetallic deposits: the Tajo Norte deposit, which contains zinc, silver and lead ore; the Marcapunta deposit, which contains an auriferous mineralization in breccia oxides, a non-arsenic copper chalcosite mineralization, and an arsenic copper enargite mineralization as a continuation of the mineralized mantles of the Marcapunta Norte; and the San Gregorio deposit, which contains zinc.

Mining is conducted through the open-pit method. El Brocal's zinc concentrate typically contains 50 percent zinc, while its lead concentrate typically contains 60 percent lead. The concentrates are sold locally and also exported to Europe and Asia (primarily Korea and China) for refining. El Brocal is currently completing necessary permitting requirements to expand the mill located at Colquijirca to increase treatment capacity to 4,000 DST per day and such increase is estimated to be fully commissioned by the third quarter of 2005. The mill had a 100 percent utilization rate in 2005.

The Colquijirca mine primarily relies on a power line, connected to the Peruvian national electricity grid in November 2002, for its electrical power.

El Brocal is continuing with its waste removal campaign at the Tajo Norte deposit to increase the extraction of ore and to permit the eventual joining of the Principal and Mercedes Norte open pit mines. In 2001, El Brocal initiated an intensive exploration program, financed by a capital increase in 2002 at the Marcapunta deposit, to confirm mineralization and find possible extensions. In 2002, exploration revealed gold-bearing arsenic copper resources in the Marcapunta deposit. El Brocal's production greatly increased in 2003 to 1,409,104 short tons of ore, a growth of 6.5 percent from 2002. In 2004, El Brocal achieved a record ore throughput of 1,492,554 DST, representing a 5.9 percent increase from 2003. In 2005, El Brocal achieved another record ore throughput of 1,513,964 DST, representing a 1.4 percent increase from 2004.

Set forth below are certain unaudited operating data for the Colquijirca mine calculated on the basis of 100 percent of the mine's production.

 

Year Ending December 31, (1)

 

2001

2002

2003

2004

2005

Mining Operations:

 

 

 

 

 

Ore mined (ST)

1,218,742

1,322,942

1,409,104

1,492,569

1,513,964

Average silver grade (oz./t)

 

 

2.59

2.93

3.23

3.96

Average zinc grade (%)

5.50

5.94

5.55

5.82

5.95

Average lead grade (%)

2.20

2.24

2.32

2.89

2.89

Production:

 

 

 

 

 

Silver (oz.)

3,453,796

2,420,034

2,895,735

3,399,130

4,394,940

Zinc (ST)

50,034

60,968

61,733

63,448

62,997

Lead (ST)

16,918

19,484

21,766

27,069

26,244

Recovery rate (silver) in zinc (%)

26.29

28.07

26.67

26.07

25.3

Recovery rate (zinc) (%)

74.61

77.63

78.89

73.0

69.9

Recovery rate (silver) in lead (%)

44.88

42.71

43.49

44.46

48.0

Recovery rate (lead) (%)

64.06

65.85

66.50

62.82

60.0

________

(1) Incorporates losses for mining dilution and recovery.

The increase in silver production in 2005 was mainly due to a 22.6 percent increase in the silver grade in the feed.

Ishihuinca

In 1985, we purchased 51.0 percent of Inminsur, the owner and operator of the Ishihuinca mine. As a result of subsequent purchases of shares of Inminsur, we currently own 78.04 percent of Inminsur. Inminsur has leased the rights to the mining concessions of Ishihuinca from a third party. The lease agreement, which expires in 2015, stipulates payment by Inminsur to the lessor of a royalty of 7 percent of the price of the concentrates sold. In 2005, Ishihuinca paid US$0.7 million in royalties. At December 31, 2005, the net total fixed assets of Ishihuinca were approximately S/.5.6 million (US$1.6 million).

The Ishihuinca mine is located in the province of Caravelí in the department of Arequipa, approximately 780 kilometers southeast of the city of Lima at an altitude of 2,200 meters above sea level. Access is by the Pan American highway.

Mining is conducted underground utilizing the conventional cut-and-fill stopping method. Ore is processed at a mill located at Ishihuinca. The mill, which has a rated capacity of 200 DST per day and which had a 81.6 percent utilization rate in 2005, utilizes bulk flotation and gravity concentration processes. The bulk flotation process produces a copper/gold concentrate, which is exported to a smelter, and a gold bearing pyrite concentrate. The gravity concentrates, from the gravity concentration processes, are treated by cyanidation and vat leaching. The dissolved gold obtained from the cyanidation of the gold bearing pyrite concentrate and gravity concentrate is precipitated on zinc dust (Merrill-Crowe process) and the resulting cyanidation electrolytic precipitates are refined in Lima and then sold to Johnson Matthey. The mill at the Ishihuinca mine was last modernized and expanded to operate at its current capacity in 1993.

Electric power is generated by three electric generators, with a capacity of 709 kw, 804 kw and 800 kw, respectively. Water for operations at Ishihuinca is obtained from nearby wells.

Exploration conducted in 2002 and 2003 indicated economically viable mineralization at Ishihuinca, suggesting that, although ore deposits at the mine seemed depleted, it may still contain reserves that warrant aggressive exploration. In 2003, we initiated an exploration program in the Córdova area, located 2 kilometers north of our Ishihuinca operations with positive results. In 2004, we identified the Prolongación Córdova vein in the Cordova area with underground workings of 2,110 meters and an estimated 5,765 metric tons at 14.56 grams per ton of gold with an average thickness of 0.85 meters. In 2005, we continued exploration of the Prolongación Córdova vein in the Cordova area with underground workings of 2,158 meters and an estimated 20,015 metric tons at 13.49 grams per ton of gold with an average thickness of 0.90 meters.

Set forth below are certain unaudited operating data for the periods shown for Ishihuinca, calculated on the basis of 100 percent of the mine's production.

 

Year Ending December 31, (1)

 

2001

2002

2003

2004

2005

Mining Operations:

 

 

 

 

 

Ore mined (ST)

20,337

38,416

57,463

60,213

65,435

Average gold grade (oz./t)

0.560

0.480

0.508

0.474

0.436

Average copper grade (%)

0.28

0.31

0.41

0.345

0.40

Production:

 

 

 

 

 

Gold (oz.)

9,770

15,694

25,287

24,505

23,911

Copper (ST)

46

89

194

169

198

Zinc (ST)

-

-

-

-

-

Lead (ST)

-

-

-

-

-

Recovery rate (gold) (%)

85.70

85.11

86.62

85.80

83.7

________

(1) Incorporates losses for mining dilution and recovery.

The slight decrease in the production of gold in 2005 was mainly due to a lower recovery rate. The increase in production in 2003 was mainly due to higher levels of tonnage placed in leach pads and the higher level of head grade of ore placed. In 2004, despite increased levels of tonnage placed in leach pads, the quantity of gold recovered decreased due to a reduction in the grade of ore placed.

Antapite

The Antapite mine is wholly owned by us. However, we have leased the mine until July 2015 to Inminsur, which is 78.04 percent owned by us and 21.96 percent owned by Brandon Properties Inc., a Panamanian corporation. Brandon Properties Inc. acquired 280,824 shares and 335,754 shares, collectively representing 21.96 percent, of Inminsur from Bernando Alvarez Calderon and Boris de la Piedra, respectively on December 26, 2003. At December 31, 2005, the net total fixed assets of Antapite were approximately S/.61.0 million (US$17.8 million).

Antapite is located in the province of Huaytará, in the department of Huancavelica, approximately 434 kilometers southeast of the city of Lima at an altitude of approximately 3,400 meters above sea level. The mine is accessed primarily by the Pan American Highway and local roads. The Antapite mine consists of 20,800 hectares and Inminsur has identified epithermal vein gold deposits containing an estimated 400,000 tons of gold ore, with average grades of 0.5 ounces per ton. The Zorro Rojo and Reyna veins are the main source of ore reserves and mining efforts are focused on these veins. Inminsur has initiated exploration of the Pampeñita and Antapite veins, which run parallel and close to the Zorro Rojo vein, and is also conducting exploration to confirm the presence of important drill intersections in the Reyna vein located two kilometers from the Zorro Rojo vein.

Mining is conducted underground utilizing the conventional cut-and-fill stopping method. Ore is processed at a cyanidation plant located at Antapite. The plant, which was completed in June 2001 with capacity for 300 DST per day, has had capacity of 450 DST per day since May 2003. The plant had a 97.8 percent utilization rate in 2005.

The Antapite mine obtains approximately 98.5 percent of its electric power through the Peruvian national electricity grid and the remaining power through Electrical Supplier Machine Sultzer. Water for operations at Antapite is obtained from an underground drainage system.

Set forth below are certain unaudited operating data for the periods shown for Antapite, calculated on the basis of 100 percent of the mine's production.

 

Year Ending December 31, (1)

 

2001 (2)

2002

2003

2004

2005

Mining Operations:

 

 

 

 

 

Ore mined (ST)

60.178

121,161

155,494

179,785

179,873

Average gold grade (oz./t)

0.64

0.60

0.59

0.57

0.60

Average silver grade (oz./t)

1.60

1.33

0.94

0.74

0.81

Production:

 

 

 

 

 

Gold (oz.)

34,607

72,380

84,361

97,137

103,931

Silver (oz.)

55,304

98,121

91,492

86,162

102,222

Recovery rate (gold) (%)

89.4

92.90

91.80

94.40

95.90

Recovery rate (silver) (%)

57.5

60.00

62.50

64.50

70.40

________

(1) Incorporates losses for mining dilution and recovery.

(2) Mining operations started in July 2001.

The increase in 2005 in gold production was mainly due to an increase in the grade of gold in the feed by 0.03 ounces of gold per short ton.

Shila

Minera Shila S.A.C., or Minera Shila, owned 100 percent of the Shila mining operation and held, directly and indirectly, through Condesa, a 100 percent equity interest in Minera Shila. As of January 2, 2003, Minera Shila merged with and into Cedimin and is no longer a separate legal entity. Cedimin operates the Shila mine, which began production in 1989. As of December 31, 2004, Minera Paula merged with and into Cedimin, and as of January 1, 2005, the Paula mine's operating results have been consolidated with the Shila mine's operating data. At December 31, 2005, the net total fixed assets of the Shila and Paula mining operations were approximately S/.12.7 million (US$3.8 million).

The Shila mine is located in the province of Castilla in the department of Arequipa, approximately 1,350 kilometers southeast of Lima and 25 kilometers south of the Orcopampa mining operation at an altitude of between 4,650 and 5,400 meters above sea level. Access is by a 250-kilometer unpaved road.

Due to the high cost of transportation and smelting of the concentrates, we installed a small cyanidation plant at the Shila mine, which entered into operation in August of 2001 with a net capacity of 3,200 metric tons per year.

Mining is conducted underground utilizing the conventional cut-and-fill stopping method. Ore is processed at a mill located at the Shila mine with a rated capacity of 250 DST per day. The mill had an 81.1 percent utilization rate in 2005. The mill utilizes bulk flotation and gravity concentration processes. Flotation concentrates are exported to smelters. Gravity concentrates are treated by cyanidation and vat leaching at the Shila mine, and the resulting cyanidation electrolytic precipitates are refined in Lima and then sold to us and BHL. During 2005, agitator tanks were added at the Shila mine which resulted in a solution with a 67 percent flotation concentration and 100 percent gravimetric concentration, that is sent to the Merrill Crow unit for gold precipitation. The Merrill Crowe precipitates averaged 14.39 percent of gold and 84.20 percent of silver in 2005 and are transferred to Lima, Peru for commercialization.

Electric power for Shila is provided by four diesel generators, two with a capacity of 650 kw, one with a capacity of 1,135 kw and one with a capacity of 1,600 kw, and a power line, connected to the Peruvian national electricity grid on April 9, 2003. Water for operations at Shila is obtained from runoff from a snow peak.

Set forth below are certain unaudited operating data for the periods shown for Shila, calculated on the basis of 100 percent of the mine's production.

 

Year Ending December 31, (1)

 

2001

2002

2003

2004

2005 (2)

Mining Operations:

 

 

 

 

 

Ore mined (ST)

52,633

52,015

50,085

41,151

64,050

Average gold grade (oz./t)

0.47

0.45

0.38

0.38

0.45

Average silver grade (oz./t)

7.9

11.7

13.80

17.50

5.9

Production:

 

 

 

 

 

Gold (oz.)

23,618

21,947

17,772

14,086

26,978

Silver (oz.)

350,969

479,415

592,261

587,181

330,184

Recovery rate (gold) (%)

96.10

93.35

94.10

90.0

93

Recovery rate (silver) (%)

86.60

78.78

85.70

81.3

83

________

  1. Incorporates losses for mining dilution and recovery.
  2. Data for 2005 reflects the consolidation of Paula's operating data has been with and into Shila's operating data.

The increase in 2005 in gold production was mainly due to the consolidation of the Paula mine's operating results into the Shila mine's operating results.

Paula

Minera Paula owns 100 percent of the Paula mining operation. Prior to October 22, 2004, Minera Aureas S.A. held a 49 percent interest in Minera Paula and we held the remaining 51 percent interest through Cedimin. On October 22, 2004, Cedimin acquired a 100 percent equity interest in Inversiones Mineras Aureas S.A.C., or Mineras Aureas, and Minera Paula became wholly owned by us. As of December 31, 2004, Mineras Aureas S.A.C. and Minera Paula merged with and into Cedimin and are no longer separate legal entities. As of January 1, 2005, Paula's operating data has been consolidated with Shila's operating data.

The Paula mine is located in the province of Castilla in the department of Arequipa, approximately 1,400 kilometers southeast of the city of Lima and 140 kilometers south of the Orcopampa mining operation, at an altitude of between 5,000 and 5,400 meters above sea level. Access is by a 300 kilometer highway from Arequipa.

Mining is conducted underground utilizing the conventional fill ascending method. After being processed at the Shila processing plant, the concentrates are sold to us and then are treated by cyanidation and vat leaching. The resulting precipitates are refined in Lima and then sold to Johnson Matthey.

In January 2005, Paula was connected to the Peruvian national electricity grid and ceased operations at its two diesel generators, each with a 65 kw installed capacity. The water for operations at Paula is obtained from runoff from a snowpeak.

Set forth below are certain unaudited operating data for Paula, calculated on the basis of 100 percent of the mine's production.

 

Year Ending December 31, (1)

Mining Operations:

2001

2002

2003

2004 (2)

Ore mined (ST)

9,689

9,512

14,880

16,831

Average gold grade (oz./t)

0.88

0.62

0.73

0.645

Average silver grade (oz./t)

6.91

5.33

4.83

4.83

Production:

 

 

 

 

Gold (oz.)

8,175

6,632

10.867

10,387

Silver (oz.)

59,309

54,658

68,914

73,594

Recovery rate (gold) (%)

95.30

93.40

95.80

94.80

Recovery rate (silver) (%)

88.60

86.90

91.40

89.00

________

(1) Incorporates losses for mining dilution and recovery.

(2) Data until January 1, 2005, when Paula's operating data was consolidated with Shila's operating data.

Huallanca

Minera Huallanca owns the Pucarrajo mining operation. Minera Huallanca was a wholly owned subsidiary of Cedimin until March 31, 2002, on which date we sold our interest in Minera Huallanca to BHL-Perú S.A.C.

The Pucarrajo mine is located in the province of Bolognesi, in the department of Ancash, approximately 441 kilometers northeast of the city of Lima at an altitude of between 4,300 and 4,700 meters above sea level. Access to the mine is by a 350 kilometer paved highway.

Mining is conducted underground by the mechanical dynamic reduction method. The minerals are processed in a concentration mill located 8 kilometers from the mine. The mill, which has a treatment capacity of 500 DST per day, produces lead, silver and zinc concentrates that are exported to smelters overseas. The mill had an 82.8 percent utilization rate until March 2002.

Electric power is generated by a diesel power generator with a 650 kw capacity and water for the operations is obtained from small lakes in the area.

Set forth below are certain unaudited operating data for Minera Huallanca, calculated on the basis of 100 percent of the mine's production.

Year Ending December 31, (1)

 

2001

2002 (2)

 

 

 

Mining Operations:

 

 

Ore mined (ST)

146,079

41,080

Average silver grade (oz./t)

2.54

2.57

Average zinc grade

8.60%

8.95%

Average lead grade

0.94%

0.52%

Production:

 

 

Silver (oz.)

215,498

45,196

Zinc (ST)

11,590

3,420

Lead (ST)

1,083

154

Recovery rate (silver) (%)

58.10

42.81

Recovery rate (zinc) (%)

92.25

93.02

Recovery rate (lead) (%)

78.87

72.09

________

(1) Incorporates losses for mining dilution and recovery.

(2) Data until March 31, 2002, when we sold our interest in Huallanca.

Reserves

We calculate our ore reserves by methods generally applied within the mining industry and in accordance with Commission Industry Guide 7. All mineral reserves are estimated quantities of proven and probable ore that under present conditions may be economically mined and processed.

The proven and probable ore reserve figures presented in this Annual Report are our and Yanacocha's estimates, and no assurance can be given that the level of recovery of gold, silver and certain other metals will be realized. See "Item 3. Key Information-Risk Factors-Reserves Estimates".

The term "proven reserves" means ore reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes, and grade and/or quality are computed from the results of detailed sampling, and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established. The term "probable reserves" means ore reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

The following table lists the proven and probable ore reserves at December 31, 2005 for each mining operation in which we have at least a 50 percent interest as well as the average grade of such ore, calculated on the basis of 100 percent of each mine's reserves and US$350 per ounce of gold and US$6.30 per ounce of silver.

Proven and Probable Ore Reserves at December 31, 2005 (1)(2)

 

Julcani

Uchucchacua

Orcopampa

Colquijirca

Ishihuinca

Antapite

Shila-Paula (3)

Total/Average

Ore Reserves (ST)

168,585

5,423,760

1,137,215

9,245,073

51,450

540,971

100,800

16,667,854

Grade:

 

 

 

 

 

 

 

 

Gold (oz./t)

-

-

0.680

-

0.397

0.362

0.464

0.062

Silver (oz./t)

21.95

16.38

0.27

2.49

-

0.52

2.90

6.99

Copper (%)

0.20

-

-

0.07

0.40

-

-

0.042

Zinc (%)

-

2.08

-

5.68

-

-

-

3.83

Lead (%)

1.60

1.56

-

2.01

-

-

-

1.64

 

 

 

 

 

 

 

 

 

Gold (oz.)

-

-

773,306

-

20,434

196,032

46,771

1,036,543

Silver (oz.)

3,700,441

88,850,722

307,048

23,020,231

-

281,700

292,320

116,452,462

Copper (ST)

337

-

-

6,471

205

-

-

7,013

Zinc (ST)

-

112,572

-

525,120

-

-

-

637,692

Lead (ST)

2,697

84,513

-

185,826

-

-

-

273,036

______________

  1. Reserves as stated are diluted and mineable.
  2. Incorporates losses for mining dilution and recovery.
  3. Reflects the consolidation as of January 1, 2005 of the operating data of Paula with that of Shila.

Seven underground mines and one open pit mine, Colquijirca, comprise our mining operations. Since establishing a significant amount of reserves in underground mines requires costly and extensive exploration programs, we have, in order to control costs, traditionally pursued an exploration and development program in our mines designed to establish an amount of reserves sufficient to permit the steady production of minerals over an extended period of time. The following table sets forth the aggregate amount of production of ore, gold and silver and the average grade of gold and silver for each of our eight mines for the ten-year period ended December 31, 2005, calculated in each case on the basis of 100 percent of the relevant mine's production.

 

Julcani

Uchucchacua

Orcopampa

Colquijirca

Ishihuinca

Antapite

Shila-Paula (3)

Total

Ore mined
(ST) #9; 9;

73,700

813,220

461,091

1,513,964

65,435

179,873

64,050

3,171,333

Gold produced (oz.)

40

-

233,182

-

23,911

103,931

26,978

388,042

Average Gold Grade
(oz./ST)

0.002

-

0.530

-

0.436

0.602

0.450

0.129

Silver produced (oz.)

1,302,596

10,213,794

86,080

4,394,940

-

102,222

330,184

16,429,816

Average silver
Grade
(oz./ST)

18.80

16.93

0.30

3.96

-

0.81

5.90

6.88

Yanacocha's Properties

Operating Properties

For operating data (including ore mined, average gold grade of ore mined and gold production) for each of Yanacocha's operating properties and a description of how ore is processed and the source of electricity and water for each of Yanacocha's operating properties, see "-Yanacocha-Overview" and "-Description of Yanacocha's Operations".

Carachugo

Carachugo is a 90-hectare gold deposit with a leach pad that covers approximately 332 hectares. Carachugo, Yanacocha's first mine, commenced operations in August 1993. Mining is conducted by the open-pit method. Carachugo has one ore processing facility.

Maqui Maqui

Maqui Maqui is a 75-hectare gold deposit with a leach pad covering 67 hectares, located five kilometers northeast of the Carachugo pit. Mining operations at Maqui Maqui began in October 1994 and used the open-pit mining method. Although mining operations at Maqui Maqui ceased in September 2000, gold recovery from the leach pad continues.

San José

San José is a 100-hectare gold deposit, located one and one-half kilometers southwest of the Carachugo pit, that shares the leach pad located at Carachugo. Mining operations at San José began in January 1996 and use the open-pit mining method. Although mining operations at San José temporarily ceased in the last quarter of 2002, in 2005 operations were initiated to complete the San José East deposit. Mining operations at San José West are scheduled to commence in 2010.

Cerro Yanacocha

Cerro Yanacocha is a 247-hectare gold deposit (ultimate pit) with a leach pad covering approximately 315 hectares. The Cerro Yanacocha pit is located two kilometers northwest of the Carachugo pit. Operations began in the fourth quarter of 1997 using the open-pit mining method. Cerro Yanacocha includes a carbon column facility and a Merrill Crowe-type processing facility.

La Quinua

La Quinua is a 376-hectare gold deposit (ultimate pit) with a leach pad covering 336 hectares. The La Quinua pit is located three kilometers southwest of the Cerro Yanacocha pit. Operations began in the fourth quarter of 2001 using the open-pit mining method. All solution processing occurs at the Cerro Yanacocha plant following treatment at the La Quinua leach pad and carbon column facility.

The La Quinua mining operation includes Cerro Negro, a 15-hectare gold deposit (ultimate pit) which is located six kilometers southwest of the La Quinua pit. Cerro Negro utilizes the La Quinua leach pad. Operations began in the second quarter of 2004 using the open-pit mining method and all solution processing occurs at the Cerro Yanacocha plant following treatment at the La Quinua leach pad and carbon column facility.

China Linda

In October 1999, we commenced lime production at the China Linda plant, which is located 12 kilometers to the northeast of the Yanacocha installations, in Cajamarca. Access to the plant from Yanacocha is by a ten kilometer private, unpaved road. We had 100 percent ownership of China Linda until December 19, 2000, at which date the plant became Yanacocha's property pursuant to the unitization of our and Newmont Mining's properties in Northern Peru. In January 2002, Yanacocha took over the operation of the China Linda plant. See "Item 4. Information on the Company-The Company-History and Development". Lime is used in the gold and silver mining process to regulate the alkalinity of the cyanide solutions in the leaching process and for pH control in water treatment applications. Currently, the plant has a production capacity of 66,000 tons of lime per year. Additionally, construction gravel is obtained as a sub-product.

Reserves

Proven and probable reserves are based on extensive drilling, sampling, mine modeling and metallurgical testing from which economic feasibility is determined. Under the Management Contract, Newmont Mining, in conjunction with Yanacocha, calculates Yanacocha's reserves by methods generally applied within the mining industry and in accordance with the regulations of the Commission. Reserves represent estimated quantities of proven and probable ore that under present and anticipated conditions may be economically mined and processed.

The following table lists Yanacocha's proven and probable reserves and the average grade of ore as of December 31 for 2001 through 2005. The table also includes proven and probable reserves for the district of Yanacocha and Minas Conga, along with average grade of ore. Calculations with respect to the estimates of proven and probable reserves are based on a gold price of US$400 per ounce as of December 31, 2005, US$350 per ounce as of December 31, 2004 and US$325 per ounce as of December 31, 2003, 2002 and 2001. Conga's copper reserves for 2005 were calculated at a price of US$1.00 per pound as of December 31, 2005, and for 2004 were calculated at a price of US$0.90 per pound as of December 31, 2004. The district of Yanacocha's and Conga's proven and probable reserves represent the total quantity of ore to be extracted from the deposits, allowing for mining efficiencies and ore dilution. Ounces of gold and pounds of copper in the district of Yanacocha's and Conga's proven and probable reserves are calculated prior to any losses during metallurgical treatment.

Proven and Probable

Reserves at

December 31, 2005

Proven and Probable

Reserves at

December 31, 2004

Proven and Probable

Reserves at

December 31, 2003

Tonnage (1)

(thousands of

dry short tons)

Average

Gold Grade (oz./dry

short ton)

Ounces

Contained

(thousands

of ounces)

Tonnage(1)   (thousands of

dry short tons)

Average

Gold Grade

(oz./dry

short ton)

Ounces

Contained

(thousands

of ounces)

Tonnage(1)   (thousands of

dry short tons)

Average

Gold Grade

(oz./dry

short ton)

Ounces

Contained

(thousands

of ounces)

Maqui Maqui----..

7,889

0.026

203

5,694

0.025

141

Quecher

- #9; -

-

-

-

-

-

1,128

0.037

43

Antonio

-

-

-

-

-

-

2,186

0.050

109

Cerro Quilish

-

-

-

-

-

-

143,431

0.027

3,855

Cerro Negro

-

-

-

253

0.031

8

20,329

0.032

643

Carachugo

69,016

0.040

2,763

66,405

0.042

2,777

63,976

0.043

2,762

San José

7,334

0.021

153

10,818

0.020

213

9,475

0.021

198

Cerro Yanacocha

208,178

0.033

6,807

257,363

0.032

8,328

311,979

0.031

9,783

La Quinua

214,643

0.027

5,812

275,157

0.027

7,388

372,739

0.025

9,395

Corimayo

62,755

0.049

3,074

58,425

0.051

3,006

54,442

0.054

2,955

In process

71,108

0.028

1,968

60,860

0.028

1,685

67,363

0.029

1,966

Subtotal Yanacocha/avg

640,923

0.032

20,780

734,974

0.032

23,547

1,047,049

0.030

31,710

Subtotal Minas Conga/avg.*

617,787

0.019

11,836

371,110

0.023

8,711

-

-

-

Total/average

1,258,710

0.026

32,616

1,106,084

0.029

32,257

1,047,049

0.030

31,710

Proven and Probable

Reserves at

December 31, 2002

Proven and Probable

Reserves at

December 31, 2001

Tonnage(1)

(thousands of

dry short tons)

Average

Gold Grade

(oz./dry

short ton)

Ounces

Contained

(thousands

of ounces)

Average

Gold Grade

(oz./dry

short ton)

Ounces

Contained

(thousands

of ounces)

Cerro Quilish

135,481

0.027

3,690

-

-

-

Cerro Negro

19,034

0.033

626

137,736

0.027

3,700

Carachugo

71,795

0.040

2,898

19,494

0.032

631

Maqui Maqui

6,054

0.022

131

76,986

0.039

2,993

San José

366,868

0.029

10,807

6,484

0.021

139

Cerro Yanacocha #9;

419,597

0.027

11,491

486,001

0.027

13,045

La Quinua

21,661

0.056

1,220

456,766

0.027

12,533

In process

58,682

0.030

1,742

-

-

-

Subtotal Yanacocha/avg

1,099,172

0.030

32,605

1,183,467

0.028

33,041

Subtotal Minas Conga/avg

-

-

-

-

-

-

Total/avg

1,099,172

0.030

32,605

1,183,467

0.028

33,041

_____________________

* Minas Conga's proven and probable reserves for 2005 include 3,226 million pounds of 0.261 percent grade copper.

Based on the current recovery rate and estimated gold production levels in 2005, Yanacocha's proven and probable reserves as of December 31, 2005 will be depleted by 2016 unless Yanacocha continues to add to its reserves. Yanacocha expects to add to its reserves by further exploration of its non-reserve mineralized material. Yanacocha's management believes that its prospective land positions and mining concessions provide it with potential for future exploration and growth in its non-reserve mineralized material and reserves. See "Item 5. Operating and Financial Review and Prospects-Yanacocha-Exploration Costs; Capital Expenditures".

BROKERAGE PARTNERS