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ij:'~i • I " —I''" rrr'""TirrT"'""n-TTi"f ir"'~"nTriiiiiiTfiiii r iii ' ^-'sbiwí

TINTAYA EVALUATION

Volume 1 of 1
June 1994

Control Number: Corporation

 • i, .1 1 vU M
e * Ri (it "• • '•

phBins 2 2 JU:-! 13S4

dadoB
Ocarparatíon • INTEROFFICE CORRESPONDENCE
K K r I I! I> o
L— 1 ■ I—

Date: June 17, 1994 1 , MHS

From: R. G Pem
¡—
1 AMM
To: J. S. Whisler
P. J. Ryan
J. L. Madson

Re: Tintava Evaluation

The attached evaluation of Tintaya, which is an update of the March 4, 1994 evaluation, is being sent to all
team members for final comment. Team members have been requested to submit comments to me by July 1,
1994 and any material revisions will be incorporated inte the final evaluation serving as the basis for a
potential bid by PDMC (timing and procedures for the bid continué to be revised by the Tintaya CEPRI).

ce: Attached Distribution

j
 CONFIDENTIAL

TINTA YA EVALUATION
DISTRIBUTION OF JUNE 17, 1994 REPORT

Control
Number
J. S. Whisler 01
P. J. Ryan 02
J. L. Madson 03
A. L. Lawrence 04
R. G.Perú 05
R. W.Rice 06
T. R. Snider 07
F. J. Longto 08
A. D. Luechtefeld 09
J. A,Benavides 10 ^
J. P. Berresse 11
F. R. Caichac 12
C. Y. Chen 13
S. D. Colton 14
R. E. Johnson 15
J. Kemm 16
T. B. Linde 17
T. D. Maki 18
F, J. Menzer 19
M. R. Mollison 20
C. Quinzio 21
G. A, Ruger 22
D. N. Sexton 23
T. J. Swendseid 24

J. Z. Weedman 25
26
27

28

29

30
 TINTAYA

EVALUATION REPORT

June 17, 1994

I

h TINTAYA

TABLE OF CONTENTS
Section Pase
-

1. Summary and Recommendations

A. Executíve Summary 1-1
B. Conclusions and Recommendations 1-5
C. Location Map and Photographs 1-Pl

2. Project Background and Current Operations

A. Project Background 2-1
B. General Observations 2-2
C. Current Operations
i. Mine 2-3
ii. Concentrator 2-7
iii. Infrastructure 2-10
D. Tintayá Management Project Plan 2-16

3- Geology
A. Regional Géology and Concessions 3-1
B. Tintaya Mining District
i. Local Geology 3-2
ii. Geological Ore Reserves 3-4
iii. Copper Grade Verification 3-5
iv. Potential Reserves 3-6
C. Exploration Programs 3-7
D. Ferrobambas Skam Belt Mineral Potential 3-9

4. Project Plan
A. Overview 4-1
B. Mine Planning
i. Tintaya Block Model 4-1
ii. Tintaya Pit Design 4-2
iii. .Other District Minable Resources 4-3
.

iv. District Mine Plan 4-6

V. Mine Equipment 4-11
vi Mine Capital 4-14
vii. Mine Operating Costs 4-17
viii. Mine Employment 4-19
C. Concentrator 4-20
D. Infrastructure 4-22
E. Exploration 4-27
 TABLE OF CQNTENTS
Section

L Political Climate, Bnvironmental,'Legal & Tax System

A. Political Glimate
}
i. Overview 5-1
11. Political Environment 5-2
iii. Legal Environment 5-3
Iv. Economy 5-4
Y. Terrorism 5-5
B. Environmental
i. Overview 5-5
11. Site Observations 5-6
iii. Latest Developments 5-8
C. Legal
i. Phelps Dodge Investment Stnicture 5-8
ii. Property Rights 5-9
iii. Mining Rights and Claims 5-10
iv. Water Rights 5-15
V. Foreign Investment Regulatipns 5-15
D. Tax System
1. Overview 5-17
li. Branches and Subsidiarles's Tax Treatment 5-18
lil. Municipal Taxes 5-18

Economic Evaluatlon
A. Project Ecónomlc Valué 6-1
B. Project Market Valué 6-5
C. Major Project Assumptions 6-6

7. Project Benchmarking
A. Project Comparisons 7-1
B. Cost Curve 7-3

8. Strategic Plan Consideratlons . 8-1

9. Financing Altematives
A. Background and Objectlve . 9-1
B. Scenario 1 9-2
C. Scenario 2 9-5

10. Appendlces
A. Additional Geology Reports
B. Mine Plan Detall Basis
i. Open Pit
ii. Underground
C. Concentrator Plan Basis
D. Infrastructure Plan Basis
E. Economic Model and Acquisition Comparisons
 PROJECT TEAM

Ñame Position Responsibility

Jorge A. Benavides General Manager, Geology

Minera Phelps Dodge del Perú

James P. Berresse* Director, Business Analysis and Overall Project Review

Planning
Phelps Dodge Mining Company

Francisco R. Caichac Manager, Engineering & Construction Infrastructure

Phelps Dodge Services (Chile)

Ching Y. Chen Director, Corporate Accounting Economic Evaluation,

Phelps Dodge Corporation Tax & Structure

S. David Colton Sénior Counsel, Legal and Structure

Phelps Dodge Mining Company
i

Pat D. Henry Concentrator Maintenance

General Maintenance Supervisor,
Phelps Dodge Morenci, Inc.

Julio Kemm Assistant Manager, Underground Mine

Planning and Engineering Plan
Ojos del Salado (Chile)

Ted D, Maki Sénior Metallurgist, Metallurgy (Concentrator)

Phelps Dodge Morenci, Inc.

Fred J. Menzer Manager, South American Exploration Geology

Phelps Dodge Mining Company (Chile)

Mark R. Mollison* Assistant Treasurer Financing Altematives

Phelps Dodge Mining Company

Ramiro G. Peni* Vice President Team Leader

Phelps Dodge Mining Company
 PROJECT TEAM
(Continuad)

Ñame Position Responsibility

ristian Quinzio Legal Manager, Legal, Tax & Structure

Pheips Dodge Services (Chile)

3. Alan Ruger Sénior Principal Engineer, Overall Project Review &

Research & Business Development and Plan
Pheips Dodge Mining Company

Tim J. Swendseid Engineer, Open Pit Mine Plan &

Pheips Dodge Morenci, Inc. Mine Planning

ulie Z. Weedman* Sénior Business Analyst Economic Modeling

Pheips Dodge Mining Company

fDid not make site visit

 SECTION 1

SUMMARY AND RECOMMENDATIONS

A. EXECUTIVE SUMMARY

i Pheips Dodge Mining Company (PDMC), consistént with the objectives of its Strategic
Plan, has been reviewing mineral properties in mining regions throughout the world. As part
pf this strategy, a PDMC evaluation team made a December 1993 site visit to the Tintaya
property in Peni, a medium-sized, open-pit copper property with attractive undeveloped
reserves. The State owned Tintaya property is held by the Peruvian company, Empresa Minera
Especial Tintaya, S.A.(EMETSA)which is to be privatized in 1994. The privatization will be
áccomplished in two sepárate stages, the flrst consisting of the Tintaya facilities and adjacent
deposits followed at some time in the fiiture by the other mineral prospects in the Las Bambas
District. Only the first stage of the privatization process (i.e., the Tintaya facilities and the
related deposits) is discussed in this report.

The property is of interest to PDMC due to the modem and well run plant, the high
quality mineral resources being mined by open-pit methods and other potentially large and
promising mineral properties nearby. The team has prepared an economic evaluation based on
PDMC's plan for the operation of the existing and future mines, both open-pit and underground,
the concentrator and the related infrastructure. Also included is a discussion of the upside and
downside potentials, an assessment of the political risks of operating in Peni, how well Tintaya
meets PDMC's strategic plan goals, and recommendations.
1

j Exploration of the Tintaya copper property originally took place beginning in 1917 by
a number of companies, but the work of importance was the Cerro de Pasco investigations in
the 1969 to 1970 time frame, including 3,140 meters of diamond drilling. Since then, Minero
Peni, the State owned mining company, has carried out an additional 33,500 meters of drilling
along with detailed topographic and geological mapping of the surface. Feasibility work
followed in the late 1970's to early 1980's culmii^ting in construction of a Canadian-designed
8,000 toimes per day (mtpd) mine, concentrator, related ancillary facilities and a townsite. The
total construction cost for all facilities was approximately $300 million with plant production
beginning in 1985.
i
I

The Tintaya copper mine and nearby deposits of the Tintaya District are located
approximately midway between Cusco and Arequipa at an altimde of about 4,000 meters and
are four to five hours by road from either city. The existing mine and concentrator have been
operating at 8,000 mtpd of ore with a 2.0% copper grade and significant by-product gold and
silver. Recent annual metal production through 1993 has averaged approximately 50,000 toimes
óf copper, 20,000 ounces of gold and 700,000 ounces of silver. A pl^, developed by the
present Tintaya management, would opérate at a throughput ranging ñ'om 2.7 to 3.0 million
toimes per year (mtpy)of ore and has identifíed a balance of about 11 million toimes of reserves

1-1
L
 in the Tintaya deposits, sufficient for four years of open-pit operation from 1995 through 1998.
TTiis plan then calis for underground developinent and mining of. the Chabuca and
L Coroccohuayco deposits in the nearby Tintaya District. The infrastnicture at Tintaya includes
[ a townsite, roads, schools, a hospital and power generation facilities. The power plant is used
only when the normal source of power via transmission line from the Machu Picchu
hydroelectric power source near Cusco is intemipted (about 1% of the time). The concéntrate
produced is sent by truck either to the port of Matarani on the Peruvian coast for shipment to
Asian smelting and refining facilities or to the lio smelter in Perú.

Stated geological reserves in the Tintaya District total 86 million tonnes of sulfide
material grading approximately 2.0% copper and containing significant gold and silver by-
products. PDMC conducted an examination of the drill cores and geological logs and
determined that the data is highly reliable with less than a 1% difference in the assays of Phelps
Dodge and Tintaya. There also existS: significant geological potential for additional reserves in
the Tintaya District. A detailed surface reconnaissance of the Tintaya and Coroccohuayco
deposits including surface geology, sampliiig of outcróppings, mapping and evaluation of prior
geophysical work has been conducted and has identified the potential for 142 million tonnes of
í I material grading approximately 2.0% copper. In addition to the sulfide potential, there are also
' geological reserves of about 25 million tonnes of oxide material grading 2.0% copper which are
part of the Tintaya District and either overlay the existing open-pit reserves or have already been
I , stripped and placed in segregated wasté dumps. Tintaya has a small crushing and pilot SX/EW
- plant oh-site which has been used for some test leaching and recovery of copper from this
material. However, this test work was stopped due to a lack of funds and some test results
í indicating high acid consumption, so these oxide reserves are not included in the economic
L- evaluation of the Tintaya property. Instead, this material is treated as waste in the open-pit mine
plans, although it represents an upside potential.

After reviewing the drill hole and geological model Information, the PDMC team
developed a somewhat different mine plan than that of the current Tintaya management. This
plan is based on open-pit ore reserves of 17.4 million tonnes at Tintaya (starting in year 1995)
and another 8.8 million tonnes at Chabuca Sur. In addition, another 28 million tonnes of
ünderground minable ore reserves have been identified at Chabuca Este and Coroccohuayco.
I To allow for gradual phase-in of the underground mines, the Tintaya open-pit is scheduled to
opérate over seven years from 1995 until 2001 and the Chabuca Sur open-pit from 2000 until
I 2012. The underground mines at Chabüca Este and Coroccohuayco are scheduled to opérate
í ! from 1998 until 2012 and 2000 until 2011, respectively. This plan will allow the concentrator
to opérate at capacity until 2010. Total estimated minable open-pit and imderground ore
reserves in the Tintaya District under this plan are 54 million tonnes averaging 2.0% copper,
with 0.4 grams per tonne (gpt) of gold and 12.5 gpt of silver. The PDMC plan will mili 3.0
million mtpy of ore in 1995 and 3.2 million mtpy of ore in 1996 through 2010 at the de-
bottlenecked concentrator, a 20% increase pver present production of 2.7 million mtpy of ore.
The capital required to opérate at this capacity is estimated to be $175.8 million(including mine
devélopment capital of $12.4 million) over &e life of the open-pit and underground mines, with
$120 million of this capital for the underground development. Only $23 million of capital is

r 1-2
p fequired in the first three years to de-bottleñeck the mine and concentrator and to improve the
éfficiency of the infrastructure. Cash operating costs are prqjected to average $0.66/lb Cu over
the Ufe of the mine ($0,60/Ib Cu for the open-pit operations and $0.70/lb Cu for the
ünderground operations). The c^h operating costs of $0.66/lb Cu ranks Tintaya at about the
57th percentile ón the world-wide, 1997 projected operating cost curve. A year by year
projection of cash operating costs is presented in Section 7, page 7-5.

I The PDMC recommended plan for development of Tintaya is not necessarily the optimal
design because of the limited scope of the study. However, the PDMC plan has focused on a
design that seeks to optimizo the project retums without sacrificing prudent operating strategies
ánd uses only stated minable reserves. The PDMC plan for 1995 through 2012 has the
following design characteristics:

Minable Reserve A total of 54 million tonnes grading 2.0%

copper with 26 million tonnes of open-pit ore
grading 1.7% copper and 28 million tonnes
of underground ore grading 2.2% copper
(additional exploration drilling could
considerably increase these reserves,
requiring a new plan to develop the
resource).

Metal Production An average annual payable production of 118

million pounds of copper, 25,000 ounces of
gold and 630,000 ounces of silver over the
16 year, full capacity life.
Open-Pit Capacity Ranging from 15 to 24 million mtpy of
material mined (ihcluding 3.2 million mtpy
of ore) with existing 12 and 6-cubic-yard
electric shovels, a mixed fleet of existing 77-
tonne and 109-tonne haulage trucks and
additional new 118-tonne haulage trucks.
Underground Mine Up to 2.5 million mtpy of ore delivered from
Capacity two mines with 8-cubic-yard scoops and 22r
tonne underground haulage trucks and reláted
ancillary equipment.
Mine Life 16 years of operation at frill capacity with
open-pit ore supplemented by underground
mines starting in 1998 and 2000 operating
through 2010, followed by two years of
rediiced mining resulting in less :than fuU
concentrator capacity.

1-3
 Concentrator Capacity Operating at a ftill capacity of 3.2 million
mtpy of ore with an average annual
production of 180,000 tonnes of concéntrate
grading 31% copper.
Existing Power System 12 megawatts of power delivered over a 290
km transmission Une ffom the Machu Picchu
hydroelectric system to Tintaya with a
backup power plant on-site.
Existing Water System 2,600 gallons per minute(gpm) usage from a
6,000 gpm capacity water system.
Employee Requirements Beginning in 1994, 725 at the mine site and
another 137 at Lima and Arequipa, for a
total of 862, followed by reductions of
approximately 150 personnel over the first
three years.

The cash flow and net present valué (NPV) economic results in the United States are
summarized as follows for the PDMC project plan based on a constant dollar 1995 forward
through 2010 evaluation period (a 16 year full production mine life), a year-end 1994 acquisition
date, and copper prices of $0,85, $1.00 and $1.15/lb:

Economic Results

Copper Price/lb $0.85 $1.00 $1.15

Cash flow ($ million) 102 284 462

NPV @ 11% ($ million) 32 117 200
NPV @ 13% ($ million) 26 103 177
NPV @ 15% ($ million) 22 91 158

As the cost of the acquisition is not known or included in the project cash flows, the
DCFROR and payback period are not within the scope of this analysis. As can be seen in the
ábove table, using a discount rate of 11% and a copper price of $1.00/lb results in an NPV
project valué of $117 million. The approximate contributions to the $117 million NPV are $92
million from the open-pit operations and $25 million from the underground operations. The
relative attractiveness of the open-pit NPV contribution compared with the underground NPV
contribution is a result of lower capital and operating costs for the open-pit mines and timing
(the underground ore is developed later).

1-4
 The significant upside and downside potentials of the Tintaya project are presented
below:

Upside Potential:

1. The potential additional geological reserves in the sulfide deposits could enhance
profitability and competitiveness.

2. The oxide leach material could be a significant opportunity to produce lov^-cost

copper at attractive economic retums.

3. The infirastructure costs could be significantly reduced by conversión of the

I townsite to a camp operation.

Downside Potential:

1. PDMC has little recent experience developing grass-roots underground mining

properties which could result in higher capital and operating costs or lower ore
grades than estimated.

Environmental risks associated with the project principally involve potential

groundwater contamination from the tailings facilities. However, analysis of samples taken
from the existing tailings effluent have been within environmental standards for Peni.

Perú has a relatively poor ranking for country risk according to the International
Country Risk Guide (97th of 130 countries) but it is rapidly improving. Even though the
investment and political risk climate is improving, the poor ranking may make it diffícult to
obtain non-recourse financing for any acquisition in Perú. Tax and dividend repatriation
regulations in Perú are straightforward and compare favorably to the balance of Latin America,
particularly with the recent passage of laws which guarantee tax rates and offshore cash
accounts.

PDMC's Strategic Plan goals would be met in three of the five major categories,
including increasing copper production, enhancing ore reserves and achieving meaningful
geographical diversification. Until an acquisition price is assumed, the ability to achieve the
two Strategic Plan fínancial goals cannot be determined.

B. CONCLUSIONS AND RECOMMENDATIONS

Tintaya is an attractive mineral property worth acquiring based on the following:

1. The mine is a relatively modem, medium-cost operation with significant by-

product credits.

1-5

b
1 2. Tintaya has significant upside opportunities including additional open-pit
reserves in the immediate area of the open-pit, potential for other reserves in the
district and some potential for an oxide leach SX/EW facility.
I
3. The acquisition of Tintaya would give PDMC a significant presence in Perú
with well-trained employees and an excellent operating base, facilitating
development of other properties or expansión ofthe existing facilities at Tintaya.

4. An acquisition of Tintaya would meet some of the PDMC Strategic Plan goals.

5. No "fatal fiaws" for the acquisition of Tintaya were encountered by the PDMC
team as a result of the site visit and subsequent analysis.

As discussed, Tintaya has many attractive characteristics that would make it a good
acquisition for PDMC at the right price. The central issue of imcertainty, however, is the
extent to which the potential additional reserves exist and the methods by which they can be
successfiilly mined. Without the development of the yet unidentified (but probable) resources,
the open-pit operations are limited to approximately eight years of ftill concentrator production,
necessitating development of imderground operations (not in the cuirent scope of PDMC's
expertise and a significant potential downside).

It is therefore recommended that PDMC only bid on Tintaya if it firmly believes that
sufficient additional resources will be discovered that extend/expand the open-pit operations
of the project.

1-6

k
 Location Map of Tintaya

Colombia

Ecuador fimvA

m^á

Matar^ni

mm ir
BMWík
!lo
 >^m^íS9r-¿

Tintaya Open Pit (Looking North)

Tintaya Open Pit (Looking South)

1-P2
Potential Mineralized Outcropping (Mine in background)

Other Potential Mineralized Outcroppings

1-P3
 Tintaya District Exploration Roads and Sites

..- --.V

.'V V-.*- ^

liiMiPn- ' •( •ifllb *■-.»

Mineralogy at Chabuca Este Underground Workings

1-P4
 ^ ■■

7 '■i.-i-^-Á

P&H 1900 12-cy Electric Shovel

ff7 '-^
IWM

^:^'-

iíl

b
B&E 45-R Electric Drill
1-P5
 Belaz 109-tonne Haul Tmck and CAT D-8 Dozer

C -~\.'^

CAT 992 10-cy Loader

k
1-P6
 Panoramic View of Tintaya Crushing and Concentrating Faciliiies

Crushing, Concentrating and Tailings Facilities

b
1-P7
 lU.niíCilh.

Primary Crusher

Fine Ore Storage

1-P8
 h

Allis Chalmer 16x20 Ball Mills

OK-38 Flotation Cells

1-P9
á

Column Flotation Cell

Larox Concéntrate Filters

1-PlO
 Truck Shop and Other Repair Facilities

Power House
b
l-Pll
 Employee Housing

,-í

ifl^íSjív-ígHiír;' j¿¿FSS

Surrounding Countryside

1-P12
 ! SECTION 2
I

. I PROJECT BACKGROUND AND THE CURRENT OPERATIONS

j • I "
1

f
I
i
A. PROJECT BACKGROUND
! ,

A Tintaya "back-of-the-envelope" economic evaluation and report was prq)ared in,

September 1993 by the South American Exploration group. Their report recommended a more
detailed evaluation and a site visit to Tintaya. A Phelps Dodge evaluation team visited the
Tintaya offices in Lima and the mine site in early December 1993 with the objectives of: 1)
assessing in greater detail the Tintaya property to determine if the potential acquisition meets
PDMC goals, 2) discovering any "fatal fláws" of the potential acquisition, 3)placing a valué on
the potential acquisition, and 4)issuing recommendations basad on continued interest by PDMC.
The following is a brief background description of the project, general observations on the
management of the current operations and a more detailed discussion of current operations
including Tintaya's management plans for the mine, concentrator and infrastructure. Section 4
will discuss the PDMC operating plan for these facilities.
I

1 The Tintaya project consists of an open-pit sulfide mine with nearby mineral reserves,
ah 8,000 mtpd concentrator, related infrastructure and townsite facilities. The Tintaya project
began operation in 1985 and cost approximately $300 million to construct. Through 1994,
approximately 25 million tonnes of ore have been processed and 443,000 tonnes of copper
recovered. During the last few years, average annual production has approximated 50,000
tonnes of copper, 20,000 ounces of gold and 700,000 ounces of silver. The project is wholly-
ciwned by Empresa Minera Especial Tintaya, S. A., a Peruvian State owned mining company
which will be privatized during 1994.

The mine, concentrator and infrastructure are located at an altitude of about 4,000 meters
in southem Perú betwéen the cities of Arequipa and Cusco as shown on the area map at end of
this section. Rain occurs in the normally dry región from November to March. The daytime
temperatures are modérate with some freezing at night during the rainy season. The project is
within 15 kilometers (kms) of the small town of Yaüri, which has a short dirt airstrip, and is.
about half an hour by plañe or between four and five hours by road from either Arequipa or
Cusco. Offices of the company exist at Cusco, Arequipa, Lima (the central office) and at the
pbrt of Matarani where approximately one^third of the concéntrate is shippéd to off-shore
smelters (the balance is treated at the lio smelter in Perú). Electric power is supplied by the
Machu Picchu hydroelectric system, which currently has an excess supply of energy. Water is
pumped from the nearby Salado river, which could supply water well beyond the needs of the
present operations. Tintaya holds water rights for about twice its present usage. The project
has abóut 728 permanent employees on-site(862 total permanent employees including the off-site
offices) and the townsite has a population of 3,100.

y . 2-1
 B. GENERAL OBSERVATIONS

General observatíons of the present operatíons and its management are summarized
below:

The mine, concentrator, related support shops, and infrastructure facilities are in
good to excellent condition. Repair and maintenance schedules are planned with
many of the procedures similar to those used at Phelps Dodge's mines. Work
areas were clean and tidy and eqüipment was not abused by the operators.

The wprk forcé appeared to be of good to excellent quality and were well
acquainted with their jobs and responsibilities. Morale was somewhat poor but
not surprising considering that the employees have hád no wage increases for
several years and are facing the uncertainties of a privatization. Tumover is a
problem due in large part to the isolated.location.

With the exception of a few areas, the mine and concentrator manning did not
appear excessive and was similar to that of Phelps Dodge's mines. The
administrative and infrastructure areas appear to be over staffed and will most
likely require some manpower reduction programs. The Lima office appears to
be disorganized and poorly,focused. The size of the offices in Cusco and
U
Arequipa may be too large.

The administrative and infrastructure areas appear to be dealing with excessive

bureaucracy and do not have the eqüipment or facilities to handle their workload
efficiently. For example, at ,the projéct site, there are four telephones linked to
the Peruvian phone system and very few computers or other time and personnel
saving eqüipment. Also, general telephone and radio communication systems
between personnel on-site were poor.

Site management appears to be well qualified and dedicated to their jobs and their
employees. They appear to be making the best of a fhistrating situation created
by govemment bureaucracy.

The technical staff is well versed in modem mining practices and keq)s abreast
of new technologies even though they have not been able to afford applying most
of them.

The quality of the technical decisions in the area of exploration is questionable.

This has been demonstrated by their exploration efforts being focused on areas
of questionable potential.

L 2-2
 8. A sizeable percentage of the staff personnel do not have their families on-site.
They have elected to commute to and from the site every month or two and leave
their families in Arequipa or^Lima.

9. If acquired, Pheips Dodge should not require a major re-organization or a major

addition of management personnel assigned to Tintaya. TTie project could use
support ahd assistance in numerous areas but the needs are most pressing in the
arcas of exploration, accounting and human resources.

C. CURRENT OPERATIONS

i. Mine

I, The nórthem edge of the mine is lócated about one kilometer from the primary crusher
next to the concentrator as shown on the map at the end of this section. The mine office, which
includes the mine administration and mine planning activities, is located cióse to, the
northwestem edge of the mine. The mine is electrified with a 10 kilovolt (kv) loop which is
stepped down to 4,160 volts for shovel and drill operations, The mine operations dispatch trucks
via radio Communications between the shovel operators and shift foremen from a tower above
the pit. The haul trucks presently have no radios although they are planning to install some this
year. The mine has been operating for almost nine years, and although some equipment has
tíeen added, very little of the original major mine equipment has been replaced.
I

I The mining rate, utilizing three eight-hour shifts, is approximately 15 million tonnes of
material per year including about 2.7 million tonnes of ore. The 200-meter deep mine presently
has excess loading equipment resulting in .a truck limiting situation. Mine design is based
around the capacity of the 12 and 6-cubic-yard (cy)shovels of 400,000 tonnes per month(mtpm)
and 225,000 mtpm, respectively. Tintaya's mine plan includes monthly plans for the current
jjear and annual plans thereafter. Mine désign is based on 8% máximum grade for haulage
ramps, 22-meterróad widths, 15-meterhighbenchesandacoppercutoff grade of0.65%. Mine
plans are done by hand with 45 to 49 degree slopes and 12-meter catch bench widths. The final
pit limit was designed in 1981 utilizing computer methods.
I
(

Blasting is done in 9 7/8-inch holes with 5.5 by 5.5 meter and 6 by 7 meter spacing for
ore and waste, resp^tively. The powder factor used ranges from 0.45 to 0.60 kilograms/cubic
meter for both ore aind waste. The final blasting practice has room for improvement as
eyidenced by the appearance of the pit slopes. Perhaps smáller holes sizes, tighter pattems,
lighter charges and double bench configuratipns should be employéd for the final limit blast.
J Sampling is performed by taking four samples from each blast hole, and the reported miñe-mili
copper grade discrepancy is cióse to zero with reported variances of ±2%. Water drainage
piroblems are not normally severe and pit dewatering, when necessary, is accomplished with a
'^0 liter/second pump at the bottom of the pit and two 45 liter/second pumps at intermediate
stations. However, during the unusually heavy rains of 1993-1994, the pit encountered serious

^3
flooding requiring additional pumping. Diversión ditches are used in the surrounding hills to
minimize water drainage into the pit.

An average of three shovels and approximately 15 trucks opérate per shift, The reported
availability for trucks, shovels, and drills is 82%, 85%, and 85%, respectively, which is quite
high considering the age of the fleet but may be the result of good preventative maintenance and
low utilization of equipment other than trucks.

An inspection of the equipment revealed that the four shovels were in excellent condition.
The shovel houses were tight with no loose or tom panels and very little rock impact damage.
All boom and dipper brass was in good shape with no excessive play. The swing gearboxes,
pinions, ring gear and house rollers were in good shape with very little play. Inside the shovels,
the houses and cabs were exceptionally clean. The generator, hoist drums, and magnetorques
were free of oil and dirt, were well maintained and there were no signs of make-shift or
temporary repairs. The shovels did show normal signs of cable groove wear. All electrical
cabinets were very clean inside and out and all wiring was tie wrapped and well marked. There
were no loose or broken doors or loosely mounted electrical components on the shovel. Since
only three of the four shovels are operated per shift, the maintenance department is given ampie
time to effect repairs and perform preventative maintenance. It is apparent by observing the
condition of these shovels that the operations personnel are not abusing the equipment and that
there is an excellent maintenance program in place.

The Wabco haulage trucks were well thought of by maintenance and mine personnel
alike. Similarly, both mine and maintenance groups agreed on the undesirability of the Belaz
(Russian) trucks. There have been ongoing problems with the cam shafts and cam shaft covers
for these Belaz trucks, and because of generally poor parts availability, the maintenance
personnel have been cannibalizing parts to keep a few of the seven Belaz trucks running.

A cióse inspection of the Bucyrus Erie 45R drills indicated that the equipment was in
excellent shape, much like that of the electric shovels. The remainder of the mobil equipment
appeared to be in good condition. Although not every piece was inspected, at least one of each
type was examined.

2-4
 A summary of the present major mine equipment is shown below;

Equipment Ouantitv
P & H 1900 12-cy electric shoveis 2
P & H 1600 6-cy shovels 2
Cat 992 10-cy front end loaders 2
B & E 45R electric drills 3
Wabco 77-tonne haulage trucks 17
Belaz 118-tonne haulage trucks 7
Cat D-9 dozers 2
Cat D-8 and D-7 dozers 1 each
Cat 16G motorgraders 2
Cat 824 rubber tire dozers 3
Backhoes 2
Water trucks 3

Mine operations has total manpower of 202 with 153 in operations and 49 in direct
supervisión and general support as presented below:

Staff Operators Total

General Support:
Support 2 2 4
Laboratory 2 11 13
Mine Security 1 15 16
Engineering and Geology J_ _9 16
Total Support 12 37 49
Load and Haul:
Shift Foremen 8 3 11
Loading and Hauling -
84 84
Mine Construction -
28 28
Cables and Drainage _4 _4
Total Load/Haul 8 119 127
Drill/Blasting:
Blasting 1 8 9
Drilling i 16 12
Total Drill and Blast 2 24 26
Total Operations 10 143 153
Total Mine 22 180 202

2-5
 I Most of the mine maintenance facilitíes are lócatéd under one roof containing the
following individual shop areás: truck shop, dozer shop, auxiliáry equipment shop, light duty
equipment shop, lubrication shop, shovel repair shop, machine shop, motor and differential
repair shop, and tire repair area. The electric shop, where motors up to 200-horsepower are
rewound, is in a sepárate building.

I Each repair area within the shop was inspected.' Adequately sized overhead cranes are
installed, as are adequate quantities of repair equipment including lathes, drill presses, and
welders. Most repair areas are staffed three shifts per day. Mobil repair equipment includes
cranes, lubrication trucks, and utility vehicles.
I

! An adequate supply of spare parts was observed in the warehouse, which is located
adjacent to the maintenance shop. The valué of warehouse items is reported to be approximately
$20 million. Stocking of several key items was higher than would be encountered in a
warehouse located in the United States due to the remote location of Tintaya.

I The manpowér involved in mine maintenance is reported to total 170, of which eight are
considered "staff as presented in the following table:
1

1 Staff Operators Total

I Total Maintenance Support 3 2 5
^ Mechanical Department: >
1 Department - 1 1
1 Shift Foremen 2 1 3
1 Craft Skills -
10 10
¡ Welding -
14 14
i Components 1 13 14
! Trucks 1 19 20
1 Tires -

11 11
1 Lubrication 1 13 14
i Shovels and Drills -

12 12
i Tractors -
13 13
[ Light Vehicles -
10 10
i Auxiliáry Equipment _9 _9
1 Total Mechanical 5 126 131
j Eléctrical Department:
! Communications -
4 4
1 Distribution/Power 7 . 7
¡ Trucks and Shovels -
8 8
1 Heavy Equipment -
9 . 9
! Components - 6 6
1 Total Eléctrical
j M _34
' Total Maintenance 8 162 170

2-6
 I Total mine manpower is 372(202 in mine operations and 170 in mine maintenance).
^ ' ii. Concentrator
I The Tintaya concentrator location is shown on the general layout map at the end of this
section. The.concentrator is adjacent to the powerhouse, maintenance shops, warehouse, and
storage tanks and has a control gate entrance from the main road. The present concentrator
facilities including crushing, milling, flotation, concéntrate dewatering, concéntrate storage and-
tóling deposition are outlined in the flow-sheet also at the end of this section.

! Ore from the mine haulage trucks is'dumped into a primary 54-irich by 74-inch gyratory
crusher which reduces run of mine mineral to minus 7-inches. . An apron feeder moves the
product to two conveyors which transfer the material to a stockpile of 10,000 tonne capacity.
The ore is conveyed by three, four-foot by four-foot vibrating feeders to the secondary crushing
circuit. This product is screened in a seven-foot by 20-foot double-deck vibrating screen and
the minus 1/2-inch material is conveyed to the covered fine ore stockpile with a capacity of
16,000 tonnes, The oversize ore is routed to the seven-foot heavy duty Symons secondary cone
i crusher. The secondary crusher further reduces the ore to minus 2 1/2-inches and is directly
—* screened by a seven-foot by 20-foot double-deck Tyler vibrating screen with the fines conveyed
tb the fine ore stockpile and the oversize ore (minus 2 1/2-inches -I- 1/2-inch) conveyed to the
tertiary crusher feed bins. Two feeders supply the ore to the seven-foot Symons short-head
crushers from the feed bins. The tertiary crushers reduce the ore to the desiréd minus 1/2-inch
product which is screened by two additional seven-foot by 20-foot double-deck Tyler screens.
The minus 1/2-inch ore from the screens is conveyed to the fine ore stockpile and the oversize
(+l/2-inch to 1-inch) is conveyed to the tertiary feed bins.

From the fine ore stockpile, the minus 1/2-inch ore is moved by two conveyors, each
with three feeders under the fine ore stockpile to the milling circuit. Grinding is accomplished
in two Allis Chalmers 16-foot by 20-foot overflow ball milis each with 3,000-horsepower
ratings. Each mili is in a closed circuit with a cluster of four Krebs D-26 cyclones. Cyclone
overflow of 5% plus 65-mesh flows by gravity to rougher flotation and the ünderflow flows by
gravity back to the ball milis for further grinding. Denver Autometric partióle size monitors are
üsed in each of the ball mili circuits.
I

¡~ I Rougher flotation is carried out in QK-38, 1,350 cubic foot cells. The primary bank of
U three rougher cells produces a final concéntrate grade product, which is pumped directly to the
concéntrate thickener. The product of the secondary bank of three rougher cells is routed to the
¡ regrind discharge sump and the rougher scavenger bank of two cells is pumped to the rougher
' feed box. The tails from the scavenger rougher bank are pumped to a distributor box, which
feeds one of two 250-foot tails thickeners. The regrind discharge sump slurry is pumped to a
I 1 tíank of eight Krebs D-6 cyclones. The cyclone overflow flows by gravity to cleaner flotation.
U Cyclone ünderflow gravity flóws to thé nine-foot by 12-foot overflow regrind mili with a 450-
horsepower rating.

2-7
 !■ . i
i
I
I . ■ 5

! Cleaner flotatíon is performed in Denver DR-300, 300 cubic-foot-cells. The first cleaner
concéntrate is routed to the second cleaner and the tails are routed to the four Denver DR-300
re-cleanefs. The second cleaner concéntrate is final concéntrate grade of 31% copper and is
routed to the concéntrate thickener. The second cleaner tail is routed to the first cleaner feed
box. The re-cleaner concéntrate is routed to the rougher feed box and the tails routed to the tails
distributor box and on to the tails thickeners. Testing of column flotation is also in progress in
á three-foot by 40-foot column with a portion of the cyclone overflow from the regrind cyclones
feeding the column. The test column concéntrate is final grade and is routed to the concéntrate
thickener with the tail routed to the re-cleaner feed box. The concéntrate thickener underflow
is pumped to a holding tank, which feeds one of four Larox filters (one PF-32 and three PF-
25's). The concéntrate thickener overflow water is pumped to a process water tank. The Larox
filter product is conveyed to a covered stockpile of 12,000 tonnes capacity.

¡ The primary collectors are Cyanamid A242 (sodium dithiophosphate) and Cyanamid
A404 (mercapto-benzo-thiazole) blended Fto 2 and added to the ball milis. Z-11 (isopropyl
sodium xanthate) is also used occasionally. The frothers are Oreprep F547 (polypropylene
glycol ether) blended with pine oil and added to the mili and first rougher bank and Dowfroth
250 added to the last two roughers and the scavengers. Other mercaptans are also add^
pccasionally to enhance recoveries and additional reagents are being tested to enhance gold
fecovery. Sodium silicate is used as a depressant. Flocculent is added to the tails thickeners.
Lime is not being used and, therefore, water treatment chemicals are not necessary. Plant
recoveries have averaged 90% for copper, 69% for gold and 60% for silver over the last three
/ears.

The tailings thickener overflow water is pumped to the process water tanks. The tailings
hickener underflows are cycloned with six Krebs D-20's and used for raising the dam when
necessary. The cyclone overflow is laundéred further downstream in the tailings impoundment.
The tailings dam setup is "backwards" compared to normal tailings dam design. The actual dam
is located about 1,000 feet from the concentrator and the tailings flow down the valley away
from the concentrator. At the end of the valley, a dam has been constructed with the upper
portions being porous to act as a filter. The water collects behind this dam and filters through
the dam, flowing down to the Salado river: The water quality meets Peruvian standards after
filtering through the tailings dam but would not be acceptable for United States standards. Fresh
make-up water is taken upstream from the tailings dam outflow into the Salado river and is
pumped back to the concentrator as necessary (a distance of several kilometers) with three
Worthington 1,500 gpm pumps. Approximately 50% of the water necessary for operations is
pumped from the Salado river tp the site, Concentrator personnel are installing larger pumps
at the tailings thickener overflows in an effort to reduce the amount of make-up water taken
from the Salado river to 25%. None of the water behind the porous dam is retumed to the
concentrator, and as a quick cPst cutting measure, a barge/pump system could be installed to
further reduce the make-up water required from the Salado river. Construction of a "normal"
dam should also be investigated in the future so pumping distances could be reduced (an
ópportunity will exist when the tailings disposal is to be moved to the next valley in about 2002).
Current water usage is 4,000 gpm of which 2,000 gpm is recovered at the tailings thickeners.
{
2-8
(
 I

With the addition of the larger pumps at the tailings thickener overflows it is hoped to recover
aitotal of 3,000 gpm.
I_
,I

¡ The current manpower for the concentrator operations totals 61, with 50 in operations,
9! in metallurgy and 2 in plant management as shown in the following table (the plant
maintenance manpower is shown in the following maintenance discussion):

,
Staff Operators Total
Plant Management 1 1 2
1

Metallurgy:
Metallurgy 1 -
1
1

Reagents 2 3 5
Testing/Research J2 J. _3
Total Metallurgy 5 4 9
Óperations: '

Operations 1 -
1
Shift Foremen 3 -
3
Worker Fill-ins -■ 9 9
Primary Crushing -
3 3
Secondary/Tertiary Crushing .
17 17
Grinding/Flotation 11 12
Total Operations _4 46 50
Total Plant 10 51 61

Plant maintenance is responsible for maintaining the following areas of the concentrator
ahd surrounding plant:
I
I -

1. Primary through tertiary crushing and fine ore storage

i 2. Milling
' 3. Flotation and concéntrate dewatering ahd storage
I 4. Tailings and Salado river water supply station
I 5. Powerhouse
6. Electrical distribution and instrumentation system within the plant
I

' The plant maintenance group is effícient and performs functions similar to maintenance
at Morenci and with similar equipment. They do not appear to have excessive personnel and
are well organized into departments. Instrumentation maintenance is not extensivo in the plant
büt the monitors, scales, metal detectors and probes are maintained by the instrumentation
department. The plant maintenance is organizó into the following departments: maintenance,

P 2r9
 planning and control, maintenance crushing, maintenance concentrator, and maintenance
instrumentation. Record keeping on equipment maintenance schedules is kept up to date.
i_

I The primary crusher through the fine ore storage areas have cranes (50-tonne in the
primary crusher) that are sufficient to handle all major maintenance jobs. For the milling area,
all bearings were quiet with no excessive noise or vibration. Lubrication is via lube injector
systems which are comparable to those used at Morenci.

! The flotation area and concéntrate dewatering and storage areas all were running
smoothly with the exception of the Larox filters. they have been a maintenance problem and
costly to keep running which will have to be improved for successfiil de-bottlenecking of the
plant. The tailings and water supply have few maintenance problems as does the powerhouse
which oniy functions when the supply from Machu Picchu is intemipted.

.I The plant maintenance is on a par in terms of staffing to that of the Metcalf concentrator._
In terms of quality of work, the repair workers were well-trained and used modem tools and
methods comparable to those at Metcalf's maintenance group. The manpower involved in plant
maintenance is 47, of which 5 are consideréd staff as presented below:
U
l Staff Operators Total

1 Plant Department 1 1 2
I Planning and Control 2 -
2

1 Crushing -
15 15
1 Concentrator 2 16 18
'instrumentation -.1 10 10
¡Total Plant 5 42 47

I The concentrator operations and maintenance combined manpower totals 108 employees.
i
iii Infrastructure

! Access tp Tintaya is via dirt roads from Arequipa(260 kms) or Cusco(250 kms), Both
of these cities have airports with commercial air service to the rest of.Peru on a regularly
scheduled basis. Iñcoming supplies for Tintaya and outgoing concéntrate we sent in or out by
rbad from Arequipa. Tintaya performs regular annual road surface maintenance during the dry
season on a 195 kms stretch of the road from Arequipa. The condition of this road deteriorares
considerably during the rainy season. During this time of the year, travel speeds must be cut
back to less than 50% of normal, which increases round-trip times for both concéntrate trucks
and light vehicles. In spite of the fact that this is a major road serving the city of Cusco and
outlying areas, there is no present plan by the Peruvian govemment to pave this road at any time
during the next few years. The location of the infrastructure facilities aré illustrated on the map
at the end of this section.

2-10
 ¡ Tintaya has a small airport located at a distance of 15 kms from the mine site next to the
tówn of Yauri. This airport is open during daylight hours (when visibility conditions permit)
^d may be used for landing by airplanes :as large as a C-130 Hercules cargo plañe, with a
máximum gross landing weight of 130,000 Ibs.

I Electric power is supplied from the Machu Picchu hydroelectric power plant via a 290
km long, 138 kilovolt (kv) transmission line. Power is stepped down to 10 kv at the Tintaya
substation. Both this substation and the transmission line are owned by Electro Sur Este S.A.
(ESESA), a state-owned power utility compány that will also be privatized soon. Tintaya has
signed a power supply agreement with ESESA providing for 12 megawatts(MW)of connected
power until May 1, 1995. This agreement provided especially low rates for Tintaya, and
because of this, ESESA is attempting to renegotiate these rates. At present the purchased power
cost is $0.044/kwhr. The 138 kv transmission line continúes from the Tintaya substation to the
city of Puno. Additionally, ESESA is considering plans to construct a 138 kv transmission line
from Tintaya to the city of Arequipa in order to sell power in that area. It is assumed that
higher power rates of approximately $0.055/kwhr will be encountered in 1996 and thereafter.

Tintaya also has an 18 MW diesel generator plant made up of 8 genérator units. This
plant supplies power for operations during power outages or brown-outs on the ESESA grid and
is also used to assist in handling surge demand peaks from processing facilities. During 1992,
ESESA's power supply capabilities were quite reliable but in 1993, there have been reports of
several power failures, for which Tintaya and ESESA have mutually accused each other of being
responsible. About 99% of the power for Tintaya during 1993 came from ESESA and the
tlalance from the Tintaya powerhouse.
O..

I The power distribution system serving Tintaya's operations is via a 10 kv loop to local
substations serving the various facilities, where it is stepped down to 4,160 volts to supply major
^uipment motors (ball milis, crushers, etc.). A low voltage substation is also on hand for
supplying off-site facilities, such as offices, camps, etc.
i
I Additional facilities at Tintaya include 5,800 square feet (sf) of mine offices, 46,000 sf
i of warehouses and 400 sf of first aid facilities located in the process facilities area. Also
i í included is a fire water loop and a sewage hetwork.

I The administrativo offices are made up of a collection of small buildings in poor to fair
condition with average maintenance. Offices are very small and there is little evidence of labor
^viiig devices or a good communication system. These offices are grouped together at a general
office, situated one mile from the concentrator plant as shown in the facilities layout at the end
qf this section. Total constructed floor space at the general office amounts to 22,900 sf.
i

I Make-up water is drawn at an intake on the Salado river and pumped to a head tank of
1.3 million gallón capacity through a buried 20-inch diameter 6.3 kms long carbon-steel pipeline.
TTiis head tank supplies the plant water loop, mine services, the fire loop and a 310 gpm
drinking water treatmeht plant. This potable water plant meets the demand for the mine and
U-
/

L 2-n
 processing facilities ánd for household use at the worker's camp and Pueblo Joven town site
(located one mile from the workers camp and inhabited by the original surface rights holders of
) the Tintaya mining claims). For the administrative offices, hospital and camp staff another
potable water source, taken from local springs totaling 100 gpm (water rights are held by
Tintaya) is used.
i

I The amount of water taken from the Salado river is approximately 2,600 gpm, but the
water intake pipeline was originally designed for a capacity of 6,000 gpm. Water rights are held
for up to 6,000 gpm from the Salado river. The volume of flow in the Salado river diminishes
tp an average of 30,000 gpm during the dry season. The pumping system connected to the
Salado river intake facilities is made up of an underwater intake, head chamber and three vertical
pumps mounted in parallel and are each designed to pump 1,500 gpm. These facilities appear
to be in good condition. Also included in the water system is a small reservoir located upstream
from the tailings disposal facility. This reservoir is used to impound runoff water during the
rainy season.
!
I Tintaya has a small hospital of 11,000 sf equipped to provide for regular medical
t I
checkups, operating rooms for emergency surgery (e.g., appendectomies, cesarían sections,
etc.), a matemity ward, an X-ray room and a laboratory for routine tests. Patients in serious
condition are sent by ambulance to Cusco or Arequipa. This hospital has 12 beds, a small
i'solation ward for contagious diseases and a total manpower of 33, including physicians,
paramedics and administrative personnel. The hospital facilities are in good condition and aré
in compliance with local regulations. The- hospital provides medical attention and distributes
medication free of charge to Tintaya personnel and dependents and to local inhabitants who are
without any apparent means of support. ,. Persons from neighboring communities may pay
(depending on ability to pay) for health care services provided by this hospital. Health care
seivices which this hospital is not able to ftimish on-site for employees are provided at outlying
cities, and part of the cost for such services is borne by a group health plan named.Seguro
Médico Familiar, for which Tintaya provides financial support.
I

I Tintaya is the owner of Camp N®2 for staff, located 4.2 kms from the concentrator plant
as seen on the facilities layout at the end of this section. This camp is comprised of 48 houses,
some single family and some duplexes with floor space ranging from 460 sf to 1,500 sf. These
buildings are used to house 60 families and 30 persons on single status. A modest hotel of forty
beds for guest lodging is located in the center of the camp. The staff camp facilities are in good
condition, except for the hotel, which will require remodelling. The total constructed floor
space at this camp amounts to 101,000 sf.
I

¡ Tintaya is also the owner of Camp N°3 for workers, located five kms from the
concentrator. This camp features 25 three-story buildings and 45 foür-story buildings with a
total of 550 apartments ranging from 400 sf to 1,000 sf. This camp has a central plaza and
certain community facilities, such as a small fresh produce market, bus terminal, supermarket,
basic shopping outlets, chapel, movie house, social center, basic sports facilities, gas station,
child day care center, school, small hotel and recreational facilities. The apartment buildings

2-12
(totalling 480,000 sf) appear to be adequately maintained. Sixty percent of the streets are paved
in the workers camp and the camp has been provided with outside lighting.
i '

I Current reports indícate that approximately 740 Tintaya employees live at the staff and
workers camps, with an estimated total population of 3,100 persons, including employee
dependents and company fumished or supported teachers. Tintaya provides electricity and water
services to both of these camps free of charge and to Pueblo Joven.
'

! The Tintaya workers camp has a school where primary education is provided free of
charge. Current reports show a school population of 943 schoolchildren, made up of the
children of Tintaya employees and children from neighboring localities. Schooling is provided
by 29 teachers paid by Tintaya and 66 govemment paid teachers, who also receive monetary
incentives from Tintaya. A certain amount of housing is available for teachers on single status,
who are given free room and board. Teachers on family status occupy housing units in the staff
or workers camps.
i
I Tintaya operates and controls the staff and workers camps, with the exception of the fresh
produce market and the gas station, which are leased out to others. Mail service and public
telephone service are provided and controlled by the Peruvian govemment.
!
(

' Tintaya is linked with the city of Cusco by means ofa four-channel UHF Communications
system, and from Cusco is linked with the rest of the country and the world through the local
carrier ENTEL. The telecommunications system is oflow capacity and limited quality. No data
channels are available to link the various company centers (Tintaya, Lima, Arequipa) ñor are
there local data networks at any of these facilities.

I Tintaya subsidizes lunch for workers at the work place with company subcontracted food
seívices, which additionally opérate the company lunch rooms and hotels. At the workers camp,
Tintaya also provides contractor personnel lodging (in fair condition) to food handlers, security
personnel, etc.
I

The overall security at Tintaya facilities is provided by the Peruvian Pólice, which
maintain a contingent of 30 pólice officers, bolstered by security contractors fiimishing a group
óf 80 armed guards posted at strategic locations. The company provides lodging, food and
monetary compensation to Peruvian Pólice personnel. ,Most facilities including the camps,
offices and the concentrator are surrounded with fencing and have controlled entrances and exits.
l^cal security has not been a probiem and they have had no terxorist incidents during the nine
years of operation. In addition, the supply Une to the make-up water pumping station has been
liuried as a measure to protect it against any potential terrorist attacks, although no such attacks
Has been reponed at any Tintaya facilities or camps. However, in the general región there have
been some terrorist activity as three terrorist attacks on the 290 Idlometer tnmsmission Une to
Tintaya were reponed during 1992, causing temporary failures in the power supply.

M3
 I The Lima office, with 97 employees, handles the general administrative ftinctions of thé
rampany (accounting, mataríais management, finance, sales, CIS, etc.). The Arequipa office,
with a manpower pf 23, provides logistic support for the mine site in addition te local
procurement and accounting support. The Cusco office,, with manpower of 17, performs public
felations functions with local authorities and provides logistic support for the mine site.
Administration totals 151 employees on-site in the areas of general administration, logistics,
traffic, exploration, accounting/finance and 137 employees at the off-site offices at Lima,
Arequipa and Cusco, a combined total of 288 employees as presented in the following table:

Staff Operators Total

' General Administration:
1 Administration Department 6 7 13
! Personnel ^ 3 23' 26
¡ Public Relations _2 12 14
: Total Gen. Administration 11 42 53
: Logistics and Warehouse:
L1 Logistics 1 3 4

! Stock Control 2 7 9
i Mine Warehouse J, 16 17
Total Logistics/Warehouse , 4 26 30
Total Traffic 1 2, 3
J Exploration/Project Engineering 16 36 52
Accounting and Finance:
¡ Department - 1 1
; General/Cost Accounting 1 6 7
1 Finance 1 2 3
1 Budget/Insurance _2 _2
' Total Accounting/Finance _2 _11 J3
i Total On-site 34 117 151
Total Off-site
Lima 45 52 97
Aerquipa 3 20 23
Cusco _3 JA J7
Total Off-site 51 _86 137^
Total Administration 85 203 288

2-14
L
 j The majority of the required supply items are purchased in Lima. Incoming imported
supply items are generally unloaded at the port of C¿lao, near Lima, where the largest port
facilities are available.
I
(

! The concéntrate produced by Tintaya is shipped from the mine site by truck to the port
óf Matarani or altematively, to the town of Cañahuas, where it is stored for subsequent inland
freight by rail to Matarani or the smelter at lio, located 383 kms from the mine site. At
Cañahuas, through an existing agreement with the Peruvian State railways, the concéntrate is
stored in a warehouse and then loaded onto 40-tonne capacity side-dumping hopper cars. Also
provided at this locatión are a truck scale and a railroad scale, both owned by Tintaya. During
1993, only 37% of the concéntrate sent to Matarani was shipped by rail due to the poor
condition of the rail line and poor service in general.
(

I At the port of Matarani, Tintaya rents approximately one hectare of land for storing and
lóading of copper concéntrate. All support services for concéntrate handling are provided by
contractors. The concéntrate is reclaimed from stockpiles by front-end loaders and loaded onto
a 48-inch wide belt conveyor of 400 to 500 mtph capacity. All of the conveying system is
owned by the Peruvian govemment port agency (ENAPU). The belt conveyor system is
I-J
^uipped with a bin scale and discharges onto portable stackers at the wharf, which are used to
load the ocean-going vessels. The chutes which discharge into the vessel holds are not provided
with any protection against the wind. It is reported, however, that losses are low (0.1-0.2%)
in spite of the absence of any means to prevent losses. During vessel loading periods at the
port, only two Tintaya employees aré on-site, along with hired guards. The size of vessels is
limited to 32 foot máximum vessel draft (25,000 tonnes) but there are no major restrictions on
vessel beam. The customary shipments of Tintaya concéntrate are in 10,000 tonne lots and the
average concéntrate ship loading rate is on the order of 300 mtph (the best record to date is 450
mtph). The Tintaya port operations in general, and concéntrate loading operations in particular,
recently have improved considerably and costs have been reduced in comparison with previous
years when the contractors were used.

I The relations of Tintaya to the región are good:

• The cómpany has been noted for its support of the development of Pueblo Joven

• The company has kept up agreements with the localities of Alto Huankaré and
Tintaya Marquiri to provide preferential treatment in hiring of unskilled
temporary-hire workers

• The company is a supporter of an agricultural and ranching research plan

• Tintaya is the only develdped industry existing in the area

L 2-15
 The current on-site infrastructure manpower totals 94 and is presentad below:

Staff Operators Total

General Infrastructure:
i Roads 1 9 10
prinking Water J. 10 11
Total General 2 19 21
i
Health:
Medical 6 3 9
Hospital Administration -
4 4
Paramedics J. 19 20
Total Health 7 26 33
Camp:
Camp Management 1 1 2
Hotels and Clubs 3 3
Cafeterías -
3 3
Building Maintenance _8 _3.
Total Camp 1 15 16
Other Infrastructure:
Communications -
2 2
Drívers -
17 17
Concéntrate Transportation 1 2 3
Matarani Port J. J, JZ
Total Other _2 22 24
Total Infrastructure 12 82 94

With the 94 personnel in irifrastructure and 288 iñ administration (including the off-site
manpower of 137), the total Generé and Administration (G & A) manpower is 382. Including
the total mine and concentrator manpower of 372 and 108, respectively, the total Tintaya
permanent employees on-site are 725 and 862 at all locations.

D. TINTAYA MANAGEMENT PROJBCT PLAN

Tintaya management has developed a plan to opérate the concentrator and mine for
ápiproximately four years with open-pit ore at 2.7 million mtpy in 1995 and 1996, 2.8 million
mtpy in 1997 and almost 3 million tpy in 1998 and a few months of 1999. The plan is to
supplement the open-pit ore with underground ore as they shift to underground operations of
,000 mtpd in late 1998 from the Chabuca Este deposit and 4,000 mtpd in 1999 from the

2-16
 Coroccohuayco deposit. Significant reserve definition work remains to bé performed on both
deposits, although design work has been compleled through the level of a pre-feasibility study.
'
I

At Chabuca Este, which is adjacent to the Tintaya open-pit, a decline with a 3.5 by 3.5-
meter section has been driven 1,607 meters along the approximate strike of the ore body. The
decline is collared on the 4000 level, and its heading is about to break through to the southwest
side of the Tintaya open-pit. The studies completed on the project assume that the most
ápprppriate mining method would be a mechanized cut and fill stoping method with ore
tMSportation to the concentrator via haulage trucks ffom the bottom of thé Tintaya open-pit,

! The Coroccohuayco deposit is located at a straight-line distance of seven kms from the
Tintaya open-pit. The ore body is appfoximately 100 meters thick and lies approximately 300
meters below the surface. The studies completed on this project assumed that a mechanized cut
and fill stoping mining method should be used, and that trucks would haul the ore to the Tintaya
concentrator.
i
I •

Generally, a substantial amount of work remains to be completed in order to properly

design and develop the proposed underground operations. The on-site techriical personnel should
be able to coordínate the execution of an underground mining project, provided that these
professionals are given proper support by experienced outside consultants..
i

Relating to infrastructure planning, Tintaya management is proposing to shift more of thé

ádministrative and infrastructure activities to third parties in order to reduce costs, The initial
opposition of the community against construction at the town of Yauri has disappeared, and
Tintaya is attempting to promote the construction of housing for workers in this town.

L. , M7
 h
PAUCARTAMBD PERU BRASIL

ANDAHUAYLAS CUZCO
QANCAV

^ VACAS *CDL
X PARAISO OTAWBOBAMBA TINTAYA
Xyahaminas \

ALCAC
ARCOUP
CHALHUANCA

TOMA
.« STO TOMAS \\ \
Q " KATANGA\

fX YAURI / V
V ARCATAX J X N AYAYIRI

CÜRACORA QRCDPM4PA /W« XOHUAYCO

rmcAO
V ^ LV/ * HUA

CDTAHUASIw CAILLD " UCUYTAMBO

LAMPif
CDRDILLERA
HUAN20 CHIVAY

CARAVEL
HUOUIBAMBA

PUNO
LEGEND

MAIN ROADS

RAILROAD AREQUIPA / LOCATION MAP

DEPARTAMENT BQRDD? TINTAYA MINE
CAMAMA
CERra VERE
TINTAYA-FERROBAMBA
METALLDtKNETIC BELT
SCALE
DEPARfAMENT CAPITAL O 20 40 60 80 100 120n

CITY
mataran V CUAJONC
MELLENE OOUFGU ^ * OUELUVECO
9 MINE

X TOOUEPALR

2-18
 TO
YAUn/CUSCO

PftIMARY
TAIUNGS

CAUP

. TAIUNGS
CAMP\NO. 2 lyPOUNDMCNT

TJNTAYA HOSPITAL
n
TAIUNCS THICKNEftS

fe EUERGENCY TAJUNGS DAM

POYCRHOUSEn
CONCENTRATOfi

FINE ORE STORAGE

CENERAL OmCES '

ORE STORAGE

'PRIUARY CRUSHER
,WAREHOUSE .

MECHANICAL/TRUCK

SECURITY
o COMBUSTIBLE
TANKS

AUXIÜARY
gAUUONIA NITRATT^ SHOP

CAMP NO. 1

DUUP

TMTAYA
opEN prr
(EXISTINC)

GHABUCA
ESTE
UNDCROR
(PROPOSB3)
CHABUCA
tUR
OPEHHT
(pROPosa)

TINTAYA PROJECT
1 I 30,000 GENERAL LAYOUT
 CONCENtRATOR FLOW DIAGRAM
TINTAYA-SiA^
TREATMENT RATE 8,000 DMT/D

—-9
F ^^

□a^
K»
o

TO TANK #1

wl Kl leñíl

LEGEND
1. PRIMARY CRUSHER ALUS CHALMER 54* X 74*
noo
PUMP HOUSE
2. COARSC ORE 5T0CKPILE 10.000 MT
3. VIBRATING SCREENS TYIIR / 2 DECK / 7' X 20"
4. SECONDARY CRUSHER SYMONS 7' STD
5. TERRARY CRUSHERS SYMONS 7' STD
6. FINE ORE STOCKPILE 16,000 MT
7. ALUS CHALMER 8Aa MILLS 16' X 20'
8. KREBS D-26 CYCLONES
9. ALLIS CHAUKER SECONDARY MÍLL 9" X 12'
10. KREBS 0-6 CYCLONES TO FLOTARON
11. OUTOKUMPU OK-38 aOTATlON CELLS
72. DENVER DR-300 FLOTARON CELLS TO INSTRUMENTS TO FILTERS
13. CONCENTRATE THíCKENER 100'e TO MILLS
14. LAROX PF-25(3) PF-32(1) FíLTERS
15. TAIUNG THICKENERS 250'fl
16. CONCENTRATE STORAGE 12,000 MT
17. RECOV^RED WATER TO TANK #2
18. PíLOT CaUMN CEU ImP X 12ai H
BLOWERS COMPRESSORS
19. TO TAIUNG POND
20. PSM - 400 (2)
 SECTION3

GEOLOGY

A. REGIONAL GEOLOGY AND CONCESSIONS

The Tintaya Mining District is located in the southeastem limit of the Ferrobamba
Copper Skam Belt of south central Peni as shown on the location map in Section 2. This beit
extends 250 kms to the northwest of Tintaya with an average width of 60 kms. It is formed by
a Mesozoic sedimentary sequence strongly folded, thrusted, uplifted and intruded during the
Andean Orogénesis (Incaic Phase). The main sfructural feature on the belt is the Abancay
peflection which is a regional warping of the sequence in such a way that the northem part runs
east-west, gradually tuming and running southeast in the southem part. All the major stnictures
within the belt parallel this regional trend.

The sedimentary sequence is of late Jurassic to early Cretaceous age and is comprised
6f the Yura quártzité at the base, overlain by the Mara redbeds and topped by the Ferrobamba
limestones. The sequence has been repeatedly intruded during late Cretaceous to mid-Tertiary
by diorites and granodiorites of the Abancay Batholith, followed by stocks and dikes óf
D monzonite porphyry and late andesite dikes.

The gray nodular limestones of the Ferrobamba formation and the monzonite porphyry
intrusions host the relevant ore deposits in this mineral province. These are of the Cu(Au-Mo)
skam, Fe-Au skam and disseminated Au in monzonite porphyry type as shown in Figures 1 and
2 (all Figures are at the end of this section). The skam copper deposits of the Tintaya and
I I Ferrobamba Belts are formed as the result of intmsive rock being emplaced into a sedimentary
rock such as shale or, limestone. The skam forms as the result of chemical reaction between the
two rock units and forms at or near the geologic contact, Other examples of skam deposits
include portions of the Shannon Mountain deposit at Morenci and the high density copper-
magnetite-chalcopyrite-pyrite ore at Chino. Tintaya Skam differ from these two deposits in that
me intmsive rock at Tintaya is generally'pporly mineralized while at Morenci, the intmsive is
mined as ore. Potential also exists in the Ferrobamba Copper Skam Belt to lócate intmsive units
mat have disseminated or "porphyry" style mineralization similar to that at Morenci and Chino.

The mining claims that will be in the Tintaya mine privatization package include those
within the Tintaya mine operation area, called the Tintaya Mining District and include the
existing Tintaya open-pit, all Chabuca deposits and the Coroccohuayco deposit. The Las
Bambas District, the Livitaca District and the Northwestern Mining District will be part of a
sepárate privatization package and are nót discussed in this section. All of these claims are
presently all under the ownership of Minero Pem but will be transférred to Tintaya and other
entities as part of the privatization process. The individual claims of each district are shown in
the tables in Section 5.

3-1
 r* B. THE TINTAYA MINING DISTRICT

i. Local Geology

! The Tintaya Mining District is the southeastem most outcropping of the Ferrobamba
Copper Skarh Belt, a window of Mesozoic sedimentary rocks surrounded by diverse volcanic
units of upper Tertíary and Quatemary age as well as recent sediments. It is located south of
the town of Yauri and west of Héctor Tejada.

The Mesozoic sedimentary units outcrop forming a broad northwest-southeast striking

anticline in which the late Jurassic Yura quartzite occupy the core and are flanked by the early
r
Cretaceous Ferrobamba limestones. Very complex parallel folding affects this broad structure
I forming tight syncline-anticline pairs locally. Associated with the folding are parallel axial
faults, as well as dip slip faults on the flanks. A major northeast-southwest shear with apparent
left lateral displacement cuts through the center of the district, apparently displacing the broad
anticline core outcropping in the southeastem part of the district (between east of Quechua and
south of Tintaya) two kilometers to the southwest (outcropping in the northwestem part between
Atalaya and Ccayo-Huinicunca).
!¡ The magmatic intrusions occurred in late Cretaceous to mid-Tertiary times. The oldest
aínd largest intrusión occurs around and northwest of Tintaya and is a granodiorite pluton limited
j~ ^ tp the south by the Tintaya shear fault and to the north by the late Tertiary volcanics. This was
followed by diorite intrusions outcropping throughout the area in dikes, stocks, and sills of
various dimensions, cutting all older units. The largest óf these crops out extensively just south
pf the Coroccohuayco deposit, A latér phase of magmatic activity was responsible for the
emplacement of monzonite porphyry dikes and stocks as well as minor granite porphyry
apophyses which are responsible for the cópper skam mineralization in the district and in general
throughout the Ferrobamba Skam Belt. The final intrusive phase is related to dacitic and
^desitic dikes and pipes related to the late Tertiary volcanic activity.

! The Tintaya Mining District hosts several copper skam deposits and prospects. Tintaya
is the most important but the district also includes the Chabuca, Chabuca Este, Chabuca Sur,
Ghabuca Norte, Inflexión and Zona Nueva deposits. Other deposits of copper skam type are
Coroccohuayco and' Atalaya as well as the Huacollo, Atuncancha, Condor Sayana and
Huinicunca prospects. Examples of these are copper disseminations in brecciated quartzite of
the Quechua and Ccayo-Huinicunca properties. The Atalaya and Quechua properties have other
ownefs and the Ccayo-Huinicunca propeity is located at a significant distance from the Tintaya
dperations. Since these properties are not part of the Tintaya privatization, they will not be
discussed in this report.

The Tintaya Copper Skam deposit surrounds the Tintaya quartz monzonite stock (Figures
li má 2) on its southeastem, southem, and southwestem contact with a wedge of Ferrobamba
limestones caught between the stock and the granodiorite píuton (lopolith) to the south. The
-i

^ 3-2
p deposit has been subdivided into different bodies which from northeast to southwest are called
Zona Nueva, Inflexión (Tintaya Open-Pit), Chabuca Este, Chabuca and Chabuca Norte. The
Chabuca Sur deposit occurs south of Chabuca and Chabuca Este, below a superficial outcrop of
the granodiorite lopolith which probably acted as a cap rock. The geometry of the first deposits
follows "grosso modo" the contact of the monzonite stock which in general dips towards the
center of the intrusive (Figures 3 and 4). These are disrupted by numerous monzonite porphyry
dikes projecting outward from the stock with southwesterly strike. It is precisely these dikes that
intrude the Ferrobamba limestones below the granodiorite lopolith and have mineralized the
contact between these two units forming the Chabuca Sur deposit with an upward concave lens
shape (Figure 5). The mineralization is hosted in gamet and diopside skam and forms irregular
high grade bodies of chalcopyrite, bomite, pyrite, magnetite and calcite. Normally there is low
pyrite contení and some of the bodies are magnetite dominant. An average ore grade of 2%
copper is a common factor, although the grade can range up to 8% or more locally.

The Coroccohuayco deposit shown in Figures 6 and 7 is hosted in a one-kilometer long

block of metasomatized Ferrobamba limestones of irregular thickness that occur "floating" in
the Coroccohuayco diorite intrusive. The discontinuous small outcrops of magnetite and gamet
skam on the westem margin of the Coroccohuayco valley are cut by a swarm of monzonite
porphyry dikes striking to the northwest and are too small to show in Figure 1. Previous
exploration at Coroccohuayco has concentrated in the central 400 meters of the skam block
(Figure 6),just west of the small magnetite and gamet skam outcroppings. The skam body was
intersected by all drill holes at depths between 100 and 400 meters below the surface, forming
a westerly dipping slab hosting the irregular-shaped bodies of chalcopyrite, bomite, magnetite,
calcite and minor pyrite. The deposit remains open in all directions (Figure 7). The average
grade of this deposit is 2.5% copper, with some high grade pods present locally.

Exploration in the Tintaya Mining District has been limited to the Tintaya and
Coroccohuayco outcrops. Surface mapping of the whole district by Minero Peni is based
primarily on aerial photography with very limited field reconnaissance. Indirect methods such
as geophysics were only used at the Tintaya deposit and limited to the outcrop area and
suiToundings. Despite this, a cióse study of oíd Minero Peni maps indicates the existence of
several outcrops of "mineralized" and "un-mineralized" skam that have never been appropriately
explored. These are the Huinicunca, Huacollo, Condor Sayana and Altucancha deposits and,
based on work completed by Phelps Dodge geologists, some of these appear to be larger than
the Tintaya or Coroccohuayco systems. Large extensions of terrain with Ferrobamba limestone
outcroppings, intruded by monzonite porphyry remain still unexplored to the west of Tintaya and
to the east of Huacollo and Altucancha. Finally, as discovered at Tintaya and Coroccohuayco,
the diorite intnisions often have lopolithic shape, with a sub-horizontal base capping potentially
mineralized terrain.

A detailed field study of geological relationships along with geochemical sampling, and
with magnetic and electrical geophysical surveying will have a potential to demónstrate the
existence of many more outcropping and blind deposits, possibly within or adjacent to the
Tintaya and Coroccohuayco deposits.

3-3
 ii. Geological Ore Reserves

The geological reserves presented in the "Report On The Resource And Back-Of-The-
iovelope Economic Evaluation" prepared by the PDMC Bxploration and Development Group,
Santiago office, dated September 1993, was based on the Tintaya reserve estímate dated June
1993. Since this date, several reserve updates have been issued by Tintaya, modifying the cut-
off grade and diverse other parameters in some cases, ahd as a result of additional exploration
drilling in others. These updates were done in an effort to increase the sulfide ore reserves for
he privatization.

A study of the reserve statements of Tintaya showed that for some ore bodies only
minable reserves were included as seen in the Inflexión and Zona Nueva (Tintaya Open-Pit),
while others included all geological reserves. In view of this, the services of Lyñx Geosystems
who had completed modeling work for Tintaya, were contracted to verify the geological and/or
minable reserves of the principie deposits óf the Tintaya District, including the Inflexión and
^na Nueva, the Chabuca Este, and the Chabuca Sur,
The geologicál reserves of both sulfide and oxide material in the Tintaya Deposit are
Usted in the following.two tablas with identified sources of Lynx (L) and Tintaya (T) and they
total 111 milUon tonnes grading 1.98% copper.

GEOLOGICAL RESERVES - TINTAYA MINING DISTRICT

Sulfide Ore

Tonnes Au Ag
Ore Body S (000) Cu % oz/tonne oz/tonne MoS2 %

Inflexion/Zona Nueva L 23,588 1.59 0.018 0.464 0.02

(Tintaya Open-Pit)
Chabuca T 2,836 2.08 n/a n/a h/a

Chabuca Este L - 23,816 2.11 0.011 0.447 0.01

Chabuca Sur T 9,053 1.92 0.009 0.320 0.09

Chabuca Norte T 593 2.63 n/a n/a n/a

Coroccohuayco T ■ 25,924 2.10 0.016 0.386 n/a

Subtotal 85,810 1.94 - - -

3-4
 Oxide Ore
L
Ore body S Tonnes (000) Cu % Cu Sol %

Inflexion/Zona Nueva T 196 1.65 1.50

(Tintaya Open-Pit)
Chabuca T 7,199 2.25 1.90

Chabuca Este T 4,755 2.03 1.85

Chabuca Sur T 2,162 1.96 1.54

Chabuca Norte T 1,285 3.05 2.00

Ex-Mine Pile T 9,682 2.00 1.62

Subtotal 25,279 2.12 1.75

1 Total Geologic Reserves 111,089 1.98% Cu

iii. Copper Grade Verification

Between January 28 and February 23, 1994, Phelps Dodge geologists conducted an
éxamination of the Tintaya drill core and geologic logs of the core on-site at the Tintaya
facilities. The purpose of this investigation was to 1) verify the Information on selected drill
Ipgs as well as the information illustrated on the geologic sections, 2) verify the lithologic and
mineralogic descriptions, 3) visually check for consistency between tíie log, core and reportad
assays with respect to copper mineralogy and grade, and 4) preparé actual composite samples
pf approximately 10% of all mathematically composited intervals throughout the entire database
tp confirm reportad total and soluble copper grades used in the ore reserve estimation. For each
of the important deposits the total length of mineralization intercepted by drilling was
determined. Ten percent of this total ore intercept length was then distributed randomly over
cross sections illustrating the ore zones and core. Sample pulps representing these intervals then
were physically pulled from the shelves, visually inspected, and the pulps representing 1.5 meter
intervals composited to ten meter intervals. A total of 3,199 samples were combined by the
equal volume method to make 537 samples for analysis. Analytical work for total and soluble
copper and also gold was performed by Bondar Clegg of Vancouver and SGS of Lima. Details
of the assay comparisons for individual deposits can be found in Appendix A which includes the
text pf the ore reserve data base verification report. The study determined that the Tintaya data
^e highly reliable with only a 0.60 percent difference in the assays reported by Tintaya and the
I^helps Dodge verifícation assays. Gold content was determined to range from 0.148 g/mt in
the Chabuca Sur deposit to 0.46 g/mt in the Chabuca deposit.

Í1
3-5
 iv. Potential Reserves

A surface geological reconnaissance of the Tintaya Mining District was undertaken by

Phelps Dodge geologists between January 28 and February 23, 1994, The objective of this
reconnaissance program was to assess the potential mineral resource of the district in addition
to the existing geological and minable reserves. The work was limited to the Tintaya and
Coroccohuayco claims that will be included in the privatization package. The Las Bambas and
óther districts were excluded from the privatization package with Tintaya and therefore were also*
excluded from this study.
I

Field work consisted of the direct qbservation, sampling, and mapping of outcropping
evidence of mineralization such as magnetite bodies, gamet skams, gossans, and copper oxide
stained areas. No indirect detection meíhod such as geophysics or optical remote sensing was
used by our reconnaissance team due to time constraints, weather constraints early in the
evaluation, and expense for this level of investigátion. Additionally, the Tintaya CEPRI would
not permit confirmatory drilling or bulk sampling at the mine or prospects. Previously existing
geophysical work, although patchy, helped assess the potential ofsome areas; nevertheless, large
areas remain open tó exploration for blind mineral deposits that are not considered in the scope
óf this work. Surface rock chip samples were analyzed by conventional methods for copper and
gold. The analytical results are considered only referentiál as outcrops are strongly leached,
exposing copper oxides only in trenches or recently exposed surfaces.
j

For the purpose of potential resource calculations, the prospects have been grouped into
the Tintaya and Coroccohuayco areas according to their proximity to each of these two main
areas, Detaüs of the estímate are included in the text of the report and also in Appendix A.
The potential geological reserves of the Tintaya Mining District from this study are shown in
the following table:

3-6
 TINTA YA MINING DISTRICT POTENTIAL GEOLOGIC RESERVES
17^-
Area Prospect Million Tonnes

1 Tintaya
h Huinicunca

Curpanchani
15

1 _2
Subtotal 17

1 Coroccohuayco Huisca - Chapi 40

Coroccohuayco 65

Condor Sayana _2Q

Subtotal 125
1
1 Total 142

The total geological reserves, of the currently defined Tintaya Deposit, for both sulfide
and oxide material amounts to 111 million tonnes. As noted in the table above there is the
potential (to the south and west) to increase the Tintaya geologic reserves by 17 million tonnes.
The nearby Coroccohuayco deposit with 26 million tonnes of geological reserves estimated on
the basis of 33 diamond drill boles, of which all but one intersected the mineralized horizons,
remains open in all directions. Based on the geological relationships of this ore body, as well
as on the surface outcrops, a potential of at least an additional 125 million tonnes with average
án grade above 2% Cu can be assumed to exist within the one-km long outcrop trend of skarn
lenses and their projection at depth as noted in the table above.
L
I The Tintaya Mining District geologic (111 million tonnes) and potential geologic 142
million tonnes) reserves could be on the order of 253 million tonnes with an average grade of
2% Cu.

I C. EXPLORATION PROGRAMS
I

In order to better assess the exploration potential of the property, define the geological
ánd minable reserves and determine the exploration requirements in the future, two exploration
sicenarios are analyzed in order of priority and timing as presented below:
1

1. The pre-acquisition work program, designed to confirm the actual reserves and
I provide an estimation of the potential of the district. This program, with the
I exception of expensive geophysical surveying, was completed.
I 2. The post-acquisition definitión drill program, designed to completely delinéate
I open ore bodies and fill in un-appropriately drilled areas. The estimated cost is
i $3 million.

3-7
 The post acquisitíon definition drilling program at Tintaya will utilizo existing on-site
U' equipment as much as possible. The Tintaya exploration department owns and opérales two
( Longyear 44 diamond drilling rigs with adequate crewing to opérate each for three shifts per day
^d tíiese and others, as needed, will be contracted. As of March 1994, the seven district
mineral resources are delineated by 805 diamond drill boles totaling 120,233 meters as illustrated
below:

Tintaya Mining District Drilling

Ore Body Number of Holes Total Length (Meters)
1

1 Inflexión 92 22,684
1 Chabuca 276 16,279
!Chabuca Este 259 41,057
¡ Chabuca Sur 117 11,023
¡Chabuca Norte 28 4,213
Coroccohuayco 33 24,977
!
Total 805 120,233

I ' As part of the Phelps Dodge review of the data supplied by the Tintaya staff, a cursory
review of the variography of the open-pit minable resources was performed by Lynx Geosystems
pf Vancouver. Lynx was contracted by Phelps Dodge specifically because Lynx software is
litilized currently at Tintaya and they could an¿yze and evalúate for Phelps Dodge, mining cost
criteria with minimal reformatting of basic data. North and east ranges of data correlation for
the Tintaya Inflexión Zone, Chabuca Este, and Chabuca Sur conñrmed by Lynx are
approximately 40 meters while the vertical ranges are 25, 20, and 6 meters respectively.

[ Cross sections illustrating drill hole data (including rock type and copper grade) and
geologic interpretations were reviewed for drilling thoroughness based on the vmography-
defined ranga criteria and desirable additional drill locations were noted and depths estimated.
Additionally, Lynx analyzed the block copper grade estimation variance to liighlight zonas
having unacceptable estimation variance levels due to inadequate drilling. The total mínimum
suggested drilling for the three deposit areas to delíncate open-pit minable reserves is 166 boles
for 17,270 meters.
I
I
I

I At Corpccohuayco a mínimum of 12,500 meters will be requiréd to fill in and delinéate

the whole ore body at a 40-meter drill grid,,a total of 50 drill boles in the periphery, within the
ore body limits. Drill boles are expected to vary firom 100 meters in length on the eastem side
to 400 meters on the westem side, with a 250 meters average depth for the 50 drill holes.

3-8
 The total program therefore amouhts to 30,000 meters, to be executed in two years at
a cost of $3 million ($100/meter). The present capacity of the two truck mounted Longyear 44
machines owned by Tintaya is 10,000 meters/year, therefore añ additional machine will have
o be contracted during this period.

After the initial two year definition drill program noted above, Tintaya should have
áppropriately defined minable and geolpgical reserves. As the project plan only develops the
^own minable ore reserves and assumes no additional reserves, the annual cost estímate for
exploration activities will only include claims maintenance and overhead for the district totaling
0.2 million per year starting after completion of confirmation of the reserves of Tintaya.

However, if PDMC acquires Tintaya, an annual exploration program should be planned

o, keep ahead of the mining reserves depletion and also explore new areas within the Tintaya
Mining district where property is acquired. This will be needed for an evaluation of the
potential for expansión of the operations, and the exploration and development of the other
j)roperties.

D. FERROBAMBA SKARN BELT MINERAL POTENTIAL

The Ferrobamba Copper Skam Belt although essentially unexplored is reported to host
át least 17 copper skam deposits, 12 iron skam deposits, 10 disseminated or skam related gold
deposits, four porphyry copper type occurrences and 15 copper vein systems. Most of the iron
skam deposits reported are associated with copper mineralization at depth, and all the porphyry
^gets remain largely unexplored. No modem explorátion methods have been used in this
prolific copper belt, largely due to the fact that since the late 1960's, Peni was politically
isolated from the rest of the world and because of a lack of accessibility, energy and
ihfrastructure in general as well as the distance to ports. The better conipetitive position and
much larger targets of the Chile-Peru coastal copper porphyry belt have experienced most of the
exploration activity during the last decade.

- Nevertheless, the total mining property saturation together with the exhaustion of
exploration targets within the porphyry belt, coupled with the much higher grade deposits and
new energy and infrastructure possibilities in the Ferrobamba Copper Skam Belt will no doubt
change the attention of new exploration efforts. Cpmparatively, the Ferrobamba Copper Skam
Bélt is the largest of its type in South America. In Perú, only two major copper skam deposits
^e known outside it: Antamina and' Cobrisa. It is second only to the Chile-Peru Coastal
Copper Porphyry Belt in copper ore reserves. The Peruvian coastal volcanogenic massive
sulfide deposits are much smaller and lower grade targets, although much closer to ports.

Finally, the geological setting and characteristics show the potential for large copper
deposits of the porphyry copper and skam types throughout the belt. Even more important,
these deposits are readily accessible to surface and indirect tele-detection methods of exploration
which have never been used in this area.

The Tintaya mine acquisition will próvide a competitive edge to the new owner, not only
because of the mining property, but also because it provides the basic exploration infrastructure
ánd support.
r

3-9
 SCALE
P777771
IqqiI Pleislocene lo Recent Grovel
I Tul Pliocene Sedimenlory ond Volccnic Rocks
[j^Poleocene to Oligocene Sedimenlory ond Volconic Rocks
;KiJ Cretoceous Inlrusive Rocks
^ Cretoceous Ferrbombo Limestone
Jurosic lo CreloceoLJS Sondslone ond
Ouortzile
^ Bedding Kiinero phcíps
^ Fold oxis tlailgi: del Peru S.A. TINTAYA PROJECT
Foult
^—-^Ore Bodies TINTAYA AREA
<=□ CLAIMS GEOLOGICAL WAP AND
OPEN PIT CLAIW.S

funcho

OR0CCO

HUINICUNC

orocc

AltuCancho
 Figure 2
'1
ümits OT Knov,
K inerali
thpyNORTE
' L
Kfcd +
X
\
Ú5]i.a(^/\Ñ X
Alluvium
Yauri F.
HUANtAí^ti^ Skorn
/ i J/-\ Porphyrile
n
Monzonite porphyry
Gronodiorite
Diorite
(A A
^A A l_ L L Ferrobcmbc
Yuro Grouc
~ -] ^ A pfie^ps
Jatiaceti pku s.t.
OEOLOOY OF THE TI^5TÁYA ÁREA
SOOn-
1—1

4.150 AL

4.100 AL
ssssssstt:

4.050 AL

4.000 AL^

3.950 AL

3.900 AL
Minoro /tltcí^tss
I I Moroine—Alluvial Cover ihminc del Perú S.A. TINTAYA PROJECT

AAAAA CHABUCA ESTE PROJECT

Wonzonite SECTION A-A 1.235.900 E
Andesitic Porphyry LOOKING W
I I Gabro— Drorite
Limestone

100 m
 Figure 4
■o

4100 +
+ +

4050

LEGEND
AUuvlal Cover

Skarn

"H Monzonite-

Vr Dioriie

Linestone

/.Cu/th i ckness

pfrc^ps
AsdaiScti im^íA r^;OJECT
J-

CHABUCA ESI
SECTIOMi
 4.150 m.s.n.m

4.100 m

4.050 m

4.000 m

3.950 m

Cobro - Diorite Minero phcips

5CAI.I.. del Poru S.>í. TINTAYA PROJECT
■ Skorn
i£Smí5¿2í

O "^0 m Monzonite
CHABUCA SUR" PROJECT
Andesilic Porpliyry
SECriON C-C N 20° E
Limeslone

Moraine - Alluviol - Cover

LOOKING NW
 SCALE

200 m

'1 1 .800 ni

LEGEND a
Gobfo-Diorile

;0' AUered Cobro-Diorile

INTRUStVES •AV Porphyrillc Oocile

o\
N.-441 .600 Ouorlz—Monronile

ta Oucriz—Wonzoolle Porphyry

MognelUe-ümomle
SKARN ZONE
SVorn

Ümeslone
SEDIMENTARY
Sliolc ond Sondstone

0 DRILL HOLE (1974-1977)

4.000
Lirrule xtenor de
Reservds Pfobod © DRILL HOLE (1982-1980)
/ " PROJECICO BORDER OF
ORE RESERVES

N.-4-1 1 .400 m - 4.090

tánriyt^ P*n$ S A.
TINTAYA PROJECT

:¡] XK'"
.7 v.v- COROCCOHUAYCO PROJECT
GEOLOGICAI. MAP AND
DRII.I. MOLES LOCA!ION
 Figure 7
OM-32 OM-43
OM-45 OM-51

4.000

5.900

3,800

LEGEND

Alluvic Cover

Skarn

Monzoníte/Docite
Diorite

Shale(hornfels)
Recrystc'iized
Ümeston^
OuortziVC sondstone

mferrec contoct
Fouit
Foiilt _ ?ne
450.00 m
Cu ■.•■ickrifss
3.600

TINTAYA PROJECT
SCALE COROCCOHUAVCO
lOOm ^
6E0L0GICAL SECTION E
LOOKtNG NE
 SECTION 4
t

n PROJECT PLAN

A. OVERVIEW

PDMC's pláns for the future operatíon of the Tintaya project are based on what is^
presently known about the mineral reserves and the existing capabilities of the facilities. As
discussed in Section 3, the potential geológica! reserves of the Tintaya District are considerable,
but those capable of being defined as "minable reserves" are much less. Minable reserves have
been identified in the existing Tintaya open-pit, in the Chabuca Este area, in the Coroccohuayco
area, and in the Chabuca Sur area.

PDMC's plan entails mining, by both open-pit and underground methods, in each of the
four areas mentioned above. The combined reserve óf the deposits will be capable of fully
satisfying the concentrator feed requirements between the years 1995 and 2010. Open-pit ore
from the Tintaya deposit will be mined through 2002, and ore from underground sources will
begin contributing to the concentrator feed in 1998. After 2002,the majority of the concentrator,
ore will origínate from the underground mines. A discussion of the mine concentrator and
infrastructure for the PDMC plan follows:

B. MINE PLANNING

i. Tintaya Block Model

A block model for the existing Tintaya open-pit was created using blocks which are 12.5-
meters by 12.5-meters by, 15-meters (width by length by height). Each block contains
information as to type of material and copper grade. Material types include; oxide skam, sulfide
skam, and non skam. Mineralization types are not coded in each individual block.

Definition of a block's material type originated from the Tintaya Engineering

Department, which provided both cross séctional ore body shapes and diamond drill hole assay
information. The cross séctional information was fumished by Tintaya in two sets: one set for
the "Inflection Zone" (Tintaya open-pit) and one set for the "Chabuca Este Area". The sections
for the Inflection Zone were constructed at 25-meter intervals in the east-west direction, and
those for the Chabuca Este Area were constructed at 12.5-meters intervals in the north-south
direction. Drill holes were composited by the Tintaya staff on 5-meter intervals.

PDMC conveyed the cross séctional information to Lynx Geosystem, of Vancouver,

Cañada, for construction of the block model and for grade interpolation of the blocks.
Assignment of each block's grade was done by kriging, Md due to information being provided
in ,two sets, two block models resulted which the Morenci Mine Plannihg Department later
combined into one. The first block model resulted from the Inflection Zone cross sections used
a kriging search radius of 60 meters along the plañe of the section (east-west direction), 25
meters across the section (north-south direction), and 25 meters in the vertical direction. The
second block model resulted from the Chabuca Este cross sections, and a search ellipse was used

4-1
 which plunged 45" to the north to account for the dipping ore body. The north-south and east-
west radius was 41 meters, and the vertical radius was 20 meters. After creating the models,
Lynx converted the information.to a format which was acceptable to the mine planning software
used by the Morenci Miñe Planning Department.
i
I

[ A considerable amount of model cross-checldng was performed by both Phelps Dodge's

South American Exploration Department and the Morenci Mine Planning Department.
Numerous core inspections were made, and check assays were performed at third party labs.
Generally, both copper and precious metal grades agreed with the estimates provided by Tintaya.
Ilie ore body shape definitions and grade inteipolations were also thought to be reasonable. As
a check of the grade interpolations, both inverse distance and polygonal estimating methods were
employed. The results substantiated Lynx's kriged grade interpolation.
I

I ii. Tintava Pit Design

I A design of the remaining portion of the existing Tintaya open-pit was performed by the
Morenci Mine Planning Department with the use of MEDSystem mine planning software. With
this software, a floating cone analysis was performed to evalúate the economic valué of mining
^ch block within the model. A copper price of$0.85 was used for the evaluation, and no valué
was given to blocks coded as oxidized copper material since no facilities for leach copper
n recovery are iñcluded in the PDMC plan. The remaining pit design parameters that were used
in the floating cone analysis are listed in the following table:

Titaya Pit Design Parameters

Parameter Valué

Bench Height 15 meters

Pit Slope 43^2' except 35'' on northwest
quadrant and no disturbance of
moraine on southeast comer
Cutoff Grade 0.65% Cu
Mining Cost $0.70 per tonne of material
Mine tó Mili Discrepancy 10.0%
Concentrating Cost $4.50 per tonne of ore
Concentrator Recovery 90% for copper
Concentrator Grade 31.0%

Inland Freight on Concéntrate , $34.00 per tonne concéntrate

Ocean Freight on Concéntrate , $40.00 per tonne concéntrate
Smelting Charge $100 per tonne concéntrate
Reñning Charge $0.10 per pound Cu
Administrative Costs $0.0894 per pound Cu
Depreciation $0.10 per pound Cu
Copper Price $0.85 per pound Cu
Precious Metal Credit $0.088 per pound Cu

4-2
 ! As indicated in the table, a pit slope of 35 ■ was designéd in the northwest quadrant due
to sloughing, and the slope elsewhere was designed at 43^2 (The 43^2° slope resulted from
designing haul roads into a pit designed at a slope of 45-.) This slope design is less steep than
the 49" slopes that Tintaya cuirently uses throughout the pit. The cost parameters for the design
were based on Tintaya's reported year-to-date costs thrbugh October 1993.

After achieving a pit design based on the floating cone analysis, mining limits were
smoothed and adjusted for haulage. Haul road designs followed the current Tintaya design
practices of 22 meters in width at an 8% grade. The resulting pit included the mining (by
open-pit methods) of the upper section of the eastem side of the Chabuca Este deposit. The
resulting minable reserves of the Tintaya pit are listed in the table titled "Tintaya District
Minable Reserve" on page 4-6.
j
j

' iii. Other District Minable Resources

I
Chabuca Este Underground

I The Chabuca Este deposit has the shape of a vertical bed which appears to lie less
vertical with depth. Continuity of the deposit has not been determined due to a lack of drilling
information at depth. Immediately south of the Chabuca Este deposit, a small synclinal shaped
ore body has been^ identified; however, lack of sufficient drilling prevents it from being
identified as a minable ore reserve. This deposit lies undemeath and to the west of the PDMC
designed Tintaya open-pit. The following figure contains a typical cross section of the deposit
and indicates the spacial relationship of the ultimately designed open-pit.

r'
4-3

0
 4,2QQ a ±200_£L
CROSS SECTiON
5,800'W
SOUTH NORTH

tOQ_£L

POSSiBLE ORE RESOÜRCE

UNE OF OXiDÍZATtON

±QQSM. ±SQQFL

ISQSLEL 3.900 n

UNDERGROUND TARGET

phelus
dadae
MarBaniUlna.
3BOñ n
3800 n

r/drAVA PROJECT

TYPtCAL SECTiON THROUQH

CHABUCA ESTE DEPOSiT
SCALS.' 1:2000 DATE: MAY 1994
L
4-4
 I The reserves for the Chabuca Este underground deposit were determined by Redpath-
Mclntosh Engineering(RME)and were calculated by estimating volumes from cross s^tion and
plan maps of the deposit and by applying the appropriate tonnage and dilution factors. The cross
section maps were generated by Tintaya geologists, and the plan maps were generated by PDMC
geologists in Santiago, Chile. In addition to Information from surface drilling, information about
the deposit carne from holes drilled from an underground tunnel which was driven through the
deposit.

Coroccohuayco Underground
i
I The reserves for the Coroccohuayco underground deposit were determined by RME and
were calculated by adjusting the Tintaya Eiigineering Department's estímate by an appropriate
recovery and dilution factor. This deposit has been defined solely by surface drilling and
áppears to be a massive ore body exhibiting greater continuity than other deposits in the district.
Additionally, the deposit is open ended in three directions, indicating a potential for additional
ore. In order to better define the ore zone, RME has recommended an extensive defmition
drilling program as part of Coroccohuayco's pre-prodiiction phase.
I

Chabuca Sur Qpen-pit

I Reserves for the relatively small open-pit deposit at Chabuca Sur were initially
determined by a Lerchs-Grossman floating cone analysis performed by Lynx Geosystems. The
floating cone parameters they used were similar to those used by PDMC to design the Tintaya
(existing) pit. The Lynx results were adjusted downwards by PDMC when it became apparent
that their block model of the deposit had used block sizes which were smaller than the mínimum
possible mining unit. To compénsate for the pfoblem, the reserve grade from the Lynx's
^álysis was decreased by 25% to account for anticipated dilution. This deposit will not be
mined as a main source of ore but rather to help fulfill the daily ore delivery requirements.
!

I The following table summarizes the minable reserves for eách deposit. The open-pit ore
grades that are shown will be lower^ by 10% when determining the concentrator head grade
in order to allow for dilution and sampling errors. The underground reserves that are Usted
already account for recovery and dilution (85% recovery and 12% dilution).

4-5
\ Tintaya District Minable Reserves as of 1/1/1993

Cut-off Ore Non-ore Total

Grade ■ tonnes Grade tonnes tonnes Strípping
(% Cu) (000) (% Cu) (000) (000) Ratio

Tintaya open-pit 0.65 20,087 1.81 89,502 109,589 4.46

i Chabuca Sur open-pit 0.65 8,800 1.40 35.585 44.385 4.04

Subtotal Open-Pit '28,887 1.69 125,087 153,947 4.33

Chabuca Este Underground 1.00 9,801 1.99 - -

Coroccohuayco Underground 1.00 18.480 2.35 - -

Subtotal Underground 28,281 ■ 2:23

TOTAL 57,168 1.95 125,087 153,947 -

iv. District Mine Plan

The summary of the district mine plan and district production sequencing is shown in the
able on the following page. A mine-to-mill discrepancy factor of 10% was applied to the open-
pit ore grades when calculating the concentrator head grades for Cu, Au, and Ag to account for
dilution and sampling errors. The underground reserve tonnage and grades have already taken
dilution into account.

4-6
 Tintaya Project
Mine Plan Summary
1994-2012

1994 1995 199B 1997 199S 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-2012 TOTAL
Operatinq Days per Year 338 350 360 360 360 360 360 360 360 360 360 360 360 360 360 360 360 720 6.808
Tintaya Open PIt Sulfide Ore Tonnes(CiOO) 2,700 2,975 3,240 3,240 2,880 2,520 1,860 672 20,087
SulTtde Ore %TCu 1.77 1.83 1.75 1.84 1.93 1.63 1.81 2.33 1.81
Waste Tonnes(000) 12,936 16,468 21,083 18,350 8,163 6,835 4,356 1,311 89,502
Total Tonnes(000) 15,636 19,443 24,323 21,590 11,043 9,355 6,216 1,983 109,589
Vt^ste Ratio 4.79 5.54 6.51 5.66 2.83 2.71 2.34 1.95 4.46
TonnesfOav (000) 46-3 57.6 69.5 60.0 30.7 26.0 17.3 5.5
Ch-Este Und. Gnd. Sulfide Ore Tonnes(OOO) 360 720 720 720 720 720 720 720 720 720 720 720 720 801 9,801
Sulfide Ore %TCu 1,99 1.99 1.99 1.99 1.99 1,99 1.99 1.99 1.99 1.99 1.99 1.99 1.99 1.99 1.99
Tonnes/Day(000) 1,0 2.0 2.0 2.0 2.0 2.0 2,0 2.0 2.0 2.0 2.0 2.0 2.0 1.1
Chabuca Sur Sulfide Ore Tonnes(OOO) 300 768 720 720 720 720 720 720 720 720 ?20 1,252 8,800
Open PIt Sulfide Ore %TCu 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40
Waste Tonnes(000) 5,700 5,700 6,902 1,536 1,440 1,440 1,440 1,440 1,440 1,440 1,440 1,440 1,440 2,504 35,302
Total Tofvies(000) 5,700 5,700 7,202 2,304 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 3,756 44,102
Waste Ratio 23.01 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2,00 2.00 4.01
Tortnes/Dsv ((X)0) 15.8 15.8 20.0 6,4 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 5.2
Corocc. Und. Gnd. Sulfide Ore Tonnes(OOO) 360 1,080 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 840 18,480
SulTide Ore %TCu 2.80 2.60 2.80 272 2.46 2,46 2.22 2.10 2.10 2.10 2.00 200 235
Tonnes/Day(000) 1.0 3.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 1.2
Total DIstrict Prod Sulfide Ore Tonnes(OOO) 2,700 2,975 3,240 3,240 3,240 3,240 3,240 3,240 3,240 3.240 3,240 3.240 3,240 3,240 3,240 3,240 3,240 2,893 57,168
SüITide Ore %TCu 1.77 1.63 1.75 1,84 1.94 1.71 1.92 2.19 2.31 2.26 2.12 2.12 1.99 1.92 1.92 1.92 1.86 1.74 1.95
SulTide Ore g./TM Au 0.44 0.44 0.44 0.44 0,43 0.42 0,41 0.40 0.41 0.41 0.41 0.41 0.41 0.41 0,41 0.41 0.41 0.36 0.42
S SulTide Ore g/TM Ag 14.20 14.20 14.20 14.20 14.17 14.13 13.30 11.88 11,49 11.49 11.49 11.49 11.49 11.49 11.49 11.49 11.49 10.71 12.45
SulTide Ore %MoS2 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0,02 0.02 0.02 0.04 0.02
SulTide Ore T/Oay(000) 6.0 6.5 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 4.0 8.4
waste Tonnes(000) 12,936 16,466 21,083 18,350 13,863 12,535 11,256 2,847 1,440 1,440 1,440 1,440 1,440 1,440 1,440 1,440 1,440 2,504 124,804
Total Tonnes(000) 15,636 19,443 24,323 21,590 17,103 15,775 14,498 6,087 4,680 4,880 4,680 4,680 4,680 4,680 4,680 4,680 4,680 5,397 181,972
Waste Ratio(Open Pits)* 4,79 5.54 6-51 5.66 4.61 4.97 5.21 1.98 200 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 4,32
Tonnes/Day(000) 46.3 55.6 67.6 60.0 47.5 43.6 40.3 16.9 13.0 13.0 13.0 13.0 13.0 13.0 13.0 13.0 13.0 7.5 26.7
Mili Foed" Sulfide Oro Tonnes(D00) 2.700 2,975 3,240 3.240 3,240 3,240 3,240 3,240 3,240 3,240 3,240 3,240 3,240 3,240 3,240 3,240 3,240 2,893 57,168
Sulfide Ora %TCu 1.59 1.65 1.58 1.66 1.77 1.58 1.81 2.11 2.28 2.23 2.09 Z09 1.96 1.89 1.89 1.69 1.83 1.68 1.87
Sulfide Ora g./TM Au 0.40 0.40 0.40 0-40 0.39 0.37 0,37 0.36 0.37 0,37 0.37 0.37 0.37 0,37 0.37 0.37 0.37 0.32 0.37
Sulfide Ore g./TM Ag 12.76 12.78 12.78 12.78 12,75 12.72 11.97 10.69 10.34 10.34 10.34 10,34 10.34 10.34 10.34 10.34 10.34 9.64 11.21
Sulfide Ore T/Day(000) 8.0 8,5 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 4.0 8.4

Notes: Averape Grades of By-Products

Au, ort-MAn, QfTM %Mo$2
Tintaya 0.44 14.2 0.02
Chabuca Esta 0.33 13.9 0.01
Chabuca Sur 0.28 7,8 0.07
Coroccchuayco 0.50 12.0 0.01

* total waste ratio calo exeludes productlon underground sources

"Mine lo mili discrepancy = 10% forall metáis ín all open pit deposits. For underground deposlts, disoepancy = 10% for Au and Ag oniy.
 Tintaya Open-pit

[1995 through
Detailedtheannual mine plans were designad for the existing Tintaya open-pit for the
end of the pit's Ufe in 2001. These annual mine plans can be found in
years
kppendix B. The 1994 mine plan followed those plans proposed by the Tintaya Engineéring
Department, since possession of the propeity could not occur until sometime in the latter part
pf 1994. PDMC's mine plans were designed to supply the mili with 3.0 million tonnes of ore
in 1995 (8,500 tonnes per day for 350 days) and 3.2 million tonnes of ore per year there after
(9,000 tonnes per day for 360 days). Currently, 2.7 million tonnes of ore are miUed each year
(8,0(K) tonnes per day for 337.5 days). The projected ore delivery increase is due to planned
de-bottlenecking of the milling flotation circuit.

The proposed mine.plan includes stripping located on the sputhwest side of the existing
Tintaya pit to uncover shallow ore located over the eastem side of the Chabuca Este deposit,
Additionally, stripping in the ñorthwest and northeast comers of the pit will uncover both and
shallower and deeper ores. While the majority of the stripping takes place, ore deUvery
requirements will be met from benches at the bottom of the pit. Significant savings in haulage
cycle times will be realized while the stripping activity is táking place since a majority of the
jvaste haulage will be to a waste rock stockpile located on the westem side of the pit. Waste
rock stockpiles west of and north of the existing pit will be utilized in this proposed plan. Both
^eas are situated in large canyons with adequate dumping capacity.

2habuca Este Underground

For the Chabuca Este underground deposit, RME was consulted to select an appropriate
mining method and to estímate the capital and operating costs. At this deposit, where several
iarge discontinuities are present, the underground mining method selected is a mechanized cut
and fill stopping. On average, the stopes will be six-meters wide and as long as the ore body
geometry allows. Horizontal cuts will be taken every five-meters. The sandfiU system will
consist of slurried mili tailings and cement piped to the stopes which require filling.

Development requirements at Chabuca Este include 6,750 meters of drifts and declines
ánd 1,000 meters of vertical raises. Ore which is extracted from the stopes will be transponed
down a series of ore passes to levels which open into the existing Tintaya open-pit(on the 4000
level initially and the 3885 level eventually). From there the ore will be transponed via
I I contractor owned trucks to the mili. The planned mine Ufe of the Chabuca Este underground
deposit is 16 years, including development.

L'

4-8
 Coroccohuayco Underground

J ' The selected mining methods in the Coroccohuayco deposit are mechanized cut and fiU
stoping (50% of total) and blast-hole stoping (50% of total). The blast-hole stopes will each
be 20-meters high and lO-meters wide, and will be mined as adjacent pañels with each panel
being filled after it is mined. The length of each panel will be determined by the geometry of
the ore body. Large hole drills will be usad to drill the blast-holes, and muck will be removed
jviá remote-controlled load/haul/dump equipment (LHD). The sandfill system will cpnsist of
screened material from surface being delivered to an underground sandplant via a bore hole.
Cement will be added and the fill material will be loaded into haulage trucks and delivered to
the stópes, where D-6 dozers will be used to spreád the fill.
I -
I The mechanized cut and fill stopes will be located in areas where blast-hole stoping
would not be possible due to irregularities in shape, poor ground conditions or narrowness of
the ore body. These stopes will be five-meters high by five-meters wide. Drilling will be done
with twin-boom jumbos, and mucking will be performed with LHD's.
I
j Sublevéis will be driven each 20 meters and haulage levels each ÍOO meters. Ore
extractad from the stopes will be hauled with LHD's to ore passes which will transfer ore to
haulage levels. The ore will be hauled in 26-tonne haul trucks to ore passes which will feed an
underground crusher. After being crushed, the ore will be transferred to sn underground storage
bin and will then be hoisted to surface and trucked by contractor to the concentrator.

The mine is designed to have a production rate of 5,000 mtpd, and development
requirements include 19,710 meters of drifts and declines,, 2,100 meters of vertical raises, and
425 meters "of a six-meter diameter vertical shaft. The deposit is expected to have a 16 year Ufe,
including development. Although the déposit contains higher grade material than other deposits
in the district, it's mining will be delayed due to the four-year pre-production phase ^d
associated capital costs. RME recommends a two-year exploratión/reserve definition phase
ifollowed by a two year development/construction phase. After bringing the mine into
production, ongoing development will include excavating 1,750 meters pf sublevéis per year.

Chabuca Sur Open-pit

I The Chabuca Sur open-pit will be stripped of its waste cap when surplus equipment from
thé existing Tintaya pit becomes available in 1998. Due to the deposit's expected low-grade,
it will not be mined as a main source of ore but rather to help ftilfiU the daily ore delivery
requirements. Haulage requirements during the stripping phase are expected to.be low since the
deposit is relatively shaUow and the waste stockpiles will be located cióse to tíie deposit.

4-9
Summarv of Annual Mine Plans

The mining of each deposit was sequenced to most econonücally exploit the district*s
reserves. Highiights of the plan are summarized in the following table:

1994 •Tintaya plans followed since PD possessíon could not occur untU latter part of year

1995 -Stríppíng over eastern side of Chabuca Este and in nortfawest comer of Tintaya pit
1996 -Strípping over eastem side of Chabuca Este, nortbwest comer, and nortbeast comer of Tintaya pit
-Development of Chabuca Este underground begins in mid-year
•Exploration/reserve definition program at Coroccohuayco underground begins
1997 -Strípping at northwest and northeast comer of Tintaya pit
-Development of Chabuca Este underground continúes
-Exploration/reserve defínitlon program at Coroccohuayco underground continúes
1998 -Strípping requirements decrease in Tintaya pit
-Chabuca Este underground begins limited ore production
-Development/construclion phase begins at Coroccohuayco underground
-Strípping begins at Chabuca Sur open-pit

1999 -Minimal strípping requirements in Tintaya pit

-Chabuca Este underground reaches full ore production
-Development/construction phase continúes at Coroccohuayco underground
-Strípping continúes at Chabuca Sur open-pit

2000 -Continued production at Tintaya pit and Chabuca Este underground

-Coroccohuayco underground begins limited ore production
-Chabuca Sur open-pit begins limited ore production

2001 -Final year of mining at Tintaya pit

-Continued production Irom Chabuca Este underground and Chabuca Sur open-pit
-Increased ore production from Coroccohuayco underground

2002 -Continued production from Chabuca Este underground and Chabuca Sur open-pit
-Coroccohuayco underground reaches full ore production

2003 -Continued production from Chabuca Este underground, Chabuca Sur open-pit, and Coroccohuayco
to underground
2010

2011 -Continued production from each deposit until exhaustion of reserves. Milling rate will fall below
to 9,000 tonnes per day
2012

4-10
 V. Mine Equipment

! Open-pit Equipment

I As discussed in Section 2, two types of haulage trucks are currently in use at Tintaya.
A fleet of 17 Wabco units (77-tonne) has been in use since 1983, and a fleet of seven Belaz
(Russian) units (109-tonne) has been in use since 1990. The Wabco trucks have performed well
at Tintaya; however, several are approaching the end of their economic life(50,000 hours). The
Belaz units have not performed well with low availability and parts that are expensive and
difficult to obtain. As a consequence, the original fleet of seven trucks has diminished to an
pperating fleet of three.

I A detailed haulage analysis was conducted in conjunction with the design of the annual
mine plans to estimate haulage truck requirements. Haulage profiles were measured, availability
^d utilization estimates were made, and a replacement/addition schedule for trucks was
determined. Utilization and availability factors are similar to valúes used at other PDMC mines
^d are based on the age of the truck.
I
^ The Cat 785 haul truck, with an 118-tonne capacity, was selected for replacement and
additional haulage units. The estimated cost with tires, freight, duty and assembly is $1.15
million per unit. Tintaya's truck shop can adequately handle this size of truck,

The existing Tintaya open-pit operation requires long hauis as a result of relatively deep
mining. However, in 1995, the Tintaya open-pit will have substantially reduced waste haulage
requirements, and the waste loading capacity will be shifted to stripping requirements to the
expansión into the Chabuca Este area and to the northwest comer of the pit. The haul distances
for both areas will be much shorter than those experienced from the bottom of the Tintaya open-
pit. Therefore, the required number of trucks in the fleet will decrease even though the tonnage
per day will increase,

I The following table lists the year's estimated haulage cycle time as well as the truck fleet
requirements and planned retirements/purchases over the life of the district. Additional
Information can be found on the Truck/Shovel Production calculation sheets in Appendix B.

4-11
 Tonnes
mined Average Wabco Belaz Cat 785
(million) cycle time 77-tonne 109-tonne 118-tonn^
Year (Tintaya pit) (Tintaya pit) (operating/retired) (operating/retired) (operating/purchased)
1994 15.6 22.2 16/0 3/0 0/0

1995 19.4 15.9 12/4 0/3 5/5

1996 24.3 14.2 8/4 0/0 5/0

1997 21.6 19.4 4/4 0/0 10/5

' 1998 11.0 30.7 4/0 0/0 10/0

1999 9.4 30.6 4/0 0/0 10/0

2000 6.2 34 0/4 0/0 10/0

2001 2.0 38.3 0/0 0/0 10/0

' '02-'09 - -
0/0 0/0 10/0

The loading and drilling equipment is estimated to be adequate for the proposed tonnage
in the mine plan. As discussed in Section 2, two 12-cubic-yard shovels, two 6-cubic-yard
shovels, two 10-cubic-yard front end loaders and three B&E 45-R dxills are utilized at Tintaya.
Current operations are limited by the number of trucks in operation. The annual Tintaya open-
pit availability for the shovel fleet is expected to average between 75% and 78%, with utilization
expected to be between 23% and 60%. Excess shovel loading capacity in the years 1998
through 2000 will be used to develop the Chabuca Sur open-pit. Since the shovel fleet should
adequately handle the loading requirements, the plans designed by PDMC do not anticípate use
of the front end loaders to load haulage trucks. Further information on each year's loading
requirements can be found on the Truck/Shovel calculation sheets in Appendix B.

Underground Equipment

RME estimated the major equipment requirements of the underground deposits. The
major equipment is Usted in the foUowing table:

4-12
 Tintaya Underground Equipment Requirements

Chabuca Este UG Coroccohuayco UG

Item units units

Blast-hole drill _

2
Jumbos, two-boom 2 4
Scoop, 7.5-cubic-yard 2 7
U.G. haul truck, 26-tonne 4 7
ANFO truck 1 4
Service vehicle 2 5
Dozer, D-6 -

2
Grader -

1
Production hoist, 2,400 hp -

1
Service hoist -
1
Primary crusher -
1

At Chabuca Este, the stopes and development headings will require two-boom jumbos
and LHD's, and haulage trucks will be utilized for hauling ore from stopes to the surface.
Sandfill will be slurried and placed via pipes rather than with additional haulage trucks and
dozers.

At Coroccohuayco, the blast-hole stopes will require the blast hole drills and LHDs and
the cut and fill stopes will require the two-boom jumbos and LHDs. Development headings will
require a jumbo and an LHD as well. Most of the haul trucks will be utilized for placing
sandfill, although some will be used to transfer ore from bore holes to the ore pass which feeds
the crusher. The small dozers will be primarily used to place the fill.

4-13
vi. Mine Capital

A summary of the total estimated requirements for the mine capital are shown in the
following table:

Mine Capital Summary ($000)

Open-pit Underground Total
Year Capital Capital Capital
1995 $7,780 _

$7,780
1996 1,430 $2,419 3,849
1997 7,650 20,290 27,940
1998 600 6,409 7,009
1999 500 21,980 22,480
2000 200 21,290 21,490
2001 200 15,931 16,131
2002 200 7,162 7,362
2003 200 4,102 4,302
2004 200 889 1,089
2005 200 4,433 4,633
2006 200 1,199 1,399
2007 200 8,385 8,585
2008 -
1,464 1,464
2009 -
4,365 4,365

Total 19,560 120,318 139,878

Open-pit Capital

Additional and replacement capital requirements for the Tintaya open-pit include
improving the pit dewatering system, modemizing the engineering/mine planning department,
replacing haulage and support equipment, and preparing Chabuca Sur for mining (establishing
Utilities and relocating 1.7 kms of the road to Arequipa which lies over the westem side of the
deposit). Although the existing auxiliary equipment for the open-pit is adequate and no additions
are anticipated, capital for replacement of Üie existing equipment is estimated to be $0.4 million
per year for the Tintaya pit and $0.2 million per year for the Chabuca Sur pit. The amount of
replacement capital is expected to drop in the final years of each deposit's Ufe. A summary of
each pit's estimated capital requirements is shown in the table below:

4-14
 Open-pit Capital Estímate ($000)

Total
Year Item Open-pit
1995 Improve capacity of Tintaya pit dewatering system $500
Improve engineering department 100
Purchase five 118-tonne tnicks 5,750
Purchase one D-9 and one RT dozer 1,030

1996 Purchase one D-9 and one RT dozer 1,030

1997 Purchase five 118-tonne trucks 5,750

Prepare Chabuca Sur for mining 1,500

'95-'09 Mise. Replacements at Tintaya OP 1,900

Mise. Replacements at Chabuca Sur OP 2,000

Total 19,560

All equipment costs include provisions for ocean freight, port fee, duty, inland freight,
and assembly. A 20% contingency has been added to all capital estimates except equipment
purchase estimates (no contingency since recent quotes for equipment purchases were available
to PDMC).

Underground Capital

RME estimated the capital requirements for the underground deposits. At Chabuca Este,
the capital estímate included the cost of purchasing equipment, driving drifts and ramps, drilling
raises, establishing ventilation systems, constnicting a sandfill system, and ongoing replacement
capital. The RME estímate includes a 15% contingency and has provisions for freight and duty.

At Coroccohuayco, the capital estímate included the cost of purchasing equipment,

driving drifts and ramps, drilling raises, sinking a shaft, establishing ventilation systems,
constnicting a sandfill system and ongoing replacement capital. A 15% contingency was used
in this estímate and provisions were made for freight and duty.

A summary of the capital investment for each underground deposit is shown in the
following table. Further details can be found in the copy of the RME report located in Appendix
B.

4-15
 Underground Capital Estímate ($000)

Total
Year Item Underground

1995 $0

1996 Development at Chabuca Este 2,419

1997 Development at Chabuca Este 14,461
Surface Infrastructure @ Corocc, 1,571
Exploration ® Corocc. 4,258

1998 Exploration @ Corocc. 6,409

1999 Construction ® Corocc. 21,980

2000 Construction @ Corocc. 21,290

2001 Mise. Capital ® Chabuca Este 12,938

Mise. Capital ® Corocc. 2,993

2002 Mise. Capital @ Corocc. 3,876

^02-'09 Mise. Replacements @ Chabuca Este 8,382

Mise. Replacements @ Corocc. 19,741

Total 120,318

4.16
 vii. Mine Operating Costs

The lable below presents a summary of the expected annual mine operating costs on a
S/tonne mined basis:

Annual Mine Operating Costs ($/tonne mined)

Tintaya Chabuca Sur Chabuca Corocc.

Year Open-pit Open-pit Este UG UG

1995 $0.712 - - -

1996 0.660 - - -

1997 0.644 - - -

1998 0.691 $0.70 $11.39 -

1999 0.787 0.70 11.39 -

2000 0.786 0.70 11.39 $9.77

2001 0.806 0.70 11.39 9.77

2002 0.893 0.70 11.39 9.77

'03-T2 -
0.70 11.39 9.77

Average 0.706 0.70 11.39 9.77

Open-pit Estímate

Mine operating cash costs reported by Tintaya for 1993 served as the basis for estimating
future mining costs for the open-pits. The table below details this basis:

Item $/tonne

Drilling $0.042
Blasting 0.097
Loading 0.067
Haulage 0.159
Pit Departmental 0.139
Redistribution of Costs 0.215
Total Mining Costs 0.719

4-17
 For annual costs, only the haulage costs were varied based upon the detailed haulage
analysis which was performed. For the Chabuca Sur open-pit, operating cost were assumed to
be constant at $0.70 per tonne.

Underground Estímate

RME estimated the operating costs for the underground mines which is shown in the
following table:

Chabuca Este Coroccohuayco

Item (S/tonne) ($/tonne)
Development $0.54 $0.47

Cut & fill stoping 5.79 2.22

Blast hole stoping -

1.14

Materials handiing -
0.99

Mine services 1.87 1.64

Maintenance 1.08 0.58

Mine general 0.71 0.49

5% allowance 0.50 0.38

Surface ore haulage * 0.90 1.86

Total 11.39 9.77

*Estimated by PDMC

These costs are expected to remain constant throughout the Ufe of each mine.

4-18
 viii. Mine Emplovment

The following table summarizes the expected employment leveis at the open-pit and underground
deposits:

Tintaya 4- Chabuca Open-Pit Mine Chabuca Este Ccróccohuayco

Year Sur Open-Pits Maíntenance Underground * Underground * Total

1993 172 185 - - 357

1994 165 140 - - 305

1995 161 140 - - 301

1996 158 132 - - 290

1997 159 132 - - 291

1998 139 114 150 - 403

1999 140 114 200 454

2000 117 114 200 218 649

2001 80 80 200 326 686

'02-'09 50 40 200 435 725

* íncludes maíntenance and staff personnel

Open-pit Estímate

For the Tintaya open-pit, average employment in the mine and mine maíntenance is
expected to decrease by 20% due to a planned reduction in the number of "foreman", a re-
distribution of personnel (for example, eliminating the use of employees to spot trucks at
shovels), reduced haulage requirements, and improvements to the availability of the newer
haulage fleet. Employment for the open-pit operations is expected to decrease from the present
172 to approximately 160, and employment for the mechanical department is expected to
decrease from the present 185 to approximately 140. The tables in Appendix B detail the
manpower estimates.

Underground Estímate

For the underground mines, RME estimated that the peak employment requirements will
be 200 for Chabuca Este and 435 for Coroccohuayco. Full employment levels are expected to
be reached in the second year of production for Chabuca Este (1999) and in the third year of
production for Coroccohuayco (2002). At Chabuca Este, first year employment is expected to
be three-quarters of full employment. At Coroccohuayco, first year employment is expected to
be half of full employment, and second year employment is expected to be three-quarters of full
employment. Appendix B details the manpower estímate.
j

4-19
h
 1 C. CONCENTRATOR
I

I The primary bottlenecks in the concentrator are in the grinding and flotation arcas. The
most significant bottleneck is the grinding circuit. The current tonnages can only be moderately
increased (from 8,000 mtpd to 9,000 mtpd) without a major expansión of the current facilities.
This increase is based on evaluation of metallurgical and plant test work as well as the current
operating conditions. The fineness of grind necessary for good recoveries is the limiting factor.
The secondary concentrator bottleneck is cleaner flotation. When higher tonnage and grade days
^e experienced, in the present circuit, the cleaners become overloaded and spillage occurs. The
primary crusher is designed for 1,500 mtph, however the conveyors are only capable of handling
|,300 mtph at máximum belt speeds. The primary crusher has capacity sufñcient for any
planned expansions up to 24,000 mtpd. The secondary/tertiary crushing circuit processes 800
to 1,000 mtph and is capable of handling future expansions of up to 16,000 mtpd without major
wpital expenditures.
I

] No additional de-bottlenecking measures are foreseen for the areas of tailings treatment,
tmlings disposal, concéntrate storage or water supply as the present system has sufficient
capacity to handie the 20% increase in throughput. However, due to the accelerated production
schedule in the concentrator, constniction of a new tailings area will be necessary two years
^lier than the originally planned date of 2005. A water reclamation system, at the existing
tmlings dam, is also planned to, reduce the demand from the Salado river and potential
environmental concems of water quality in the river.

The concentrator currently is budgeted for 8,000 mtpd. It has handied tonnages of up
tp 8,700 mtpd when the ore was available. At these higher tonnages the cleaner circuit has been
the bottleneck and additional flotation cells will be necessary to run 8,500 to 9,000 mtpd
continually. Other methods of flotation (flash/column flotation) are currently being evaluated
for increases in throughput. The 8,500 mtpd capacity may be attainable with the addition of
conventional flotation cells but for tonnages of up to 9,000 mtpd the fineness of grind becomes
critical and other types of cells may be necessary to quickly remove the faster floating copper
particles and allow for removal of the slower floating partióles with the cells now in place. The
I^ox filters may also be a bottleneck with this expansión. Either filter availability will have
tp increase from present levels or an additional unit will be required, to handle the additional
concéntrate produced. Since the Larox filters have been a maintenance problem, it is advisable
to add an additional filter for the increased throughputs.

For any tonnages greater than 9,000 mtpd it will be necessary to add an additional ball
mili, flotation cells and ancillary equipment. An additional regrind mili may also be necessary
at tonnages greater than 9,000 mtpd and concéntrate and tailings thickener capacities would also
have to be investigated. Other areas that will assist in the de-bottlenecking of the concentrator
tp 9,000 mtpd include addition of extra launders to the rougher flotation cells to pulí off more
of the fast floating copper, automation of the grinding circuit and installation of a conditioning
tánk for reagent addition to flotation. A plant test with a column flotation cell is in progress and

4-20
appears to be working well. They are currently waiting for approval to do a plant test using
flash flotation cells.

The additional capital required for the concentrator to achieve and maintain the 9,000
mtpd capacity is shown below by year:

Additional Capital
Year (S 000) Description
1995 $2,865 Additional flotation cells, crusher optimization, additional
filter and tailing water reclamation
1996 700 Plant modifications to support increased tonnages
2000 602 New tailing dam begins
■ 2001 4,155 New tailing dam construction
■ 2002 2,403 Completion of new tailing dam
2005 1-100 Second stage of tailing dam
Total $11,825

For higher tonnages the present reagent scheme should be adequate and includes a
mixture of collectors, frothers and modifiers. The concentrator metallurgical performance is
very good and the metallurgical and plant staff are working on several projects which will
provide opportunities for increased recoveries and concéntrate grades. Current recoveries and
grades of 90.5% recovery and 31% Cu should be attainable for the remainder of the Tintaya
open-pit life. Some potential exists for both increased recoveries and grades with column or
flash flotation. Limited test work has been performed on the other deposits but indications are
that an overall recovery of 90.5% with a 31% Cu concéntrate grade are feasible. Changes in
ore types (more chalcopyrite and possibly some pyrite) in Chabuca Este may result in slightly
lower recoveries and concéntrate grades but this should be balanced by the Coroccohuayco ore
which contains more bomite and is higher grade and therefore should have higher recoveries and
concéntrate grades. Future recovery of by-product gold and silver are estimated to remain the
same as the present operation at 69% and 60%, respectively. Existing plant maintenance
manpower should be sufficient to serve the facilities without additions in the expanded scenario.
The replacement capital for these facilities is estimated to be $350,000 per year from 1995 until
2009.

The annual estimated production, ore grade, recovery, additional/replacement capital and
operating cost with the concentrator operating at capacity are shown on the following page:

4-21
 Ore Conc Added/Sustain Operating
Milled Ore Grade Recovery Grade Capital Cost
Year (000 tonnes) (%CU) (%Cu) (%Cu) ($000) ($/Tonne)*
1995 2,975 1.65 90.5 31 2,865 4.54
1996 3,240 1.58 90.5 31 700 4.76
1997 3,240 1.66 90.5 31 350 4.76
1998 3,240 1.77 90.5 31 350 4,76
1999 3,240 1.58 90.5 31 350 4.76
2000 3,240 1.81 90.5 31 952 4.76
2001 3,240 2.11 90.5 31 4,505 4.76
2002 3,240 2.28 90.5 31 2,753 4.76
2003 3,240 2.23 90.5 31 350 4.76
2004 3,240 2.09 90.5 31 350 4.76
2005 3,240 2.09 90.5 31 1,450 4.76
2006 3,240 1.96 90.5 31 350 4.76
2007 3,240 1.89 90.5 31 350 4.76
2008 3,240 1.89 90.5 31 350 4.76
2009 3,240 1.89 90.5 31 350 4.76
2010 3.240 1.83 90.5 31 _

4.76
TOTAL 51,575 1.90 90.5 31 16,375 4.74

*Power costs are increased to $0.055/kwhr in 1996.

D. INFRASTRUCTURE

Annualized operating cost for infrastructure (G & A) in 1993 was $9.6 million ($3.1
million at the Lima and Arequipa offices, $2.4 million at the mine office and indirects, and $4.1
million of camp expenses). Based on the 109 million pounds of copper produced at Tintaya, the
ünit cost is $0.088/lb Cu. By traditional Phelps Dodge standards this is quite high compared
to a range of about $0.02 to $0.03/lb Cu at United States mines, Ojos del Salado and the
éstimates for the El Abra and Cerro Verde projects. The major differences between the Tintaya
project G & A and the other mines is that Tintaya is a govemment run mine that supports a
townsite in a remote area resulting in relatively high infrastructure costs. If the mine were to
be planned today, it could be based on a single status camp with rotating shifts as was proposed
for El Abra and as is now functioning at Escondida in Chile yielding substantial cost savings.
)Vhile it might be possible to change the Tintaya townsite to a camp in the long run, this concept
is not included in the plan due to the major complexities associated with a conversión.
However, conversión of the townsite to a camp is considered as an upside potential for the
;)roject.

Streamlining the G & A and reducing manpower is something that can be assumed for
he Tintaya plan since there was sufficient information from the site visit to know that ampie
ópportunities for improvement exist. As noted earlier in Section 2, the G & A area appears to
have excessive regulations, paperwork, and an inadequate data processing and communication
system, all contributing factors to relatively high G & A manpower requirements and resultant
costs. The reduction of costs in the G & A area will require some investment in equipment and
training as discussed later. Based on the inclusión of these investments and reduction of

4-22
manpower in areas believed to be excessive, the estimated annual G & A costs for the project
are presentad below (after 2010 the mine and concentrator throughput is reduced and the G &
A is assumed to decrease to $4.5 million per year);

Year ($ million)
1993 9.6
1994 9.2
1995 8.6
1996-2010 8.1
2011-2012 4.5

Inland freight, road maintenance, sales commissions and port costs associated with
concéntrate shipment from the plant to the port and embarkation are discussed later in this
section and included in the off-site costs, not in the G & A costs. It is also assumed that PDMC
will have two expatriates in key management positions assigned to the project. The cost of these
management personnel is estimated at $0.3 million per year and is included in the above G & A
estimate.

One potential area of general efficiency improvement is the replacement of the relatively
outdated manual systems for data management and updating of the communication system to
reduce delays. To improve labor efficiency and speed the Information process a general
upgrading of the on-site administrativo and general offices with a better communication system
(only 12 voice grade Unes connect Tintaya with the Peruvian national phone system) and a new
data processing system is recommended. This would include microwave capability to the city
of Cusco as this link should have a highly reliable voice and data transmission capabiUty. Also
included would be a "LAN" computer Information system with related software for upgrading
the quality and retrieval speed of information. System implementation would additionally enable
the administrative payroll to be reduced in Lima, Arequipa and at the mine site. The total cost
of this upgrading is estimated at $1 million, spent over two years. In addition, these changes
will require that training be supplied in part by PDMC from the United States and Chile. The
costs of this service are assumed to be provided by PDMC and are not included in the G & A
of Tintaya. The implementation of new communication Unes and information management
system will require fewer, but more qualified persons. As a result, the Lima office will be
considerably reduced in size. Also some administration office improvements are required and
are estimated to cost $0.26 million.

The PDMC plan incorporales a reduction in the annual cost of operating the camps
through the transfer of many services to contractors (this is already underway at Tintaya with
good results). Such an arrangement would reduce the Tintaya manpower requirement.

Under current Peruvian labor legislation, all personnel reductions in forcé must be based
on voluntary resignations by the employees themselves. To induce employees to voluntarily
resign, a common practice in Perú is to use a resignation incentive payment which averages

4-23
ápproximately one year of an employee's present salary. Prior to privatization, Tintaya will be
reducing manpower by about 78 employees using fínancial incentives. This should contribute
to the cost reduction of G & A from $9.6 million in 1993 to $9.2 million in 1994. After
acquisition, another contemplated reduction would include about 70 Tintaya employees and is
estimated to cost about $0.3 million in both 1995 and 1996.

The Matarani port area badly needs upgrading and Tintaya has included money in its
994 capital budget for the construction of fences and for paving a yard on its own land, located
ádjacent to 0.8 hectares of land currently leased ffom Compañía Minera Madrigal. Having its
own facilities will make the belt conveyor/stacker ship loading operations more labor efficient
as well as improve control of dust losses. These upgrades are estimated at $0.56 million
distributed over a two-year period.

The local control system at the pumping station on the Salado River will need to be
changed over to a remote control system in order to reduce manpower requirements. The capital
estimate for this item has been included within the concentrator section of the report. The water
intake system and pipeline were originally designed for a flow of 6,000 gpm. This flow is equal
to the amount of water rights held by the company and is double the amount of make-up water
reponed as being currently used. No restrictions are foreseen regarding water in regard to an
expansión of Tintaya facilities.
I

, As noted in Section 2, the on-site hoteis and lunch room were in only fair condition and
heed to be upgraded to opérate more efficiently and with less manpower. The estimated cost
pf this upgrading is $0.1 million.
I
I

The 180 km road between Tintaya and the town of Cañahuas is maintained by the
company. This portion of the road is the segment which suffers the most deterioration during
the rainy season and the normal annual maintenance cost is estimated to be $0.3 million. In
1994, special repairs (conducted every three-years) will be carried out at a cost of $0.3 million.
pn-site roads for non-mining traffíc at Tintaya and the road connecting the mine site with the
nearby town of Yauri are normally maintained by the company at an annual cost estimated at
$50,000.

The small runway at the local airport is in good condition and requires minimum
maintenance expenditures amounting to $20,000 every three years. This airport is not suitable
for use, however, by regularly scheduled flights of commercial airlines. It is believed that any
upgrade or expansión for commercial flights from this air strip would be quite expensive and
have not been included.

I Replacement capital will be required for general infrastnicture, buses and other vehicles
ánd is estimated to be $0.2 million per year.

4-24
 The estimated capital and/or majpr upgrade cost per year for Tintaya G & A from 1995
úntil 2007 is as follows:

Tintaya G i& A Capital ($000)

1995 1996 1997 1998 1999 2000 2001-2010 TOTAL
Administrative office $200 $60 _ _ • _

$260
Improvements
Mine Site/Tintaya-
Cañahuas Roads 350 50 $50 $350 $50 $50 $150/yr 2,400
Airport - 20 - - 20 - -
40
Labor Fórce
Reduction Cost 300 300 - - - - -
600

Hotels & Cafeterías 20 80 - - - - -

, 100
CommunicationyCIS 500 500 - - - - -
1,000
Matarani Port
Improvement '380 180 - - - - - 560
Sustain Capital 200 200 ' 200 200 200 200 100/vr 2.200
TOTAL 1,950 $1,390 250 550 270 250 2,500 7,160

The operating cost for the Lima and Arequipa office, the mine office and indirects and
the camp expenses are presented in the following tables:

¡ Lima & Arequipa Offices ($000)

1993 1994 1995
Board of Directors $86 $57 $10
Privatization Committee 34 63
Executive President 60 50 20
Interné Audit 93 62 30
General Management 370 300 280
Legal Advisor 131 128 70
Administration Management 933 880 700
ControUers/Financial Management 645 590 480
GIS 80 98 190
Materials Management 684 640 480
Services for Personnel 18 18 12
Communications -
60 150
PDMC Management - 100 300
TOTAL 3,132 3,046 2,722

4-25
 Mine Office and Indirects (SOCO)
1 1993 1994 1995

¡ Mine Audit $28 $25 $5

' Unions & Workers Association 125 121 110;
Community Development 118 98 96
, Promotion & Regional Development 18 42 . 45
Bngineering División (net of distributions) 181 178 160
pther Administrativé Expenses 32 35 35
i Operations Management 313 310 310
Superintendency of Administration 115 107 95
' Industrial Engineering 95 91 75
I Human Resources 174 159 130
1 Social Welfere & Training 181 165 145
, Mine Financial & Accounting 201 190 150
Mine Systems Office 124 122 122
Mine Logistics 684 600 470
TOTAL 2,389 ,2,243 1,948

Camp Expenses ($000)

1993 1994 1995
Mercantile $52 $52 $40
Hotels & Club 121 121 100
General Services 71 70 52

Camps 694 680 600

Cafeterías 779 760 734
Motor Pool 402 395 360
Medical Service 512 499 430
Family Medical Insurance 380 ' 338 312

Services for Personnel 124 110 100

Nursery 8 7 7

Recreation Programs 31 12 12

Educátional Centers 145 137 115

Security 78Q 754 600

TOTAL 4,099 3,935 3,462

4-26
 According to the current electrical power contract between Tintaya and the power and
ight utílity, Electro Sur Este S.A.(ESESA) the average cost of energy is $0.044/Iwhr. The
expectations at present are that the current rate will not last beyond April 31, 1995, which is the
expiration date of the current power supply agreement between ESESA and Tintaya. Thus, from
May 1, 1995 on, the most likely rate will be somewhere near that which energy commands on
he local free market or an average of $0.055/kwhr.

ESESA has 10 megawatts(MW) of power available immediately beyond the 12 MW

contracted to Tintaya and is slated tó have 15 MW of additional power available in the fiiture.
pie high voltage power transmission line that supplies Tintaya has a surplus transmission
rapacity of 13 MW. Thus, no restrictions are foreseen in either electrical power supply or
transmission for any expansión of up to as much as 100% in the capacity of Tintaya facilities.

j The local power generating plant produced an average 1% of Tintaya*s energy demand
during the last year. This annual avérage has varied on a monthly basis in recent years from
0.08% to 14.7% of the monthly power consumption, Tintaya officials anticipate that the local
power plant will be included in the Tintáya privatization package and that Tintaya may sell the
power plant or the power to third parties. It is assumed that the power plant would be used
solely for present or expanded power needs of the project and that the plant will not be sold.

Some of the Tintaya concéntrate will be smelted and refined in Perú. However, for the
évaluation, it is assumed that the costs will be based on all concéntrate being shipped off-shore
through Matarani, as local smelting and refining rates are adjusted to off-shore rates including
the additional freight. In December 1993, Tintaya made a tender award of a trucking contract
for the inland freight of 170,000 tonnes of concéntrate at an average rate of $21.30/tonne.
Assuming that 20% of the concéntrate output will still be transported by rail to Matarani from
the railhead at Cañahuas, the average mine-to-port haulage cost for 1994 is estimated at
$30.47/tonne of concéntrate FOB Matarani. This cost includes Tintaya/Cañahuas road
maintenance and is based on the inland freight rate obtained through the December 1993 tender
and the cost forecasts for port services during 1994 excluding marketing and sales costs. The
total cost per tonne of concéntrate including logistics and marketing is estimated at $34 per tonne
of concéntrate.

E. EXPLORATION

As discussed in Section 3 of this report, $3 million (spent in 1995 and 1996) is the
estimated cost of the defmition drilling to verify the existing resources in the Tintaya district.
Xdditional exploration, although a logical investment ifPDMC acquired Tintaya, is not required
for the project plan. Thus, ongoing exploration costs wóuld only amount to $0.2 million per
year for claims maintenance and some administrative costs (pit drilling and geological support
for the open-pit operations is included in the open-pit operating cost). The annual exploration
expenditures for the defínition drilling ahd claims maintenance are presented below:

4-27
 Definition Drilling Exploration Budget Total Budget
Year (SOOO) ($000) ($000)
1995 $1,600 $200 $1,800
1996 1,400 200 1,600
1997-2009 ^ 200 200
Total 3,000 2,800 5,800

; A summary of the añnual capital and operating cost developed in this section are
summarized in the following table:

Capital Plan Por Tintaya Project ($000)

Mine (open-pit Total
Year ánd underground) Concentrator Infrastructure Capital
1995 $7,780* $2,865 $1,950 $12,595
1996 3,849 700 ■ 1,390 5,939
1997 27,940 350 250 28,540
1998 , 7,009 350 550 7,909
1999 22,480 350 270 23,100
2000 21,490 952 250 22,692
2001 16,131 4,505 250 20,886
2002 7,362 2,753 250 10,365
2003 4,302 350 250 4,102
2004 1,089 :350 250 1,689
2005 4,633 , 1,450 250 6,333
2006 1,399 350 250 1,999
2007 8,585 350 250 . . 9,185
2008 1,464 350 25Ó 2,064
2009 4,365 350 250 4,965
2010 _
'-
250 250
Total 139,878 16,375 7,160 163,413

* Does not include $12.4 million in pre-stripping costs.

>

4-28
 Operalíng Cost Plan For Tintaya Project

Tinlaya Chabuca Sur Chabuca Este Coroccohuayco Mili G& A Expíoration*

Year ($/t materíai) ($/t material) ($/t material) ($/t material) ($/t ore) ($MM/yr) ($MM/yr)

1995 $0.712 - - - $4.50 $8.6 $1.8

1996 0.660 - - ■ 4.54 8.1 1.6

1997 0.644 - - - 4.76 8.1 0.2

1998 0.691 $0.70 $11.39 - 4.76 8.1 0.2

1999 0.787 0.70 11.39 - 4.76 8.1 0.2

2000 0.786 0.70 11.39 $9.77 4.76 8.1 0.2

2001 0.806 0.70 11.39 9.77 4.76 8.1 0.2

2002 0.893 0.70 11.39 9.77 4.76 8.1 0.2

2003 - 0.70 11.39 9.77 4.76 8.1 0.2

2004 - 0.70 11.39 9.77 4.76 8.1 0.2

2005 - 0.70 11.39 9.77 4.76 8.1 0.2

2006 - 0.70 11.39 9.77 4.76 8.1 0.2

2007 - 0.70 11.39 9.77 4.76 8.1 0.2

2008 - 0.70 11.39 9.77 4.76 8.1 0.2

2009 - 0.70 11.39 9.77 4.76 8.1 0.2

2010 - 0.70 11.39 9.77 4.76 8.1 -

2011- - 0.70 11.39 9.77 4.76 4.5 -

2012

* Includes defmition drilling of $1.6 million ín 1995 and $1.4 míllion in 1996.

4-29
 SECnON 5
¡
1 POLITICAL CLEV^TE, ENVIRONMENTAL, LEGAL & TAX
I

I
I

A. POLITICAL CLIMATE
I
I

I
I
i. Overview
I

I Political risk analysis is a complex area subject to a wide variety of opinions and is
influenced by circumstances which are constantly changing. Although the current Phelps Dodge
review is relatively short, it captures all of the key issues which mold Peru's complex political
environment.
1
I

i With the election of President Alberto Fujimori in 1990, Perú has undergone major
structural changes in an attempt to revitalize its economy. The two principal areas of change
^e the privatization of State owned businesses and the encouragement of foreign investment.
While the ultímate success of the changes which have been put in place is yet to be fully
ünderstood, the changes in Peruvian law have currently created one of the best "legislative"
environments for foreign investment and mining in South America. The International political
isolation that occurred when President Fujimori disbanded the legislature, announced judicial
reforms, and took strong measures to control terrprism, appears to have softened, with limited
International money now available for investment in Peni.

i Potential roadblpcks continué to exist which may destabilize'the new laws which have
peen put in place. Failure to allocate portions of the proceeds from privatization to address
I ! social issues could result in a political backlash thereby resulting in roadblocks to reform.
Allocation of a portion of the privatization proceeds would go a long way towards developing
popular acceptance of the economic model and wpuld assist in fostering an environment
conducive to long-term economic and political stability ih the country.
i
I Additionally, presidential elections to be held durihg 1995 could replace President
Fujimori's coalition govemment with another party which could modify the current pro^
investment environment. It appears, however, that the parties who would likely be able to gain
I)ower over Fujimori*s coalition govemment, either individually or through a coalition, would
continué the principal elements of the economic and foreign investment strategies of the Fujimori
govemment.
t , ,

i Unless the hew laws continué generating positive economic change, other elements in the
country which appear to have been signifícantly reduced in power may again reassert themselves.
Although Perú has been successful in capturing most of the leaders of the two principal groups
of térrorists (Sendero Luminoso (the Shinirig Path) and the Movimiento Revolucionario Ttípac
Amaru (MRTA)), isolated incidents of terrorism continué. It is anticipated that these incidents
will continué, at least over the short-term, with the govemment taidng aggressive steps to

5-1
counter such activities. Should the Peruvian economy stagnate, Ihese incidents may become
more frequent and aggressive.

With Peru's persistent recession and the United States and other countries' continuing
demand for cocaine, it has been very difficult for the Peruvian govemment to control the
production of coca leaves and the associated flow of drug money and influence, particularly in
the northeastem part of the country. A revitalized economy represents the best hope for the
govemment to create viable economic altematives for the coca growers in northeastem Peni. -

The judiciary system is also problematic, with corruption and "inadequate" judges
creating a significant lack of confidence in the system. President Fujimori has announced his
intent to introduce significant reforms to the judicial system. However, without a strong
commitment to increase the salaries and the qualifying requirements to be a judge, this probiem
will likely persist.

A summary of the political risk study by Intemational Country Risk Guide(ICRG)ranks

Perú in the 97th position, in a tie with Guatemala, (but improving in the one year ahead
forecast) out of 130 countries. Zambia is ranked one position worse than Perú and Guayana is
ranked one position better than Peni.

ii. Political Environment

Prospects for political stability have improved markedly in the last year with the election
of a new Congress after President Fujimori dissolved the Congress in April 1992. A new
Constitutional law was promulgated in December 1993, enacting important political and
economic reforms that give further legal stability to the reformist policies and altitudes of the
new Congress.

Additionally, the new Congress recently approved new legislation allowing for the
possibiíity of re-election of an incumbent President (for the first time), but limited the Presidency
to two consecutivo terms of five years each. Given President Fujimori's current popularity, it
is likely he will be re-elected and his party remain in power through the year 2000.

The April 5, 1992, disbandment of Congress, resulted in the virtual demise of several
major traditional partios. It is uncertain what might rise out of the ashes and whether President
Fujimori can transíate his popular support into a strong political organization, however, the
current sentiment is that there is not an individual or political group able to defeat President
Fujimori in the scheduled 1995 election. Given the relatively uneducaled nature of the general
population, if Fujimori is unable to show positivo economic results in jump-starting the economy
within this year, things may chango quickly.

The unexpected death of President Fujimori could also cause instability in Perú.
President Fujimori appears to be a very charismatic leader. However, he has also been very
strong handed and has pushed many of the other partios into a somewhat dormant position from
their prior status. In the event of the death of President Fujimori, there is the possibiíity of a

5-2
 political vacuum being created, with associated political instability as a replacement is selected.
V
Given the current majority in the Legislature enjoyed by the coalitíon between Fujimori's party
the Nueva Mayoría, it is likely that Jaime Yoshiyama, tiie President of the Congress and
elose fríend of Fujimori, would replace President Fujimori until the next Presidential election.
^ether Yoshiyama would be successful in continuing in power after the next election is
uncertain.

Based upon discussions with individuáis in Perú, most bélieve that any party that would
be successful against Fujimorí's party would continué the economic and foréign investment
policies of the Fujimori govemment. Many individuáis in Peni believe it would be almost
impossible to significantly alter the direction of the Fujimori govemment due to the current
policies of Peru's donor nations,, those of the intemational finance community and Peru's
significant dependence on these entities.

iii. Legal Environment

Decree No. 674^ initiated the prívatization of state owned companies. The govemment
intends to reduce its involvement in areas which are typically the jurísdiction of prívate
companies and to reduce the bureaucracy which has developed by limiting its task to providing
services which are "social functions" ¿ublic health, education, justice administration, basic
securíty and public facilities). Atpresent, approximately 35% ofPeru's Gross Domestic Product
(IgPD) is in State hands. Fujimorí's intention is to eliminate state-owned companies through an
aggressive prívatization program. There have been some clear signs of success. The
prívatization of 35% of the shares of Peru's two phone companies was awarded recently to
Telefónica de España for an up-front payment of $2 billion. Two other phone companies, GTE
^d Southwest Bell bid over $800 million each. The prívatization process has had some
disappointments. Cerro Verde received only one bid at a príce at the low end of expectations.

Foreign exchange regulations have been extensively modified. There are no restríctions
ór formalities on possession, transfer and remittances, locally or abroad in foreign currency.
Individuáis are free to remit foreign currency abroad or maintain foreign currency accounts in
Peni. No approvals are required to set up off-shdre accounts.

Peni has taken major steps to simplify its tax structure. Decree Law No. 25988
éliminates 38 of thé 44 categories of federal taxes which were in place. The principal taxes
currently in place, are the income tax (30%), the valué added tax or general sales tax (18%),
Md the excise tax (10-75% depending on the type of goods and services). Nevertheless
Peruvian corporations remain subject to a minimum annual income tax of2% of their asset book
valué, which is not deductible as a credit for future income tax payment.

*In Peni there are at least four types of Decrees. The "Decree Law" is from the executive
branch óf govemment. The "Supreme Decree", "Decree", and "Legislative Decree" are other
forms of law from the executive and legislative branches that supply the regulation and legal
interpretation of laws.

5-3
 Supreme Decree 024-93-EM which was passed in June 1993, regúlales the guarantee and
promotion of mining. This decree prevenís Ihe taxation of profits which are reinvested lo
expand production and investments made in infrastruclure that will benefit the public such as
roads, schools, hospitals, etc. This may be of limited valué wilh the removal of the corporate
equily tax.

Legislative Decree No. 668 substantially reduced the administrative burden on importing
and exporting goods from Perú. Essentially, this Decree eliminated all administrative
restrictions or limitations on the importation of goods and services íncluding the need lo secure
prior authorization to do so.

There is, however, a substantial financial consequence for imports consisting of a custom
duty of either 15% or 25% depending on the nature of the goods imported, a general sales tax
of 18%, and an excise tax with rates between 10% and 75% for a reduced list of products (cars,
cigarettes, liquors, etc.). There are essentially no restrictions on exportation (either
administrative or fínancial). Companies exporting goods have the right to total or partial refunds
for laxes imposed on the import of goods used in the production of the export,

Import duties applicable to equipment and machinery for the mining sector are 15% and
the valué added tax is applied on the CIF valué plus the 15% import duties. These import duties
may be subject to deferred payment(up to 48 monthly installments) with interest charged on the
installments. However, this benefit is only available for imports with clearance documents ñled
on or before December 31, 1994. Refund of customs duties is not contemplated by the Peruvian
legislation in the future.

Valué added tax (VAT)paid in the acquisition of goods and services or from construction
contracts, including the tax applied to imports, give an exponer tille to a "credit balance". This
credit balance can be: (i) deducted from VAT to be payable to the State; (ii) if there is no VAT
payable, it can be credited against income tax; (iii) if there is no income tax due, it can be
credited against any debt arising from other taxes; or,(iv) if no other altemative is applicable,
reimbursement by the State of the credit balance is made by means of "Negotiable Credit
Notes", which can be traded in the local market.

Extensive modifications of the labor law have occurred, however, there is still significant
protection for the rights of employees which exceed those of many developing countries. For
instance, a worker hired under an indefinite duration contract cannot be dismissed except for
cause. Decree Law No. 25897 decreases the govemment's role in managing pensión programs
by allowing for the creation of prívate pensión funds, similar to those found in Chile. This is
intended to develop and strengthen the social security and pensión systems.

iv. Economy

While most analysts agree that Perú needs further economic improvement before they will
consider Peru's economy recovered, there have been some impressive benchmarks. Inflation

5-4
fell from 7,460% in 1990 to 39% in 1993 and is forecast to be approximate 20% in 1994. GDP
growth in 1993 achieved a record rata of 6.8% and is forecast to be still higher in 1994.

Net International reserves increased from a déficit of $200 million in July 1990 to a
surplus of $2.7 billion in December 1993.

The Peruvian stock market has shown increased vibrancy. The Lima Stock Exchange
Index increased by 89% in dollar terms in 1993 following a 126% gain in 1992.

V. Terrorism

Headway has been made in the govemment's actions against terrorism. The vast majority
of the leadership of the two primary terrorist movements are now either in jail or deceaswl and
popular support for their causes has dropped substantially. The capture of Abimael Guzman,
the leader of the Shining Path, highlighted the govemment's success in this area. Recent
military success in thwarting planned campaigns and providing amnesty for defectors may signal
the end of these movements. Further, the Peruvian Congress has started discussing the
imposition of the death penalty which, if applied to terrorists involved in actions resulting in
death or loss of public property, or drug lords, could act as a further deterrent for these groups.
A recent cali for a nationwide armed strike by the Shining Path resulted in only isolated
incidents and minor work slowdowns. However, it is quite possible that the Shining Path will
continué as a small terrorist movement with the capacity to conduct limited attacks.

There are two geographic areas where the Shining Path retains some visible presence:
the southem area of the Ayacucho región and the rural areas of the Ancash región. Both areas
are to the north of Tintaya. However, peasant patrols have been very successful in reducing its
presence. Particular care should be exercised in conducting business in these areas.

The MRTA, the other significant terrorist movement in Peni, is viewed as being on the
verge of liquidation. Serious intemal divisions, capture of national leaders, and massive
desertion has crippled the organization. However, like the Shining Path, the MRTA retains its
ability to carry out periodic actions.

B. ENVIRONMENTAL

i. Overview

Tintaya is an open-pit mine which principally processes copper sulfíde ore. The primary
extraction method is milling and flotation to produce a copper concéntrate. Historically, the
focus has been on operations and worker safety while environmenial consequences have taken
a secondary position, The major areas of potential exposure are geotechnical stability of the
tailings impoundment, groundwater contamination, hazardous material treatment and fugitive
dust. However, according to the January 28, 1994 report prepared by Pincock, Alien & Holt

5-5
 (PA&H), "the Tintaya project can be characterized as a modem facility with environmental
Controls that approach North American standards".

Tintaya has limitad groundwater and no air quality monitoring programs, therefore, the
Jull scope of the problems discussed in this section have not been quantified. If Phelps Dodge
is the successful bidder, it should attempt to negotiate indemnities from the Peruvian govemment
for prior operations, the scope of which will have to be defined.

Groundwater and surface water contamination pose the most significant risk and may
óccur in several areas of the operations. "^^e interrelationships, if any, between groundwater
Md surface water associated with Tintaya and the downstream Rio Salado or other drainage
^eas are not currently understoód. Overburden does not appear to be a source of acid
generation apparently due to the buffering impact of limestone found in the waste rock.

Perú has initiated environmental regulations which are generally consistent with those of
u many developing countries. The standards called for by these laws have not been published to
date.
1
It is assumed
■
the standards will be reasonable. However, '
until those standards are
published and regulatory bodies become familiar with them, it is uncertain how they may impact
the project.

ii. Site Observations

Tailings from the concentrator report to a tailings dam located in the drainage area of the
Rio Coamaomayo, an intermittent stream feporting to the Rio Salado. As constructed, the
L- t^lings dam is designed to filter water from the tailings and have it flow downstream to the Rio
Salado. There is significant surface water flow generated from the tailings dam. The surface
water is used by local farms and ranches for domestic and agricultural use. PA&H have alsp
ijeported the tailings dam as currently operated is holding excessive water and while originally
designed for a downstream extensión, in fact, an upstream extensión has been incorporated.
^urther studies are being conducted on the stability of the tailings dam and should be monitored
carefully.

Tintaya personnel report that surface water quality is higher than that of the Rio Salado
ánd is higher than the mínimum drinkiñg,water standard established by the govemment. Regular
Surface water tests are conducted by Tintaya personnel and an independent laboratory. These
^sts show water quality in the Rio Salado is not adversely impacted by Tintaya. Should Phelps
Dodge be the successful bidder, the water quality below the tailings dam should be reviewed
carefully, because of potential downstream tailings slimes and seepages. There are also likely
cost savings which could be realized by recirculating the water. However, any pump-back
systems should evalúate the impact on local downstream uses of the surface water.

In addition to the surface water, it is possible that a portion of the water associated with
the tailings reports to the groundwater. It is unclear what the relationship is between the
groundwater and the surface water in the. area. A few groundwater test wells have been
constructed, however, it is uncertain how accurately or consistently tests have been conducted.

5-6
I ;

The PA&H report concluded "The Tintaya water treatment plañt provides ,a good source of
drinking water to the employees and their townsite. This water meets all applicable standards".
\
Drainage from the mine and the town site flows to the Rio Tintaya, another intermittent
stream which flows to the Rio Salado. Tintaya's personnel stated that water quality from this
drainage does not have an adverse impact on the Rio Salado. This should aiso be confirmed,
The complex has four sewage treatment facilities which handle the sewage generated by the
operations (it should be noted that only one of those systems was working dúring our visit). It
appears that these systems could easily become overloaded creating a downstream problem.
However, Tintaya personnel indicated all tests of the waters of the Rio Salado done by the
Health Sector Authority have shown "acceptable levels of contamination". Thus, the General
Direction for Health Environment has continuously authorized Tintaya to dispose its sewage
waters into the Rio S^ado. The last authorization was given through Certifícate No. 022/V-93
which is in forcé until June 16th, 1998.

Groundwater contamination can also occur through the use of spent oils for dust control
6n the roads around the mine. The use of spent oils appears to be a common dust control
^ethod in most mining operations in Perú.,

It is recommended that should Phelps Dodge be the successful bidder, water-monitoring

i i wells be installed as a way to capture water for process use and to determine the scope of any
groundwater contamination. Evaluation of methods .to control the loss of water should be
conducted, and altemative methods for dust suppression should be evaluated. The adequacy of
sewage treatment facilities should also be reviewed.

While of limited use, the current methods at Tintaya for the use, storage and disposal of
hazardous materials such as lixiviants, kerosene, lead, and asbestos could pose potential
problems to workers' health and should be evaluated. Several of these products create toxic
fumes and their impact could be modifíed by improved ventilation. The mandatory use of
u-
i;espirators would also reduce the health risks associated with exposure to these chemicals.

The waste product generated by the processing plant and equipment repair facilities are
¿urrently dumped and buried on-site. It does not appear that the dump areas are lined ñor is
there a specifíc area which is used as a dump. These wastes are treated in a similar fashion at
Southern Peni Copper Corporation and Cerro Verde. While not currently regulated in Perú, it
is likely that fiiture regulations will address these issues. An area should be set aside for
qumping these materials and the apprppriateness of lining considered.

Used asbestos brake linings from trucks are currently deposited in dumps with no attempt
to isolate these linings from the elements or employees. It is also uncertain what precautions
^e being taken to protect employees who work oii these brake linings. Procedures should be
introduced for the appropriate disposal of asbestos.

Petroleum products are currently stored in above ground steel storage tanks ahd appear
o be well maintained. Spillage appears to be associated with fílling tanks and is minimal.

5-7
 Because of the dry climate, fugitive dust control could be a continuing issue. Since our
review was during their rainy season, we were not able tó see problem areas. However, PA&H
reports the following:

"Tintayá's mitigation of air quality impacts is extremely efficient. The utilization

of water trucks for dust suppression ón haul and access roads, coupled with the covered
course ore stockpile, have a positive effect on visual air quality.

The utilization of scrubbing systems in the crushing circuit also are some of the
best units on the market. However, one practice that could be improved upon is the
disposal of fines that are collected in the scrubbers. Currently this material is piled
outside the scrubber facilities and is ultimately discharged into Rio Tintaya. It is,
recommended that this material be put into the mili circuit, minimizing any adverse
effects and recovering additional metal valué."

Tintaya currently has no reclamation plan and no accruals for future reclamatiori. Should
Ijhelps Dodge be the successful bidder, an appropriate reclamation program should be developed
and funds allocated to cover its cost.

The mine appears to have a fair safety record. Additional improvements can be expected
irough improved safety programs, similar to those at Phelps Dodge operations. Certain cultural
attitudes about safety will also need to be addressed and modifíed in order for any safety
program to succeed in Peni.

iii. Latest Developments

Tintaya has signed an agreement with Universidad Nacional de Ingeniería in order to find
splutions for the tailings dam problems. A team from the university is doing research in order
to 1) improve the efficiency of the tailings dam,2)find a way in which the dam's capacity could
bp extended and, 3) should the building of a new tailings dam be needed, determine its proper
location.

C. LEGAL

i. Phelps Dodge Investment Structure

We have been informed that the govemment intends to sell Empresa Minera Especial
Tintaya S.A. (Tintaya S.A.) as a stock transaction. As part of the purchase agreement,
appropriate indemnities and warranties will need to be négotiated to protect Phelps Dodge from
any unknown or contingent liabilities and to confirm the status of assets. Tintaya S.A. is a stock
Corporation (sociedad anónima) wholly owned by the Peruvian State.

Tintaya S.A. could be acquired by our Delaware subsidiary PD Perú, Inc., currently in
place and wholly owned by Phelps Dodge Corporation. PD Peni, Inc., at this point owns only

5-8
 he exploration activities of Phelps Dodge in Perú. This structure is desirable for several reasons
^d is consistent with the stnicture used for La Candelaria. First, if Phelps Dodge decides to
divest itself of Tintaya S.A., it could sell thé stock of the Delaware subsidiary without incurring
Peruvian tax liability. Second, it would irisulate Phelps Dodge from the acquisition financing
^angements with third party lenders. Third, this structure would allow Phelps Dodge to pledge
the stock of the Delaware subsidiary to third party lenders as part of the security package.
Utilization of this format would also be helpful in the event Phelps Dodge desires to invite
^ditional investors to particípate in Tintaya S.A. Addiüonal investors would particípate in a
like manner to La Candelaria. Phelps Dodge investment for acquiring Tintaya would be
protected through the execution of a stability agreement under the scope of the Foreign
investment Promotion Law as discussed in this section. Future investments for expansions at
'pintaya would be secured by the execution of a sepárate and independent stability agreement
under the scope of the Mining Law.

ii. Property Rights

r¡
j h
The legal framework for property rights are found in articles 70 through 73 of the néw
eruvian Constitution, published on December 30, 1993. Under the Constitution, property is
inviolable and is guaranteed by the State, and no individual can be deprived of his rights except
for reasons of national security or public exigency. Even in these circumstances the State is
bound to compénsate the owner. Adequate compensation includes the appraised valué of the
property, plus the resulting damage to the owner. Aiticle 71 of the Constitution expressly states
that regarding property rights, foreigners ~ whether individuáis or legal persons ~ have the same
standing as Peruvians, and no exception ñor diplomatic protection can be invoked.

Without prejudice to the above, the Constitution bans foreigners from directly or
indirectly purchasing or owning, within 50 kilometers from Peru's borders, mines, property,
^orests, water, fuels or energy sources. Failure to comply with this directive is subject to
^orfeiture of any acquired right. Special restrictions and bans for the purchasing, owning and
transferring of certain goods are also in place.

On the other hand, the Civil Code gdvems the inherent conditions and rights to property.
In this sense, property is defined as follows: ".. .the legal power that allows to use, enjoy and
dispose of a good". Property rights shall be exercised in accordance with the social interest and
within the limits of law.

Property is the máximum right an individual can have over a good, which allows him to
use and exploit it in any exclusive manner and for perpetuity. Property can be conveyed by
contract and by devise or intestate succession. Likewise, the owner is fully entitled to create
^sements, rights of way, usufracts, superficial and any pther kind of property rights, as well
as to lease, mórtgage (if it is real estáte) or pledge (if it is personal) property.

In the case of real estáte, article 954 of Civil Code provides that property extends to the
subsoil, surface and projections up to where the exercise of said right is useful to the owner.

5-9
 However, natural fescarces, mineral deposits and archeological remains, as well as other ítems
govemed by special laws, are excluded from real property.
j

i iii. Mining Rights and Claims

I
I

I Mining rights are govemed by the General Mining Law, which unified text was approved
by Supreme Decree No. 014-92-EM dated June 4, 1992. Supreme Decree No. 03-94-EM,
published January Í5, 1994, approved the Regulations to the General Mining Law.

Under said statutes (which govem the exploitation of mineral substances from the soil
or subsoil excepting oil, hydrocarbons, guano deposits, geothermic resources and mineral-
medicinal waters) all mineral resources belong to the State, but may be exploited by the State
ór prívate parties through a concéssión system. Law defines the following as mining activities:
mining sampling, prospecting, exploration, exploitation, general .work, benefit, trading and
transportation.

j Under Articles 2 and 3 of the General Mining Law, sampling, prospecting and trading
^e subject to free competition within the national terrítory, and no concession is required except
where 1) mining concessions have been granted to third parties, 2) fenced or cultivated lots
where mining activities are not allowed, 3) urban areas, 4) 2U"eas reserved for urban expansión,
5) areas reserved for national defense, 6) archeological or public use purpóses. In such cases,
y/rítten permission of the holder or owner or from the competent govemment entity is required.

¡ Article 7 of the General Mining Law expressly recognizes the ríght of individuáis and
jurídical persons ~ whether national or foreign ~ to the exploration, exploitation, benefit,
general work and mining transportation through a concessions system.

Article 9 deals with the mining concession. Under the definition embodied in Article 9,
a mining concession is a property ríght which grants its holder ".. .the ríght to exploration and
exploitation of the mineral resources conferred which may be within an,indefinite depth solid,
limited by corresponding vertical planes to the sides of a square, rectangle or closed polygon,
which comers are referred to Universal Tránsversal Mercator (UTM)coordinates".

The law considers a mining concession as a different and sepárate property ríght from
the real estáte where the concession is located., The concession includes its parts and
accessoríes, even when the latter are located outside the concession periméter.
(

[ Mining concessions are granted in sizes which vary from 100 to 1,000 hectares and, in
the case of sea domairí, from 100 to 10,000 hectares. .Concessions are classified as metallic or
rion-metallic, depending on the kind of substance exploited. No overlapping príoríty can exist
between metallic and non-metallic concessions. However, the concessionaire can change the
substance of the concession initially granted.

Non-metallic concessions cannot be established on agrícultural lands or on rural lands

identified for agrícultural puiposes. In the case of urban and urban expansión areas, title will
í.
5-10
p be granted with previous authorization of the corresponding Municipality. The authorization will
be deemed granted if the Municipality does not issue an Opinión within 60 days following the
filing of the application.

! According to the information fumished to us by the Information Memorándum, the

privatization of Tintaya will include the mining concessions that are within the Chabuca Este,
Chabuca Sur, Coroccohuayco and the present open pit areas.

I The mining rights of Tintaya over such areas are reviewed and the specific claims shown
in the following:
i . •

j The following mining rights were originally granted in favor of the Peruvian State as
Derechos Especiales del Estado (special State Rights), and assigned to Minero Perú for its
exploitation. Later, in 1991, each of these rights was converted into mining-exploitation
concessions. All of them form the so called "Unidad Económica y Administrativa TINTAYA
(Econpmical and Administrative Unit)" accounting for 1,124 hectares.
i
1

I As original shareholder of Empresa Estatal Mineral Asociada Tintaya S.A., which was
later transformed into Empresa Mineral Especial Tintaya S.A., Minero Peni transferred these
rights to the former, Notwithstanding, no action was.taken in order to formalize the transfers
^d, therefore, Minero Perú still appears as titleholder according to the Public Mining Registry.
No liens affecting these mining rights are currently recorded at the Public Mining Registry.

Recorded in
Public Mining Registry
1 Cusco
1

Concession Ñame Hectares District Province Padrón Book Page

1 1- Andrés 12G Yauri Espinar 51 ■ 97 41
|2. Carmen 78 lYauri Espinar 61 93 167
3. Chabuca 120 Yauri Espinar 30 1 31
¡4. Juana 60 Yauri Espinar 50 98 7
i 5. La Providencia ^ 72 Yauri Espinar 56 89 341
16. Numero Veinte 42 Yauri Espinar 58 92 327
17.
'1
Perseguida 12 Yauri ^ Espinar 59 92 319
Is. Progreso Primera 108 Yauri Espinar 35 1 367
!9. Progreso Segunda 30 Yauri Espinar 36 1 371
|10. Progreso Tercera 48 Yauri Espinar 37 1 379
lll. Progreso Cuarta 54 Yauri Espinar 38 1 381
1 12. Rosita 96 Yauri Espinar 57 89 301
!i3. Sahara 72 Yauri Espinar 55 95 489
Il4. San Antonio 20 Yauri Espinar 53 98 3
Il5. San Enrique 54 Yauri Espinar 52 95 475
: 16. San Luis 90 Yauri Espinar 54 95 469
17. Santa Maria 48 Yauri Espinar 49 95 495

5-11
 The following rights are not part of "Unidad Económica y Administrativa TINTAYA":

Recorded in
Public Mining Registry
Cusco
Concession Ñame Hectares Distríct Province Padrón Book Page
1. Tintaya Segunda' 2,476 Espinar Espinar 86 253 47

2. Coroccohauyco^ 12,000 Yaurí Espinar 86 212 455

Palpata
Ocururo

' According to the Public Mining Registry, a 2,368 hectares lot was expropriated from
prívate owners and assigned to Tintaya for infrastructure purposes (camp buildings,
offíces, disposing areas, among others). It ís not clear íf saíd lot is part of the 2,476
hectares declared as the tota! area of this concessíon, or it is an additlonal area.

^ This mining right is partially superímposed over mining ríght of "Quechua D" and
mining claims "Quechua A" and "Quechua B" belonging to third partios.

Tintaya has also claimed property over the concessions listed hereinafter, having been
recently granted title over the same (with the exception of JUDITH). No liens affecting these
mining rights are currently recorded at the public registry.

Recorded in
Public Mining Registry'
Cusco
Concession Ñame Hectares Distríct Province Padrón Book Page
1. Coporaque 900 Coporaque Espinar
2. Coporaque I 1,000 Coporaque Espinar
3. Coporaque II 1,000 Coporaque Espinar
4. Coporaque III 1,000 Coporaque Espinar
5. Coporaque IV 1,000 Coporaque Espinar
6. Judith I 500 Livitaca Chumbivilcas
7. Eva Luz 600 Livitaca Chumbivilcas
8. Eva Luz I 900 Livitaca Chumbivilcas
9. Judith 1,000 Livitaca Chumbivilcas

' Said rights are not yet recorded in the Public Mining Registry, although registration is
expected to take place soon.

A number of concessions are included in the legal framework for mining as discussed
in the following.

5-12
 The concession for mineral processing grants the right to process, purify, meit of refine
minerals, whether by means of a set of physical, chemical or physical-chemical processes.
Tintaya owns a processing concession located in the District of Yauri, Province of Espinar,
Cusco, covering 350 hectares. This right was granted by means of Directoral Resolution No.
048-93-EM/DGM issued ,by the General Mining Directorate on April 22, 1993. The
rarrespondent title is recorded in Card No. 003318 at the Cusco Regional Mining Registry
Dffice.

By means of Directorial Resolution No. 042-93-EM-DGM issued on April 5, 1993 by

L'
he General Mining Directorate, Tintaya was granted an authorization tó opérate an oxide pilot
plant to treat 85.4 tonnes per day of copper oxide, through a process involving hydrometallurgic,
watery solution purification and electro deppsition methods. Directorial Resolution No.001-91-
M/DMSRC,issued on April 3, 1991 by the Mining Subregional Directorate, authorized Tintaya
0 opérate a sulfide processing plant.

The general labor concession grants the right to render auxiliary services to one or more
mining concessions, such as ventilation, sewage, hoisting or exploitation. This type of
concession is not required at this time at Tintaya.

The transport concession grants its holder the right to opérate a continuous massive
ransportation system of mineral products between one or more mining units and one harbor or
processing plant or refinery by means of conveyance belts, pipelines and track cables. This type
óf concession is not required at this time.

1 By virtue of Administrative Resolution No. 007-ATDRC-CDRC-SAR-C-93 issued by

Cusco's Regional Watering Aüthorities, Tintaya was granted an authorization to extract, within
a ten and a half month term, 5,000 cubic meters of fine gravel and concrete from the Salado
^ver in the "Javier" mining claim area. This authorization is no longer in forcé. An extraction
duty must be paid,to the Municipality of the District of Espinar Cusco, under the terms of the
authorization.

Article 37 of the General Mining Law grants, among others, the following rights to
concession holders:

1. Free mining use óf the surface of uncultivated lands within the boundiaries
of the concession.

2. To request the Mining Authority to establish easements, rights of way and

other servitudes, imposed on uncultivated lands located outside the
boundaries of the concession.

3. To request authorization for the éstablishment of easements in third party

properties, required for a logical exploitation of the concession, subject to
compensation.

5-13
 4. To request authorization for mining use or easements on the surfaces of
V'
other concessions, provided that they do not affect or interfere with the
V,
holder's mining activities.

5. To build in the adjoining concéssions the infrastructure required for

access, ventilation and sewage associated with activities on the concession,
as well as for the transport of minerals and the security of the workers;
subject to fair compensation.
f!
6. To request expropriation, subject to adequate compensation, of real estáte
assigned to other uses when the mining activity is a higher and better use
than current use of the property.
L
7. To benefit from the mining substances contained in the waters served by
the concession.

The principal obligations of a concession holder are the following:

1. To work the mining concession, investing the needed resources for the
production of mineral substances. In this respect, the yearly production
shall not be less than an equivalent, in national currency, of U.S. $100
per granted hectare of metallic substances. In the case of nonmetallic
■ substances, the yearly minimum production amounts to U.S. $50 per
hectare.

2. To pay an annual fee;("Derecho de Vigencia") that amounts to U.S. $2

per hectare. Said fee may be paid in national currency or in U.S. dollars.
' i

Different amounts apply to small mining producers.

3. 'To file an Annual Consolidated Form (Declaración Consolidada Anual),

in accordance with the Form approved by the Ministerial Resolution No.
104-93-EM-DGM.

The holder of a concession is authorized to transfer the same. He can also mortgage the
concession, as well as plédge the personal property he owns involved in the mining activities or
the extracted or treated minerals of his property. As per Article 163 of the General Mining
l^w, for a mining contract to be effective before the Government and third parties, the same
must be formalized by public deed and recorded in the Public Mining Registry. Article 58 of
the General Mining Law provides that a concession is terminated due to caducity, abandonment,
nullity, renouncement and cancellation clauses.
I

J 5-14
 iv. Water Rights
u
I
\
All water in Peni belongs to the State and permits are grantéd upon application subject
to pre-existing rights. The regulations outline priorities upon which the rights are subject.
Preference is given to the needs of citiés, towns livestock. Discretion is given to allocate
any remaining water basad upon the perceived public need. Degradation of the water is
prohibited.

The Constitution regards water as a natural resource and, thus, water can neither be
acquired ñor a prívate property right. The General Water Act, Decree Law No. 17752, enacted
pn July 24, 1969, outlines the water law of Perú. The regulations covering the Decree Law
were issued under Supreme Decree No. 26169-AP, pubíished on December 15, 1969.
The following represent the significant water rights associated with Tintaya:

1. EMETSA is authorized to use 252,288 cubic meters per year of spring

waters for human purposes, from the Tintaya and Chabuca springs. Said
right was granted by virtueof Directorial Resolution No.0053-91-DUAD-
XX-C issued on January 23, 1991.

2. An authorization to use 12,614,400 cubic meters per year of water from

the Salado River, for mining purposes, was aiso granted to EMETSA by
Directorial Resolution No. 0052-01-DUAD-XX-C,issued on January 23,
1991.

3. Authorization No. 040/V-90 issued by the competent environmental

authority, enables EMETSA to dispose 293,700 cubic meters per year of
sewage waters into the Chullomayo River, a tributary of the Salado River.
This authorization which expired on September 20, 1992 has been recently
renewed.

V. Foreign Investment Regulations

Under Legislative Decree No. 662(Foreign Investment Promotion Law)and Legislative

Decree 757 (Framework Law For Prívate Investment Growth) and its Regulations (Supreme
Decree No. 162-92-EF), the Penivian State promotes and guarantees foreign investments in the
country. Foreign investment is defined as any investment . .origiriating abroad, made in
economic activities which generate income", in any form. According to the above mentioned
statutes, the following are considered foreign investments:
¡

1. Contributions through the National Financial System to the capital of a

new or existing company.

5-15
L- - 2. Investments in local currency from resources that have the right to be
transferred abroad.
y

3. Prívate debt-equity swaps.

4. Reinvestment of dividends.

5. Investments in properties located in the country.

6. Intangible technologic contributions.

7. Investments assigned to the acquisition of bonds, documents and financia!

papers quoted in the stock exchange, as well as certificates of deposit in
local or foreign currency.

8. Resources assigned to temporary associations or joint venturos.

Equal treatment is granted to foreign and national investors. No authorízation or prior

govemment approval is required to invest in Perú. Freedom of prívate enteipríses based on free
competition and equal access by prívate investors, is guaranteed subject only to restríctions
established in the Peruvian Constitution. Dividends and profits are freely transferred outside
Peni, as well as the capital associated with the investment. For this purpose, the most favorable
exchange rate of the day in which the transfers are made shall apply.

In addition, foreign investors have the following guáranteos:

1. The ríght to remit abroad, in freely convertible currency, without prior

áuthorization of any public authoríty, the total amount of their capital,
dividends and profits.

2. The ríght to convert foreign to national currency, or vice versa, at the

most favorable exchange rate effective at the moment of the transaction.

3. The ríght to execute Stability Agreements with the State ~ provided that
certain conditions relating to amounts of investment and other
qualifications are met ~ guaranteeing for ten years the tax regime in forcé
upon execution of the agreement; free disposal of foreign currency; free
remittance of capital and profits abroad; and non-discríminatory treatment
with respect to domestic investors.

4. , The possibility to acquire shares, equity or lights owned by national or

subregional investors, with no limitation whatsoever.

5-16
 I-. ! In order tp become a beneficiary of said guarantees, foreign investment shall be
channeled through the National Financial System and registered with the National Commission
ón Foreign Investments and Technology(CONITE). In this respect, every application submitted
before any entity of the Public Administration is considered approved on the same day of its
filing.
I

D. TAX SYSTEM

i. Qverview

I The Framework Law for the National Tax System (enacted by Legislative Decree 771.
published December 31, 1993), significantly reduced the number of taxes and provides that the
fpllowing taxes and contributions remain:

1. IncomeTax
2. Valué Added Tax
3. Excise Tax
4. Customs duties
5. Fees for the rendering of public services, including those charged in
administrative proceedings
I 6. Unique Simplified Regime
I
Domiciled corporations, as well as branches, agencies and permanent establishments of
foreign corporations, are subject to a 30% income tax rate on the corporation's net income. It
is worth noting that starting from January 1, 1994, Legislative Decree No. 774(new Income Tax
law) has eliminated income tax on dividénds, as well as on any other form of distribution of
profits. However, Peruvian corporations remain subject to minimum annual income tax of 29%
of their asset book valué as noted earlier in this section.
I
i

1 An 18% VAT is imposed on sales, services, imports, leasing and specific construction
contracts. It is structured as a multi-phase tax levied only on the valué added at each stage of
the production and circulation of goods and services, which allows the táx paid at the previous
stage to be deducted as a tax credit.
(

L I Under the Income Tax Law, royalties are the consideration paid in money or in goods,
originated by the use of patents, brands, trademarks, designs or models, plans, secret processes
I I
pr formulas and copyright, literary, artistic or scientific properties, as well as all consideration
1 }
I , paid for information related to industrial, commercial or scientific experience. Industrial,
cpmmercial or scientific experience information, is defined ^ all transmissions of secret or non-
s^ret technical, economic, financial or any kind of knowledge related to commercial or
industrial activity. Royalties paid to non-domiciled persons are charged at a 10% income tax
rate.

5-17
 I Interest payments on foreign loans are assessed with a 1% income tax, provided they
í^lfill the following requirements:

I 1. Entry of foreign cash into the country should be proven.

I

2. The foreign loan should not accrüe an annual interest higher than the
preferential rate effective in the country of origin, plus three points. Thé
I mentioned three points must cover charges and commissions, premiums
1 and any other additional sum of any kind associated with the interest paid
I to the beneficiary abroad.
I

j When the credit has been granted in the United States, the prime rate plus three points
is considered to be the preferential rate in forcé. In case of loans obtained in the European
market, the Libor rate plus four points is considered to be the preferential rate. If the agreed
I ! interest is higher than the máximum rate mentioned above, an assessment rate of 30% on the
I i
excess will be applied.
j

j In addition, interest paid by a company for loans granted by an affíliate foreign

Corporation are levied at a 30% rate. Article 75 of the Income Tax Regulations provides that
affiliation exists whenever the foreign company has more than 30% of the domiciled
Corporation's shares, either directly or through a third party; or, when the domiciled corporation
L. has more than 30% of the shares of the foreign company, either directly or indirectly.
I
I

¡ The production, sale and import of certain goods are assessed an excise tax. Excise tax
rátes very from 10% to 14.2%. Imported goods are assessed with a practically "flat" tariff.
Thefe are only two applicable rates: 15% and 25%.

I ii. Branches and Subsidiaríes' Tax Treatment

In general terms, thefe is no signifícant tax advantage of being a foreign branch and a
I^eruvian corporation.. Under the Income Tax Law, both entities are taxed at same rate (30%).
T^e only important difference is that branches of foreign companies are only assessed on their
inconie originated in a Peruvian source; whereas Peruvian coiporations are taxed on their global
income.

iii. Municipal Taxes '

A Real Estate Equity Tax is assessed on the valué of real-estate capital. The rate is
'j plrogressive to a máximum of 1 %.
I

i' ! However, under Article 78 of the General Mining Law and Article 9 of Supremo Decree
L No. 024-93-EM, municipal taxes imposed on goods that belong to mining concessionaires shall
only apply to those goods located in urban areas. Likewise, concessions are not be subject to
municipal taxes.

5-18
 SECTION 6

ECONOMIC EVALUATION

A traditional discounted cash fiow valuation of the Tintaya project, based on the
identifíed minable ore reserves and the PDMC operating plan, was conducted. In addition, an
indicated market valué was determined based on an analysis of prior acquisition prices for other
ácilities on the basis of the identified open-pit and the underground reserves.

A. PROJECT ECONOMIC VALUE

Economic analyses of the Tintaya project weré performed based on the PDMC project
^lan in Section 4, which called for a 20% increase in capacity via de-bottienecking of the
existing facilities and mining the open-pit and underground reserves in the proximity of the
present plant. The purpose of this evaluation is to provide Information on the expectéd
^nomic performance of the project. All economic analyses have been conducted on a 100%
^uity project basis but without inclusión of a purchase price.

The results of the economic analyses (based on 1995 fonvard, after-tax cash flows in
Perú and in the United States) over the 16 year period of fuíl concentrator capacity from 1995
uñtil 2010 are presented below for three copper prices (spreadsheets for the base case at all
copper prices are in Appendix E):

ECONOMIC ANALYSES RESULTS

Copper Price/pound $0.85 $1.00 $1.15 .

Proiect Economics in Peni

Cash Flow $106 million $293 mUlion $476 million

NPV @ 11% $ 34 million $121 million $206 million
® 13% $ 28 million $106 million $182 million
@ 15% $ 23 million $ 94 million $162 million
Proiect Economics to U.S.

Cash Flow $102 million $284 million $462 million

NPV® 11% $ 32 million $117 million $200 million

® 13% $ 26 million $103 million $177 million
® 15% $ 22 million $ 91 million $158 million

Key capital, operating cost and metal price assumptions supporting the economic analyses
and sensitivities to the $1.00/lb copper price base case are summarized as follows:

6-1
 KEY ASSUMPTIONS
Capital Costs C1994 S'»
Capital Additions/Replacements $175.8 million (includes $12.4
million in mine development)
Operatina Costs ("1994 Si
Mining:
Open-Pit $0.70/tonne of material
Underground $10.32/tonne of ore
Concentrating $4.75/tonne of ore
General and Administration $8.1 million/year
Explcration $0.2 million/year
Treatment and Refmine Charees
Copper - Treatment (Smelting) $100/tonne of concéntrate
- Refining $0.10/lb Cu
Concéntrate Transportation
Inland Freight to Port in Perú $34/tonne of concéntrate
Ocean Freight to Smelter $40/tonne of concéntrate
Metal Prices
Copper $1.00/lb
Gold $375/ounce
Silver $5/ounce
!
SENSITIVITIES
NPV @11% NPV Variation
íS millionsi /$ millionsi
Base Case
$1.00/lb 116.7
SENSITIVITIES
Copper Price
$0.85/lb 31.7 -85
$1.15/lb 199.5 +83
Caoital Cost
+ 10% 109.7 -7
- 10% 123.5 +7
Operating Cost
I 4- 10% 80.3 -36
- 10% 152.8 +36
, Proiect Discount Rate
¡ 13% 102.4 -14
' 15% 90.6 -26

6-2
I Economic analyses were also performed for the scenarios of Tintaya operating as an
ppen-pit operatíon oníy and an undergroünd operation only. The open-pit ore (26 million
tonnes) and underground ore (28 million tonnes) are almost equal over the Ufe of the project.
The NPV comparisons at $1.00/lb Cu in the U,S. are presentad in the table below for discount
rates of 11%, 13% and 15%:

NPV in Smillion
Discount(%) 11 13 15
Open-Pit $92 $ 86 $ 81
Underground 25 17 10
Total $117 $103 $91

\ The table above shows the relative attractiveness of the open-pit operation compared
to the underground operation on a discounted basis. This NPV advantage is due to a variety of
factors including the timing of the underground operation (beginning four years into the
property's Ufe) and its higher capital spending requirements, significantly reducing the
underground operation's NPV.
!

Figure 6-1 on the following page shows the non-discounted cumulative cash flow
throughout the project Ufe. Again, the relative attractiveness of thé open-pit operation compared
to the underground operation is apparent due to the higher capital and operating cost for the
underground operation. However, on a non-discounted basis this attractiveness is offset by the
higher grades of the underground ore.

6-3
 r

TINTAYA CUMULATIVE CASH FLOW

$300

(O
i-
JO
O
G

o $100 >vXí'.

(O
£ c
o

o CM co ■M* lO (O r^ oo O) o
o O O o O O O o o o
o o O o O O O. o o o o
CNI Csl CNJ CM CM CM CM CM CM CM CM

Open Pit H Underground -*-Total

Figure 6-1
I l
B. MARKET VALUE

A "market" based method for determining the valué of an acquisition, as opposed to

jaditíonal discounted cash flow analysis,.utili2es a statistical averaging approach to historical
acquisition pnces on the basis of geológica! reserves. There are, however, many factors that
influence the ultímate acquisition price of a given property (e.g., operating cost profile, stage
of development, political/social environment of the location, etc.). So many in fact, that this
approach should only be used as a reference for the valuation based on the traditional NPV
^alysis.

The Tintaya property has two very distinct sets of reserves: those associated with the
existing open-pit operations (Tintaya and Chabuca Sur totaling 33 million tonnes) and those
associated with the potential underground operations(Chabuca Este and Coroccohuayco totaling
53 million tonnes). The delineation of these reserves is nécessary as the historical market valúes
óf operating properties and development properties are very different. Additionally, the Tintaya
deposits have appreciable gold and silver by-products, theréfore a contained copper equivalent
must be calculated prior to the determination of market valué based on this approach. The
equivalent copper for the Tintaya reserves is shown below:

EQUIVALENT COPPER FOR THE TINTAYA RESERVES

I \
Geológica!
Reserves Grade Cu Contained Equivalent Cu
iieserve (million tonnes) (% Cu) (billion Ibs) (billion Ibs)
^en-Pit 33 1.7 1.2 1.4
Jnderground 53 LZ M M
Total 86 2.0 3.8 4.3

A historical database of past acquisitions (147 Western world copper acquisitions over
¿e period of January 1985 through April 1992) of 23 producing stage and 56 early exploration
stage copper acquisitions were used to determine unit acquisition prices for this analysis. The
result of this analysis is an average expected acquisition cost per pound of equivalent copper of
$0.055/lb Cu for producing properties and $0.014/lb Cu for exploration potential(see Appendix
E). This translates to an implied market valué of $118 million ($77 million for the existing
Open-pit reserves and $41 million for the potential underground reserves).

Another measure of market valué is the 1993 acquisition of Cerro Verde in Perú for $37
million. The geológica! reserve tonnage of 794 million tonnes and grade of 0.64% Cu results
in an acquisition price of $0.003/lb. Cu which is much lower than the average $0.055/lb Cu or
$0.014/lb Cu calculated above. The market price may be less than the above noted average
acquisition price due to some of the less desirable features of Cerro Verde such as the relatively
Ipw copper grade of the deposit, the infrastructure needs such as water and power and possibly
due to its location in Peni.

6-5
I ^ ; The average unit market valúes of $0.055/lb Cu for producing properties and $0.014/15
1 Cu for undeveloped reserves and the unit market price of $0.003/15 Cu for Cerro Verde along
with the calculation of an expected market valué are shown in the tahle below:

EXPECTED MARKET VALUES FOR TINTAYA

Equivalent Market Market Cerro Acquisition
[
t Copper. Acquisition Acquisition Verde Price Based
1
(billion Cost Price Acquisition on Cerro
1 pounds) ($/lb Cu) (millions) Cost Verde
!

($/lb Cu) (millions)

, Open-Pit 1.4 $0.055 $77 0.003 $4
1 Underground 2.9 $0.014 41 0.003 $9
1 Total 4.3 1
$118 $13

I As can be seen, the acquisition pnce ranges from $13 million based on the Cerro Verde
acquisition price to $118 million using the historical acquisition market prices. The above
analysis does not include any valué for the potential reserves from surface reconnaissance (142
million tonnes) or from the oxide ore (25 million tonnes). However, as there is more
uncertainty about the potential of these reserves they should have a smaller valué than that
associated with development properties (i.e., $0.014 per pound of contained copper).
I

The Tintaya acquisition price will be based on numerous subjective variables such as the
quality of the project and reserves, their location and the aggressiveness of the bidders. In
addition, as noted in the discussions on the competitive cost curve in Section 7, any price
premium for potential reserves will be related to the possibility of extracting these resources by
ppen-pit means. These reserves do not have as high a valué in an underground operatioñ sincé
their cash operating costs of $0.70/15 Cu are above the average for present operating mines.
Thus, in all likelihood, Tintaya will sell at a premium to the expected market price only if the
bidders believe that the potential reserves can be mined by open-pit methods, or if the bidders
believe their skills are sufficient to make the underground operations much more competitive.

C. MAJOR PROJECT ASSUMPTIONS

I In developing the Tintaya discounted cash flow evaluation, numerous assumptions were
made and are summarized as foUows(the assumptions are discussed in greáter detall in Sections
2, 3 and 4):

1. The productipn plan for the open-pit mines was developed with a cutoff grade of
0.65% total copper to maximize Üie valué of the mine resources.

2. The open-pit mine plan is based on a floating cone evaluation of the existing
Tintaya open-pit and of Chabuca Sur deposits.

6-6
3. The project runs through year 2010 which is íhe last year of full production.
4. The miné to mili discrepancy was estimated at 10% for the existíng Tintaya open-
pit and Chabuca Sur. .

5. The operatíons of the underground mines were assümed to be less profítáble than
the open-pit mines and therefore their start-up was delayed as long as possible.

6. The underground mine plans' grade and reserves were developed by Redpath-
Mclntosh and are based on'the geological reserves for the Chabuca Este and
Coroccohuayco deposits.

7. The open-pit and underground mine capit^ requirements are based on U.S. dollar
quotes for mine equipment in the U.iS., Perú, and Chile and include freight,
duties and assembly costs.

8. The open-pit mine operating costs were based on 1993 Tintaya costs and were
modified to account for projected increases and as a resuU of detailed haulage
analysis.

9. The underground mine operating costs were developed by Redpath-Mcintosh.

The cost of ore transport to the concentrator was developed by PDMC. -

10. Concentrator recoveries were assumed to be 90.5% for copper, 69% for gold and
60% for silver based on earlier test work and the results of the present
8,000 mtpd plant.

11. The concentrator de-bottlenecking design assumptions are based on engineéring

information from Tintaya and discussions with Tintaya engineers.

12. The concentrator operating costs were based on 1993 unit costs for the present
Tintaya operations. The unit costs were adjusted for anticipated increases in
future power costs in Peni from the present $0.044 to $0.Ó55/kwhr.

13. Concéntrate grades óf 31% Cu were assumed based on the existing 8,000 mtpd
plant and test work on the planned ore deposits.

14. Although some of the ore at Tintaya contains molybdenite, the grades in all the
deposits is estimated to be below a level for economic recovery and a plan to
recover it was not included in the analysis.

15. The costs of exploration are assumed to be $0.2 million per year for claims
management with no further exploration since the plan for Tintaya only mines
ores that have already been found and are considered minable.

6-7
16. The PDMC plan assumes that concéntrate will be shipped te.the Peruvian port at
Mataran! and then overseas for smelting and refining and for sale as cathode.
Although some of the total concéntrate cóuid be smelted at the lio smelter, their
smelting and refining charges are adjusted to be equivalent to overseas smelting
including freight, so the offshore smelting and refining rates are used on all
concéntrate.

17. A $34/tonne of concéntrate inland freight charge ,was assumed based on existing
contracts, along with an in-transit concéntrate loss of 0.2%.

18. The study used ocean freight of $40/tonne of concéntrate, smelting charges of
$100/tonne of concéntrate and refining charges of $0.10/lb Cu. Metal smelting
recovery of 96% and refinery recovery of 93% for gold and 90% for silver are
used.

19. The analysis is based on an evaluation using mid-year 1995 forward economics,
which includes all expenditures beginning with 1995.

20. The evaluation assumes 100% equity with no debt financing and with no
acquisition price included.

21. The evaluation assumes a discount rate for the base case of 11% with sensitivities
of 13% and 15%.

22. No escalation of operating costs, capital costs or revenue is included in this

constant dollar analysis and all costs and capital are in 1994 dollars.

23. Corporate tax consists of the foUowing:

a) Income Tax

Corporations that have third category income (income from trade,

industry, mining activity, and the exploitation of natural resources) aré
subject to Peruvian income tax at a flat rate of 30%.

b) Mínimum Income Tax

Companies other than exempt compahies must make a mínimum annual

payment of income tax equal to 2% of net assets. Net assets are total
ássets in the balance sheet at year-end, net of accumulated depreciation
and amortization. For mining companies, assets representing investments
' for staff welfare or investments that have not yet been put into production
are not included. The corporate income tax liability would, therefore, be
the greater of 30% of profits (after deducting lósses carried forward) and
2% of net assets minüs the business equity tax paid.

6^
 c) Dividend Remittance Tax

There is no dividend tax effective January 1, 1994 per Price Waterhouse

in Perú.

d) Workers* Participation

Companies generating third-category income must allocate 8% of book

profít before income tax to a cash participation fünd for workers.

24. Depreciation and depletion are calculated using the straight-line method over the
mine life for buildings and five years for all machinery and equipment for income
tax purposes. For book income a 12-year straight-line depreciation method is
used for all machinery and equipment. No depletion expense is allowed in the
current Peruvian tax system.

25. Development costs which include pre-stripping for Chabuca Sur and development
costs for both underground mines are expensed as incurred for tax purposes but
amortized over the life of the mine for book purposes.

26. Working capital for the project consists of accounts receivable and accounts
payable (initial supply inventory is assumed to be part of the acquisition price).
Accounts receivable is calculated for monthly revenue based on a 30-day
collection period. Accounts payable for cash operating costs is based on a 30-day
payment cycle.

27. It is assumed that excess cash on hand, after payments of legally allowed
dividends at the end of each operating year, will be repatriated as a retum of
capital investment after a one-year waiting period. This is to assure that there
wül be enough operating cash on hand in the following year.

28. No reclamation cost at closure or environmental remediation costs were included

at Tintaya.

6-9
 SECnON 7

BENCHMARKING

A. PROJECT COMPARISONSi

Benchmarking is a process used to compare a company's performance, practices, and

óperations relative to the best-in-class companies from both within and outside the industry.
This benchmarking methodology is used to compare Tintaya to a number of selected operatidns.
The performance measurements use comparable information for the ore resource and production
evel, and operating cost.

r The three similar size operátions that are benchmarked with the Tintaya project are all
ocated in Chile and include; Ojos del Salado, Mantos Blancos and Los Pelambres. The
information in the table below compares the benchmarking information for these mines gathered
rom recent in-house studies, files, ^d Brook Hunt information.

BENCHMARKING COMPARISON OF TINTAYA WITH OTHER MINES

Tintaya ' Ojos del Salado Mantos Blancos Los Pelambres

RESOURCE

Location Perú Chile Chile Chile

Ore Tonnes (million) 54 16 125 50

Grade (%Cu) 2.0 1.48 1.07 1.65

Reserve Base Minable Minable Minable Minable

By-Producis Au/Ag Au/Ag Ag Mo/Ag

. .. .. .. . . ,

PRODUCTION

Mine type open pit/ underground open pit/ underground

underground underground
Miiúng rate (mtpd) . 68,000 4,500 70,000 5,000
Stríp ratio* 4.5 - 5.5 -

Milling rate (mtpd) 8,000 4,000 11,000 5,000

Mili grade(%Cu) 1.80 1.55 1.30 1.50

Mili recovery(%) 90.5 92 94 87

Salable Copper
(million Ibs/yr) 118 44 96 47

Employees 712 344 650 385

OPERATING cost
Mining cost (S/rot)
open pit 0.70 0.78
underground 10.32 6.58 10.79 7.24

Milling cost(S/mi) 4.76 4.29 5.14 3.57

Total Cash Costs

($/lb) 0.66 0.58 0.70 0.73
Stnp ratio only for open pit.

7-1
 1. Resource

As shown in the above table, the resource at Tintaya is about the same size of those in
Chile, but higher in grade. All of the reserves stated have marketable by-products and are the
most recent minable reserves quoted.

Based on the 1991 Western world copper sulfide reserve study formulated for the PDMC
Strategic Plan, the Tiritaya reserves would be ranked tpward the lower end of the 51 copper
deposits evaluated, as shown below:

Ore tonnage - 41st ■

Copper grade - lOth
Salable Copper - 39th

This lower ranking is attributable to the relatively small size of the Tintaya project due
to limited ore reserves. However, one of the upsides for the project is the potential for
additional reserves which could enhance the above resource ranking.

ii. Productíon

The overall mining rate at Tintaya is comparable to the Mantos Blancos mine which is
^so a combined open-pit and underground operation. These mining rates are substantially
higher than Ojos and Los Pelambres due to the fact that they are open-pit mines and have
associated high stripping ratios.

The milling rates for Tintaya falls in the middle of the other three operations. Tintaya
^so has a higher mili head grade with average mili recoveries comparable to the other
operations. The Tintaya salable copper production is cióse to Mantos Blancos but substantially
ligher than the other two operations due to the higher milling rates and mili head grade.

The employee requirement for Tintaya is almost twice that reflected for the two
underground and small mili operations, probably due to the high infrastructure manpower of
Tintaya, but similar to the number of employees at the Mantos Blancos mine,

iii. Operating Costs

Mining costs for the open-pit portion of Tintaya are slightly lower than the open-pit
mining cost of Mantos Blancos. The underground mining costs of the four operations show
Tintaya to be below Mantos Blancos but higher than those shown for the underground operations
of Ojos and Los Pelambres. Milling cost show Tintaya to be in the expected operating range
of similar size operations. Total average mine life unit cash costs reflect Tintaya to be higher
than Ojos but slightly lower than either Mantos Blancos and Los Pelambres.

7-2
 B. COST CURVE

The unit cash cost curve shown on the following graph (Figure 7-1) incorporales the
latest update (April 12, 1994) of production and associated cash operating costs 11994 dollars'^
of the principal westém worid copper mines, including both chánges in existing copper supply
as well as anticipated new copper supply for the period 1997 through 2000. By the late 1990's,
this anticipated new supply amounts to approximately 1.1 million tonnes of copper production
and has a weighted average operating cost of$0.55/lb Cu essentially lowering the cost curve and
making it more difficull for other new projects to be cómpetitive.

The Tintaya cash operating costs, shown in the table below, reflect the total average cash
cost for the life of mine along with the cash costs of both the open pit and underground portions
of the operations. These cash costs are shown along with their respective time period and rank
on the cost curve ahd are compared to selected other mine operating costs in 1997.

Percentile
Time period Cash costs Ranking on the
!(yrs) (1994 $/lb Cu) 1997 cost curve
' Total Tintaya mine life 1995-2010 0.66 57th
Tintaya open-pit mining only 1995-2010 0.60 40th
Tintaya underground only 1998-2010 0.70 72nd
Cuajone , 1997 0.65 52nd
Toquepala 1997 0.67 58th
Cerro Verde T997 0.69 70th
La Candelaria 1997 0.52 27th
Morenci 1997 0.66 57th
Chino 1997 0.65 50th

Figure 7-2 shows the Tintaya annual unit cash cost throughout its 16-year mine life. It
reflects the increase in costs from the addition of the more expensive underground mining
portion of the project. Due to the increase in cost over the life of the project, the average unit
cash cost over the total life of Tintaya ($0.66/lb) was chosen to accurately represent the
operation on the copper cost curve.

Using the average mine life cash cost, the Tintaya project is as competitivo as many other
Peruvian concentrator operations, such as, the Cuajone and Toquepala mines owned by Soiithern
Peni Copper Corporation(SPCC)and the Cerro Verde expanded operation based on 1997 costs.
Tintaya is also as competitivo as Morenci and Chino, and less cómpetitive than La Candelaria
based on 1997 cash costs and ranks at the 57th percentile on the cost curve. Using only the
I

I I initial open-pit cash operating costs, the Tintaya operations would be more cómpetitive and
rañked in the 40th percentile.

7-3
 1997 COPPER COST CURVE
Major Mine Cash Operating Costs

(O

c CERRO VERDE
0
o
CUAJOME TOQUEPALA

k
G>
o> CH NO

LA CANDELARIA
(O
O MORENC
ü
TINTAYA
(Life of Mine)

30 40 50 60 70 100

% of Cumulative Production

Figure 7-1
 SECTION 8

STRATEGIC PLAN CONSIDERATIONS

The goals outlined in the Phelps Dodge Mining Company (PDMC)Strategic Plan and
the impact of the purchase of Tintaya on them are shown below:

' 1. Reduce copper unit product cost:

a. By 10% to 15% from 1991 average unit production cost by 1995 (1991$) and
thereafter maintain costs at 1995 levels:

Impact: The addition of.Tintaya would increase the unit copper production costs
in the year 2002 from $0.55/lb Cu to $0.56/lb Cu (1991$) and from
$0.51/lb Cu to $0.54 in the year 2007 (1991$).

b. To remain at least in the lower half of unit production costs among world
producers:

Impact: The addition of Tintaya wóuld move PDMC to a higher póint on the cost
curve of world producers.

12. Grow and maintain PDMC mine production to at least 10% of world production:
Impact: The addition of Tintaya would increase PDMC copper production by the
year 2002 to approximately 5.8% of world production (an increase of
0.7%).

Remain an integrated copper producer through rod production:

Impact: The addition of Tintaya would decrease somewhat the integrated copper
producer position through rod since thé concéntrate would be sold
worldwide and not smelted or refined by PDMC.

Enhance ore reserves by replacing those reserves lost due to production and increasing
ore reserves at a 5% per annum growth rate:

Impact: The addition of Tintaya would increase PDMC minable reserves by 54

million tonnes graded 2.0% copper.

8-1
I Achieve meaningful commodity and geographical diversifícation:
I

Impact: The addition of Tintaya would increase PDMC geographical

1 diversifícation but would not increase PDMC commodity diversifícation.

Achieve average annual operating cash flow retum on investment(OCF ROI) of 20%
at $0.90 per pound of copper (1992$):

Impact; This fínancial indicator cannot be calculated until an acquisition price is

determined.

Achieve average annual eamings before interest retum on investment(EBI ROI)of 10%
at $0.90 per pound of copper (1992$);

Impact: This fínancial indicator cannot be calculated until an acquisition price is

determined.

Additional details on the impact of Tintaya operations on Phelps Dodge Mining

Company's copper production and cash operating cost goals are shown in the table below:

SALABLE COPPER PRODUCTION & CASH OPERATING COSTS'

1995 1996 1997 2002 2007

Tons (000)
Existing PDMC 654 670 671 516 185

Percent of World 7.0% 7.0% 6.7% 5.1% 1.7%

Tintaya 47 49 52 71 59

Combined 701 739 723 587 244

Percent of World 7.5% 7.7% 7.2% 5.8% 2.2%

Cost/Pound Cu

Existing PDMC 1994$ $0.60 $0.61 $0.61 $0.60 $0.55

Restated to 1991$ $0.55 $0.56 $0.57 $0.55 $0.51
Tintaya 1994$ $0.63 $0.64 $0.61 $0.66 $0.71
Restated to 1991$ $0.58 $0.59 $0.57 $0.61 $0.66
Combined 1991$ $0.56 $0.57 $0.57 $0.56 $0.54

^Data may differ slightiy from 1994 budget due to certain Strategic Plan assumptions.
8-2
 TINTAYA COST CURVE
Total Unit Cash Cost

75

Máximum Underground Mining Reachéd

(2.5 million tpy)

Y»
(/I

ínitiaí Underground Mining Starts

(360.000 tpy)

55lO co h- CO O
O) CM CO M- in CO N. OO G) O
o> O) O) O) O) o O O O O o o o O O T-
O) O) O) O) G) o O O O O o o o O O O
CM CM CM CM CM CM CM CM CM CM CM

Figure 7-2
 SECTION 9

FINANCING STRATEGY

: A. BACKGROUND AND OBJECTIVE

i ^ ^ ■
i PDMC believes, based on its experience at its La Candelaria mine and its preliminary
discussions with members of the Peruvian and International financial markets and institutions,
it is possible to arrange financing for the project. However, any financing arrangement will
require extensivo negotiations to completé, therefore it is not likely that a firm financing
arrangement can be put in place prior to submission of the bid. Additionally, it may be difficult
tp secure non-recourse financing for the project.
I
i
, As the bid instructions have not yet been received describing the required fonn of
ihvestment, and based on current market intelligence gathered ffom our Tintaya financial
consultant(Celta based in Chile), two distinct financing scen^os are being reviewed. Although
there are some similarities between the two scenarios, the fundamental differentiating
characteristic is an assumed requirement.for the use of Peruvian debt paper as a required form
pf investment in one case, while assuming no such requiremeht in the other.
r

j The financing strategies discussed bélow are based on PDC's analysis of current market
conditions and will be reviewed prior to implementation incorporating any advantages associated
with changing market conditions where possible.
í

i The overall objectives of the financing strategy are to:

i

• Reduce direct PDC cash investment in thé project

• Obtain competitive debt financing with involvement from the local

Peruvian market if possible

• Limit debt financing to a project financing or "non-recourse" type

financing to PDC

• Limit project risk through the purchase of political risk insurance

• Complete the financing in an efficient manner with respect to both costs

and time

9-1
 B. SCENARIO 1 - NO CONSTRAINTS ON THE REQUIRED FORM OF
INVESTMENT

This scenario is based on PDC having máximum flexibility (i.e., no stípulation for use
jpf Peruvian debt paper as form of consideratíon in the bid) in structuring its financing plan for
he acquisition of Tintaya.

(i1 Equity Altematives

Three altematives have been reviewed in connection with PDC reducing its equity
exposure in the Tintaya acquisition and are discussed below:

Tal Japanese Partner

Based on prior discussions with our existing Japanese partners (namely Mitsubishi and
Sumitomo) and recent correspondence froni Mitsui, it is likely that a Japanese equity partner
could be secured for the acquisition of Tintaya. Besides the reduction in equity exposure and
commensurate up-front payments, the advantages and disadvantages of this type of structure are
as follows:

Pro: 1. Already have an existing working partnership relationship in place

with both Mitsubishi and Sumitomo. Mitsui currently owns nearby
concessions to Tintaya.

2. The structure of the equity investment would be limited tp a

"passive" investment allowing PDMC to opérate the project at its
discretion.

3. Poténtial for "fast tracking" of an agreement based on existing

relationship.

4. Strong partner with access to significant funds for future

investment requirements.

5. Access to Japanese concéntrate markets will be enhanced.

Con: 1. Negotiations could take an extended period of time.

2. Difficulty in agreeing upon evaluation parameters and ultimate

valué of project.

PDC's equity exposure can also be reduced by using local investors. Peruvians also look
avorably on foreigh investors who co-invest with local partners. Two possibilities exist in Perú
br co-investment:

9-2
 (T)") Local Mining Partners . ,

General discussions have been held with the Milpo and Simsa gróups (two of the largest
ocal Peruvian mining companies), bóth of which expressed interest in being a minority partner
bf PD in Tintaya. They have indicated thát they would like a 20-40% interest and could raise
$20 millioñ or more, as needed, with some undefined help from PD. The pros and cons of this
ype of investor are obvious:

Pro: 1. Established local miner with connections and ability to do business

in Perú.

2. Source of technical expertise and personnel.

Con: 1. MigHt wish to be more "active" than we want.

2. Cash poor now and perhaps in the future and might be unable to
come up with their share of expansión money.

re') Local Equitv Qffering

The local stock market has been doihg well and is benefiting from both local and
International funds. It could provide some amount of équity for Tintaya.

Pro: 1. Avoids single shareholder who could later become disgruntled and
cause problems.

Con: 1. Question as to whether we can get proper valuation in the local

market.

2. Does not provide máximum "political benefits".

3. Requires ongoing public financial reporting.

(ii') Debt Financing Altematives

There are a variety of debt fihancing altematives available including the following:
(al Local Financing

It is believed that at least $50 million might be arranged in the Peruvian market, as a
biidge loan,, which we would aim to refinance in the Peruvian and/or Eurobond market. The
likely bond term would be limited to the five-year range and the final takers of the Tintaya paper
could be a combination of International investors and/or Peruvian pensión funds or banks.

9-3
 Banco de Crédito and Banco Wiese are two local sources of bridge financing. The cost
bf funds for bridge financing could be as much as 3-4% over prime (floating rale). The take-out
financing would most likely be around 3% over the underlying Treasury benchmark plus fees
for a total cost of around 10%. As a reference point, SPCC recently completed a financing
package including commitments from Banco de Crédito and Banco Wiese on which the all-in
cost was about 10%. The non-Peruvian portion of SPCC financing was largely tied to export
^es of copper.

The timing and documentation requirements for the take-out financing issue have not been
éxplored in detail. It is reasonable to expect that in the case of a bond issue the prospectus
would require, at a minimum,audited financiáis, and a business plan that addresses future issues
like ore reserve positions and cost reduction/efficiency programs. Six months is a reasonable
estímate to complete a bond deal for a going concern like Tintaya.

A locally financed bridge loan which is intended to be taken óut by a future bond issue
])resents a risk that the bond investors' pérception of Peni, copper market, or the company
changes during the bridge loan period (i.e., before the bond is issued) thereby jeopardizing the
ong-term finance plan.
J
fb^ Import-tied Financing

Other sources may include import-tied financing similar to that which was arranged for
;-a Candelaria, but the availability of such funding, even were it to be commercially viable,
depends upon the status of Tintaya's existing concéntrate sales contracts. More will be leamed
about these contracts during the coming months.

(c^ Project Financing

The likelihood of intemational commercial banks providing limited funding (perhaps

$20-25 million) to Tintaya on a project basis is slim at best. However, until a defiñitive
operating program has been prepared and submitted to them for discussion, this option cannOl
be entirely ruled out.

(di Export-Import Bank Financing

The U.S. Export-Import(EXIM) Bank may also be able to provide some financing to
íntayá although dealing with them is difficult and slow moving. As with the SPCC
Gommitment, availability of U.S. EXIM guaranteed funds would be dependent upon finalization
of a bilateral "Project Incentive Agreement", which remains under review by both the United
States and Peni.

(iiil Political Risk Insurance

Multiláterial Investment Guarantee Agency(MIGA)is open for business in Peni and up

o $60 million in political risk coverage may be possible. Overseas Prívate Investment

9-4
 Corporation (OPIC)is also open in Pei^, for both insurance and financing, but may be limited
in coveriñg new copper investments. OPIC's per-project financing limit has been increased to
$200 million from the $50 million which was in place when we financed La Candelaria, and
their insurance limit has been increased to $200 million from $100 million. The approximate
per annum cost for the full OPIC insurance program is 1.8%. This covers currency
iriconvertibility, expropriation, and political viólence.
' ■ !
I Preliminary applications to both OPIC and MIGA for political risk coverage of our
I ; potential investment in Peni have been submitted. These preliminary applications neither
[! guarantee us ñor commit us to a political risk insurance program, but they do get us into the
cue. Neither organization would be able to formally commit to providing insurance to us until
we indicate we have won the bid, but both are able to commence with some of the required due
diligence in advance.
i ,

I There are many things that can happen in Perú that might be categorized as political risk
events but which, while harmful, would not cause PDC to decide to stop operating. Political
risk insurance via project financing ór OPIC insurance "pays off only when it allows us to cut
óur financial losses.

j The concept of "political risk" spans a broad speclrum. Arranging project fmancing may
cover some aspects of political risk, but not others. For example, if a facility is expropriated
without compensation or if civil war destroys the plant, having limited recourse financing in
^ place allows the equity investor to walk away with only the loss of equity. -But, other fprms of
j govemmental harassment, such as onerous regulation, taxes, and mandated social and labor
— costs, are more likely to occur in today's world than expropriation, war or inconvertibility.
these "creeping forms of expropriation" leave the equity investor in business but with a greatly
I I reduced rate of retum. This reduction in rate of retum is not covered by the "insurance"
purchased by project financing or OPIC/MIGA programs.

C. SCENARIO 2 -- PERUVIAÑ DEBT PAPER REQUIRED AS PART OF THE

'.J
I FORM OF INVESTMENT
i I
! 1 I (i) Background
I . ^

1 Both the COPRI ~ the body in charge of all privatizations ~ and the CEPRI ~ the
committee in charge of the Tintaya privatization, have expressed that they are considering the
use of Peruvian debt papér for the privatization of Tintaya. Mr. Francisco Fernández, the
president of the Tintaya CEPRI, said that the mechanism being discussed may cali for a
minimum cash payment and a variable amount of debt paper. Under this scenario, the bidder
that commits to presenting the authorities with the greatest amount of debt paper would win the
Tintaya bid. However, the possibility that the formula used in Centromin (a fixed amount of
debt paper and a variable amount of cash), may be chosen by Peruvian authorities should not
be fuled out. Or still, given the fluidity of the process, that the Tintaya privatization will not
include the use of debt paper at all.

9-5
 If the Tintaya privatization includes the use of debt paper, it would be regulated by
])ecree No. 17.94-EF. This decree stipulates that Peruvian authorities will consider only the
face valué of eligible Peruvian debt paper when comparing bids. Any cash offered above the
mínimum cash requirement cañnot be substituted for debt paper. Present regulations further
specify that, after the opening of the bid envelopes, the winner will have seven days to present
the debt paper to the Peruvian authorities. There is, hcwever, a provisión that extends this time
limit to ninety days, provided that the winner obtain a stand-by letter of credit in favor of the
govemment agency specifíed in the Instructions to Bidders.

fii> Equity Altematives

The equity altematives for this scenario are identical to Scenario 1.

fiii^ Altematives For Using Debt Paper

fa') Debt-for-equity Swap

As discussed in the equity altematives, PDC is considering a partnership with a Japanese

éonsortium. In the negotiations with the potential Japanese equity partners, the availability of
Peruvian debt among the banking branches'of these consortia should be explored. Two of the
potential consortia were original lenders to Tintaya: The Sumitomo Trust & Banking Co. has
ÜS$114 million of the outstanding obligations and the Mitsui Trust & Banking Co. has
US$7.2 million of the outstanding obligations to Tintaya (all Tintaya creditors are expected to
.
exchange their obligations for Peruvian debt paper). Japanese banking institutions, like the ones
mentioned, probably have a substantial amount of other Peruvian debt. It is possible that, say,
^itsui would be willing to trade off Peruvian debt for a share of Tintaya equity. PDC should
also explore the possibility of asking the potential Japanese consortium for both cash and debt
papér as the form of equity buy-in.
! I
The possibility of including other debt holders in addition to the Japanese as equity
partners was evaluated but was discarded on two grounds. First, it was considered that a
shareholders agreement that includes PDC, a Japanese consortium, and a group of debt holders
^resumably several banks), would prove unwieldy, especially in the short amount of time
remaining between now and the bid date (late Septembe^. Secondiy, there is a problem of
' i (^nfídentiality: any discussion of a specific formula for converting debt paper into equity in
Tintaya would likely result in a fairly large group of banks knowing in what doUar range PD
ultimately expects to place its bid.
í •
fbl Purchase of Peruvian Debt Paper From Proceeds Of A Loan To PDC Pem

Banco de Crédito del Peni, the country's largest bank, has told us that they could put
together a US$25-50 million five-year loan (non-récourse to PDC). This loan could be used to
purchase Peruvian debt paper in the secondary market. If other options discussed in this
memorándum prove to be more advantageous to PDC,the Banco de Crédito loan could be used
br Tintaya*s future investment commitments. Altematively, a portion of this loan could be used

9«6
 to purchase Peruvian paper in the secondary market and a portion assigned to the financing of
iiture investment commitments.

(c) Debt-for-debt Swap

A third option would be for PDC to enter inte a debt-for-debt swap agreement with
lolders of large amounts of Peruvian debt. Under such an agreement PD would take existing
debt from Peruvian debt holders and replace it with a new Tintaya obligation. This agreement
would of course be contingent on PDC winning the bid. Though banks holding Peruvian debt
as a rule prefer the potential capital appreciation that comes from debt-for-equity swaps, this
may be the right time for negotiating a debt-for-debt swap that includes some upside potential.
Tintaya could be the first privatization in which the use of debt paper would play a significant
role. Banks are eager to put their debt paper to use not only in the privatization of Tintaya but
in other privatizations as well, and they are likely to be more flexible in this first negotiation.
In addition, if more privatizations allow the use of debt paper, the price of Peruvian debt in the
secondary market is likely to rise above the 45-50% (has reached 70+%)of face valué at which
"■eruvian debt has been trading in the last weeks, giving bankers more negotiating clout.

I I

i i
i '

fi
9-7
 APPENDIX A

GEOLOGY REPORT

Included in this appendix are the following reports:

1. Tintaya Mine Ore Reserve Data Base Verification, April 1994.

2. Potential Resource Evaluation of the Tintaya Mining District.

A-l
Rep.0101-2/94

TINTAYA MINE
ORE RESERVE DATA BASE VERIFICATION
By : Fernando Castilla
Rev: Jorge Benavides
Minera Phelps Dodge del Perú S,A.
April 1994

1. INTRODUCTION

The Tintaya ore reserve data hase verification work was

undertaken between January 28 and February 23, 1994, as an integral
part of the thorough evaluation of the Tintaya Mine by PDMC with
view to its possible acguisition.

The task basically consisted in the cross-checking of randomly

selected drill hole ore intersections for consistency between the
log descriptions, metal grades reportad and core inspection.
Approximately a 10Z of all ore intersections were inspected and re-
analyzed for total copper, soluble copper and gold.

2. SCOPE AND OBJECTIVES

The scope and main objectives of this pre-acguisition work

program were the following:

Verify the correct drill hole Information of selected drill

logs, as well as their plot on maps and seCtions.

Check the correct description of lithology and mineralization

of selected ore intersections.

Visually check for consistency between the log and core with
respect to total and soluble copper content as well as the
type and guality of mineralization.

Prepare composite samples of the randomly selected ore

intersects for analysis of total and soluble copper as well as
gold content, in order to check on the precisión of the
Tintaya laboratory with the SGS peruvian laboratory and with
Bondar Clegg of Cañada.

Obtain a 10% randomly selected ore intersects grade control

for gold, which was only sporadically analyzed by Tintaya.

3. METHODOLOGY

Based on the Tintaya data room Information, contained in

reports, drill logs, maps and sections, of the Chabuca Este,
Chabuca, Chabuca Norte, Chabuca Sur and Coroccohuayco ore bodies

A-2
Rep.0101-2/94

that contain 90% of the geological and minable ore reserves of

Tintaya, it was determined that the total length of drill hole
Information to be selectively checked, up to December 1993, was of:

TINTAYA TOTAL EXPLORATION DIAMOND DRILL LENGTH

ORE BODY NUMBER OF DRILL HOLES DRILLED LENGTH

Inflection (open pit) 92 22,684

Chabuca Este 259 41,057

Chabuca 276 , 16,279

Chabuca Norte 28 4,213

Chabuca Sur 117 11,023

Coroccohuayco 70 24,977

TOTAL : 842 120,233

For each deposit a systematic selection of cross-sections was

carried out, on which the randomly selected ore intersect
information would be verified. This guáranteos the uniform
distribution of verified information . In this fashion and in order
to verify a 10% of the ore intersections, it was determined that
the appropriate distance between selected cross-sections and the
total length of verified ore intersections for each orebody should
be as follows:

DISTRIBUTION OF VERIFIED ORE INTERSECTS

DISTANCE BETWEEN TOTAL LENGTH OF

SELECTED CROSS - MINERALIZATION
ORE BODY SECTIONS VERIFIED/METERS

Chabuca Este 60 2,109.38

Chabuca 25 ■ 625.90

Chabuca Norte 100 337. 10

Chabuca Sur 80 559.56

Coroccohuayco 100 1,280.00

TOTAL : 4,911.94

A-3
 Rep.0101-2/94

Once the core intersects to be checked were selected, field

work started witb the optical inspection of the core in the Tintaya
mine core sheds and comparing ít with the core log, followed by the
preparation of composite samples of 10 meter intervals.
In arder to prepare the composite samples the individual 1.52
meter (5 foot) samples, previously preparad and analyzed bv
Tintaya, were used. These samples were initially prepared by
sawing the core in two crushing one half into < 1/4", and after
splitting, pulverizing to -100 mesh and homogenizing, 6 paper
envelopes of approximately 100 grams each were filled. One split
was analyzed at Tintaya, -a second at a commercial lab and if there
was a discrepancy, a third was used. The remaining envelopeS were
stored at the Tintaya core shed and have been used by us to prepare
the 10 meter composi tes.

The composite samples were prepared by us using two methods,

first by equal volumes, employed in the initial work for Chabuca
Este sec tions 70 to 140, and which consisted in taking equal
volumes of each envelope to form a composite of approximately 60
grams. Afterwards composites were made by weight, using the
specific gravity and length to determine the weight of material
that each sample contributed towards a specific composite.
' /I total of 537 composite samples were prepared, distributed as
follows:

COMPOSITE SAMPLES DISTRIBUTION

ORE BODY INDIVIDUAL SAMPLES COMPOSITE SAMPLES

Chabuca Este 1,488 212

Chabuca 384 62

Chabuca Norte 264 51

Chabuca Sur 402 78

Coroccohuayco 661 134

TOTAL : 3, 199 ■537

Samples were analyzed using conventional methods, extraction

by the composites fire, dissolution and atomic absorption
spectrometry determination for total copper and gold. Acid attack
FOR 1/2 hour and AAS determination was used for soluble copper
analysis.

Results are presented in this report in the adjoined tabl es

A-4
Rep.0101-2/94

grapbs and sections.

4.RESULTS

The total copper grades reported by Tintaya for the verified

10 meter composites, a mathematical average of the 1.52 meter
individual sample analysis at the Tintaya Lab, are compared ta
those reported by SGS del Perú lab and Bondar Clegg of Vancouver
for the composites prepared by our personnel, in the followins
tables: ^

TOTAL COPPER COMPARATIVE RESULTS AND CORRECTION FACTOR

OREBODY TINTAYA % CU SGS-B. C. % Cu +- % CORR.FACT.

Chabuca Este 2.060 2.020 - 1.94

Chabuca 2.006 2. 024 - 0. 12

Chabuca Norte 1.641 1.639 ■h 0.90

Chabuca Sur 2.210 2. 150 - 2. 71

Coroccohuayco 2.280 2.300 -t 0.88

Average : 2.039 2. 027 - 0.60

The gold and soluble copper grades cannot be compared as Tintaya

only analyzed for gold sporadically, and for soluble copper in
oxide ore.

The average gold and soluble copper contents determinad by

SGS/Bondar Clegg on the analyzed composites are:

GOLD AND SOLUBLE COPPER AVERAGE COMPOSITES SAMPLES RESULTS

ORE BODY GOLD g/MT SOLUBLE COOPER & Cu

Chabuca Este 0.439 0.318

Chabuca 0.460 0. 770

Chabuca Norte 0.350 0. 920

Chabuca Sur 0. 148 0.466

Coroccohuayco 0.255 0. 428

Average : 0.330 0.580

A-5
Rep.0101-2/94

5. CONCLUSIONS

The comparative total copper resulte give remarkable

consistency and validity ta the Tintaya information, a fact that
was also evidenced during the optical inspection of the cores,
compared to the core logs, which were found to be very consistent
and precise descriptions of the inspected ore íntervals.

Despite this, it was found that with respect to intrusiva rock

description and identification, consistency was poor and in many
cases little effort in correlation was evidenced. The better
understanding of the intrusiva event sequence and its relation to
mineralization will significantly improve futura exploration
success.

Based on the results of this work, the correeted geological

sulphide ore reserves grade for the Tintaya Property is as follows:

SULPHIDE ORE

Au Ag MoS2
OREBODY S MMT CuTZ CuSZ oz/MT oz/MT Z

Inflexion/Zona L 23.588 1.59 N/A 0.018 0. 464 0.02

Nueva Open Pit

Chabuca T 2.836 2.08 0.92 0.011 N/A N/A

Chabuca Este L 23.816 2.07 0.32 0.014. 0.447 0.01

Chabuca Sur T 9.053 1.87 0.47 0.005 0.320 0.09

Chabuca Norte T 0.593 2. 70 0. 77 0.012 N/A N/A

Coroccohuayco T 25.924 2. 12 0.43 0.010 0.386 N/A

TOTAL : 85.810 1.92 0.013

A-6
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A-7
 CHABUCA ESn

'KOESm PSOFONDIDA (Q) LAB. TIHTATA LAB. BOKDAE CLE66 LOKG. DIFERENCIAS [
DE A Cut 9 Cu Sol 9 Au 6r/Ti CuT 9 Cu Sol 9 Au Gr/Iüi (a) Cu! S Cu Sol \ CuT \ Cu Sol !
IOS "70"
_.-GH-6
A-000401 71.Í5 81.90 1.27 0.24 1.29 0.412 0.036 10.45 -0.02 -0.172 0.0004 0.0296
A-000402 81.90 92.75 2.31 0.10 2.20 0.116 0.214 10.85 0.11 -0.016 0.0121 0.0003
A-000403 92.75 102.50 2.23 0.14 2.15 0.203 0.535 9.75 0.08 -0.063 0.0064 0.0040
A-000404 102.50 112.30 1.32 0.10 1.06 0.156 0.244 9.80 0.26 -0.056 0.0676 0.0031

SECCION "75"
93-Í8
A-000Í37 28.07 37.52 3.40 0.16 3.74 0.151 0.731 9.45 -0.34 0.009 0.1156 0.0001
A-OOOÍ38 39.41 47.15 2.30 0.16 2.24 0.134 0.502 7.74 0.06 0.026 0.0036 0.0007
A-000<39 47.15 60.96 4.84 0.19 4.93 0.211 1.274 13.81 -0.09 -0.021 0.0081 0.0004
A-0004ÍO 60.96 72.45 0.32 0.09 0.25 0.057 0.109 11.49 0.07 0.033 0.0049 0.0011
A-0Ü0441 72.45 87.32 0.16 0.04 0.12 0.014 0.013 14.87 0.04 0.026 0.0016 0.0007
A-000442 87.32 99.12 1.46 0.14 1.44 0.125 0.469 11.80 0.02 0.015 0.0004 0.0002
A-OOOÍÍ3 114.36 127.68 0.96 0.07 1.10 0.087 0.232 13.32 -0.14 -0.017 0.0196 0.0003
A-OOOÍU 134.26 144.11 1.31 0.11 1.25 0.098 0.169 9.85 0.06 0.012 0.0036 0.0001
A-000445 150.30 166.85 1.53 0.11 1.53 0.115 0.381 16.55 0.00 -0.005 0.0000 0.0000

SECCION "80"
ET-CHl
A-000Í05 106.70 119.05 0.55 0.05 0.50 0.106 0.170 12.35 0.05 -0.056 0.0025 0.0031
A-000Í06 119.05 129.68 0.95 0.06 0.87 0.084 0.335 10.63 0.08 -0.024 0.0064 0.0006
A-000^08 129.68 140.66 1.26 0.09 1.29 0.105 0.280 10.98 -0.03 -0.015 0.0009 0.0002
A-O00Í09 140.66 155.07 1.22 0.09 1.14 0.096 0.310 14.41 0.08 -0.006 0.0064 0.0000
DOÜO 171.89 182.84 1.69 •0.11 1.24 0.111 0.303 10.95 0.45 -0.001 0.2025 0.0000
)0Ü1 182.84 193.61 2.57 0.24 2.44 0.276 0.962 10.77 0.13 -0.036 0.0169 0.0013
A-000Í12 193.61 204.09 1.74 0.07 1.67 0.067 0.183 10.48 0.07 0.003 0.0049 0.0000
A-0D0U3 : 204.09 214.38 2.73 0.21 2.23 0.090 0.275 10.29 0.50 0.120 0.2500 0.0144
A-DODÍIÍ 214.38 224.86 4.07 0.13 3.60 0.079 0.363 10.48 0.47 0.051 0.2209 0.0026
A-ooon5 224.86 235.57 5.26 0.13 4.91 0.112 0.509 10.71 0.35 0.018 0.1225 0.0003
A-0D0416 235.57 244.71 1.19 0.05 1.82 0.067 0.201 9.14 -0.63 -0.017 0.3969 0.0003
EXP-CH5
A-OOOÍ17 222.85 233.00 1.28 0.95 0.112 0.370 10.15 0.33 0.1089
A-000Í18 ' 233.00 243.85 1.53 1.55 0.115 ,0.277 10.85 -0.02 0.0004
A-000Ü9 243.85 254.30 3.84 2.46 0.100 0.681 10.45 1.38 1.9044 t

A-000420 254.30 264.85 3.00 3.12 0.168 2.422 10.55 -0.12 0.0144
A-000Í21 264.85 275.40 2.28 2.44 0.222 0.852 10.55 -0.16 0.0256
A-000<22 275.40 284.75 3.99 4.76 0.088 0.084 9.35 -0.77 0.5929
A-000423 294.30 304.95 3.46 3.22 0.119 0.200 10.65 0.24 0.0576
A-00042Í 304.95 315.70 3.61 3.61 0.215 0.833 10.75 0.00 0.0000
A-000425 315.70 326.00 3.73 4.03 0.323 2.056 10.30 -0.30 0.0900
A-000428 < 326.00 337.80 3.65 3.13 0.264 0.766 11.80 0.52 0.2704
A-000427 , 337.80 348.35 2.38 2.24 0.207 0.605 10.55 0.14 0.0196
EÍP-Cfl^O
A-000428 249.35 259.40 2.29 2.27 0.203 0.597 10.05 0.02 0.0004
A-000429 . 259.40 269.50 1.96 1.83 0.145 0.447 10.10 0.13 0.0169
A-OOOOO ' 269.50 280.45 2.19 2.21 0.179 0.428 10.95 -0.02 0.0004
A-OD0431 280.45 290.90 1.52 1.10 0.098 0.227 10.45 0.42 0.1764
A-000432 290.90 301.20 1.30 1.20 0.069 0.367 10.30 0.10 0.0100
^10433 301.20 311.20 2.33 2.50 0.136 0.098 10.00 -0.17 0.0289
i0434 ^ 311.20 321.15 1.63 1.81 0.113 0.040 9.95 -0.18 0.0324

A>8
 CHABOCA ESTE

K'KÜESTHA PSOFONDIDA U) LAB. TINTAÍA LAB. BONDAR CLE6G L0N6. DIFERENCIAS X

DE A Cut l Cu Sol \ Au Gr/To CuT \ Cu Sol l Au 6r/Ta (Di Cul 1 Cu Sol l CuT \ Cu
A-000Í35 321.15 329.25 1.65 2.02 0.190 0.046 8.10 -0.37 0.1369
A-000436 329.25 336.00 2.08 2.33 0.179 0.045 6.75 -0.25 0.0625

SECCIOR "85"
506-37
i
A-000446 43.95 56.91 0.77 0.68 0.171 0.110 12.96 0.09 0.0081
A-000447 94.70 107.50 1.90 2.01 0.136 0.350 12.80 -0.11 0.0121
A-000Í48 126.64 137.22 1.77 1.97 0.112 0.272 10.58 -0.20 0.0400
A-000449 137.22 147.89 2.30 2.23 0.148 0.383 10.67 0.07 0.0049
A-000450 147.89 157.58 1.72 1.62 0.167 0.236 9.69 0.10 0.0100
ET-CHE-3T
A-000451 46.97 56.68 1.16 1.06 0.456 0.373 9.71 0.10 0.0100
A-000452 125.00 132.35 1.09 0.91 0.148 0.099 7.35 0.18 0.0324
A-000453 159.48 171.47 1.04 1.05 0.109 0.555 11.99 -0.01 0.0001
A-000454 171.47 183.24 1.75 1.86 0.299 0.875 11.77 -0.11 0.0121
A-000455 183.24 191.91 3.18 3.08 0.372 0.435 8.67 0.10 0.0100
A-000456 191.91 202.70 0.76 0.73 0.222 0.059 10.79 0.03 0.0009
A-000457 202.70 211.19 0.66 0.59 0.157 0.425 8.49 0.07 0.0049
A-000458 211.19 224.88' 1.92 1.86 0.296 0.255 13.69 0.06 0.0036
A-000459 224.88 231.13 0.47 0.47 0.083 0.300 6.25 0.00 ■ 0.0000
EXP-CH-43
A-000460 35.20 42.25 1.08 1.01 0.346 0.215 7.05 0.07 0.0049
A-000461 155.70 169.05 1.27 1.34 0.240 0.367 13.35 -0.07 0.0049
A-000462 201.95 217.30 1.46 1.94 0.182 0.521 15.35 -0.48 0.2304
BXP-CH-32
A-000463 274.55 285.25 2.51 1.85 0.177 0.409 10.70 0.66 0.4356
A-000464 285.25 295.90 2.39 2.40 0.263 0.727 10.65 -0.01 0.0001
A-000465 295.90 308.10 4.21 4.00 0.442 1.175 12.20 0.21 0.0441
A-00.0466 312.00 322.05 2.87 2.27 0.263 0.470 10.05 0.60 0.3600
A-000467 322.05 327.75 3.04 3.00 0.379 0.383 5.70 0.04 0.0016
A-000468 330.35 335.00 1.03 1.46 0.217 0.373 5.65 -0.43 0.1849
EXP-CH-44
A-000469 277.75 288.35 1.52 2.12 0.244 0.377 10.60 -0.60 0.3600
A-00047D 288.35 299.20 2.49 2.05 0.273 0.625 10.85 0.44 0.1936
A-000Í71 299.20 310.80 2.20 2.96 0.270 0.440 11.60 -0.76 0.5776
A-000472 310.80 320.95 8.83 10.14 0.380 0.800 10.15 -1.31 1.7161 *
A-000473 320.95 330.95 4.12 2.70 0.218 0.104 10.00 1.42 2.0164 *
A-000474 330.95 341.40 4.05 3.78 0.336 1.590 10.45 0.27 0.0729
A-000475 341.40 352.15 2.60 3.06 0.608 0.804 10.75 -0.46 0.2116
A-000476 352.15 362.40 3.78 3.22 0.313 1.210 10.25 0.56 0.3136
A-000477 362.40 372.35 1.07 1.54 0.109 0.239 9.95 -0.47 0.2209
A-000478 372.35 387.30 1.42 1.15 0.061 0.058 14.95 0.27 0.0729
EXP-CH-30
A-000479 324.90 334.40 1.56 1.44 0.461 0.623 9.50 0.12 0.0144
A-000480 337.45 347.75 3.04 3.04 0.508 1.332 10.30 0.00 0.0000
A-000481 347.75 359.05 2.86 3.14 0.371 1.267 11.30 -0.28 0.0784
A-000482 359.05 364.55 1.80 1.79 0.236 0.411 5.50 0.01 0.0001
A-000483 364.55 374.65 2.74 2.74 0.288 1.433 10.10 0.00 0.0000

SECCION "90"
EXP-CH-6
A-000301 73.44 83.53 2.30 0.12 2.19 0.120 0.563 10.09 0.11 0.000 0.0121 0

A-9
 CHABDCA ESTE
'KÜESTEA PEOPÜNDIDA (q) LAB. TINTAYA LAB. BOHDAE CLEG6 LOKG. DIFEEENCIAS X
DE A Cut .1 Cu Sol \ Au Gr/Tfli CuT \ Cu Sol \ Au Gr/Im (e) CuT \ Cu Sol \ CuT \ Cu Sol 1
D0302 83.53 92.59 2.16 0.13 2.25 0.138 0.412 9.06 -D.09 -0.008 0.0081 0.0001
.. J0303 92.59 105.80 2.23 0.13 2.18 0.200 0.260 13.21 0.05 -0.070 0.0025 0.0049
A-000304 120.16 129.74 0.96 0.12 0.92 0.172 0.108 9.58 0.04 -0.052 0.0018 0.0027
A-000305 129.7Í 143.95 2.56 0.08 4.13 0.175 0.273 14.21 -1.57 -0.095 2.4649 0.0090
TVE-7
A-000306 33.75 42.90 0.71 0.82 0.230 0.128 9.15 -0.11 0.0121
A-000307 42.90 53.30 0.94 1.17 0.196 0.059 10.40 -0.23 0.0529
A-000308 53.30 64.25 0.64 0.53 0.058 0.110 10.95 0.11 0.0121
A-000309 76.45 85.60 2.19 1.95 0.118 0.202 9.15 0,24 0.0576
A-000310 85.60 102.30 0.32 0.36 0.049 0.043 16.70 -0.04 0.0016
A-000311 102.30 112.10 0.59 0.63 0.049 0.059 9.80 -0.04 0.0016
k-mm 184.95 196.30 0.58 0.60 0.058 0.084 11.35 -0.02 0.0004
A-000313 196.30 205.35 4.53 4.41 0.215 0.646 9.05 0.12 0.0144
A-0003H 205.35 220.50 3.58 3.18 0.051 0.616 15.15 0.40 0.1600
ECCION "95"
EAP-CHE-8
A-000315 213.92 221.95 1.05 0.04 1.36 0.264 0.277 8.03 -0.31 -0.224 0.0961 0.0502
A-000316 229.35 240.30 0.96 0.05 1.12 0.072 0.166 10.95 -0.16 -0.022 0.0256 0.0005
A-000317 240.30 248.85 5.16 0.22 5.17 0.225 1.268" 8.55 -0,01 -0.005 0.0001 0.0000
A-000318 260.10 273.75 0.61 0.07 0.56 0.061 0.180 13.65 0.05 0.009 0.0025 0.0001
A-000319 273.75 283.02 3.11 0.19 3.04 0.168 1.377 9.27 0.07 0.022 0.0049 0.0005
A-000320 283.02 290.79 3.21 0.39 3.31 0.622 0.459 7.77 -0.10 -0.232 0.0100 0.0538
518-32
A-000382 67.82 75.96 1.16 0.43 1.17 0.561 0.075 8.14 -0.01 -0.131 0.0001 0.0172
3K "100"
ET-CHE-12
A-00D321 98.15 109.28 0.62 0.04 0.57 0.080 0.057 11.13 0.05, -0.040 0.0025 0.0016
A-000323 109.28 117.80 3.53 0.09 3.41 0.161 0.580 8.52 0.12 -0.071 0.0144 0.0050
A-00032Í 123.65 132.70 2.96 0.07 2.58 0.145 0.111 9.05 0.38 -0.075 0.1444 0.0056
A-000325 132.70 139.11 5.67 0.07 5.92 0.135 0.261 6.41 -0.25 -0.065 0.0625 0.0042
A-000326 139.11 148.25 0.40 0.03 0.36 0.031 0.040 9.14 0.04 -0.001 0.0016 0.0000
A-000327 148.25 161.70 0.76 0.04 0.85 0.068 0.037 13.45 -0.09 -0.028 0.0081 0.0008
525-31
A-000328 150.05 160.69 0.91 0.06 0.76 0.033 0.326 10.64 0.15 0.027 0.0225 0.0007
A-000329 160.69 171.57 3.39 0.17 3.35 0.104 0.687 10.88 .0.04 0.066 0.0016 0.0044
A-000330 171.57 184.19 2.40 0.13 2.15 0.076 0.347 12.62 0.25 0.054 0.0625 0.0029
A-000331 188.27 200.25 2.85 0.18 2.50 0.135 0.414 11.98 0.35 0.045 0.1225 0.0020
SECCION "110"
537-26
A-000332 44.65 56.66 1.85 1.08 1.89 1.335 0.299 12.01 -0.04 -0.255 0.0016 0.0650
A-000333 56.66 65.76 3.23 1.58 3.10 2.093 0.474 9.10 0.13 -0.513 0.0169 0.2632
A-000334 65.66 73.58 1.74 0.51 1.67 0.553 0.370 7.92 0.07 -0.043 0.0049 0.0018
A-000335 107.75 117.35 1.77 0.09 1.73 0.213 0.339 9.60 0.04 -0.123 0.0016 0.0151
A-000336 117.35 126.64 2.11 0.06 2.06 0.207 0.202 9.29 0.05 -0.147 0.0025 0.0216
A-000337 126.64 138.14 2.71 0.16 2.65 0.629 0.595 11.50 0.06 -0.469 0.0036 0.2200
A-000338 138.14 151.64 4.19 0.21 4.13 0.740 0.513 13.50 0.06 -0.530 0.0036 0.2809
A-000339 151.64 164.16 2.57 0.09 2.52 0.361 0.435 12.52 0.05 -0.271 0.0025 0.0734
IR "115'
A-10
 CHA6UCA ESTE

Jl' KÜESTEA PSOFIIRDIDA (E) LAB. TIHTAÍA LAB. BORDAR CLE66 LORG. DIFERENCIAS ]I
DE A Cut S Cu Sol % Au Gr/Tis CuT S Cu Sol « Au 6r/Ti (e) CuT \ Cu Sol l CuT \ Cu Sol \
ET-CHE-20T
A-000Í84 139.45 150.20 4.03 3.35 0.146 0.651 10.75 0.68 0.4624
A-000485 150.20 160.43 4.69 4.58 0.172 0.508 10.23 0.11 0.0121
A-000486 160.43 168.03 6.16 6.20 0.135 0.256 7.60 -0.04 0.0016

SECCIOH "120"
ET-CHE-23
A-000487 38.30 49.00 4.10 4.23 2.929 0.473 10.70 -0.13 0.0169
A-OOOÍ88 49.00 59.60 3.03 2.84 0.622 0.966 ■ 10.60 0.19 0.0361
A-000489 59.60 70.40 1.76 1.97 0.164 0.310 10.80 -0.21 0.0441
A-000490 70.40 82.60 4.32 3.59 0.979 0.694 12.20 0.73 0.5329
A-000491 82.60 95.80 1.51 1.85 0.181 0.280 13.20 -0.34 0.1156
A-00Ü492 95.80 115.30 2.11 2.03 0.115 0.377 19.50 O.08 0.0064
A-000Í93 115.30 117.80 0.36 0.38 0.034 0.097 2.50 -0.02 0.0004
A-D00Í9Í " 134.85 144.85 2.94 2.31 0.136 0.350 10.00 0.63 0.3969
A-000495 144.85 148.95 0.71 0.71 0.027 0.084 4.10 0.00 0.0000
550-27
A-000498 54.01 64.92 3.13 3.36 0.641 0.642 10.91 -0.23 0.0529
A-000497 64.92 75.77" 3.12 3.23 0.227 0.433 10.85 -0.11 0.0121
A-000498 75.77 86.87 3.04 3.08 0.148 0.497 11.10 -0.04 0,0016
A-OOOÍ99 86.87 95.77 3.33 3.09 0.148 0.842 8.90 0.24 0.0576
A-000500 95.77 104.15 1.89 2.32 0.133 0.512 8.38 -0.43 0.1849

SECCION "125"
KT-CBE-25T
A-000520Í 79.10 85.35 1.55 1.57 0.049 0.264 6.25 -0.02 0.0004
A-0005202 85.35 93.55 1.64 1.99 0.069 0.372 8.20 -0.35 0.1225
556-20
A-000203 83.61 86.26 0.80 0.79 0.027 0.115 2.65 0.01 0.0001
A-00020Í 86.26 89.21 4.41 4.18 0.171 0.300 2.95 0.23 0.0529

SECCION "130"
562-31
A-0003ÍÜ 28.86 n.u 1.78 0.06 1.64 0.151 0.366 9.97 0.14 -0.091 0.0196 0.0083
A-0003Í1 38.83 51.69 1.71 0.60 1.87 0.172 0.211 12.86 -0.16 0.428 0.0256 0.1832
A-000342 176.48 184.22 1.10 0.06 1.00 0.072 0.159 7.74 0.10 -0.012 0.0100 0.0001
562-33
A-000343 16.34 26.67 2.50 0.27 2.58 0.592 0.295 10.33 -0.08 -0.322 0.0064 0.1037
A-000344 26,67 36.45 2.34 0.08 2.31 0.216 0.267 9.78 0.03 -0.136 0.0009 0.0185
A-000345 43.34 54.65 2.08 0.08 2.22 0.204 0.231 11.31 -0.14 -0.124 0.0196 0.0154
A-000346 54.65 62.33 1.79 0.07 1.79 0.115 0.196 7.68 0.00 ^0:045 0.0000 0.0020
A-000347 62.33 71.29 2.07 0.04 2.08 0.136 0.190 8.96 -0.01 -0.096 0.0001 0.0092

SECCION "135"
TÜE-1
A-000205 69.75 80.85 2.15 2.05 0.062 0.245 11.10 0.10 0.0100
A-000206 80.85 91.70 2.78 2.47 0.056 0.335 10.85 0.31 0.0961
A-OOD207 96.60 99.45 3.27 2.21 0.065 0.654 2.85 1.06 1.1236 *

A-000208 102.25 110.55 1.50 3.01 0.101 0.664 8.30 -1.51 2.2801 i

A-000209 114.80 122.00 1.23 1.20 0.055 0.278 7.20 0.03 0.0009
A-000210 145.70 151.05 2.96 3.10 0.131 0.414 5.35 -0.14 0.0196
A-000211 151.05 160.75 3.08 3.02 0.137 0.657 9.70 0.06 0.0036

A-11
 CHABOa ESlg

N' HOESTBA PSOPONDIDA (a) LAB. TINTAYA LAB. BONDAB CLEG6 LONG. DIPEEENCIAS
DE A Cut \ Cu Sol Au Gr/Tm CuT \ Cu Sol 1 Au Gr/Tni [al CuT \ Cu Sol \ CuT \ Cu Sol
-CHE-2?
000212 55.65 62.65 2.74 2.82 0.060 0.371 7.00 -0.08 0.0064
A-000213 66.80 71.45 2.06 2.13 0.081 0.226 4.65 -0.07 0.0049
A-00021Í 72.90 79.10 1.58 2.43 0.056 0.370 6.20 -0.85 0.7225
A-000215 85.25 94.65 2.19 2.23 0.113 0.269 9.40 -0.04 0.0016
A-OOÜ216 211.85 222.65 3.39 3.28 0.122 0.448 10.80 D.ll 0.0121
A-00021? 222.65 231.60 2.03 2.00 0.051 0.284 8.95 0.03 0.0009

SECCION "HO
EXP-CHE-23
A-0003Í8 Í8.58 52.95 4.61 4.48. 0.642 0.457 4.37 0.13 0.0169
A-000349 53.35 65.05 1.83 1.78 0.250 0.217 11.70 0.05 0.0025
A-000350 65.05 77.50 1.89 1.85 0.265 0.256 12.45 0.04 0.0016
A-000351 77.50 92.30 2.18 2.16 0.461 0.321 14.80 0.02 0.0004

SECCION "lí5f
EXP-CHB-22
A-000218 41.20 53.15 1.69 1.68 0.402 0.138 11.95 0.01 0.0001
A-000219 53.15 63.80- 1.90 1.87 0.338 0.257 10.65 0.03 0.0009
A-000220 63.80 74.05 2.40 2.25 0.247 0.819 10.25 0.15 0.0225
A-000221 74.05 85.25 2.78 2.69 0.386 0.474 11.20 0.09 0.0081
A-000222 85.25 95.45 2.64 2.57 0.279 0.377 10.20 0.07 0.0049
A-000223 95.45 100.25 2.14 2.20 0.448 0.266 4.80 -0.06 0:0036
A-000224 118.70 129.40 1.92 1.79 0.365 0.344 10.70 0.13 0.0169
A-000225 129.40 139.10 1.32 1.27 0.269 0.166 9.70 0.05 0.0025
•> Ü00226 139.10 149.75 1.77 1.75 0.216 0.230 10.65 0.02 0.0004
10022? 149.75 160.60 2.80 2.69 0.560 0.723 10.85 0.11 0.0121
«-000228 160.60 162.75 2.64 2.56 0.291 0.302 2.15 0.08 0.0064
A-000229 167.05 173.80 2.51 2.35 0.690 0.712 6.75 0.16 0.0256
A-000230 177.80 186.35 2.26 2.18 1.019 0.462 8.55 0.08 0.0064
A-000231 186.35 196.65 4.05 3.79 1.532 1.066 10.30 0.26 0.0676

SECCION "15C]
EXP-CHE-2Í I
A-000352 57.90 68.40 1.50 1.47 0.276 0.367 10.50 0.03 0.0009
A-000353 68.40 77.95 2.41 2.38 0.462 0.497 9.55 0.03 0.0009
A-000354 77.95 86.90 2.44 2.23 0.618 0.608 8.95 0.21 0.0441
A-000355 86.90 97.75 1.98 1.91 0.200 0.268 10.85 0.07 0.0049
A-D00356 102.30 108.40 2.97 2.81 0.542 0.204 6.10 0.16 0.0256
■ A-000357 114.95 126.40 2.37 2.36 0.427 0.284 11.45 0.01 0.0001
A-000358 126.40 137.20 2.46 2.33 0.654 0.527 10.80 0.13 • 0.0169
A-000359 137.20 145.40 1.74 1.68 0.294 0.247 8.20 0.06 0.0036
A-000360 147.95 155.85 7.28 7.06 0.690 0.566 7.90 0.22 0.0484
A-000361 155.85 164.85 1.44 1.49 0.140 0.247 9.00 -0.05 0.0025
A-000362 164.85 174.55 1.83 1.80 0.224 0.118 9.70 0.03 0.0009
A-000363 174.55 181.90 2.16 2.18 0.219 0.295 7.35 -0.02 0.0004
A-000364 181.90 189.40 6.19 6.00 0.875 0.800 7.50 0.19 0.0361
587-35
A-000365 243.10 248.30 2.60 2.63 0.280 0.369 5.20 -0.03 0.0009
A-000368 266.05 277.40 3.82 3.68 0.895 0.486 11.35 0.14 0.0196

ON "155'

A-12
 CBABDCA im

N'MUESTRA PSOFOKDIDA (m) LAB. lINTAYA LAB. BONDAR CLEG6 LORG. DIFERENCIAS [
1
DE A Cut í Cu Sol l Au Gr/Tm CuT \ Cu Sol 1 Au Gr/Tu (l) Cul í Cu Sol l CuT \ Cu Sol »
EXP-CHE-35
A-000232 48.20 62.55 1.03 1.01 0.229 0.186 14.35 0.02 0.0004
A-000233 70.70 91.45 1.27 1.23 0.309 0.275 20.75 0.04 0.0016
A-00023Í 203.60 213.00 5.73 5.39 2.059 0.712 9.40 0.34 0.1156
EIP-CHE-36
A-0005235 237.65 251.40 2.60 2.38 0.287 0.379 13.75 0.22 0.0484
A-0005236 251.40 261.80 2.81 2.82 0.115 0.722 10.40 -0.01 0.0001

SECCION "160"
BXP-CHE-38
A-000238 189.90 209.05 1.42 1.28 0.174 0.266 19.15 0.14 0.0196

SECCION "165"
EXP-IN-8
A-CI00238 71.25 76.65 1.07 1.01 0.138 0.174 5.40 0.06 0.0036
A-000239 148.45 158.65 2.73 2.68 0.480 0.328 10.20 0.05 0.0025
A-0002ÍÜ 158.65 169.35 4.37 4.31 0.795 0.254 10.70 0.06 0.0036
A-0002Í1 169.35 183.05. 10.03 9.48 0.622 0.249 13.70 0.55 0.3025

SECCION "170"
EXP-IR-5 ■

A-000367 153.90 194.45 2.99 0.21 2.90 1.170 0.413 40.55 0.09 -0.960 0.0081 0.9216
A-000368 194.45 201.45 3.44 0.21 3.37 1.610 0.103 7.00 0.07 -1.400 0.0049 1.9600
A-000369 210.55 221.40 2.14 0.12 2.14 0.343 0.239 10,85 0.00 -0.223 0.0000 0.0497
A-000370 221.40 231.95 3.30 0.45 3.19 1.619 0.986 10.55 0.11 -1.169 0.0121 1.3666

SECCION "175"
618-52
A-0002Í2 306.02 316.87 1.74 1.56 0.440 0.191 10.85 0.18 0.0324
A-0002Í3 334.88 339.70 2.19 2.12 0.204 0.234 4.82 0.07 0.0049

LE? HEDIA TINTAyA= 2.06 LEY HEDIA BONDAE = 2.02 0.318 0.439 2109.38 8.52 23.1492
NO CONSIDERADO EN CALCULOS

A-13
 Rep,. 0101-1/94

POTENTIAL RESOÜRCE EVAUJATTñN nr

TBE TINTAYA MTSIEG DTETPTflT

By: Saúl Santa Cruz

Rey: Jorge Benavides
Minera Phelps Dodge del Perú S.A.
April 1994

) I
í.- IfiTRODUCTTON

^eoio^jcai reconnaíssance of the Tintaya Mining

Distrjct property, soon ta be privatized by the peruvian
! i government, was undertaken between January 28 and February 23
994, as al part of the thorough evaluatión of this
property by PMDC with yiew ta its possible acquisition,
I V

L- í'Ae oÍJjectjVe of the reconnaíssance is that of assessing the

potencial mineral resource of the district, in addition to the
^eoio^icai reserves. The work was limited to
u the Tintaya and Coroccohuayco claims which will be included in the
Package. The Las Bambas,
Northwestern Tintaya (Ccayo-Huinicunca) districts were excluded
from the package and therefore also from the scope of this
evaluation. > f

in tAe direct observation, sampling and

outcropping. evidences of wineralization such as
magnetite bodies, garnet skarns, gossans and copper oxides
I "! stainings. No indírect. detection method was used by our
,P'-^víously exísting geophysícal work,
niJíVil 1 large.^elped
nevertheless assessopened
areas remain the topotential of for
exploration someblínd
areas;
ore
( ,

an/lh considerad
and that constitute an additional in theresource.
potential scope of this work.
«ampies were analyzed by conventional
methods for copper and gold. The analytícal results are considerad
only refer^ntial, as outcrops are strongly leached, exposing copper
oxjdes only in tranchas or recently exposed surfaces.
For the parpóse of potential resource calculations, the
prospects have been grouped ínto the Tintaya and Coroccohuayco
i I proximity to each of these two main
LJ
mineralizad areas. The most prominent prospects in the Tintaya
area are Huinicunca, Curpanchani, and Llanccacchua; and in the
Coroccohuayco area are Chapi-Huisca, Condor Sayana, and
Coroccohuayco .itself (Map, 1). .

A-14
Rep.0101-1/94

22. riHTAYA AREA

The prospects in this area are locsted to the west of the

Tintaya deposit (Maps 1^2 & 3), along the contact of the Cretaceous
Ferrobamba limestones and the diorite intrusivas. A series of
outcropping magneti te and garnet skarns bodies with a rough N-S
aligment, cut sporadically by digitations of iBonzonite porphyry
radiating out of the stock emplaced in the canter of the Chabucas-
Inflexion (actual open pit) orebodies of the Tintaya deposit.
According to their location these bodies have been grouped
ihto the Huinicunca prospect, northwest of Chabuca Norte, The
Curpanchani prospect, southwest of Chabuca Sur, and the
Llanccacchua prospect, south of Curpanchani.
2. 1 Huinicunca (Maps 1 & 2)

donformed by a series of large wagnetite bodies cropping out

along the eastern contact of the Huinicunca diorite intrusiva, west
and northwest of cerro Huinicunca, as well as by smaller ones to
the east of that contact which are associated to small diorite
apophyses and silicified limestones (Photos 1 to 4/.
The IP geophysical anomaly (Figure 1) registered by J. Arce
for Tintaya,^ clearly su^^esfs the co/iti/juity of mineralization ai
depth associated to the diorite-limestone contact. This anomal}
although modérate to weak on the southern extreme, becomes strong
to the north of the northernmost magnetita outcrop and remains
opened in that direction, under quaternary cover.

The projected structural arrangement at depth, as well as

analytical results are presented in sections A,B & C (Figures
2,3,4). In general these show a west to northwest dip and low
metal valúes due to strong leaching. Only sporadic copper
stainings are observed, Gold valúes are erratic and show some
correlation with the higher copper valúes.

The potential mineralization in the prospect has been assigned

mostly to the contact associated magnetita bodies and IP anomaly,
a 1.5 kilometer strike with a 25 meter width and 300 meter depth
block with a 50% ore grade sulphide mineralization potential.
Assuming a specific gravity of 3, the potential resource at
Huinicunca adds up to a minimun of 15 million metric tons (MMT) of
2% Cu grade mineral ization.

2.2 Curpanchani (Maps 1 & 2)

West southwest of Chabuca Sur occurs a 500 meter magnetita and

garnet skarn outcrop alignment in a N 35^W direction (Figures 1,5).
These show abundant copper oxides (atacamite and chrisocolla) alongé

A-15
 Rep.0101-1/94

^'2. Coroccobuaveo (Maps 1 & 4)

wífo
Mitsui, ^entioned
was left befare,
opened_ the Coroccohuayco
in all directionsorebody drilled by
and therefore a
lxDand"%hp" ° drilling program around it would inmediately
nZl hi \total reserves contaíned,
probable ^evertAeiess, in order
a surface to calcúlate
geology, the
IP geophysics
and known orebody overlay has been preparad in Figure 7. It shows
and
Jlti-
the ^^nL''d-''^ r'°" the drilled orebody. IP anomaly
sporadic skarn outcrops running north south along the
eastern edge of both the diorite intrusiva and IP anomaly. These
outcrops, formed by thin discontinuous magnetita and garnet skarns
commonly stained with copper oxides (Photo 10). preLn? a 45' to
snnth of
and south nf Huisca, down to Altucancha
locality. north
on the of Coroccohuayco
southern extreme of
índ"T%
ana ip completely delineating the eastern burder of the diorite
anomaly.

TP anomaly (equiv.suggested
IP to > 3Z ore
Fe),continuity within
and limited to the most
east intense
bv the
skarn outcrops. we have estimated potential ore reserves o'f the
order of 65 MMT with an average Cu grade of 2%.
3.3 Candor Savana (Maps 1 & 4)

southwestern extreme of the Coroccohuayco

diorjte intrusivo on the eastern border of the Quechua claims of
íiín'íl'if p
magnetite skarns along a 1.5 Coroccohuayco property.
kilometer contact zone.outcrop 5
These
outcrops are strongly leached and vary from 400 to 20 meters in
(Phltos'^°lT&T2)^°° meters of continuous outcrop. 10 to 50 m thick
Although some gold grades of up to 2 g/T were reportad, copper
Y' definitively due to the strong acid
inf surface by the thin massive smooth magnetita
hnif i / sihca coating formed
boxworked gossan that forms all the on all surfaces.
mentioned over a porous
outcrops.

tn zu MMT of 2Z copper
to Potential ore reserves
mineralization. at Candor
assuming Sayana
a 50Z amount
continuity
for ore grade mineralization within the 1.5 km long. 30 m thick and
duu m deep orebody, using a specific gravity of 3.
3-4 Uchuv Pucara (Map 4)
A very promising prospect cropping out to the east of
Coroccohuayco, in a window of Ferrobamba limestones and monzonite

A-16
 Rep.0101-1/94

intrusive surrounded by quaternary cover. The magnetite and gama

skarn formad st the intrusiva contad ovar the exposad length o
300 maters hava 20 to 50 m thicknass and dip to tha north mly
oftan are stained of coppar oxides and the collactad samplas gave
clearly anomalous copper and gold valúes.
The size and lack of exposure hinders a potential ore
estímate nevertheless it highlights the large potential that could
ThaViZld^t" coverbyata tAe
that could be easily explorad Tinta%mining
magnetíc survey. Lstrict and

4. SVMMARY

As a result of the surface reconnaíssance and the verv

prehminary geological interpretatíon of the limitad available
Information, a conservativa estimate of the potential reserves that
í' expiorcd io tAe Ti^taya Mining District has been
as fVlTols^ Phelps Dodge del Perú S.A., and is summarized
TINTAYA MINING DISTRICT POTENTIAL ORE RESOÜRCE
AREA PROSPECT
1 1
1 HUINICUNCA j 15,000,000
TINTAYA CÜRPANCHANI 1 2,000,000
SUB-TOTAL i 17,000,000
HUISCA - CHAPI 1 40,000,000
COROCCOHUAYCO
COROCCOHUAYCO j 65,000,000
CONDOR SAYANA j 20,000,000
—
SUB-TOTAL 1 125,000,000
TOTAL
1 142,000,000 1

It is assumed that the Cu grade of the potential ore will

average
„ ,
2%,
,
y^rhich is a regional average for similar deposits in the
ueuus 1 Ls in ene
Ferrobamba Copper Skarn Belt and specifically in the Tintaya Mining
iJ 3.s L r1 c L •

A-17
Rep..0101-1/94

The mentioned potential resource does not include the present

stock of + 100,000,000 MT geological and minable reserves with 2Z
Cu content, ñor does it include the blind or covered orebodíes that
remaín to be explorad, and whích potential reserves are impossible
ta asses with the available information.

For a more precise ore potential estímate it is stróngly

recommended to carry out an airborne magnetic survey, followed by
ground magnetic and IP surveys over specific targets.

Á-IS
 CKABUCA NORTE

s A 7*w>0

Ji .

ÍÑAOüCX

Sondeos Geofísicos üc
Carsebilidsd, Dicicnbre
Keccinendedos pare ?erfo
Exploratoria. Comprobar >n la
Existencia de Sulfures
lintaya (Enero 1972>

map Ar® 2 for iocation 7

liAÚ 0(

HUANOARAf/A

EMPRESA MINERA ESPECIAL TINTAYA S.A.

Exploraciones Ceofrsicas de Polarización Inducida
T371-1973-1S91

UBICACION PE AREAS EXPLORADAS

y L2KJIES DE AKCÍ-IALIA rJERIS
DISTRIBUCION DE ANOMALIAS
DE CARGABILIDAD ELECTRICA
Figure -
Enero 1992 1:25 000

:í>:-:S F. a;í?:F HFS K*-*»:.': «.-.r, Cv«]«v;irrwrj: r-r.«.r,rt K"

A-19
 (See map N** 2 fyr tocofion}

D — 4,220

— 4,200
Rece Ut. Miiielfiteea
Upe Sieti Werk
4,120

-Jt X * X X T^x XtVI X * x¡ í* X *

X X X X X X X X [f^+ix X X { iX X
— 4,120

i~VOO

ASSAY RESULTS
e«T e« 2 Aa
K* % % 2/TM

721 7.11 7.024 att7

724 0.74 0ÍJ7X . 0x12

7IS 2.22 2.772

722 7.07 2.222 0.0*1

~727 0.22 0.212' 0.022

722 a4z al 72 aeis

KEY 722 L44 1.221 o.ei4

740 2.21 1.222 ex42

Ferrobamb tím^siOM 741 1.22 1X22 e.ioo

742 1.22 2X10 7.202

742 3X2 2.017 L727

Garnetité 744 0.42 eX20 ai4o
742 0.21 0.124 e.et4

CüS'Setubfe eepper
MagMfite
Ulo0fe phB¡pS
■í.* -sx.- Diorite
\
dadge da! Par» S.A.
MoMonite TINTAYA AREA
. + +
A-20 CURPANCHANI PROSPECT
Fock ehip sampte heation SECTION D-D^
Geolow : S. S.C. OoüT Fib,/94 iFiff«r« n;
Oraft. R C O ScQle: ttS.OOO I 5
 (See map N**3fot hcation} j

ASSAY RESULTS
Stmflt C« T. Cu 5. Au
N* •/. V. g/TM.
rii e.e« 0.014 0.041

r«i 0.0S e.eia 0.09*

rts ao9 aeso •0.010

r«4 e.os ' aoet -0.010

rtt 0.09 0.014 •0.010

rat aos bOIS •0.010

rar a»4 aoo9 •0.010

•es aea 0.0» e.e«o

•04 ais o.esr •0.010

.aoa e.i< e.ori •e.oto

«es . e.e« e.éi4 •aoio

ser •aoT 0.0IT -e.oie

•e« e«r 0.014 •aoio

CvS'Soluble cepper
KEY

Ferrobomba iimestone

Magnefífe

&á«íJ Pioríte Minoro pllSipS

+ + ♦
dadge 4ot Ptrb S.A.'
Monzotttte
TINTAYA AREA
LLANCCACCHUA PROSPECT
Andesife
A-21
SECTION e-e'
Rock chlp samp/é locofíoh Gwtegy ; S. S.Ci Oott: F«b./94 FIffm H*.
Dfoft. ; R.C.Q. i Swlt; 1:20.000 6
 (See map 2 for hcation)

4 2CO

— 4,ltO

-4.U0

-4.120

— 4.100

— 4,Ote

- 4.060

— 4.020

4.oeo

ASSAY RESULTS
Somt* e«T CiS Al
N* % l/TM

reí 0.09 0.O8C 0.04I

ría 0.0« 0019 0.017

ri« 0.09 0.011 0019

TIT 004 e.eer o.tei

TIO 0.04 0.009 0.099

KEY
rj* 0.09 aoo* a089

780 aor aoot 0.088

Ferrobamba tim^ston»
781 0.07 0.018 0.097

714 0.08 0009 —

MógnttHe 789 0.09 aoor ae4i CuS=Solubtf

789 0.09 aoo9 0.009 eopper

Oioritt -
-

Uintrc phsIpS
Monionitf
dadge M Pmrú S.A.
TINTAYA AREA
© Rockehip smph tocation HUINICUMCA-'PROSPECT
A-22
SECTION A-A'
O*oteoy ; S.'Xc. I Poto; F4ib./94 IRaufe'Ñi
 '*/0O

(See mop 2 for locotion)

B B'
r- «í^t

~A t

— 4
' * * * * X Kb xV

¿f/
* * * * * * . «Mi * x\ r- «^«e
X X X fv¿i^?^\x X X, X X
X X *-A • ■* •4

— 4 )

4,...>

ASSAY RESULTS
SofflpK Ca T. Ca S. 4a SOTOW e«T Cat 4a
*• V. % 4/TM H* % V, 4/T4
701 0.00 O.OI4 0.041 71» oos 0X14 0.0» 1 t
rex 0.04 0.022 0«2> 714 oxs aoii 0.00»
T0« 0.04 0O2O 0020 714 0.04 e.oo4 0.0»!
704 0.04 0.044 01047 7J4 0.09 O.004 0021
70» 0.01 0.02» 0X1»
720 &07 0.00» o.or.
70* 0.07 0.0 »0 l.»44 721 0.012
0.07 0.0»7
707 0.00 002» 0.044
KEY 700
TXt 0X7 0.404 0.041
0.0» O.OS4 0.010 72» OXft 0.020 0.001
70» 0.04 0.014 0.027 727
Fmrrobomta Hmtsfon* I.2S 0.»»» 004:
710 0.04 eo2X 0.021
711 0.04 0«I4 O.OII

•£. 'Mogfíttife 7iS 0.0» oei» 0X2» CvS* SotubM copper

Diorif pheips
dad^e pti ptri s.a.
Menzomte
TINTAYA AREA
HUINICUMCA. PROSPECT
AnOzsite
A-23
SECTION B-B'
^ Rock cftip sanph hcoUoñ ^«©'ogy : S, S. C. *OóTt: * Feb./94 Figure N
Droft, R.<.Q. ScoU: 1:5.000 3
 i

(See map 2 for iocation)

Concreciones
SUiceos con Ox.Cu .1

-^240

- 4,220

- 4,200

.«^lOO
CUERPO OESTE
CHABUCA NORTE •4,ICO

- 4,t4e

-4,t2e
-4,100

ASSAY RESULTS
Saavit CaT Cal A«
N* . •/. . V. l/TH
KE Y 727 1.29 0.»99 ao»2
72« aoi 0.00»
72»
Ferrobambo iimesione 0.04 0.01» O.027
790: 0j04 0.011 OXIS
79t 0.09 0.014 __

Garfíetite 7S2' 0.09 OAie 0.021

74» 19.70 14.14 0.100

7ft0 0.49. 0,16 0.064
Magnetife
CuS
' So/utte eopfier
X XX
X X Dfor/'fe Utnero phcípS
+ ♦ dadige de! Perú S.A,'
Monzon/fe
TINTAYA AREA
A A 'A - . .
La. A Anaesite HUINICUMCA. PROSPECT
A-24 SECTION C-C'
Rock chip sompfe Iocation <>*otegy: S. S.C. 1~E>oU; Ftb./94 IPiq. Rf
Drnft • Q'C r\ 1 C..>.. >• r — ««a. I ^ '
 APPENDIX B

Appendix B contains open-pit and underground mine information as outlined below:

A. Annual Mine Plan Maps

Annual mine plans were designed for the Tintaya pit to verify that ore delivery
xequirements could be met en an annual basis and to permit a detailed analysis of the annual'
haulage requirements. The maps do not include the waste rock pile developments, although
the location of the westem waste rock pile is shown. Some overlap between the latter years
has been indicated on the maps.

B. Truck/Shovel Production Calculation

Estímales of the haulage and shovel fleet requirements were made in conjunction
with the design of the annual mine plans. The calculation sheets indicate production estimates
for a truck limited, a shovel limited, and a driver limited situation. The driver limited situation
is the most appropriate situation to estimate the equipment requirements since with it, an
adequate number of trucks and shovels will be available.

C. Manpower Estimate

Estimates were made for annual staffing requirements at the Tintaya pit, the
open-pit mine maintenance shop, and for the Chabuca-Este and Coroccohuayco underground
mines. The current Tintaya pit and mine maintenance shop staffing levels are listed in the
1993 column, and reductions in the current levels is expected through redistribution of
personnel, reduced haulage requirements, and improvements in the availability of the haulage
fleet.

D. Rednath Reports

Redpath-Mcintosh Engineering was consulted to assist with the evaluation of the

Chabuca Este and Coroccohuayco underground deposits. Their entire reports are presented.

B-l
 lintaya Project Date T557TW
TrucWShovel Production Calculatíon
Tintaya/Este Pít
Period 1994 SCHEDULE
üPtkATINó PARAMETER
Possible Shífts 1,095 85T Truck Avallabillty 70.0%
Holiday Shifts 15 120T Truck AvailabiÜty 35.0%
Operable Shifts 1,080 1900 Shovel Availability 78.0%
Weather Shifts O 1600 Shovel Avallabillty 78.0%
Net Shifts 1,080
85T Truck Cycle Time 21.5 Minutes
120T Truck Cycle Time 22.2 Minutes
Operatíng Time 390 Min/Shift 1900 Shovel Cycle/85T truck 3.0 Minutes/Truck
Hours Per Shift 8 Hours 1600 Shovel Cycle/85T truck 4.5 Mínutes/Truck
Truck Drivers Avallable 10.3 1900 Shovel Flset Síze 2
1600 Shovel Fleet Size 2
Truck Factor 77.0 Tonnes/Tmck 85T Fleet Size 18
120TTruck Factor 108.0 Tonnes/Truck 120T Fleet Size 3.0
TRUCK LIMltÉb pRODUCTlon
85T Truck Production 15.224,082 Truck Shifts 11,548
120T Truck Production 1.229.449 Shovel Shifts 2,055
Total Production 16,453.531 Tonnes Per Shift 15,235
Tonnes Per Truck Shift 1,425
Tonnes Per Shovel Shift 8,008
85T Truck Hours 70,848 85T Drivers Req'd 10.1
120T Truck Hours 4,212 120T Drivers Reo'd
M
Shovel Hours 13,355 Total Drivers Req'd 10.7
85T Truck Utilization 72.2%
120T Truck Utilization 45.8%
Shovel Utilization 48.9% Shoveis Req'd 2.6
5HÓVEL LIMITED PkóDUóTlóN
1900 Shovel Production 15,767,136 Truck Shifts 18,814
1600 Shovel Production 10.511.424 Shovel Shifts 3,150
Total Production 26,278,560 Tonnes Per Shift 24,332
Tonnes Per Truck Shift 1,397
Tonnes Per Shovel Shift 10,010
85T Truck Hours 122,292 Tonnes Per Loader Shift 6,673
1900 Shovel Hours 10,238 Drivers Req'd 17.4
1600 Shovel Hours 10,238
85T Truck Utilization 124.6% 85T Trucks Req'd 27.6
1900 Shovel Utilization 74.9%
1600 Shovel Utilization 74.9%
LIMITED PftóDUóTIóN

85T Truck Production 15,224,082 Truck Shifts 11,148

120T Truck Production 470.658" Shovel Shifts 1,980
Total Production 15,694,740 Tonnes Per Shift 14,532
Tonnes Per Truck Shift 1,408
Tonnes Per Shovel Shift 8,008
85T Truck Hours 70,848
120T Truck Hours 1,612 85T Drivers Req'd 10.1
Shovel Hours 12,739 120T Drivers Req'd 0^
85T Truck Utilization 72.2% Total Drivers Req'd 10.3
12bT Truck Utilization 17.5%
Shovel Utilization 46.6% Shoveis Req'd 2.5

B-9
 Tintaya Project Date TJSTrar
Tmck/Shovel Production Calculation
Tintaya/Este Pit
Period 1995 SCHEDULE
PARAMETER
Possible Shifts 1,095 BSTTruck Availabilíty 70.0%
Hollday Shifts 15 120T Truck Availability 92.0%
Operable Shifts 1,080 1900 Shovel Availability 75;0%
Weather Shifts O 1600 Shovel Availability 75.0%
Net Shifts 1,080
85T Truck Cycie Time 15.2 Minutes
120T Truck Óyele Time 15.9 Minutes
Operating Time 390 Min/Shift 1900 Shovel Cycle/B5T truck 3.0 Mínutes/Truck
Hours Per Shift 8 Hours 1600 Shovel Cycle/85T tnjck 4.5 Minutes/Truck
Tmck Drívers Available B.6 1900 Shovel Fleet Size 2
1600 Shovel Fleet Size 2
BSTTruck Factor 77.0 Tonnes/Truck B5T Fleet Size 12
120TTruck Factor 117.0 Tonnes/Truck 120T Fleet Size 2.5
TRUCK LIMITED PRObUcYloH '

85T Truck Production 16,150,547 Truck Shifts 10,609

120T Truck Production 6.9B5.562 Shovel Shifts 2,889
Total Production 23,136,110 Tonnes Per Shift 21,422
Tonnes Per Truck Shift 2,181
Tonnes Per Shovel Shift 8,008
B5T Truck Hours 53,136 85T Drivers Req'd - 7.6
120T Truck Hours 15,822 120T Drivers Reo'd g3
Shovel Hours 18,779 Total Drivers Req'd 9.8
85T Truck Utilization 72.2%
120T Truck Utilization 78.5%
Shovel Utilization 71.5% Shoveis Reo'd 3.9
¿HOVkL LIMITED PRóDUóTlóN
1900 Shovel Production 14,968,800 Truck Shifts 12,628
1600 Shovel Production 9.979.200 Shovel Shifts 2,991
Total Production 24,948,000 Tonnes Per Shift 23,100
Tonnes Per Truck.Shift 1,976
Tonnes Per Shovel Shift 10,010
85T Truck Hours 82,080 Tonnes Per Loader Shift 6.673
1900 Shovel Hours 9,720 Drívers Req'd 11.7
1600 Shovel Hours 9,720
85T Truck Utilization 111.5% 85T Trucks Req'd 18.5
1900 Shovel Utilization 74.0%
1600 Shovel Utilization 74.0%
bUIVER LIMITED PRDDUDTIDN ■

85T Truck Production 16,150,547 Truck Shifts 9,325

120T Truck Production 3.300.142 Shovel Shifts 2,429
Total Production 19,450,689 Tonnes Per Shift 18,010
Tonnes Per Truck Shift 2,066
Tonnes Per Shovel Shift 8.008
B5T Truck Hours 53,136
120T Truck Hours 7,475 65T Drivers Req'd 7.6
Shovel Hours 15,788 120T Drivers Reo'd U.
85T Truck Utilization 7Z2% Total Drívers Réq'd . 8,6
120T Truck Utilization 37.1%
Shovel Utilization 60.1% Shoveis Req'd 3;2

B-10
 í intaya Project Date
TrucWShovel Production Calculatíon
Tíntaya/Este Pit
Period 1996 ' SCHEDULE
PARAfyIETER'
iKpssIble Shifts 1,098 12UI Iruck Avaílablílty
iHpliday Shifts 15 85T Truck Availabilíty
86.0%
70.0%
lOperable Shifts 1,083 1900 Shovel Availability 75.0%
Iweather Shifts O 1600 Shovel Availability 75.0%
iNet Shifts 1,083
120T Truck Cycle Time 14.2 Minutes
B5TTrlick Cycle Time - 13.5 Minutes
JOperating Time 390 Min/Shift 1900 Shovel Cycle/120T truck 3.7
Hpurs Per Shift 8 Hours 1600 Shovel Cycle/120T truck 5.2
llruck Drívers Available 6.3 1900 Shovel Fleet Size 2
1600 Shovel Fleet Size 2
I12OT Truck Factor 117.0 Tonnes/Truck 120T Fleet Size 5
ISST Truck Factor 77.0 85T Reet Size 8

ll 20T Truck Production 14,402,222 Truck Shifts 9,947

ISST Truck Production 12.156.555- Shovel Shifts 2,590
iTotal Production 26,558,777 Tpnnes Per Shift 24,523
Tonnes Per Truck Shift 2,670
Tonnes Per Shovel Shift 10,254
ll2PT Truck Hours 29,133 120T Drivers Req'd
|85Ír Truck Hours 35,522 85T Drivers Réo'd
4.1
5^
Ishovel Hours 16,836 Total Drivers Req'd 9.2
ll2pT Truck Utilization 77.1%
|B5^ Truck Utilization 72.2%
Ishovel Utilization 63.9% > Shoveis Req'd 3.5
üHüVtL LIMITAD PRÓDUÓTIÓN
11900 Shovel Production 18,492,957 'Truck Shifts 9,850
I16ÓO Shovel Production 13.158.450 Shovel Shifts 2,999
iTotal Production 31,651,407 .Tonnes Per Shift 29,226
Tonnes Per Truck Shift 3,213
Tonnes Per Shovel Shift 12;332
|l2pT Truck Hours 64,024 Tonnes Per Leader Shift . 8,775
ll9Ó0 Shovel Hours 9,747 Drivers Req'd 9.1
ll6C^ Shovel Hours 9,747
|l2pT Truck Utilization 169.5% 120TTrucks Req'd 11.0
ll9Cjo Shovel Utilization 74.0%
11600 Shovel Utilization 74.0%
C)KivtR limI i kü PRÓDUÓTIÓN
jl2pT Truck Production 14,402,222 Jruck Shifts 9,018
l85T Truck Production 10.090.496 Shovel Shifts 2,369
ITotálProduction 24,492.718 Tonnes Per Shift 22,616
Tonnes Per Truck Shift 2,716
Tonnes Per Shovel Shift 10,254
|l20T Truck Hours 29,133
IsSTj Truck Hours 29,485 120T Drivers Req'd 4.1
IShovel Hours 15,526 85T Drivers Req'd ±2
|l 20T Truck Utilization 77.1% Total Drívers Req'd . 8,3
|85TjTruck Utilization 59.9%
Ishoyel Utilization 58.9% Shoveis Req'd 3.2

B-11
 lintaya Project Date CiSimÁ
Truck/Shovel Production Calculation
Tintaya/Este Pít
Period 1997 SCHEDULE
OPERATING PARAMETER
Possible Shífts 1,095 120T Truck Availabílity 88.0%
Holíday Shifts 15 85T Truck Availabílity 70.0%
Operable Shifts 1,080 1900 Shovel Availabílity 75.0%
Weather Shifts 0 1600 Shovel Availabílity 75.0%
Net Shifts 1,080
120T Truck Cycle Time 19.9 Minutes
85T Truck Cycle Time 19.2 Minutes
Operating Time 390 Mín/Shift 1900 Shovel Cycle/120T truck 3.7 Minutes/Truck
Hours Per Shift 8 Hours 1600 Shovel Cycle/120T truck 5.2 Minutes/Truck
Tnjck Drivere Available 8.7 1900 Shovel Fleet Slze 2
1600 Shovel Fleet Size 2
120TTruck Factor 117.0 Tonnes/Truclí 120T Fleet Size 10
85T Truck Factor 77.0 Tonnes/Truck 85T Fleet Size 4
TRUCK LIMITED PRODUCTlON

120T Truck Production 21,106,565 Truck Shifts 11,930

85T Truck Production 4.261.950 Shovel Shifts 2,474
Total Production 25,368,515 Tonnes Per Shift 23,489
Tonnes Per Truck Shift 2,126
Tonnes Per Shovel Shift 10,254
120T Truck Hours 59,832 120T Drivers Req'd 8.5
85T Truck Hours 17,712 85T Drivers Reo'd 2.5
Shovel Hours 16,081 Total Drivers Req'd 11.0
120T Truck Utilízation 77.6%
85T Truck Utilízation 72.2%
Shovel Utilízation 61.2% Shoveis Req'd 3.3
shovel LIMITED PRODUCTION

1900 Shovel Production 18,441,730 Truck Shifts 13,765

1600 Shovel Production 13.122.000 Shovel Shifts 2,991
Total Production 31,563,730 Tonnes Per Shift 29,226
Tonnes Per Truck Shift 2,293
Tonnes Per Shovel Shift 12,332
120T Truck Hours 89,476 Tonnes Per Lóader Shift 8,775
1900 Shovel Hours 9,720 Drivers Req'd 12.7
1600 Shovel Hours 9,720
120T Truck Utilízation 116.1% 120T Trucks Req'd 15.0
1900 Shovel Utilízation 74.0%
1600 Shovel Utilízation 74.0%
DRIVER LIMITED PRÓDUCTIÓN

120T Truck Production 21,106,565 . Truck Shifts 9,429

85T Truck Production 351.221 Shovel Shifts 2,093
Total Production 21,457,786 Tonnes Per Shift 19,868
Tonnes Per Truck Shift 2,276
Tonnes Per Shovel Shift 10,254
120T Truck Hours 59,832
85T Truck Hours 1,460 120T Drivers Req'd 8.5
Shovel Hours 13,602 85T Drivers Rea'd 0.2
120T Truck Utilízation 77.6% Total Drivers Req'd 8J
85T Truck Utilízation 6.0%
Shovel Utilízation 51.8% Shoveis Req'd Z8

B-12
 Tíntaya Project Date
Truck/Shovel Production Calcularon
Tlntaya/Este Pit
Períod 1998 SCHEDULE
OPERATING PARAMET¿R
Possibie Shifts 1,095 . 120TTruckAvallability 83:0%
Holiiday Shifts 15 65T Truck Availabillty 70.0%
OpeVaÚe Shifts 1,080 1900 Shoveí Availabillty 75.0%
l/Veather Shifts O 1600 Shovel Availabillty 75.0%
NetShifts 1,080
120T Truck Oyele Time 30.7 Minutes
85T Truck Oyele Time 30.0 Minutes
Operating Time 390 Min/Shift 1900 Shovel 0ycle/120T truck 3.7 Minutes/Truck
Houre Per Shift 8 Hours . 1600 Shovel 0ycle/120T truck 5.2 Minutes/Truck
Truck Drívers Available 7.9 1900 Shovel.Fleet Size 2
I 1600 Shovel Fleet Size 2
120T Truck Factejr 117.0 TonnesH'ruck 120T Fleet Size 10
BSTlTruck Factor 77.0 TonnesH'ruck 65T Fleet Size 2
TRUOK LiMiTEb f-RoDUoTlóN
120T Truck Production 12,693,623 Truck Shifts 9,903
BSTlTruck Production 1.363.824 Shovel Shifts 1,371
Total Production 14,057,447 Tonnes Per Shift 13,016
Tonnes Per Truck Shift 1,420
Tonnes Per Shovel Shift 10,254
120t Truck Hours 55,512 -120T Drívers Req'd 7.9
85T¡Truck Hours 6,856 S5T Drívers Reo'd 13
Shoyel'Hours 8.911 Total Drívers Req'd 9.2
120t Tnjck Utílization 76.3%
85T|Truck Utillzation 72.2%
Shovel Utílization 33.9% Shoveis Req'd 1.8
SHOVEL LIMITED PRODUCTION

1900 Shovel Production 18,441,730 Truck Shifts 21,236

1600 Shovel Production 13.122.000 Shovel Shifts' 2,991
Total Production .31,563,730 Tonnes Per Shift 29,226
Tonnes Per Truck Shift 1,486
Tonnes Per Shovel Shift 12,332
120t Truck Hours 138,035 Tonnes Per Loader Shift 8,775
1900 Shovel Hours 9,720 Drívers Req'd 19.7
1600 Shovel Hours 9,720
120"^ Truck Utillzation 189.8% 120TTruoks Req'd 24.9
1900 Shovel Utílization 74.0%
1600 Shovel Utillzation 74.0%
DRiVER limITED PRÓDUÓTIDN'

120T Truck Production 12,626,377 Tmck Shifts 8,495

65T Truck Production O Shovel Shifts 1,231
Total Production 12,626,377 Tonnes Per Shift 11,691
tonnes Per Tmck Shift 1.486
Tonnes Per Shovel Shift 10,254
120t Truck Hours 55,218
85T^ruck Hours O 120T Drívers Req'd 7.9
Shovel Hours 8,004 85T Drfvers Reo'd 0£
1201^ Tmck Utílization 75.9% 'Total Drívers Req'd . 7.9
85T Tmck Utílization 0.0%
Shovel Utílization 30.5% Shoveis Req'd 1.6

B-13
 Tintaya Project Date 06/06/94
Truck/Shovel Productibh Calculation
TIntaya/Este Pit
Period 1999-2000 SCHEDULE
OPERA MNCá PAKAMbl bK
Possible Shitts 1,U9b 12UI 1 ruck Availabitlty 79.5%
Holiday Shifts 15 85T Truck Ávailablilty 70.0%
Operable Shifts 1,080 1900 Shovel Avallabllity 75.0%
Weather Shifts Q 1600 Shovel Avallabllity 75.0%
Net Shifts 1,080
120T Truck Oyele Time 30.6 Minutes
85T Trud( Oyele Time 29.9 Minutes
Operating Time 390 Mln/Shift 1900 Shovel Cycle/120T triick 3.7 Minutes/Truck
Hours Per Shíft 8 Hours 1600 Shovel Cycle/120T truck 5.2 MinutesH'ruck -
Truck Drivers Avaílable 8.2 1900 Shovel Fleet Slze 2
1600 Shovel Reet Slze 2
120TTruck Factor 117.0 Tonnes/Truck 120T Fleet Slze 10
B5T Truck Factor 77.0 Tonnes/Truck 85T Fleet Slze 2
TRUCK LIMITED PRODUCTION

120T Truck Productlon . 12,041,365 Truck Shifts 9,438

aSTTruck Productlon 1.368.385 Shovel Shifts 1,308
Total Productlon 13,409,750 Tonnes PerShift 12,416
Tpnnes PerTrudc Shift 1,421
Tonnes Per Shovel Shift 10,254
85T Truck Hours 52,488 85T Drivers Req'd 7.5
120T Truck Hours 8,856 120T Drivers Reo'd 13
Shovel Hours 8,500 Total Drivers Req'd 8.7
85T Truck Utillzation 75.4%
120T Truck Utillzation 72.2%
ShovelUtlIization 32.3% Shoveis Req'd - 1.7
SHOVEL LIMITED PRODUC1 ION

1900 Shovel Productlon 18,441,730 Truck Shifts 21,167

1600 Shovel Productlon 13.122.000 Shovel Shifts 2,991
Total Productlon 3t.563,73Ü Tonnes Per Shift 29,226
Tonnes Per Truok Shift 1,491
Tonnes Per Shovel Shift 12,332
85T Truck Hours 137,585 Tonnes Per Loader Shift 8,775
1900 Shovel Hours 9,720 Drivers Req'd 19.6
1600 Shovel Hours 9,720
85T Truck Utillzation 197.6% 85TTrucks Req'd 26.2
1900 Shovel Utillzation 74.0%
1600 Shovel Utillzation 74.0%
DRIVER LIMITED PRODUCTION

85T Truck Productlon 12,041,365 Truck Shifts 8,856

120T Truck Productlon 784.318 Shovel Shifts 1,251
Total Productlon 12,825,683 Tonnes PerShift 11,876
Tonnes Per Truck Shift 1,448
Tonnes Per Shovel Shift 10,254
85T Truck Hours 52,488
120T Truck Hours 5,076 65T Drivers Req'd 7.5
Shovel Hours 8,130 120T Drivers Reo'd OI
85T Truck Utillzation 75.4% Total Drivers Req'd 8.2
120T Truck Utillzation 41.4%
Shovel Utillzation - 30.9% Shoveis Req'd ■ 1.7

B-14
 Tintaya Project L3ate
Truck/Shovei Production Calculatíon
Tintaya/Este Pit
Period 2000-2001 SCHEDULE
OPbKA 1 INü PAKAMt i bK
Possibie Shifts 49b 12UI Iruck Avaílability 77.5%
Holíday Shifts S 85T Truck Availability 70.0%
Operable Shifts 486 1900 Shovel Availability 75.0%
Weather Shifts Q 1600 Shovel Availability 75.0%
Net Shifts 486
120T Tmck Oyele Time 38.3 Minutes
85T Truck Oyele Time 37.6 Minutes
Operating Time 390 Min/Shift 1900 Shovel Oycle/120T truck 3.7 Minutes/Truck
Hours Per Shift 8 Hours 1600 Shovel Cycle/120T truck 5.2 Minutes/Truck
Truck Drívers Avaiiable 5.4 1900 Shovel Fleet Size 2
1600 Shovel Fleet Size 2
120TTmck Factor 117.0 Tonnes/Tiuck 120T Fleet Size 10
85T Tnick Factor 77.0 Tonnes/Truck 85TFIeetSize 0
TRUCK LIMITED PRODÜC DON

120T Truck Production 4,186,706 Truck Shifts 3,514

85T Truck Production Shovel Shifts 408
Total Production 4,186,706 Tonnes Per Shift 8,615
Tonnes Per Truck Shift 1,191
Tonnes Per Shovel Shift 10,254
85T Truck Hours 22,842 85T Drivers Req'd 7.2
120T Truck Hours 0 120T Drivers Reo'd ÍLÜ
Shovel Hours 2,654 Total Drivers Req'd 7.2
85T Truck Utilization 74.4%
120T Truck Utilization 0.0%
Shovel Utilization 22.3% Shoveis Req'd 1.2
SHOVEL LIMITED PRODUCI ION

1900 Shovel Production 8,298,778 Truck Shifts 11,922

1600 Shovel Production 5.904 900 Shovel Shifts 1,346
Total Production 14,203,678 Tonnes Per Shift 29,226
Tonnes Per Tnjck Shift 1,191
Tonnes Per Shovel Shift 12,332
85TTnjck Hours 77,493 Tonnes Per Loader Shift 8,775
1900 Shovel Hours 4.374 Drívers Req'd 24.5
1600 Shovel Hours 4.374
85T Truck Utilization 252.5% 85TTrucks Req'd 33.9
1900 Shovel Utilization 73,6%
1600 Shovel Utilization 73.6%
DRIVER LIMITED PRODUCTIÜN

85T Truck Production 3.126,668 Truck Shifts 2,624

120T Truck Production Q Shovel Shifts 305
Total Production 3,126.668 Tonnes Per Shift 6,433
Tonnes Per Truck Shift 1,191
Tonnes Per Shovel Shift 10,254
85T Truck Hours 17,059
120T Truck Hours 0 85T Drivers Req'd 5.4
Shovel Hours 1,982 120T Drivers Reo'd 12J2
85TTruck Utilization 55.6% Total Drívers Req'd 5.4
120TTnjck Utilization 0.0%
Shovel Utilization 16.7% Shoveis Req'd 0.9

B-15
Tintaya Project
'oposed Mine Department Staffing—Tintoyo Open Pit

1993* 1994 1995 1996 1997 1998 1999 2000

fv ine Superintendent 1 1 1 1 1 1 1 1
Mine Secretary 1 1 1 1 1 1 1 1
G^eo. and Mine Eng. Dept. Chief 1 1 1 1 1 1 1 1
Planning Engineers 2 2 2 2 2 2 2 2.
Geological Engineers 4 4 4 4 4 4 4 4*
1 Draftsmen 2 2 2 2 2 2 2 2
! Surveyors 1 1 1 1 1 1 1 1
; Rodmen 2 2 2 2 2 2 2 2
1 Samplers 1 1 1 1 1 1 1 1
03erations Dept. Chief 1 1 1 1 1 1 1 í
Mine Shift Supervisor 4 4 4 4 4 4 4 4
Asst. Shift Supervisor 4 4 4 4 4 4 4 4
Clerks 3 3 3 3 3 3 3 3
Haul Truck Drivers 54 42 35 34 35 32 33 22
Shovel Operators 12 12 16 14 14 8 8 8
Leader Operators 6 6 6 6 6 6 6 6
Loading Assistants 12
Auxiliary Equipment Opérate 22
Drivers 5
Track Dozer Operators 12 12 12 12 10 10 8
Rubber Tired Dozer Opérate 8 8 8 8 6 6 4
Grader Operator 8 8 8 8 8 8 8
Water Truck Driver 4 4 4 4 4 4 4
Cable Equipment Operators 1 1 1 1 1 1 1 1
Cable Equipment Laberers 3 3 3 3 3 3 3 3
General Mine Laborers @ 1 15 14 14 14 13 13 1 1
Drill & Blast Dept. Ghief 1 1 1 1 1 1 1 1
1 D & B Chief and Foremen 3
Explosives Operators 2 2 2 2 2 2 2 2
Explosives Handiers 8 8 8 8 8 6 6 4
Drill Operators 8 8 8 8 8 6 6 4
Drill Helpers 8 8 8 8 8 6 6 4
TOTAL 172 165 161 158 159 139 140 1 17
The dato shown is actual staffing for October 1993, which has 15 more
employees than the January 1, 1994 data shown in the text of the report.

B-16
Tintaya Project

1993* 1994 1995 1996 1997 1998 1999 2000

Maintenance Superintendent 1 1 1 1 1 1 1 1
Maíntenance Secretary 1 1 1 1 1 1 1 1
Planning & Control Chief 1
Maintenance Pianners 4 2 2 2 2 2 2 2
Maíntenance Clerk 1 1 1 1 1 1 1 1
Maintenance Helper 1 1 1 1 1 1 1 1
Maintenance Dept. Chief 1 1 1 1 1 1 1 1
Clerk 1
Moint. Shift Supervisors 4 4 4 4 4 4 4 4
Fieid Repair Foreman 4 4 4 4 4 4 4
Weldlng/Repalr Sectíon Boss 1
Foremen 4
Machinists 7 7 7 6 6 4 4 4
Welders 11 11 11 9 9 7 7 7
Mechanics 10 9 9 7 7 6 6 6
Lab Technicians 2 2 2 2 2 2 2 2
Tires/Lube Section Boss 1
Foremen 5
Equipment Operators 2 2 2 2 2 2 2 2
Mechanics & Lubemen 26 10 10 8 8 6 6 6
Tiremen 9 8 8 8 8 8 8 8
Warehouse Clerk 1 1 1 1 1 1 1 1
Shovel/Drill Section Boss 1
Foremen 2
Mechanics 9 8 8 8 8 6 6 6
Welders 1 1 1 1 1 1 1 1
Tractor Section Boss 1
Foremen 2
Mechanics 10 9 9 9 9 6 6 6
Welders 1 1 1 1 1 1 1 1
Light/Aux. Equip. Section Bos 1
Foremen 2
Mechanics 11 10 10 10 10 8 8 8
Welders 2 2 2 2 2 2 2 2
Electricians 2 2 2 2 2 2 2 2
Sheet Metal Worker 1 1 1 1 1 1 1 1
Warehouse Clerk 1 1 1 1 1 1 1 1
General Maint. Laborers ® 12 12 12 11 11 9 9 9
Electrical Supervisor 1 1 1 1 1 1 1 1
Eléctrica! Shift Supervisors 4 4 4 4 4 4 4
Comm./Distrib./Power Sec. B 1
Foremen 3
Electricians 10 9 9 9 9 9 9 9
Operators 4 4 4 4 4 4 4 4
Mechanics 1 1 1 1 1 1 1 1
Shov./Drills/Hvy Equip. Sec. 1
Foremen 6
Electricians 17 9 9 9 9 7 7 7
TOTAL 185 140 140 132 132 114 114 114
* The data shown is actual staffing for October 1993, which has 15 more
employees than the January 1, 1994 data shown In the text of the report.

B-17
 APPENDIX B
Mine Plan Detall Basis

Underground Employment Details

Operation Chabuca Este Coroccohuayco
Development 23 23

Cut & fill stopes 67 88

Biast hole stopes -

88

Materials handling - 64

Mine services 28 41

Maintenance 69 99

Staff 13 32

Total 200 435

B-18
Redpath

4440 SOUTH RURAL ROAD TEL: (602)831-0310

MHNTQSH SUrTE 100
TEMPE. ARJZONA 85282
FAX: (602)831-0317

I ENGINEERING INC.

REVIEW

OF

UNDERGROUND MINING

AT

CHABUCA ESTE

Prepared Por

Pheips Dodge Mining Company

MAY 1994

B-19
IC:\PJlOI\W7ROCy3<6>CHABUCAJ66
 Table of Contents

Sectíon Description Page

1 Introduction 1

1.1 General 1
1.2 ScopeofWork 1
1.3 Major Assumptions and Parameters 1
1.4 Geology 2

Mine Plan 2

2.1 General 2
2,2 Geologic Resource and Mineable Reserves 3
2.3 Mine Development 3
2.4 General Development Plan 4
2.5 General Mine Plan 8
2.6 Unit Operations 9
2.7. Equipment List 12
2.8 Manpower 15
2.9 Mine Services 15
2.10 Schedules 15

Redpath

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 1.0 INTRODUCnON

1.1 GENERAL

Redpath Mcintosh Engineering Inc. (RMEI) has been requested by Phelps Dodge Mining
Company (PD) to review the Chabuca Este Mining project, located in southem Peni. This
review is based on the information provided to RMEI by PD of the Chabuca Este area of the'
Tintaya mining district. The information includes cross sections 128 (E 1*235,600,00)
through 175 (E 1*236,187.50), level plan of the 4005 adit, plan levels from 3750 through
4150 meters above sea level, and the projected limits of the adjacent Tajo Open Pit Mine.
RMEI developed the following estímate assuming that the information provided presents the
best interpretation of available data.

1.2 SCOPEOFWORK

The scope of work for RMEI includes the following major items:

1. Review the information provided and recommend altematives for an underground

mining method.

2. Estímate capital costs for the proposed mining method.

3. Estímate operating costs for the proposed mining method.

1.3 MAJOR ASSUMPTIONS AND PARAMETERS

1. All development work will be done by a contraaor.

2. The contractor will provide all of the equipment, materials and labor necessary to
perform the scope of work.

3. All labor rates include payroll burdens.

4. All costs include contractor*s Insurance, bonds, and margins.

5. Costs do not include any taxes. An import duty of 15% has been added to the
equipment purchase price.

6. All costs are 2nd Quarter 1994 US Dollars.

B-21
M^iNTOSH
K;\PflOAWFftOCO«60tABUCAJ«6 ENGINCIRINC
 7. Escalation of costs has not been considered.

8. All permanent materials have been costed as new.

9. Costs do not include a materials handling system on the surface to transport ore from
the coarse ore stockpile to the mili.

10. A 15% contingency has been assessed against the total project's capital costs. This
contingency allows for lack of detailed design within the study as well as an
allowance for unforeseen delays in construction.

11. A 5% contingency has been assessed against the total project*s operating costs for
lack of detailed design.

12. The operating costs assume that a competent labor forcé is available.

13. The schedules provided do not include any surface drilling recommended prior to the
start of exploration development to cióse off the ore body.

1.4 GEOLOGY

The Chabuca Este deposit has been classifíed as a metasomatic contact deposit. The ore
body is approximately 1,300 m long, 25 m wide, and 300 m deep and strikes east/west and
dips 70®N. The major mineralization consists of magnetite, specularite, pyrite, pyrrhotite,
chalcopyrite, and bomite. The deposit represents a typical skam with varying ore grades.

j^DPATH
B 22 '
MCINTOSH
K:VPROAWPROC\3«6Va{ABUCAJ60 ENCINCERJNO
 2.0 MINE PLAN

2.1 GENERAL

RMEI has selected drift and fill as the proposed mining method. The decisión reflects the
unfavorable rock quality encountered and the diverse ore body configurations. The estímate
assumes that all stopes will require a backfill material.

2.2 GEOLOGIC RESOURCE AND MINEARLE RESERVES

An estimated mineable reserve was provided by PD. The indicated resource at a 1.42% Cu
cutoff is 11,505,000 tonnes ore at 2.5% Cu.

Ore Productíon Rate and Desígn Parameters

Mineable Reserves 11,505,000 tonnes

Average Mine Life 16 yr
Annual Ore Production 720,000 tonnes/yr
Daily Ore Produaion Rate 2,000 tonnes/day

The mine life 1s calculated according to current resource estimates. Further exploratíon
drilling may increase this resource and mine life.

2.3 MINE DEVELOPMENT

RMEI estimated the major deyelopment workings based on the following developmeñt
scheme:

• 2,000 tonnes/day production

• Primary access through the existing 4005 level, with an additional haulage access at
the 3885 level developed later in the mine life.

• Initíal mining of the ore body will be west of the Tajo Pit, utilizing two declines to
access the initial main level at 3900 m elevation. An ascending drift and fill method
will be used with access to the ,stopes from sublevéis driven at 20 vertical meter
spacing. The area under the Tajo Pit will be developed using one maih level with
three sublevéis, later in the mine life.

j^DPATH
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MqNTOSH
K;\PROJ\WPROC\3«'CHABUCA_J« ENaNE£RING
 Haulage ñ'om the sublevéis wíll be by 26-tonne tmcks and will exít the mine at the 4005
level portal located within the proposed extensión of the Tajo Pit. As the mine is developed
to the east on the 3885 elevation, a second access will be located at the 3885 level of the
Tajo Pit.

The following is a projection of development excavatiohs for the life of mine:

Summaiy of Underground Excavations

Total Vent/Raise 1.000 m

Total Decline 1,750 m
Total Horizontal Drifting 5,000 m

2.4 GENERAL DEVELOPMENT PLAN

2.4.1 Prqiroduction Development Phase

The development contractor will supply temporary surface facilities required for the
preproductipn phase ^ich will include the following: ofñce, shop, and dry house facilities.
It is assumed that power for development will be available from the existing facilities.

Preproductibn development will begin with rehabilitating the existing 4005 drift by increasing
the cross-sectional area from 4 m x 4 m to 4.5 m x 5.0 m, for the éntire length of the
existing drift.

Two declines will be developed from the 4005 level to the 3900 level at a -15% gradíent with
cross sectipns of 4.5 m x 5.0 m. Two raises will be bored, 3 m diameter, to próvide
ventilation. One will intersect the 4005 level cióse to the proposed pit setback for exhausting
aír. The second will intersect the 3900 level at the westem end as a fresh air intake.

A connection between the two declines will be developed on the 3900 level. Mining will
commence at this level with stope accesses included as a part of preproduction. The 3920
sublevel will also be driven as a part of preproduction, but development of stope access will
be deferred until production commences.

. , The preproduction development phase will concur with the final year and a half of the
extended pit prpduction. AU of the development waste will be hauled by trucks out the
existing portal. As the pit reaches the end pf its life on the 4000 level, a second portal will
^DPATH
B.24 —
MCINTOSH
K:VROAWntOO36AaiAIUCAJ06 £NaN££RJNC
 be opened into the pit. Production will then begin from the underground mine with all of
the ore being hauled to the pit.

Total Rreproduction Shaíts/Raíses

Vent Raise West 170 m

Vent Raise East _2Q m

Total 260 m

Total Preproiduction Dríftmg

Dévelop West Decliné 790 m

Develop East Decline 790 m
Develop 3900 Main 385 m
Develop 3900 Stope Access 34Ó m
Develop 3920 Sublevel 425 m

Total 2,730 m

Total Freproduction Excav^ons (otfaer)

Slash Existing Adit 5,545 m3

Miscellaneous Slashing 832 m'

Total 6,377

2.4.2 Defínhion Drilling

Diamond drilling will be conducted from the 4005 level. Drilliñg estimates are based on
30 m centers with 15 m intersections. RMEI has estimated 15,000 m of drilling to define
the ore body below the 4005 horizon.

Redpath

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MCINTQSH
K:VP(UU\WMlOC\3££W3IABIirA W
 TABLE1: Preproduction Capital Costs
M^INTOSH
i5S<i5ETZ

rrEM
• .
ESTIMATED ESTIMATED
NUMBER UNIT TOTAL
OESCRIPTION QTY . U^JIT COST

SURFACE

1 MOBILIZE CONTRACTOR
2 CONTRACTOR PLA?^ SETUP
1 lURip lum $125,000 $125,000
3 CONSTRUCT TEMP;WAREHOUSE/SHOP FACILITY
1 lump 8um $20,000 $20,000
150 ; $350
4 CONSTRUCTTEMP.OFFICE/DRY FACILtTY $52,500
200 m»' $400 $80,000
5 CONSTRUCTBACKRLL PLANTA INSTALL EQUIPMENT 1 lump tum $375,000 $375,000
■i lump tum
6 SURFACE ELECTRICS
7 $25,000 $25,000
CONTRACTOR PLANT TEARDOWN 1 lump tum
0 CONTRACTOR DEMOBILIZATION $30,000 $30,000
1 lump Bum $100,000 $100,000
^EANDLEVELDEVELQPMEHT
9 CONSTRUCT DECLINE PORTAL ON SURFACE 1 lump tum $20,000 $20,000
10 CONSTRUCT PORTAL IN THE PIT 1 lump tum
11 SLASH EXIST1NG DECLINE TO 4.5m X 5.0m (6.5mVm) $60,000 $60,000
1.755 m» $65
12 SLASH EXISTING 4005L DRIFTTO 4.5m X 5.0m (6.5mVm) 3,770 m«
$114,075
$60
13 MISCELLANEOUS SLASHING TO 4.5m X S.üm (6.5mVm) 032 m*
$226,200
$60 $49.920
14 •EXCAVATE WEST DECLINE TO 3900L (4.5m X 5 Om) 790 lin. met.
15 EXCAVATE EASt DECLINE TO 3900L (4.5m X 5.0m) $1,200 $948,000
790 lin. mel. $1,200
16 OEVELOP 3900 MAIN HAULAGE LEVEL (4.5m X 5.0m) 385 lln. met.
$948,000
17 DEVELOP 3900 LEVEL STOPE ACCESS (4.5m X S.Om) $1,000 $385,000
340 lin. mel. $1,000 $340,000
IB OEVELOP 3920 SUBLEVEL {4.5m XS.Üm) 425 lin. met. $1,000 $425,000
19 UNDER6ROUND TRUCK HAULAGE 195,094 lonnet ' $1.00 $195,094
VENIILATION
í
20 EXCAVATE 3m. DIA. VENT. RAISES (SURF.-3900L) 260 lin. met. $600 $208,000
DIAMOND DRILLIWq

21 DIAMOND DRILLING
15,000 meters $130 $1,950,000
22 DIAMOND DRILLING ASSAYS 6,150 each $20 $123,000
OWNER-S costs

23 CONTRACT ADMINISTRATION - 2 STAFF MEMBERS 478 dayv '

24 HEAD OFFICE COSTS $650 $310,700
1 íurnp tum $200,000 $200,000
25 CAPITAL EQUIPMENT
1 -lump lum $6,518,000 $6.518,o6o
26 EQUIPMENT IMPORT DUTY Q 15.00% 1 lump tum $977,700 $977,7P0
27 ENGINEERING/PROCUREMENT 6 15.00% 1 lump ium $977,700
OF CAPITAL EQUIPMENT $977,700

SUBTOTAL PREPRODUCTION CAPITAL COST

C0NTIN0ENCY*O igoo%
ESVMATED PREPRODUCTION CAPfTAL COST
íf6.800.462
2.4.3 C^ital Summary

Surface Facilities

Mobilize/Demobilize Contractor $275.000

Temp Surface Facilities 132.500
Backfill Plant 375,000
Temp Surface Electrics 25.000

Total $807,500

Ramp and Level Development

Raises $ 208.000
Rehabilítate 4005 level 390.195
Declines 1.896,000
Drifts 1,150,000
Portal Construction 80,000
Haulage 195,094
Diamond Drill 2.073.000

Total $5.992,289

Owner*s Costs
Contract Admin S 310,700
Head Office Cost 200,000
Capital Equipment 6,518,000
Equipment Import Duty 977.700
Engineering/Procurement 977.700

Total $8.984.100

Contingency 1.096.573

Grand Total $16,880,462

I^pPATH
B-27
Mq^OSH
tNONCIMNC
 2.5 GENERAL MINE PLAN

Drift and fíll mining has been selected based on ihe infonnation that RMEI has received on
ground conditions and ore body configurations. The westem portion of the reserve will be
mined first to allow completion of the Tajo Pit. As production in the Tajo Pit ceases, the
development of the eastem pan of the reserve will begin.

Stopes will be accessed from sublevéis developed on 20 m vertical spacing. Access to the
stopes will have a máximum grade of +/-18%. Stopes will be 6 m wide by 5 m high. A
twin boom jambo will be used for drilling and a 5 m^ LHD used for mucking. Each sublevel
will Service four stope levels 5 m high and will have access to the ramps that were developed
dufing preproduction.

Haulagé will utilize 26-tonne trucks, which will be loaded at the stope access intersection
with the sublevel by LHDs. The trueles will then transport the ore to the portal at the 4005
level'in the Tajo Pit. When the 3885 level is fully developed, haulagé will access bóth
levels. Surface haul trucks will then transport the ore to the concentrator. The costs for the
surface transportation has not been included in the estimates of operating costs.

Later in the mine life, orepasses will be constructed between levels ánd all haulagé will take
place on the 3885 level. These orepasses will be located cióse enough to the ore body and
working stopes to allow haulagé from the stopes to be handled by LHDs. A chute will be
installed at the bottom of each ore pass to facilítate truck loading.

2.5.1 Drift and FUI Stopes

Thé stopes'will be oriented longitudinally along the apparent strike of the deposit. Single
drifts will be driven in portions of the ore body that are 6 m or less in width. In wider
areas, panels will be driven at a máximum 6 m spacing. The primary panels must be
excavated and filled with a cemented fill prior to the excavation of the adjacent panel.

The stopes in wider areas will be accessed from the sublevéis by a máximum +Á 18% ramp.
The access ramp will achieve the required elevation for the stoping level at the initial contact
with the ore. Then it will driven across the ore block at a level (or slightly positive) grade
for drainage. The primary panels will be driven perpendicular to the access in both
directions along the contact. Spacing of the subsequent panels will retreat toward the
entrance of the access.
>

Redpath

B-28
M^lNTQSH
K:\PRO;\WPROCU06VCHABUCAJd6 ENaNURINC
 In the areas of substantial width, múltiple panels can be míned at the same time given that
at least one secondary panel, or temporary pillar, is left between active panels.

For purposes of developing the cost estímate, it is assumed that 50% of the stopes will
require pattemed bolting and 50% wíll require shotcrete.

2.5j2 Ongoing Development

During the preproduction phase, the 3900 level will be developed, with stope accesses, for
the beginning of production. A second sublevel, 3920 sublevel, will aiso be developed to
facilítate start-up problems and to ensure a sustained production rate.

The óngoing development required to produce 2000 tpd equates to the development of one
sublevel, including accesses, per yeaf plus the required slashing of the existing accesses that
is required as the stopes ascénd. This work is carried as an opérating cost at the rate of
400 mf /yeár of driftirig and 23,000 tonnes /year of slashing.

A cohtractor will be brought back on site in Year 4 of production to develop the eastem
portion of the deposit located below the pit extensión (see Ongoing Capital Schedule).

2.6 UNIT OPERATIONS

2.6.1 prilllng

Twín-boom hydraulic jumbos will to be üsed for development heádings and drift and fill
stopes.

2.6.2 Blasting

ANFO aiid high explosives will be used for blasting.

2.6.3 Loading and Underground Haulage

5 m'LHDs will be used in the stopes. 26-tonné trucks will be used for haulage.

2.6.4 Fill Material

A backfill plant will be cónstructed on site and backfill will be placed in a slurry form.
REDPATH

B-29
M^INTOSH
PKjfjKirvDiKjr.
 f
REDPATH ENGINEERING^ INC. PHELPS DODGE CHUBUCA ESTE - OPSUM.WK3
■; 1 . .. . .
MINE OPERATING COSTS 27-May-94
COSI SUMMARY - PRODUCTION BUILDUP 01:32 PM
i
t
PAGE 1 OF 54
• j

DESIGN BASIS . . DAILY ORE TON MINED: . 2.Ó00 BREAKDOWN TON/DAY:

DAYS WORK PER YEAR: 360 DRIFT/FILL METHOD: 100.00% 2000
ANNUAL TONS MINED? ■- 720;000 BLASTHOLE MEtHOD:

LABC R MATER AL OTHEF TOTAL

■

COST
CENTER SUBDIVISION $/YEAR . $/TON $/YEAR $/TON. > $/YEAR $/TON $/YEAR .. $ / TON

MINE . DEVELOPMENT $43.747 ■ $0.06 $342.620 $0.48 $386.367 $0.54

PRÓP-DRIFT/FILL $360,911 $0.50 $3.809.407 $5:29 .

•

^ $4,1.70.318 $5.79

PROD-BLASTHOLE -
•

í
i
9
MATERIAL HANDLING
'

IN PRODUCTIC N COSTS •

MINE SERVICES $154.492 $0.21 $1,190,315 $1,65 1

$1.344.807 $1.87

MÁINTENANCE $394,884 $0.55 $379.816 $0.53 $774.700

t
$1.08

MINE GENÉRAL . $353,150 $0.49 . $160,680 $0.22 $513,830 $0.71

i

I.
•

"i ' '

SUBTOTAL $1,307,184 $1.82 $5,882.839 $8.17 $7.190.023 $9.99

.

5% ALLOWANCE ' $65.359 $294.142 $359,501

TOTAL $1.372.543 $1.91 $6.176,981 $8.58 $7.549,524 $10.49
 2.7 EQUIPMENT LIST

The following listing of major mining equipment have been estimated as being required for
ore production at the rate of 2,000 tonnes/day.

Redpath

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K:\PftOJVWPKOC\3é0\CHABUCA.366 ENQNEIRiNG
I
PHELPS DODGE -

PERMANENT EQUIPMENT LIST

TOTAL
UNIT TOTAL
:m No. ITEM TOTAL COST COST

1 Compressor 2 SI07,000 $214,000

2 Frpnt End Leader 0 S265.000 $0
3 Fork Lift 0 $41,000 $0
4 Pickup Truck - 3/4 ton ■ 3 521.000 $63,000
5 Mise. Shop Equipment 0 $35,000 SO
6 Potable Water Piant 0 S160.000 $0
7 Sewage Plant 0 $27,000 $0
8 Fue] Station 0 S6.000 $0
9 Office Equipment 0 $30.000 $0
10 Haulage Leve! Chute 0 $73,000 $0
11 Drill Júmbo - 2 Boom 2 $402,000 $804,000
12 Rockboitíng Jumbo 1 $378.000 $378,000
13 LHD - 7.5 yd 2 $360.000 $720,000
14 Haul Tmck -26 ton 4 $265,000 $1,060,00?
15 Scissor Lift 2 $126,000 $256,00^
16 Explosives Tmck 1 $189,000 $189.000
17 Bulldozer 0 $120,000 $0
18 Road Gradar 0 $244,000 $0
19 Shotcrete Mixer 1 $123,000 $123,000
20 Shotcrete Tmck 1 $281,000 $281.000
21 U/GLubeTmck 1 $123,000 $123,000
22 U/G Boom Tmck 1 $127,000 $127,000
23 U/G Service Tmck 0 $141,000 $0
24 Personnel Carrier-10 man 2 $50.000 $100.000
25 Tractor 4 $31.000 $124,000
26 Engineering Tractor 1 $38.000 $38,000
27 Jackiegs and/or Stopers 6 $5,000 $30,000
28 Tugger 0 $9.000 $0
29 PowderTraller 0 $3.500 $0
30 CapTraíler 0 $3.500 SO
31 Engineering Equipment 1 $28.000 $28,000
32 Bench Drill 0 $121,000 $0
33 Exhaust Veníilation Fans - 500 HP 3175.000
1 $175,000
34 Dev't/Stope Fan - 60 HP 4 $5,000 $20,000
35 Development Fan -150 HP 1 $17,000 $17,000
36 Mise. Air Doors $16,000
1 $16,000
37 Main Dirty Water Pumps - 300 HP 1 $45,000 $45,000

B-32
DHELPS DODGE -

PERMANENT EQUIPMENT LIST

TOTAL
UNIT TOTAL
VI No. ITEM TOTAL COST COST

38 Developmént Dirty Water Pump ^ 13 HP 5 33,000 $15,000

39 Clear Water Feed Pumps -150 HP 2 336,000 $72,000
40 Service Water Pump - 450 gpm 0 32,900 30
41 Service Pressure Tank 0 35,200 $0
42 Pire Water Pump 0 330,000 $0
43 Pire Extinguisher - 20 Ib 25 3200 $5,000
44 First Aid Klt 15 3100 $1,500
45 Seif Contained Breathing App. 0 36,200 SO
46 Breathing App. Tester 0 35.700 $0
47 Mise. Mine Rescue Equipment 0 32,100 $0
48 First Aid Suppties 1 31,000 $1,000
49 Cap Lamps & Chargers - 60 4 310.000 340,000
50 Self Rescuers 200 3100 $20,000
51 Cement Storage Silo & Screw Conveyor 1 3240,000 . 3240,000
52 Cement Water, Fllter Cake Weigh Hopper 1 $18,000 $16,000
53 Spiral Concrete MIxer 1 3115,000 $115,000
54 Slurry Hopper & Agitator 1 $46,000 $46,000
55 Brídge Crane 1 334,500 $34,500
56 600 Amp Discohnects 2 36.000 $12,000
57 SF6 Breakers 2 $40,000 $80,000
58 10 MVa Transfoimer 1 3140.000 $140,000
59 5 kV Breakers 10 325,000 3250,000
60 Tránsformer- Utilities 0 315,000 $0
61 Transfoimer - Fans 1 $25,000 $25,000
62 Tránsformer - U/G Utilities 1 315,000 315,000
63 Tránsformer - Auxiliary 1 $11,000 $11,000
64 Mine Load Centers 3 345,100 $135,300

Subtotal $6,207,300
Miso. Equipment Allowance @ 5.00% $310,365

Total $6,517,665

B-33
 2.8 MANPOWER

Manpower is estimated as follows based on mining method and equipment selection:

Operation Miner Helper Oper Ütil Mech Elec Labor

Development 5 8 7 3'
Cut & FiU 15 22 22 8
Mine Services 4 6 2 4 12
Maintenance 38 12 16 3

Subtotal 24 74 31 27 16 3 12

Total Manpower: 187

2.9 MINE SERVICES

2.9.1 Ventilation

Assuming an air renewal and gas dilution requirement of 120 cfm per tonne, the total
ventilation requirement for the mine will be 250,000 cfm.

2.9.2 Electric Power

The power requirement is 14 kW /tonne.

2.10 SCHEDULES

The listed schedules are provided in the following pages:

Capital Expenditure Schedule

Development Schedule
Ongoing Capital Schedule
Replacement Schedule

Redpath

B-34 MCINTOSH
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 CAPITAL EXPENDITURE SCHEDULE
M^INTOSH
IMONUIUNKjINC.-

Yean
DescrlPtion Year2 TOTAL
Ouarler 1 Quartar 2 Quarlar 3 Quaflar 4
cosr
8UHPACE

MOBIHZ£ CONTmCTOW " SI 25.000

CONTRACTOR PtANT SETUP S20.000 $126.000
. CONSTRUCT TEMP, WAREHOUSEfiMOP fÁcÍÜtt S52.500
$20,000
CONSTRUCT T6MP. OFFICE«>RY FAC1UTY $62.600
SBO.OQO
CONSTRUCT BACIffnt PIANT « INSTALL ÉQUIPu'ÉÑT ' $281.250 $80.000
$93.750
SURFACE EIECTRCS ' _ " $25.000 $376,000
CONTRACTOR PLANT TEARDOWN' $26,000
CONTRACTOR OEMOetlgATION"" $30,000 $30,000
RAMP ANO LEVEL DEVELQPIIFMT '^ " $1^.000 $100.000
CONSTRUCT D€a.tNE PORTAL OÑ SURFAcj" $20,000
CONSTRUCT PORTAL IN THE PIT $20,000
SLASHEXISTIMOOearNE TO4SenXSOm js WAn) '$60,000
$114.075
SLASH EXISTIMO 40O31 DRIFT TO 4 5 Om $114.076
$ÍÍ3j!0p Sin,100
MISCELLANEOUS SLASHINQ 10 4 5wX &Óm (e Sm-Ár^j .$2^200
$49.92(1
EXCAVATEWEST DECLINE W 390CT. jJ i 5^| Í282.400 $S69.édÓ $95 600
$49|t20
EXCAVATE EAST DECLINE TO39001(4 SmX 5Onj_ $474.000
$948,000
$474.000
DEVEIOP 3900 MAIN HAUIAGE LEVEL 14 Sm X SfWi $948,000
$385.000
DEVtlOP 3900 LEVEl STOPS ACCESS(4 Sm X 3 Owi $386,000
DEVEIOP 3920 SUBLEVEL(4 Sm X 5 Oml _ 'SUÓ.OOO $170,000 $340,000
$212.500 $212,500
UNOERGROUND TRUCK HAUIAGE " ""
$19.510 $58.528
"" $426,000
VEWTXAUQH -
$78.038 '$39.018 ' $196,094
EXCAVATE 3m. DIA VENT RAISES JSURf -390011
Kj» DIAMOND DRItUWC
S^'.OOO $208,000
DIAMOND DRULINO
DIAMOND DRILIING ASSAYS'
$585.000 $Í,3f5.ÓTO $1,960,000
"$36.900 fié.iqo
OWWER-S COSTS _'_$123,000
CONTRACT ADMIHISTRATION - 4 STAFf MEMBERS $31.0^0 $62.140 $62,140 $62;Í4b $62.140
MEAD OFFICE COSTS $31.070 $310.700
$2Ó.Ó0Ó $40,000 $40.000 $40.000 $40.000 $20.000 $200,000
Subtotat Caoltat Coxt $176,070 $1,109.976 $2,033.218 $663,658
Contlnoency fli 1SH $211.070 $7,310.489
$26.411 $166.496 $304.983 $83.049 $31.661
Capital Equipmeni * _ $1.096,673
$723.200 $2.535.600 $3.259.000
EnglneeflDQ/Pfocufemenl taiSS ^ $6,618,000
$108.480 $380.370 $488.650 $977,700
Impod Du(y on Capital EQuIpment • @ 15H $108.400 $380370 $488.650 $977.700
Tola!Capital Cost $202.481 $2.216.631 $2.338.201 $3.710.473 $3.933.247
$16.880.462
 REDPATH McINTÓSH ENGINEERING INC.
Yeari Y9ar2

Duration Quarteri
| Quarter2 I Quarter 3 I Quarter4 QuarterS 'l QuarterS I Quarter7|QuarlerB
iName
TOTAL PROJECT DURATION: 47Bd

Surface: 47Bd

Conlractor Mobitizalion 90d

Cohiraclor PlanI Setup I4d

Consiruct Temp. Warehouse/Shop Facility 7d

Consiruct Témp. OfTice/Dry Facility 7d

Consiruct Backfill Plant & Instali Equipment 60d

Surface Electrice , 30d

Contractor Plant Teardown 7d

Contractor Demobilízation 30d

Ramp and Level Devetopment: 287d

Cohstfuct Decline Portal on Surface 14d

14d
Construct Portal irí Itie Ptt
25d
Stash Existíng Decline to 4.5m x 5.0m - 1755 cu m.
53d
Slash Existirig 4005L Drift to 4.5m x 5,0m • 3770 cu m.
12d
Mise. Stastring to 4.5m x S.pm - 832 cu.m.
I23d
Excávale West Decliné to 3900 Level•790 m.
123d
Excávate East Decline to 3900 Level - 790 m
53d
Develop 3900 Main Haulage Level - 385 m
46d
pevelop 3900 Level Stope Access• 340 m.
5Bd
Develop 3920 Subtevel:425 m.
Ventllatlon: 35d

Excávate 3m. Día. Ventitation Raises(Surf • 4005L) I4d

Excávate 3m. Dia. Ventilation Rajses (Surf • 3900L) 21d

Diamond Drllllng: 109d

109d
Diamond Drilling & Assays

CrIÜcal Milestone 4
PHELPS DODGE - CHABUCA ESTE DEPOSIT Noncrltlcal Summary
DATE:S/26/94 Progress Rolled Up O
.,EDPATH

Ongoing Capital Costs

M^INTOSH
(MCINICIUK« INC

ESTIMATED ESTIMATED
ITEM
UNIT TOTAL
NUMBER DESCRIPTION QTY UNIT COST COST

SURPACE

MOBILIZE CONTRACTOR 1 lump sum $125,000 $125,000

CONTRACTOR PLANT SETUP 1 lump sum $20,000 $20,000
CONTRACTOR PUVNT TEARDOWN 1 lump sum $10,000 $10,000
CONTRACTOR DEMOBILI2AT10N 1 lump sum $100,000 $100,000
RAMP AND LEVEL PEVELOPMENT

5 EXCAVATE DECLINE TO 3885L (4.5m X 5.0m) 100 lin, met. $1,200 $120,000
6 DEVELOP 3805 MAIN HAULAGE LEVEL (4.5m X 5 Om) 600 lin met. $1,000 $600,000
7 DEVELOP 3885L OREPASS ACCESS LEVEL (4 Sm X 5 Om) 110 lin. met $1,000 $110,000
8 DEVELOP 3925L HAULAGE DRIFT(4 Sm X S.Om) 425 lin. met. $1,000 $425,000
9 DEVELOP 3925L OREPASS ACCESS (4.5m X S.Om) 60 lin met. $1,000 $60,000
10 UNDERGROUND TRUCK HAULAGE 85.204 lonnes $1 00 $85,204

MATERIALS HANDLING

11 EXCAVATE OREPASSES - 4 @ 40m each 160 lin. met $750 $120,000

12 CAPITAL EQUIPMENT REBUILD & REPLACEMENT 1 lump sum $8,381,730 $8.301,730
13 EQUIPMENT IMPORT DUTY @ 15 00% 1 lump sum $1.257.260 $1,257.260
14 ENGINEERING/PROCUREMENT @ 15.00% 1 lump sum $1,257,260 $1,257.260
OF CAPITAL EQUIPMENT

SUBTOTAL ONGOING CAPITAL COST

$12.671.463
CONTINGENCY*@ 15.00%
$266,281
ESTIMATED ONGOING CAPITAL COST
* - No Contingency on Capital Equipment, Engineehng/Procureinent or Import Duties $12,937,734
 ir Cc>* p.hf
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■tlMtOM ♦ MIIM Dp O
■ATE:5/t7/94
 Red PHELPS DODGE

ONGOING CAPrTAL REPLACEMENT SCHE POR EQUIPMENT

McitsfTPSH 2,000 TPD CASE

t. fn
17%

a. ■~T iniitmi>iti —iiniMiBimiiíi^nti»

4. T>i««««NO ONMiWi^ktiTMn lOerlI.
i. *11 •HinM■ii»i|»». lar eastMan

BNO towwtm un AIMUAL ouAMTirr PUKOlASe l'FMFWOOtr > numoucnov t«M9

U3A0C mee
(luun) pum) C<«ui .1

1 CimiiMii.» aSOT TS90 1 tIOT.OOO >114.000

tftijao
1 FmCMlaar 19.000 3S00 0 (109X00 90
) PUk> Tnick •IM un 11.000 3900 9 CI.OOO >39X00 ML2I0
S MAaiue-lOgan 20A30 «90 1 1401.000 >004X00 tsn.«o OMAfl
• AacneaifMFM aooo «00 1 071X00 tan.ooo tzsjoo tm.oco
J uo>rj)o 20.CO0 43» 1 000.000 im.ooo tMLtao 1730,000
• HirfTiua>20W> MOCO 49» 4 (109X00 11,000X00 Pioaoo tlABOOO
1 •CMvLil 19000 9900 1 imxoo tHAOOO tiri.sn (190.000
10 EjOBMaTnjot 20000 43» 1 IIWXOO tm.ooo IIM.OOO
11 WiilH r n.000 3000 0 tiaooo to
11 ftaaOCMir »ooo 3900 c 044.000 so
11 (■■eaulita* aooo 43» 1 1129X00 iia.ooo BL4I0 fIZUOO
14 •haoMTnuk 10.000 43» 1 091X00 >931.000 tl«A2TD taijooo
ts IMUMTnEk 20.000 3400 1 itaooo siaxoo Gn.*io tiaooo
11 tMBeeniTmOt 10.000 9400 1 9197.000 tMI.OOO ttTD.iaa 1194.000
17 taMMCuiW-tOm 20000 3400 1 (90X00 >190X00 OTAn tiooooo
!• Tioeur 20.000 3000 4 OIXOO >124.000 t«xoeo (I34M0
1* Engueem lieeur IQOOO 3000 1 (99X00 >«Xao tB.4«0 tüjooo
J» «aua Ony«*atrPMtu*.xotv lOOOO 3400 1 949.000
taojea noooo
17 0*ii^v«<0»iy mau .laHP 10.000 9400 s aooo >13000 tio^ tIMOO
29 Ov WUw r«aO Pw<«i .1907» IQOOQ >400 9 939.000 971.000
tnsm
M e4u«U(»^>fcOOui»C——>a 90.000 >400 1 >140.000 C4oxao
as C»iuA1U9».F^C«u«M(9l»«onn 73.000 0490 1 119.000 119X00
93 ae IBUClH il lA if n.ooo 4000 1 >111000 >119.000
ai SUif MW*r A «CAW 19.000 4000 1 >44XC0 >43000
ve
SU8TOTAL ftCBUUmnACCMEKr cosr • >0 >0 so so SL3SS.U0 S4,tOU» tsnxoo tllSM so so B

SALES TAXAT 0M% (0 so so so to to se B B B B

COKimOENCr AT eM% >0 >0 so so to to to $0 B se to

TOTAL ftEBUUWtEnAeCKENT BY PItODUCTIONYEAA • >0 so so so t4.10USO

t3J8«.(80 tonm S11S.OOO B B B

♦ Wo»;n»e llrtedterrw»I f»pi»»>nt etettÉi p««cftw«. tnd »» occoumorf fot » aeeonflngty. TOTAL ONOOINO CAPITAL C09T FOft 11 VEARS OF FUU. SCAIE PRODUCmN >
 SHATT

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 REDPATH ENGINEERJNG INC.

MEMORANDUM cc:FiIe
M.Gray
Dr. P Ryan
DATE: 6-10-94 JMadson

TO: Pheips Dodge Corp.

ATTN; Tim Swendseid

FROM: David J. King

SUBJECT: Chubca Este Reserve Estímate

Picase find attached the Chubca Este reserve estímate which was performed by Redpath
Mcintosh Englneering Inc.(RMEI). This estímate ís based on the informatíon that was
provided to RMEI by Pheips Dodge Mining Co.(PD). The following is a listing ofthe
Information that RMEI had received:

1. Geologic sections numbered from 128 to 175:

These sections were received by RMEI as part ofthe preliminary package from
PD with a request to review both the Chubuca Este deposit and the
Coroccohuayco deposit. The sections cover the area ofthe deposit between
Easting 236,200 and Easting 235,600. Each section consists of a copy of a
"D" size plot that had been colored tó identify the geologists interpretation of
the skarn material. Drill holes are also identified on these plots with Cu grades
from assay intervals within the skarn.

2. Geologic sections numbered from 115 to 127:

These sections were received by RMEI via fax machine from Tim Swendseid
ofPD. The faxes were received as 8.5 x 11 standard paper size and were
Xerox copies of the areas pertaining to additional sections that Tim had on the
deposit. Some of the copies were in two pages to cover the entire area ofthe
skarn on the section.. The drill holes and grades were included on the copies
received, although no very clear. Tim was contacted to verify grades that
could not be deciphered from the copies. These sections cover the area of the
deposit between Easting 235,600 and Easting 235,437.5.

B-42
 3. Geologic section numbered from 109 to 114

These sections were again received by RMEI via fax machine from Tim
Swendseid ofPD. The faxes were received as 8.5 x 11 standard paper size and
were Xerox copies of the arcas pertaining to additional sections that Tim had
currently received by fax from Perú. Some ofthe copies were in two pages to
cover the entire area ofthe skarn on a section. The drill holes and grades were
included on the copies received, although no very clear. The grades were
deciphered as best as possible from the copies. These sections cover the area
ofthe deposit between Easting 235,437.5 and Easting 235,362.5.

Note that RMEI had also received a plan section detailing the as-built ofthe
existing drift on the 4000 Level. This plan section indicates that there is skarn
material at the 4000 level between sections 83 and 109(Easting 235,362.5 and
Easting 235037.5.) There were no geologic sections provided covering this area,
therefore, it has not been included in this estímate.

ESTIMATING PROCEDURES

Determine Area Volumes:

Each section was taken and the identified skarn material digitized into the ACAD
system to calcúlate the area. All of the skarn material was digitized régardless of
grade except areas which fell within the boundaries ofthe pit limits as per Tim
Swendseid's pit design dated 5-10-94. The section that were received by fax
required calibrating the digitizer for each section to ensure an accurate calculation.
The sections are plotted on a 12.5 meter interval, therefore a 12.5 meter thickness
influence was assigned to each section to obtain the total volume of skarn material
in cubic meters. A tonnage factor of3 tonnes per cubic meter was then applied to
calcúlate the total tonnage of skarn material within the study area. This total was
considered the total Geologic Resource.

Each section was then reviewed to identify either areas of oxide material, area
containing grades less then 1% Cu or areas that were to small to justify mining
them. These identified areas were again digitized to calcúlate the volume and
removed from the Geologic Resource. The results of the remaining tonnage is
listed as the Mineable Resource.

Determining Area Grades:

Each section was then reviewed concerning drill holes and assay data. Grades
within the outlined skarn material only were considered. The indicated grades
within the skarn were composited on a weighted average basis depending on the
width ofthe assay interval. In some cases the grades could not be read due to
poor copy quality. When this occurred the interval was either assumed to be the

B-43
 grade of surrounding assays or in some cases if the first digit could be read it was
assumed to be that grade. Ex. if a 2. could be deciphered the assay valué was
assumed to be 2.00.

Any grades above 5.0 were reduced to 5.0, as designated by PD.

Many of the skarn areas only contained one drill hole. In this case the entire areas
was assumed to be the grade of that drill hole. In some cases the skarn area was
interceptad with numerous drill holes. When this occurred an attempt was made to
assign a percentage ofthe area to a given hole and then a total was calculated on a
weighted average basis. If an area had no drill holes within it, it was assigned the
grade ofthe adjacent section or an average ofthe grades from the sections on
either side. Although the grades fluctuated between sections, there appears to be a
reasonable consistency across the deposit. Areas of waste intrusions were not
included in the resource, therefore the grade of these waste areas were not
included in the resource grade calculation.

A composite of the entire drill hole was not performed to determine the extent of a
grade outline at a 1% cut-off. This means that a full composited length of hole
was not calculated to determine what lower grade material could be carried by the
higher valued assays. This would have resulted in a higher tonnage's at a lower
overall grade. This would have been difficult and time consuming given the assay
data in the form that it was received. A visual inspection determined only where
grades were above 1 %. If a lower grade was encountered within a higher grade
interval it was included in the calculation.

TOTAL RESOURCE

Each section was listed with its geologic tonnage, mineable tonnage and
corresponding grade. These were totaled, resulting in a Geologic Resource of
12,617,481 tonnes and a Mineable Resource of 10,027,054 tonnes at a grade of
2.21% Cu.

Applying an 85% recovery factor and a 15% dilution factor with an assumed grade
of0.5%Cu the resulting Mineable Reserve estimate totals 9,801,445 tonnes at a
grade of 1.99% Cu.

B-44
 AREAS.XLS

iChubca Este Geologic Resource and Mineable Resource Estímate

Section Geologlcal Geological Geological MIneable Mineable MIneable Grade

No. Cu. Meters

109 19472 243400 730201 6620 82756 248268 1.74

110 5873 73414 220241 4346 54326 162979 2.48
111 4292 53648 160944 3090 38626 115879 *1.74
112 6794 84919 254757 5299 66237 198711 1.74
113 13582 169774 509321 7334 91678 275033 2
114 7545 94314 282941 6866 85825 257476 2.33
115 7880 98506 295517 7644 95550 286651 3.85
116 8626 107827 323482 7764 97045 291134 2.63
117 14704 183803 551410 12058 150719 452156 2.12
118 11246 140573 421718 9559 119487 358460 1.61
119 9103 113787 341360 6554 81926 245779 2.45
120 10182 127279 381838 6924 86550 259650 2.67
121 7994 99919 299757 5755 71942 215825 2.38
122 9821 122766 368297 8937 111717 335150 2.38
123 8987 112334 337002 7459 93237 ■ 279712 1.94
124 5775 72186 216557 4678 58470 175411 2.55
125 7356 91953 275858 5444 68045 204135 2.16
126 11978 149724 449172 6468 80851 242553 1.68
127 9067 113334 340002 5893 73667 221001 2.34
128 5737 71711 215132 5570 69629 208888 2.31
129 6987 87337 262011 6536 81696 245088 1.87
130 6115 76433 229300 5727 71593 214780 1.87
131 5831 72889 218667 5808 72600 217800 1.87
132 3662 45774 137323 3662 45774 137323 1.97
133 4080 51002 153006 2980 37252 111756 1.63
134 3081 38516 115548 3081 38516 115548 2.36
135 2739 34240 102721 2739 34240 102721 2.92
136 3055 38187 114561 2560 32000 96001 3.26
137 2507 31333 93999 2282 28520 85561 3.26
138 2341 29259 87778 2206 27569 82707 2.96
139 1825 22817 68452 1595 19937 59811 2.66
140 903 11289 33866 602 7528 22583 2.66
141 3687 46084 138252 3687 46084 138252 2.66
142 4926 61578 184733 4926 61578 184733 2.29
143 5244 65546 196639 5244 65546 196639 2.29
144 6941 86768 260303 6863 85781 257344 2.13
145 6143 76786 230358 6143 76786 230358 2.61
146 6647 83088 249263 6647 83088 249263 2.57
147 7540 94255 282766 7317 91457 274370 1.86
148 7260 90752 272256 7260 90752 272256 1.45
149 4832 60400 181200 4832 60400 181200 1.45
150 3027 37835 113505 3027 37835 113505 2.69
151 3398 42469 127407 3398 42469 127407 2.35
152 3940 49249 147747 750 9381 28143 1.8

B-45
REDPATH

4440 SOUTH RURAL ROAD TEL: (602)831-0310

SUnt 100 FAX: (602)831-0317
M'^INTOSH TEMPE. ARJZONA 85282

ENGINEERJNG INC.

REVIEW

OF

UNDERGROUND MINING

AT

COROCCOHUAYCO

Prepared For

Phelps Dodge Mining Company

MAY 1994

K:U>ROJVWPROCO«6\COROCC0.3«é
B-46
 Table of Contents

Section Descríptíon Page

1- Introduction 1

1.1 General 1
1.2 ScopeofWork
1.3 Major Assumptions and Parameters 1
1.4 Geology 2

Mine Plan 2

2.1 General 2

2.2 Geologic Resource and Mineable Reserves 3

2.3 Mine Development 3
2.4 General Development Plan 4

2.5 General Mine Plan 10

2.6 Unit Operations 11
2.7 Equipment List 14

2.8 Manpower 18
2.9 Mine Services 18
2.10 Productlon Schedule 19
2.11 Capital Expenditure Schedule 20
2.12 Development Schedule 21

2.13 Replacement Schedule 22

1
I

Redi

MUNIQSH
á
K:\I'R0J\WPR0C\3«\C0R0CC0.3«
ENaNEERJr"-
B-47
 1.0 INTRODUCnON

1.1 GENERAL

Redpath Mclmosh Engineering Inc. (RMEI) has been requesied by Pheips Dodge Mining
Company (PD) to review the Coroccohuayco mining project, located in southern Peni. This
review is based on the information provided to RMEI by PD, consisting of cross seoions,
defined A through I. derived from the 36 diamond drill heles in the Coroccohuayco area'of
the Tintaya mining district. RMEI developed the foUowing estimate assuming that the
information provided presents the best interpretation of available data.

1.2 SCOPE OF WORK

The scope of work ibr RMEI includes the lollowing major ítems:

1. Review the information provided and recommend alternatives for an underground

mining method.

2. Estimate capital cosis for the proposed mining method.

3. Estimate operating costs for the proposed mining method.

1.3 MAJOR ASSUMPTIONS AND PARAMETERS

1. .\\\ development work will be done by a contracior.

2. The comractor will provide ai! of the equipment. materiaís and labor necessary to
perform the scope of work.

3. A\\ labor rates include payroll burdens.

4. Al! cosis include comractor's Insurance, bonds, and margins.

5. Costs do not include any taxes. An impon duty of 15% has been added to the
equipment purchase price.

6. All costs are 2nd Quarter 1994 US Dollars.

7. Escalation of costs has not been considered.

^Dj^TH
iC

K:\FRQÍVWPR0a3é«0R0CC0.3«
 8. AIl permanent materials have been costed as new with the exception of the
service/sinking hoist and productíon hoíst.

9. Costs do not include the constmction of a high voltage service line, a service road to
access the portal site, or a materials handling system on the surface to transpon ore
from the coarse ore stockpile to the mili.

10. A 15% contingency has been assessed against the total project's capital costs. This
contingency allows for lack of detailed design within the study as well as an
allowance for unforeseen delays in constructíon.

11. A 5% allowance has been assessed against the total project's operating costs. This
allows for lack of detailed design.

12. The operating costs assume that a competent labor torce is avaílable.

13. The schedules provided do not include any surface drilling recommended prior to the
stan of exploration development to cióse off the ore body.

1.4 GEOLOGY

The Coroccohuayco deposii has been classified as a metasomatic contact deposit. The ore
body is approximately 500 m long, 100 m to 300 m wide. with an average strike of N30°E.
Copper mineralization consists of cuprite, chrysocolla. and native copper: copper sulfide
mineralization consists of bornite. chalcopyrite. and chalcocite. .Mineralization varies. as is
typicai with skarn bodies of this type. which leads to varying ore grades.

2.0 MINE PLAN

2.1 GENERAL

For costing purposes. RMEI has selected a combination of blasthole stoping and drift and fill
at a ratio of 50/50, based on the indicated ground conditions and ore body geometry. It is
assumed that the ore body interpretation has sufficient continuity to suppon a transverse
orientation of the blasthole stopes. This will minimize the amount of exposed hanging wall
which appears to be less competent than the ore body mineralization. 50% of total productíon

LEdíÍI^
REpi?

K;\PROJ\WPROC\3«\COROCC0.3« B^9
McIntoIh
tNaNttW^
 wiil come from drifi and fill methods. The drift and fill stopes wilí be located in peor rock
quality areas, and in complex ore configurations.

(t is assumed that all excavated stopes will require a backfill material.

2.2 GEOLOGIC RESOURCE AND MINEARLE RESERVES

The geologic resource was provided by PD. The indicated resource at a 1.0% Cu cutoff is
19,417.680 tonnes ore at 2.56% Cu. Mineable reserves were determined as follows:

Ore Production Rate and Desígn Parameters

Geologic Reserves 19.417.680 tonnes

Recovery 85 %
Dilution 12 %
Mineable Reserves 18.485.630 tonnes
Average Mine Life 10 yr
Annual Ore Production 1.800.000 tonnes/yr
Daily Ore Production Rate 5.000 tonnes/day

The mine life is calculated according to current resource esíimates. Further exploration
drilling may increase this resource and mine life.

2.3 MINE DEVELOPMENT

RMEI estimated the major deveiopment workings based on the following development
scheme:

• 5.000 tonnes/day production

• Primary mine access by shaft with secondary access through a decline

• Three main production/hauiage levels. each servicing four intervening sublevéis

The main production levels are projected for the 3700. 3800. and 3900 elevations. Operation
of two sublevéis will be required to obtain daily production of 5,000 tonnes. The average
tonnage per sublevel is 1.5 m tonnes, based from the geologic resource. It should be noted
that the main body of the reserve appears to lie below the 3900 level. All drifts will be
4.5 m wide by 5.0 m high. This will facilítate the use of 26-tonne haul trucks
Redpath

h;.yPROJ\WPROC\3«>COIlOCCO,i« n.CA
M''JNTOSH
CNaNLCMNG
 The following illustrates the projecced developmenc excavations for the life of mine.

Summary of Underground Excavations

Total Shaft 425 m

Total Vent/Fill/Orepass Raise 2,100 m

Total Decline 2,460 m

Total Horizontal Drifting 17,250 m

Total Material Handling (lin) 445 m

Total Material Handling (vol) 6,110 m-

2.4 GENERAL DEVELOPMENT PLAN

2.4.1 Exploration Phase

Temporary surface tacilities will be erected on site by the contractor during the exploration
phase. These tacilities will include temporary office, shop, warehouse, bunkhouse, and
kitchen. Power generaiion will be provided by an onsite generator.

A decline at 15% grade, will bé developed from surface to the proposed exploration level at
3,800 meiers above sea level in the footwall. An,access dríft will be driven at thai level
through the ore body to allow development of an exploration drill drift in the hanging wall.
The drift will run parallel to the strike of the ore and will span the distance between cross
sections A through I. RMEI estimates that a total of 2,530 m pf drifting will be required.

Diamond drilling can then be conducted from the exploration drift between Sections A and I.
Drilling estimates are based bn 30 m centers along strike with 15 m intersections oh the
apparent dip. The majority of exploration drilling is targeted below the 3800 horizon; RMEI
has estimated 35,000 rfi of diamond drilling to define the ore body below the 3800 horizon.
(See Tables 2 and 3 for drilling costs.)

Redi-'

M^INTOSH
K:\PR01VWPR0O3«\C0R0CC0.3« B-51 EÑ^^EERÍF"-^
TABLE1: Total Estimated Capital Costs

ítem k^llUAIkU I esmUTEB

NUMBER UNfT TOTAL
□ESCRIPnON QTY UNIT COST I cost
EXPLORATION PHASE 1 lump tum S9.37S.9S0 S9^7S.990
PREPRO0UCT1ON PHÁSE 1 lump aum S46.676.881 $46.678.881

SUBTOTAL CAPITAL COSTS

$56.082.831
C0NTINQeNCY*(9 <5«
$4,753,407
TOTAL ESTJMATED CAPITAL COSTS |
coflfjnpeocy oo«s net tnehJtím Cépit»! Spuipmont or Bngme^nngfProcuremern ot imoort Cufias

Redpath

MCINTOSH
£NaN£tRJNC
B-52
TABLE 2: Expíoration Phase Estimated Capital Cosí

ESTHMATEO ESTMATEO
ITEM UNrr TOTAL
NUMBER OESCRIPTON QTY uNrr COST COST

SUWEACE
"

1. MOBILtZE CO^^^RACTOR 1 lumo «um 5230.000

2. CONTRACTOR PLANT SETUP 1 lump tum 550.000 SSO.OOO
3. CONSTRUCTTEMP. OFFICE/DRY FACILITY 125 m* 5350 S43,7S0
4. CCNSTRUCTTEMP. SHOPAVAREHOUSE FACILITY 1 lump tum 520.000 S20,000
5. CONSTRUCTTEMP. BUNKHOUSES/KiTCHEN 450 m< 5270 5121,900
6. SURFACE ELECTRtCS 1 lump pum 575.000 575,000
7. CONTRACTOR PLANTTEAROOWN 1 himp lum 550,000
8. CONTRACTOR OEMOBILIZATION 1 lump tum 5100.000 5100,000

DECLiNE AND LEVEL PEVELQPMENT

9. EXCAVATE ANO CONSTHUCT PORTAL 1 lump tum 560.000 560.000

10. EXPLORAT10N OECUNE TO SBOOL (4.5m X 5.0m) 1.700 lin. mee 51.400 52,360.00"
11. EXC. 3800L EXPLOR-N ORIFT ACCESS(4.5m X 5.0m) 230 lin. m«t. 51.1W 52S3,a
12. EXC. 3800L EXPLOR'N ORIFT Í4.5m X 5.0m) 600 lin. mct. 51.100 5680,00

DEFlNmON DtAMOWD DRíUJNG

13. □lAMONO ORILUNG 20.000 metert 5130 52,600.000

14. OIAMONO ORILLING ASSAYS 6.200 ctcfl 520 5164.000
15. SUPPORT OURING OIAMONO ORILLING 219 dayt 52.300 5503.700

QWNEffS CQSTS

16. GEOLOGICAL SUPPORT - 12 STAFF MEM8ERS 250 dayt 52.800 5700.000

17. CONTRACT AOMINtSTRATION • 3 STAFF MEMBERS 365 dayt 51.000 5365,000
18. FEASIBILfTY 1 lump tum 5500.000 5500,000
19. OLTTSIDE CONSULTANTE 1 kjmp tum 5250.000 5250.000
20. HEAO OFFICE COSTS 1 lump tum 5250.000 5250,000

ESVMATED EXPLORARON PHASE CAPfTAL COST t9.37S.9SO

doaa not inciud» acetas rosas or nign voaags powar lino to mms asa

REor. ..

M^INTOSH
tNCI.«Jt£WN
B-S3
I Total Expioration Drifting
I

i Ramp to 3800 Level 1.700 m

Access across Ore Body
¡
I
Expioration Drift _6Q0 m
I
I

; Total m

I
I
The expioration phase includes costs íor a teasibility study and 30% engineering design.

2.4.2 Preproduction Development Phase

Immediateiy following the expioration drilling program and positiva acceptance of a feasibility
I study. a preproduction development plan wiil be carried out.
I

' Surface facilities required tbr preproduction will ¡nclude the following: shatt sinking
! equipment and headframe. offices, shop. warehouse, living quarters. hoist room. compressor
i house. and security facilities. Power for development will be generated on site.

A'6. i m diameter. concrete lined. fully furnished production/service shaft will be sunk to the
3600 level. This shaft will serve as the main intake airway for the mine in addition to
providing personnel access and ore production. The shaft has been costed using conventional
shaft sinking methods.

The decline will be extended to the 3700 level. The entire decline will be used as a
secondary ventilation intake and to allow for equipment egress to and from the surface. This
aiso eliminates the necessity ot an underground shop.

A total of three raisebored shafts, 3 m in diameter, will provide for exhaust ventilation. Two
raises will be developed to the 3700 level. A third raise will be developed to the 3800 levei.
This raise wiil be used to deliver tlll mataríais to a batching piant.

Two main ore passes. 2 m in diameter. will be bored between main leváis. These ore passes
will service the main collection leveis to the crusher. Three additional ore passes, 2 m in
diameter. will be developed between the stopes and the main collection leveis.

Compietion of the 3800 main hauiage level and fuil development of the 3700 mam haulage
level as well as the 3720 and 3740 sublevéis will be required prior to production.
REDPAT!

MCjNTOS
tNaNEIRlt
K:\PR0J\WPROCO6tf«:0R0CC0.3« B-54
 TABLE 3: Pnproduction Phaao Capitai Costa

ESTMATBD ESTWAIEO
ITEM
uNrr TOTAt.
NUMBER DESCRTRnON QTY UNfT COST COBT

SURgACE»

1. MOBÜZE CONTRACTOR 1 liimptum $250000 $250'

2. CONTRACTOR PLANT SETUP 1 lumptuffl 650000 $50000
3. JNSTAa SINNNG/SERVICE HOlST * 1 lumptúm 63SOOOO $350000
4. CONSTRUCT HEAOFRAME ISOtomM $40001 $720000
6. CONSTRUCTSMXMGSERVICEHOIST HOUSE' 250 m* $480 ' $115000
6. INSTALL PROOUCTION HOIST * 1 lumptum 6390000
7, CONSTRUCT HEAOFRAME DUMP ARRANGEMENT 1 tumpsuin 6200000 $200000
a. CONST.PROON HOtST/ COMPRÉSSOR HOUSE * 600 m< $400 $278000
9. CONSTRUCT WAREHOUSE/SHOP FACIUTY
' 450 m* $456 $204,750
10. CONSTRUCT OFFICECRY.FACIÚTY
'
11.
750 m* $600) $450000
SfTE FENCINGAMTES 1,000 UnjML $50 $50000
12. SECURTTYOFFICE 1 lumpHim $20000
13. SURFACE ELECTRtCS
14. CONTRACTOR PLANT TEARDOWN
1 Kimpium $3000001
16.
1 lumpMjm $750001 $75000
CONTRACTOR DEMOeaigATTON 1 lumpMjm 62SOOOOÍ $260000
PROouenow shaet

16. SINMNG SETUP 1 fumotum 644Sm $445.000

ir. StNK AND EQUIP 6.1m OIA. SHAFT 425 Dn. mct siaioo usáojsca
"18. EXCAVATE SHAFT STATiONS 1440 m* 1200 $288,000
19. CONSTRUCT SHAFT STATIONS 4 MCP 645,000 $180;000
20. EXCAVATE LOAOING POCKET 820 m* S22S 6184,500
21. CONSTRUCT LOAOING POCKET Mumpsum 675,000 S79M0
22. EXCAVATE SPfLL RAMP TO SHAFT BOTTOM 265.IIn.m«. 6900 S238J500
23. CHÁNQEpVER SHAFT TO PROOUCTION 1 lump «um 618OM0 $iaom)
MATERIALS HAWnUWQ

24; EXCAVATE & UNE TWOO)SHAFT BINS•1SOOT EA. 1.850 m* 6200 6370,000
25. BIN LOAOOUTS ANO TRANSFER CONVEYOR 1 lumpsum 6179M 6175,000
26. CONVEYOR RAMP EXCAVAT10N(4Sm X S.Om) 180 lin.mM. 61,400
27. INSTÁU RAMP CONVEYOR 160 Dn. 6300 $S4jOOO
28. EXCAVATE CRUSHER STN & CRUSHED ORE BIN 2,000 m* 6200
29. INSTALL CRUSHER A CRUSHED ORE BIN LOADOUT 1 lumpsum 6550m
30. MAIN ORE/WASTE PASS EXCAVATION 200 Un, nwt 6950 $1B0J
31.
32.
STOPE ORE PASS EXCAVATION 300 Iín.rTMt 6B50( $2S5J.
U/GTRUCKHAUAGE 348.872 tennM 62J0 $872.181
LEVELDEVELOPMEMT

33. EXC. DECLINE TO 9700L (4.Sffl X 5.0m)' 760 Un. RMt 61,400 61.064,000
34. DEVELOP 3800 KMJN HAULAGE LEVEL(4.5m X S.Otn) 615 Un. m«t 61.100 6676,500
36. DEVELOP 3700 MAIN HAULAGE LEVEL(4.5in X S.Om) 925 lin. RMl 61,100 61.017.500
36. OEVELOP 3720 SUBLEVEL (4.5ffl X S.Om) 1.150 Un.m«L 61.100 61.26SOOO
37. DEVELOP 3740 SUBLEVEL(4.Sm X S-Om) 1,150 Un.nwc 61,100 61,2a.000
VEMTTLATIOH

38. EXCAVATE 2-3m. OIA. VENT.PAISES(SURF.-370a) 660 Dn. nwL 6900 $594.000
39. EXCAVATE i-Sm. OIA. VENT.RAISE(SURF..3eOOL) 230 lin. fflét 6900 6207.000
DIAMOND bRILLlMO

40. DIAMOND DRIUJNG 15.000 nwtpri 6130 $1,950.000

41. DIAMOND ORIUJNQ ASSAYS. 6,150 Mch 620 $123,000
OWNER'S CÓ5TS
42. CONTRACT AOMINISTRATION•4 STAFF MEMBERS 730 dáys 61,300 6949,000
43. HEAD OFFICE COSTS 1 lúmpsum 6500.000 $500,000
44. CAPITAL EQUIPMENT 1 lumpsum 618.047,000 $16.047.000
46. EQUIPMENTIMPORTDUTY Q 15.00% 1 lumpsum 62,707.050 $2.707,050
46. ENGINEERING/PROCUREMENT O 20.00% 1 lumpsum 63.609.400 $3,606.400
OF CAPITAL EQUIPMENT '

eSTJMATED PREPRODUCTJON CAP/TAL COST $48.$78.881

■ inelüOes •//^ndation»
'- does notinetuó» éccmaa /Mds or hfgh vo/lmo» powtfi'n» lo mm aitm

REDP/lir

MINTQSH
B-55 LNONmtJN('
2.4.3 Capital Summary

INVESTMENT IN EXPLORATION

Site Work $4,043,250

Diamond Drilling 3,267,700
Owner's Cósts 2.065.000
Subtotai $9,375,950

INVESTMENT IN UNDERGROUND DEVELOPMENT WORKINGS

Shaft, 405 m, 6.1 m dlameter $ 5,883,500

Main Decline 1,064,000
Raíses 1.246.000
Drifts 4.224,000
Cnisher. Conveyor. Stprage 1.801,000
Other Related 872.181

' Subtotai $15,090,681

INVESTMENT ÍN UNDERGROUND ÍNFRASTRUCTURE

Surface Facilities $3,700,000

Surface Equipment ' 4,708,112
Electric Equipment ^ 1,359,750
Ünderground Equipment 11,979.888
Diamond Drilling 2,073.000
Owner's Cost 1.449,000
Equipment Impon Duty 2,707,050
Engineering and Procuremeni 3,609,400
Contingency @15% 4.753.407

Subtotai $36,339,607

^DPATh
MciNTOSl-
K:\PR0J\WPROC\3«6VC0ROCCO.3é6 CNONURIhK
B-56
 2.5.2 Drift and Fill Stopes

Drift and fill stoping will occur ih areas where the ore body is narrow; has an irregular shape
or where poor ground conditions are encountered along the hanging waíl. It has been
assumed that the purposes oí this study that 50% of production will come from drift and fill
stopes.

Each stope will be accessed from the subleve! with a ramp of máximum +/- 18% gradient.
Ule stopes will be oriented longitudinaily along the strike of the ore body. Each stope will
have a cross sectional area óf 5 m wide by 5 m high. A twin-boom jumbo will be utilized
for^drilling and a 5 m^ LHD for mucking. It has been assumed for estimating purposes that
50% óf the drift and fill stopes will require shotcrete and 50% will require bólting on a 1.5 m
pattern for ground support. The resulting estimated operating costs for drift and fill stopes
is $2.22 /tonne. (See Table 4.)

2.5.3 Ongoing Development

Two sublevéis wílI be required to be developed in order to sustain production. The inilial
two sublevéis are driveñ during the preproduction development phase. The additional
sublevéis will be driven during production at a rate of 122,843 tpnnes per year, or an
equivalent of 1750 m per year. The estimated cost of development is $0.46 /tonne.

2;6 UNIT OPERATIONS

2.6.1 Drilling

Twin-boom hydraulic jumbos will to be used for development headings and drift and fill
stopes. Bench drills will be used for blasthole stopes.

2.6.2 Blasting

ANFO slurry will be used.

2.6.3 Loading and Underground Haulage

5 m^ LHDs will be used in the stopes. 26-tonne trucks will be used on the main haúlage
levels.

Redi...

K:\PROJ\WPROCO««MROCC0.366
B-57
 2.6.4 Fill Material

Fill will be delivered to the mine through the vent raise which terminales on the 3800 level.
An underground batch plant will process the fill which will then be transported by 26-tonne
trucks to the stopes. A small dozer will be utilized to compact the fill material.

2.6.5 Cnishing

A 1060 mm by 1375 mm jaw crusher will be used for primary crushing.

2.6.6 Conveyor

A 1060 mm conveyor belt will transport ore from the crusher to the storage bins.

2 6.7 Hoisting

The service hóist will be a 3 m diameter, 750 hp, double-drum hoist with an operating speed
of7.6m/s.

The production hoist will be a 3 m diameter, 2,400 hp, double-drum hoist with an operating
speed of 12.7 m/s.

2.6.8 Shaft Characteristics

The main service/production shaft will be a double compartment shaft, 6.1 m in diameter,
425 m in depth, and lined with 0.3 m of circular monolithic concrete. The shaft will contain
four shaft stations, one of which is the loading pocket.

R£DPATH

MCfNTOSH
K!\PROnWPROC\3«6>COROCC0.366 B-58 ÉÑGINttWSC
REDPATH MclNTOSH ENGINEERING INC. PHELPS DODGE
PROJECT#366
TADLE 4 MINE OPERATING COSTS
COSTS SUMMARY

DESIGN BASIS DAILY OREMINED: 5000 BREAKDOWN TONS/DAY:

DAYS WORKED PER YEAR: 360 DRIFT & FILL; 50%
ANNUAL TONS MINED: 1800000 BLASTHOLE METHOD: 50%

SUBDIVISION LABOR MATERIALS TOTAL

$/YR $/Broken ton $n"ON $/YR $/Broken ton $/TON $/YR $/TON

DEVELOPMENT $126.548 $1.00 $0.07 $711.256 $5.63 $0.40 $837,804 $0.47

DRIFT & FILL $623,438 $0.69 $0.35 $3.379.255 $3.75 $1.88 $4.002.693 $2.22

BLASTHOLE $541,469 $0.60 $0.30 $1.511.476 $1.68 $0.84 $2.052.945 $1.14

MATERIALS HANDLING $405.522 $0.23 $1.383.386 $0.79 $1,788.909 $0.99

MINE SERVICES $230.188 $0.13 $2,726.238 $1.56 $2.956.426 $1.64

MAINTENANCE $576,095 $0.33 $465.845 $0.27 $1.041.940 $0.58
MINE GENERAL $619.200 $0.35 $257.143 $0.15 $876.343 $0.49

SUBTOTALS; $3.122,460 $1.78 $10.434.599 $5.96 $13.557.060 $7.53

5% ALLOWANCE $156.123 $521.730 $677.853

TOTAL $3.278.583 $1.82 $10.956.329 $6.09 $14,234.913 $7.91

RE i McINTOSH ENGINEERING INC.

5/24/94
 2.7 EQUIPMENT LIST

The following ítems of major mining equipment have been estimated as being required for
ore production at the rate of 5,000 tonnes/day.

Equipment Use

Jumbo Development Headings/Stopes

Rock Bolter Development Headings/Stopes
Bench Drill Stopes
5 LHD Development Headings/Stopes
Utility Vehicle Services
Explosives Truck Blasting
Boss Buggy Supervisor
Lube Truck Services
Shotcrete Development Headings
26-tonne Haul Truck Stope Pili
Road Grader Services
Raise Borer Development
Concrete Hauler Stope Pili
Main Hoist Hoisting
Service Hoist Services
Main Fan Ventilation
Compressor Services
Crüsher Production
Conveyor Haulage

Redpath

MciNTQSH
K:\PROJVWPROCUi6yMROCrOJé6
ENGINEERJNC
B-«0
PHELPS DODGE
PERMANENT EQUIPMENT LIST

TOTAL
ITEM No. ITEM UNIT TOTAL
TOTAL COST COST

1
Compressor
2 Front End Loader $107,000 $321,000
3 ■Fori< Lift $265,000 $265,000
4 Pickup Tnjck - 3/4 ton $41,000 $41.000
5
Flatbed Tmck -10 ton $21,000 $126,000
$29,000
6
Flatbed Tmck - 30 ton O
$0
7 Service Tnjck $51.000 SO
8 Mise. Shop Equipment $47.000 $0
9 Potable Water Plant $50,000 $50.000
10 Sewage Plant $160.000 $160.000
11 Fuel Statión $27.000 $27,000
12 Office Equipment $6,000 $6,000
13 Haulage Level Chute $50.000 $50.000
14 Grane - 25 ton Overtiead $73,000 $219,000
15 Jaw Cnjsher $75,000 $75,000
16 Dust Collector $350.000 $350,00C' ^
17 Grane - 3 ton Monorail $31.000 $31,00CK
18 VIbratory Feeder $11,000 $11.000
19 Loadout Gonveyor- lOm. $12.000 $12.000
20 Gonveyor to Bin - 180m. $11.000 $11,000
21 Beit Magnet $120,000 $120.000
22 Transfer Gonveyor - 25m. $17,000 $17,000
23 Grane - 3 ton Monorail $19,000 $19.000
24 Loading Pocket $11.000 $22,000
25 10 ft Production Hoist - New $185,000 $185,000
26 Head Sheave $850.000 $850,000
2 $69,000
27 Wire Ropa $138,000
3 39,500
28 Wire Rope Attachments $28.500
29 Gonveyance - Gage
3 $39.000 $117,000
1 $227.000
. 30 Cage Chairing System $227.000
3 $67.000
31
Gounterweight 1
$201,000
32 10 ft Sínking/Service Hoist - Used $38.000 $38.000
1 $650.000
33 Head Sheave $650,000
2 $55.000
34 Wire Rope $110,000
3 $6,000
35 Wire Rope Attachments $18.000
3 $35.000
36
Gonveyance - Skip 3
$105,000
37 Dufnp Scrolls $125,000 $375,000
2 $16.000 $32,000

B-61
 PHELPS DODGE

PERMANENT EQUIPMENT LIST

TOTAL
UNIT TOTAL
ITEM No. ITEM TOTAL COST COST

7¡5 First Aid Supplies 1 $1,000 . 31,000

Cap Lamps & Chargers - 60 . 8 $10,000 380,000
¥ Setf Rescuers 400 3100 $40,000
^8 Fire Hydrant O $1,600 30
79 Hose House O 31,900 30
80 Cement Storage Silo & Screw Convéyor O 3240.000 $0
8^1 Cement, Water, Filter Cake Weigh Hopper 1 $18,000 $18,000
82 Spiral Concrete Mixer 1 $115,000 $115,000
346,000
i
Slurry Hopper & Agitator O 30
8.3
84 Bridge Crane 1 $34.500 334,500
85 Seal Water Booster Pump O 32,200 30
8:6 Process Water Pump O 32,500 30
600 Amp Disconnects 2 36,000 312,000
¥ $40,000 380,000
88 ■SF6 Breakers 2
8:9 10 MVa Transformar 2 $140,000 $280,000
9p 5 kV Breakers 22 325,000 3550,000
Transformar - Utilities 315,000 $15,000
92 Transformer-Office $11,000 311,000
Transformar - Compressors 315,000 $15,000
Transformer - Fans 325,000 325,000
95 Transformer - Hoist 311,000 311,000
9P Transformer - Conveyor 311,000 30
Transformer - U/G Utilities 315,000 $15,000
98 Transformer - Auxiliary 311,000 311,000
9^ Mine Load Centers 6 345.100 $270,600
100 Diesel Generator - 2400 kW O 3550,000 30

Subtotal $17,187,600
Mise. Equipment Allowance @ 5.00% $859,380

Total $18,046,980

b
B-62
 2.8 MANPOWER

Manpower is estimated as follows based on mining method and equipment selection:

Operatlon MIner Helper Oper Util Mech Elec Labor

Development 7 14 2
Cut & Fill 28 52 8
Blasthole Stope 26 52 10
Material Handling 60 4
Mine Services 4 6 4 12 15
Maintenance 46 8 37 8

Subtotal 65 170 84 24 37 8 15

Total Manpower: 403

2.9 MINE SERVICES

2.9.1 Véntilatíon

Assuming an air renewal aíid gas dilution requirement of 120 cfm per tonne, the total
ventilation requirement for the mine will be 600,000 cfm. Two main fans rated at 500 hp
each are to be used.

2.9.2 Electric Power

The power requirement is 17 kW /tonne.

REOPy-ii i%J

McimtosK
K:VPR0J\WPROa3«\C0ROCCO.3« _„ tÑOÑttWÑ
l>-o3
 REDPATH McINTOSH ENGINEERING INC PHELPS OODGE
PROJECTWee
COROCCOHUAYCO UNDERGROUND PROJECT
PRODUCTION SCHEDULE
MINEABLE TONNES = i í
1S4&0000
AVERAGE Cu GRADE = 235%

PRODUCTION YEARS TOTALS

LEVEIS GRADE TONS 5 6 7 8 9 10 11 12 13 14 15 16
Total Tons 16480000 360,000 1,060,000 1,800,000 1,600,000 1,600,000 1,800,000 1,600,000 1,600,000 1,800,000 1,600,000 1.600,000 640,000 18480 000
Cu Grade 2.35% 2.80% 2.60% 2.60% 2.72% 2.46% 2.46% 2.22% 2.10% 2.10% 2.08% 2.00% 2.00% 2.35%

00

4^

R6DPATH McINTOSH ENGINEERING INC.

5/20/94
 UNGOING CAPIIAL REPLACEMENT SCHEDULE FOR EQUIPMENT
M^INTOSH
5,000 TPD CASE

1. VMtranMM ^»qirtp«m»r> «Btnxa Ih.laicMf» Bu «MU

nx eíih.i«ir.c«fi.^pi«h.»prt*

10 NO EOUVHCKTrrCH
UFE AKNUAL QUAtmrr PURCKASE I-PREFROOTTI
USAOS PRICE FUll PR00ÜCJ70N rC4ftS
[rtouril |yMta|

ra>mitei
36000 7550
Fnm End leaMr
3107.000 3321.000
15X00 3500 3215.070
fortlA
3203.000 3255000
15.000 3500 3177.550
341.000 34I.OQO 3755.000
FIcitoTiua-MIon 15.000 3500 321.000 527.470
3125.000 341.000
nnMTiudflOlon 15.000 3500 529.000 354 420
30
EMMTnic*.sotan IS.OOO 3500 SSt.OOO
SatvbaTtuet 30
15.000 3500 3a7.000
loaoautCoNv^w. tem. SO
30.000 6480 3ti.mo 311.000
Carn^yar uBh- mu
30X00 3500 3120.000 3120.000
BMMagtwl 35.000 3500 317.000 317.000 350.400
TimtW Cewew2Sm, WXOO 3500 319.000 319.000
Cnna.StenUmai 511.390
25X00 3500 311.000
HMStaM 311,000 312.730
20.000 3500 309.000 3135.000 37X70
MAmCis.IBaom 15X00
3I1.000
3400 3402.000 392.460
RacUoWigjMiM 3504.000 3135.000
15X00 3400 3370.000 3535.550
LHO>r.S,« 3371.000 31342.550 3504.000
15.000 3400 3253.260
3300000 31X50.000 3375.COO
HMTntt-»** 3720.000 5720.000
15X00 3400 3365X00 3723.500 3452.400
SeuotUtl 3795.000 3530.000 31552.400 3720.000 31X02.400
18.000 3400
3265.000
3130.000 3255.000
3532.650 3177.550 3972.550
EiCtaaM* Tnic* 5255.000 3530.000 3442X50
14.000 3400 3171.520
3I09.000 3375.000 3427520
euuotw
15.000 5375.0CO 3427.S2Ó
3400 3120.000 3253.260
Omaomm 3120.000 3511X50 3531X50
18X00 5120.000
3400 350.400
3344.000 3244.000 32ua.4Q0
SnatoauWitr 3200.400
18.000 3400 3133.000 3153.450
SheioaM Tniea 3123.000 3244X00
15,000 3400 352.410
3201.000 3291,000 3123.000
UOluarnO
15.000 3400 3155.270
3123.000 3123X00 3251.000
UQBaomTftict 15X00 3400 3123,000
3127.000 352,410 3205.410
3127,000
w» UQ Sanca TluA M.MO 3400 3141.000
3127.000
355.090
1205.410
•"««KnlCaMif.iOnwi 3141.000 3212.090 3212.090
18.000 3400 394.470
Traesof 3SO.OOO 3100.000 3141X00
15X00 3400 367.000
331.000 3310.000 1100.(00
6i^iia«iijTnao> 18,000 3400
330.000 3207.700 U'OXOO
Tun> 335X00
20.000 3500 325.450
39.000 327.000 335.000
SancnDi*
20X00 3500 315.090
3121.000 3121.000 327.COO
EinM Vcoiian Fm.HO HP 80X00 5400 351.070
OntíStoaaFan-SOHP sth.ooo 3350.000 3202X70
60X00 8400 3S.0D0 340.000 3350.000
Oxwipncn Fan* tSO HP 50.000 5400
317.000 334.000 340X00
M* DnjtM««PuB*»•*0HP 75.000 «480
345.000 390.000 334.000
OMSOTMOHrWnrPvnv 18X00 4000 33X00 315.000 390.COO
CtarWMf Faa4 Puifc•ISOHP 20X00 4000 315.000
335.000 373.000 321.00
S*»*fca WWar PwT».aso ít»B 20,000 4000 345X40
32.900 32.900
Canoa Slaraot 8to« SeneC«n««yar 45.000 4320 31.943
Canoa,waw.F«arCalía WaVi Happan 3340.000 30
46000 4320
319.000 315.000
SpniCanoiuWtiar 35.000 4320 3115.000
SkarrHetvarSAgUiw 3113.000
45X00 4320
345.000
SrtSgaOana
SO.OOO 3500 334,500
SaalWaareoaalarPUTa) 20.000 3500 32.200
PreeaianraarPvmo 20.000 3500
32X00 .

SUBTOTAL ReBUUVREPLACEMEMT COST•

$1.371,000 $2,923,000 $10,050 $4,318J4J $1.199.028 $$.384,780 $1,464,130
SALES TAXAT OMX $4X68,120 $0 $0
COKnHCENCYAT 0.00%
$0 $0 $0
TOTAL REauiUVREPLACEMEMT BY PROOUCTIQN YEAR ■ $0 $0 $0
$1,371.000 $2,923X00 $0 $10,080 $4,318X43 $1,199,020 $0X84,780 $1.4«.1J0 $4,365,120 $0 $0
•Nel,: Th» rihna //«>*0 ror Y.ar.f. y„r t,na Yaar2npn.airteapAi/ purcftai**. anrfaf* aeeoimfatf tor»lMwti9n aeeoníy/jgy.
TOTAL ONCOINO CAPITAL COST FOR 11 YEARS OF FULL SCALE PROOUCTION a
$19,741,443
 CAPITAL EXPENDITURE SCHEDULE

Yaar2
YMr3
TOTAL
Ouutorio
OPLOAATKMPHUe
Contraen tzao.oooi
SSO.OOOI
itujso
179.0001
uo.oooi
H08.S09 1911,4891 9709.701
9l71.eu 979.003 97,980,000
MOOL
1800000
91.193 3001 11,193.300 9001.088
990.000 t3JIT.TOO
91000001
tiao«o
991.290 1912901 991290 191290
931290 131290 9312901 931.290 931.290 931.290 931.290:
tico 000 S90.0CO: 9100.000 •290200
9290.0001
9299.9001 9299.9001 9189.000

Csfnxr^MGM 9208.333 941.007

990.0001

9720.0001
nnjoo
9200.0001
t20MOe
9119.000
1111200
9293.9001 997.9001

9217.429! 9907.3291
9200.0001 91000001 nnn twn

awaxtaifiTt lililí 8 91.322.093 91.903.140 91.432287:

loaOTiQ nidMl 4 92929001 9179.9001

918aOOOI
91192901 91192901

9370 000
9173.0001
9292.0001
994.0001
9220.000

9100.000
9299.0001
990.149 9174.438 9174.438 9174438 9174438 91182811 9172.101

9490.194
t12M
9414.920 1281.980
D»iafcei372O?»0iHiM 9179200
9530,9701
91217200
9932.172 9772.928:
— *1*1»12m.VHI>.fc»>mnni 9719.1721 997241
9207.000
Oi«wondOnfciii4A«.-y,no 9207.OOO 1277.0001
171.4931 11288,890 9714.8781

ni200
9290.000
OimfiCoMK C4fmU4thi8.m»[>...
9118.829 9118.8291 9118.8291 9III.S29 9118.9231 9111.9231 9119.8291 9118,829
983900: 982.9001 982.900 9935001
011290: 112412» timtni I125M42 rniju 91240.891 Ít«S£S! uetAsa OJOO.TOlt 99213.423 t42»1.0OI
94 188 188234 199.098 199.921 9144 334 9218 008 9293.908'
973419 9430.108 9984 013 9077.390 9842.0001 9419 881 9388437 nsoM 91.793207
93214839 93.214.839 93214.890 93.214.890 t1tltt2M
ItrciotlDulyenCifllMEtmcniinl' o un 9491.173 9491,179 iUt.lTSI 9491.1791 9491.1791 9491.179 g,Tg720a
t482.1Mi 9487.100 947310OI 9483.190
f416^. fT.477,T«' ftlt","»' |1,e98,064: 11303,MC 934401441 «J41.083 «aoTT.aal 17203X11. 2,^.. ti.oai.m

Mai «1.039J1Q
 eXISTiNG CSAOC

RAkP PORIAL

AIN eXHWST RAISCS

PROOUCTIGH<SCRVICC SHATT
2 20 TOMC 9(IPS
1 CACC/CWT

UAIN RAUP
4.SWW x SW .

UIFCRALIKD
ZOrC CTTPI

MAULACC/SCRVICC LCVCL /

1000 TOWC aiNIS)

2 AT ISOO»

HAU.ACC^SCRVICC LCVCL

REDPATH
SKIP LOAOINC POCKCT PtCLPS OOOCC
SCHKMATtr SECTION
NOT TO SCALC
jsm
M<^1NT0SH
TINTATA yirc PROJCCTS

COROCCOHUYCO
SOCHATIC SCCTION

Damaetc m

mm.

«w.

[ee^SK'j 0
-
 APPENDIX C

CONCENTRATOR PLAN BASIS

A. CAPITAL

The capital costs for the Tintaya concentrator are shown below:

1995

Flotation (estimates based on recent Morenci Concentrator projects):

Additional bank of 3 Rougher Calis OK 1350 cu.ft. $ 243,000
Three additional banks of 3 Cleaner cells 300 cu. ft. 189,000
Ancillary equipment, freight, duties and installation 468.000
Subtotal $ 900,000

Filtering (estímate based on recent Morenci installation):

Additional filter (ceramic; parchase and installation) $1,200,0(X)
This may also replace one or two of the existing filters

Tailings Water Reclamation (barge, pumps and piping) $ 400,000

Rio Salado remote control pumping (Tintaya estímate) $ 125,000

Raise the tailings dam and tailings deposition $ 240.000

(Tintaya estímate)

Total 1995 Capital Project Costs $2,865,(K)0

im

Plant Modifications/Testwork to Support Additional Tonnage:

Flotation testwork (in-plant) $ 250,000

Cross launder installation in rougher flotation $ 50,000
Miscellaneous piping/pumping upgrades/freight & duties S 400.000
Total 1996 Capital Projects Costs $ 700,000

1997-2010

The tailings deposition/raise dam cost is included in the annual concentrator operating
cost.

C-l
B. OPERATING COST

The operating cost for the Tintaya concentrator is shown by year below:

Year Total Cost Tonnes Unit Cost

1993 $12,890,000 2,799,000 $4.60/tonne
1995 $13,520,792 2,975,000 $4.54/tonne
1996 $15,422,427 3,240,000 $4.76/tonne

The basis for these operating costs is the Tintaya 1993 cost statements and the
calculations are shown below:

For 1993 actual fixed cost is $0.933/tonne and consists of salaries, contracted work,
work orders, sampling and assaying.

The 1995 operating cost is calculated below:

$0.993/tonne x 2,799,000 tonnes = $2,611,467

($4.60 - $0.933)/tonne x 2,975,000 tonnes = $10,909,325
$2,611,467 + $10,909,325 = $13,520,792
$13,520,792/2,975,000 tonnes = $4.54/tonne

The 1996 operating cost is calculated below:

Fixed costs = $2,611,467

Power costs increase from $0.044/kwhr to estimated $0.055/kwhr in 1996

1993 cost for power is $1.147/tonne
(.055/.044) X $1.147/tonne = $1.434/tonne
$1.434 - $1.147 = $0.287/tonne
($4.60 - $0.933 + $0.287)/tonne x 3,240,000 tonnes = $12,810,960
$12,810,960 + $2,611,467 = $15,422,427
$15,422,427/3,240j000 tonnes = $4.76/tonne

C-2 ■ ^
i
 APPENDIX D

INFRASTRUCTURE PLAN BASIS

Included in this appendix is the cost basis for the Tintaya operating cost, the new tailings
dam capital and the infrastructure capital for Coroccohuayco underground mine.

A. OPERATING COST

The operating costs for the Tintaya infrastructure are based on the 1993 cost report for
Tintaya concentrator. A summary of the data is included in this appendix.

B. CAPITAL COST

The basis for the capital cost for the new tailing area for Tintaya operating by the year
2002 and the Coroccohuayco underground mine are as foliows:

D-l
 TINTAYA S.A.
RESUMEN DE COSTOS V GASTOS
Del 01 de Enero al 31 de Diciembre de 1993
(U.S, $)
Mina 1 $/tonne-conc $/tonne Monto Cents/Ib Cu |
Superintendencia 4.187 0.040 660,203 0.604
Gastos Generales 48.359 0.466 7,625,263 6.974
Perforación y Disparos 14.463 0.139 2,280,514 2.086
Operaciones Mina 31.527 0.304 4,971,150 4.547
Depreciación - Costos Indirectos (6.074) (0.059) (957,818) (0.876)
92.462 0.891 14,579,311 13.335
Planta Concentradora
Superintendencia 2.439 0.137 384,579 0.352
Gastos Generales 51.413 2.896 8,106,775 7.415
Procesos Planta 54.229 3.055 8,550,782 7.821
Depreciación - Costos Indirectos (6.745) (0.380) (1,063,471) (0.973)
IÜI.337 6.089 15,978,666 14.615
Costs de Comercialización - Ventas
Comisión y Comercialización 2,465 388,679 0.356
Fletes 30.892 4,871,007 4.455
Seguros 0.063 9,934 0.009
Embarque, Análisis y Ensayes 1.705 268,843 0.246
Otros Gastos 2.970 468,307 0.428
38.095 6,006,770 5.494
Costs de Administración
Sede Central 19.865 3,132,272 2.865
Sede Mina 4.090 644,908 0.590
Gastos de Exploración y Desarrollo 2.841 447,966 0.410
26.796 4,225,146 3.865

Total Costos antes de depr/amort 258.689 40,789,893 37.308

Depreciaciones:
Mina 3,137,232 2.869
Concentradora 3,855,432 3.526
Comercialización 76,790 0.070
Administrativos 318,354 0.291
Costos Indirectos de Operación 2,021,289 1.849
9,409,097 1 6.757 1
Amortización 10,559,615 9.658

Total Costos 60,758,605 53.724 1

Gastos Financiaos (743,457) (0.680)
Otros Gastos (633,712) (0.580)
Intereses deuda a largo plazo 2,952,757 2.701

Ganan y/o perdidas adjust monetary (1,740,259) (1.592)

Grand Total 60,593,933 53.573
Mine Production (tonnes) 16,360,719
Tonnes milled 2,798,921
Concéntrate Production (tonnes) 157,679.147 d.2
Cu Production (Ibs) 109,332,061
 TINTAYA S.A.
Cost Parameters for Economic Evaluation
based on actual 1993 cost report

Cents/ib - Cu
Mining Cost($/tonne mined)* 0.891 13.335
Concentrating ($/tonne milled)* 5.709 14.615
Mili Recovery - Cu 90%
Mili Recovery - Au 69%
Mili Recovery - Ag 60%
Concéntrate Grade -% Cu 31.5%

Smelting/Refíning
Smelting with freight allowance ($/tonne conc) 100.000 14.881
Reíining ($/lb - Cu) 0.100 10.000

Inland Freight*** 37,736 5.494

Freight allowance($/tonne Conc) 40.000 5.952
G & A($/Ib - Cu)** 0.039 3.865
Metal Credit ($/Ib - Cu) (0.088) (8.800)
Cash Cost 59.342
Depreciation (S/lb - Cu) 0.100 10.000
Total Cost 69.342

*mcludes cost allocation of mine administration expenses

**includes $0.03/lb ofLima Office overhead.
***includes road maintenance and port expenses.

D-3
 TINTA YA S.A.
Costos de Explotación Mina
Del 01 de Enero al 31 de Diciembre de 1993

Monto $/tonne mined Cents/Ib Cu

Superintendencia Mina 660,203 0.040 0.604

Gastos Generales Mina 359,936 0.022 0,329
Transferencia de Gastos 7,269,192 0.444 6.649
Perforación Primaria 605,347 0.037 0.554
Perforación Secundaria 81,804 0.005 0.075
Desparo Primario 1,554,268 0.095 1.422
Disparo Secuundario 32,721 0.002 0.030
Carguío 1,096,168 0.067 1.003
Acarreo 2,421,386 0.148 2.215
Botaderos y Canchas 179,968 0.011 0.165
Cables Drenaje y Consl. 1,276,136 0.078 1.167
Depreciación - Costos indirectos (957,818) (0.059) (0.876)
Producción Costos antes de Depreciación 14,579,311 0.891 13.335
Depreciación 3,137,232 0.192 2.869
Depreciación - Costos Indirectos 957,818 0.059 0.876
Producción Mina 1 18,674,361 1.141 17.080 1

Monto S/tonne mined Cents/Lb Cu

Por Elementos de Costo
Remuneraciones 1,096,168 0.067 1.003
Materiales y Suministros 2,077,811 0.127 1.900
Servicos de Terceros 49,082 0.003 0.045
Gastos Generales 425,379 0.026 0.389
Compensación Tiempo de Servicios 65,443 0.004 0.060
Ordenes de Trabajo 670,789 0.041 0.614
Enwgia Eléctrica 703,511 0.043 0.643
Agua 0 0.000 0.000
Análisis y Muestreo 16,361 0.001 0.015
Maquinaria Equipo 3,180,406 0.194 2.909
Gastos Indirecto de Operación 3,726,525 0.228 3.408
Redistribución de Costos 3.525,653 0.215 3.225
Depreciación - Costos Indirectos (957,818) (0.059) (0.876)
Producción Mina antes de depreciación 14,579,311 0.891 13.335
Depreciación 3,137,232 0.192 2.869
Depreciación - Costos Indirectos 957,818 0.059 0.876
Producción Mina 18,674,361 1.141 17.080

D-4
 TINTAYA S.A.
Costos de Producción Planta
Del 01 de Enero al 31 de Diciembre de 1993

Monto $/tonne Conc $/tonne milled Cents/lb Cu

Superintendencia Planta 384,579 2.439 0.137 0.352
Gastos Generales Planta 29,013 0.184 0.010 0.027
Transferencia de Gastos 8,077,745 51.229 2.886 7.388
Chancado de Grueso 279,250 1.771 0.100 0.255
Chancado de Finos 943,079 5.981 0.337 0.863
Molienda y Clasificación 5,658,018 35.883 2.021 5.175
Flotación 856,355 5.431 0.306 0.783
Espersado Filtrado 531,852 3.373 0.190 0.486
Relaves 132,135 0.838 0.047 0.121
Almacén de Concentrado 83,097 0.527 0.030 0.076
Preparación de Reactivos 33,901 0.215 0.012 0.031
Otros Gastos de Concentrado 33,113 0.210 0.012 0.030
Depreciación - Costos Indirectos (1,063,471) (6.7.45) (0.380) (0.973)
Producción Concentrado antes de Depr 15,978,666 101.337 5.709 14.615
Depreciación 3,855,432 24.451 1.377 3.526
Depreciación - Costos Indirectos 1,063,471 6.745 0.380 0.973
Producción Concentrado 20,897,569 132.532 7.466 19.114

Por Elementos de Costo Monto $/lonne - Conc $/tonne milled Cents/Ib Cu|
Remuneraciones 499,370 3.167 0.178 0.178
Materiales y Suministros 2,452,068 15.551 0.876 0.876
Servicios de Terceros 126,301 0.801 0.045 0.045
Gastps Generales 107,222 0.680 0.038 0.038
Compensación Termpo de Servicio 23,337 0.148 0.008 0.008
Ordenes de Trabajo 1,853,518 11.755 0.662 0.662
Energia Eléctrica 3,208,928 20.351 1.146 1.146
Agua 401,924 2.549 0.144 0.144
Análisis y Muestreo 133,081 0.844 0.048 0.048
Maquinaria Equipo 158,625 1.006 0.057 0.057
Gastos Indirecto de Operación 4,155,161 26.352 1.485 1.485
Redistribución de Costos 3,922,601 24.877 1.401 1.401
Depreciación - Costos Indirectos (1,063,471) (6.745) (0.380) (0.380)
Producción Conc antes de depreciación 15,978,666 108.081 5.709 5.709
Depreciación 3,855,432 24.451 1.377 1.377
Depreciación - Costos Indirectos 1,063,471 6.745 0.380 0.380
Producción Concentrado 20,897,569 139.277 7.466 7.466

D-5
 TINTAYA S.A.
Costs de Comercialización - Venta
Del 01 de Enero al 31 de Diciembre de 1993

Monto $/toime - Conc Cents/lb Cu|

Fletes - Gastos de Transporte 4,871,182 30.893 4.455
Seguros 9,934 0.063 0.009
Gerencia Comercial 35,320 0.224 0.032
División Logistica Comercial 222,643 1.412 0.204
Depto de Trafico de Concentrado 129,139 0.819 0.118
División de Ventas 1,419 0.009 0.001
Comisiones - Tramites de Venta 158 0.001 0.000
Gastos de Ensayo y Muestreo 32,482 0.206 0.030
Gastos de Embarque y Desembarque 236,361 1.499 0.216
Gastos de Almacenaje 45,254 0.287 0.041
Otros Gastos 422,878 2.682 0.387
Costs de Comerc - Venta antes de Depr 6,006,770 38.095 1 5.494
Depreciación 76,790 0.487 0.070
Total Costos de Comercialización - Venta 6,083,560 38.582 5.564

Por Elementos de Costo

Remuneraciones 211,290 1.340 0.193
Materiales y Suministros 13,403 0.085 0.012
Servicios de Terceros 5,716,482 36.254 5.229
Gastos Generales 25,859 0.164 0.024
Compensación Tiempo de Servicios 10,565 0.067 0.010
Ordenes de Trabajo 13,403 0.085 0.012
Análisis y Muestreo 3,311 0.021 0.003
Maquinaria Equipo 12,457 0.079 0.011
Costos antes de Depreciación 6,006,770 38.095 5.494 1
Depreciación 76,790 0.487 0.070
Total Costos de Comercialización - Venta | 6,083,560 38.582 5.564

D-6
 TINTAYA S.A
Costs de Administración
Del 01 de Enero al 31 de Diciembre de 1993

Gastos Administración - Sede Central Monto $/torme - Cene Cents/lb Cu

Directorio 86,355 0.548 0.079
Comité Privilizacion 34,216 0.217 0.031
Presidencia Ejecutiva 59,445 0.377 0.054
Auditoria Interna 92,873 0.589 0.085
Gerencia General 370,073 2.347 0.338
Asesoría Legal 131,031 0.831 0.120
Gerencia Administrativa 933,145 5.918 0.853
Gerencia Finanzas y Contabilidad 643,331 4.080 0.588
Sistemas e Informática 79,470 0.504 0.073
Logistica 683,854 4.337 0.625
Servicios al Personal 18,291 0.116 0.017
Gastos antes de Depreciación 3,132,085 19.864 2.865
Depreciación 137.969 0.875 0.126
Gastos Administración - Sede Central 3,270,054 20.739 2.991

Gastos Adminstrativos Mina

Auditoría Mina 27.594 0.175 0.025
Centros Educativos 144,749 0.918 0.132
Sindicatos y Asoc de Trabajad 124,882 0.792 0.114
Desarrollo Comunal 118,102 0.749 0.108
Promoción y Desarrollo Regional 16,714 0.106 0.015
División de Ingeniería 234,154 1.485 0.214
Distribución a Obras en Curso (52,665) (0.334) (0.048)
Otors Gastos Administrativos 31,461 0.200 0.029
Gastos antes de Depr/Amort 644,990 4.091 0.590
Depreicacion 117,629 0.746 0.108
Amortización Proyectos 10,559,615 66.969 9.658
Total Gastos Administración - Mina 11,322,234 71.806 10.356

Gastos Exnloracion Investií^acion v Desarrollo

Gastos Indirectos Exploraciones 448,071 2.842 0.410
Gastos Investigación y Desarrollo 0 0.000 0.000
Gastos antes de Depreciación 448,071 2.842 0.410
Depreciación 62,756 0.398 0.057
Total Gastos Ezploracion/Desarrollo 510,827 3.240 0.467
Total Gastos de Administración 15,103,115 95.784 13.814

Por Elementos de Costo

Remuneraciones 2,150,404 13.638 1.967
Materiales y Suministros 192,999 1.224 0.177
Servicios de Terceros 1,523,969 9.665 1.394
Gastes Generales 171,397 1.087 0.157
Compensación Tiempo Servicios 103,280 0.655 0.094
Ordenes de Trabajo 84,989 0.539 0.078
Producción Agua 5,992 0.038 0.005
Análisis y Muestreo 946 0.006 O.COl
Maquinaria Equipo 13.718 0.087 0.013
Disbribucion y Redistribución (22,548) (0.143) (0.021)
Costos antes de Dcpr/Amort 4,225,146 26.796 3.865
Depreciación - Sede Central 137,969 0.875 0.126
Depreciación - Sede Mina 117,629 0.746 0.108
Depreciación - Exploracion/Desairollo 62,756 0.398 0.057
Amortización Proyectos 10,559,615 66.969 9.658
Total Costos de Administración 15,103,115 95.784 13.814
 TINTAYA S.A.
Costs Indirectos de Operación
Del 01 de Enero al 31 de Diciembre de 1993

I Monto $/lonne - Conc Cents/lb Cu

Gerencia de Operaciones 312,993 1.985 0.286
Superintendencia Administrativa 115,263 0.731 0.105
Racionalización Ing. Industria! 95,554 0.606 0.087
División de RR.I1.
174,393 1.106 0.160
Bienestar Social y Capacitación 181,173 1.149 0.166
Finanzas y Contabilidad Mina 200,568 1.272 0.183
Oficina de Sistemas Mina
124,093 0.787 0.114
Seguridad y Protección Interna 780,039 4.947 0.713
Logística - Mina 684,012 4.338 0.626
Mercantil
51,876 0.329 0.047
Servicios Generales
71,429 0.453 0.065
Hoteles y Clubs 120,625 0.765 0.110
Campanmentos 693,788 4.400 0.635
Comedores y cocina 778,935 4.940 0.712
Motor Pool
401,609 2.547 0.367
División Medica
512,457 3.250 0.469
Ser\'icios al Personal
504,573 3.200 0.462
Cuna Maternal
8,199 0.052 0.007
Programas de Recreación 31,239 0.198 0.029
Costos Indirectos antes de Depreciación 1 5^42,820 37.055 5.344 1
Depreciación 2,021.289 12.819 1.849
Total Costos Indirectos de Operación 1 7,864,109 49.874 1 7.193

Por Elementos de Costn

Remuneraciones 2,487,073 15.773 2.275
Materiales y Suministros 947,967 6.012 0.867
Servicios de Terceros 935,037 5.930 0.855
Gastos Generales
137,969 0.875 0.126
Compensación Tiempo Servicios 110,848 0.703 0.101
Ordenes de Trabajo 591,297 3.750 _ 0.541
Energía Eléctrica 488,805 3.100 0.447
Producción Agua 105,645 0.670 0.097
Maquinaria Equipo 38,177 0.242 0.035
Costos antes de Depr/Amort 5,842,820 37,055 1 5.344 1
Depreciación 2,021,289 12.819 1 849
Total Costos Indirectos de Operación 7,864,109 49.874 1 7.193 1

D-8
 Tintaya new Tailings Dam

1. Direct cost $ X OOO's

Tailings pumping station

Earthwork 4,000m3 @ $7.5/cm 30.00
Concrete work 200 m3@ $380/cm 76.00
Tailing pumps 4 ea @ $ 78,000/ea 312.00
Air compressed system & seal pumps Lot 60.00
Frequency variators 2 ea @ $80,000/ea 160.00
Power & Control system Allowance 175.00
Electiical room 600 sf@ $ 54/sf 32.40
Fieid instrumentation Lot 55.00
Structural steel support & tankage 12 mt@$3.8/kg. 45.60
Piping & valves Allowance 35.00
23 KV poweriine 2 km @ $26/lm 52.00
Fences Lot 40.00
Grounding & electrical bulk Allowance 35.00
Sub-total 1,108.00

Pipeline
Earthwork 15,000 m3@ $5.0/cm 75.00
Pipe-HDPE 1.8 km @$ 300/Im 540.00
Pipe-PVC l.Skm @$ 74/lm 96.20
Pipe trenching & burying 2.2 km @ $14/lm 30.80
Piping hardware & valves Allowance 75.00
Sub-total 817.00

Tailings distribution system

Earthwork 2,500 m3@ $8.2/cm 21.00
Drop box 2 ea @ $15,000/ea 30.00
Pipe & valves Allowance 170.00
Power Lot 25.00
Lighting 2km @$ 23,000/km 46.00
Sub-total 292.00

Dam N®1.First stage

Top soil removal 5 hectares @ $12,000/h 60.00
Mine waste material 250,000 m3@$1.18/cm 295.00
Waste bulldozing 250,000 m3@$0.4/cm 100.00
Lining tailings bed 35,000 mS @$2.8/em 98.00
Láning 17,500 m2@$4.5/sm 78.75
Drains 3.2km@$ll/Im 35.20
Temporary access road Lot 85.05
Sub-total 752.00

LIMPIE2A.XLS 05/25/94
D-9
 Water reclaiming
Raft & pumps lset@$ 140,000' 140.00
Pipeline 2.2 km @96/lm 211.20
Earthwork 5,000 m3@ $6.2/cm 31.00
Piping support & valves Allowance 88.00
Power & control Lot 180.00
Miscellaneous Allowance 10.80
Sub-total 661.00

Seepage control(Dam N®1 & N®2)

Wall seepage collection trencliing Lot 36.00
Geotextile and collection trenching Lot 25.00
Collection chamber & pump 1 set 52.00
Piping Lot 41.00
Power & control Allowance 52.00
Monitoring wells 5ea@$ 11,000/ea 55.00
Accesses Allowance 48.00
Sub-total 309.00

Flood control
Earthwork (divertion canals) 25,000 m3@$ 6.2/cm 155.00
Protection wálls Lot 25.00
Divertion walls Lot 18.00
Culverts & miscellaneous Allow 11.00
Sub-total 209.00

Dam N°2. Single stage

Top soil removal 2.5 hectares@$ 12,000/h 30.00
Mine waste material 130,000 m3@$ 1.18/cm 153.40
Waste bulldozing 130,000 m3@$0.4/cm 52.00
Lining tailings bed 18,000 m3@$ 2.8/cm 50.40
Lining 9,000 in2@$4.5/sm 40.50
Drains 1.9km@$ll/lm 20.90
Temporary access road Lot 45.80 _
Sub-total 393.00

Land
Land purcheise Allowance 50.00
Local farmers relocation Allowance 70.00
Sub-total 120.00

Total direct cost 4,661.00

LIMPIEZA.XLS 05/25/94
D-10
2. Indirect cost

Design 12,500 mhrs @ $24/mhr 300.00

EIA 4,000 mhrs @ $31/nihr 124.00
Field survey Allowsince 45.00
Engineeríng expenses 21,800 mhrs @ $3/inhr 65.40
Permitting appUcation & lobbing 800 mhrs @ $36/mhr 28.80
Procurement & Contracts mngt services 3,500 mhrs @ $31/mhr 108.50
Operation manuals & start up 1,000 mhrs @ $28/mhr 28.00
Construction management 5,500 mhrs @ $46/mhr 253.00
Field office expenses Allowance 300.00
QA 10,000 mhrs @ $18/mhr 180.00
Project management 4,000 mhrs @ $46/mhr 184.00
Project insurance & miscellaneous Allowance 120.30
Total indirect cost 1,737.00

3. Contingency & rounded up 762.00

Total 7,160.00

4. Déferred capital. Dam N°l. Second stage.

Rise dam wall to 4000 masl elevation

Top soil removal 4.2 hectares @$ 12,000/h 50.40

Mne waste material 254,000 m3@$ 1.18/cm 299.72
Waste bulldozing 254,000 m3@ $0.4/cm 101.60
Lining tailingS'bed 34,000 m3@$2.8/cm 95.20
Lining 17,000 m2@ $4.5/sm 76.50
Drains 2.5km@$ll/lm 27.50
Geotextile & collection trenching Lot 14.00
Temporary access road Lot 26.00
Relocation of existing pipes & powerlines Allowance 45.00
Indirect cost 30% of direct cost 220.78
Contingency & rounded up Allowance 143.30

Total deferred capital 1,100.00

LIMP1EZA.XLS 05/25/94 D-11

 CQSh Flow($ X OOO's)

Tíntaya new Taüings dam

Yodr Yoar Year Year Year Year

Item -2 -1 1 2 3 4 Tetáis

EIA, survey & permitting 198 198

Design & eng. expenses 150 215 365
Procurement 109 109
Op. manual & startup 28 28
Constructlon management , QA & expenses 597 256 853
Project management 70 74 40 184
Tailings pumping statlon 831 277 1,108
Tailings pipeline 531 286 817
9 Tailings distribution system 292 292
Dam N°1. First stage 752 752
Water reclaiming 361 300 661
Seepoge control 100 209 309
Fiood control 50 159 209
Dam N®2 93 300 393
Land 120 120
Contingency 64 442 256 762

Total ínitíGÍ capital 602 4,155 2,403 7,160

Deferred capital. Dam N®]. Second stage 1,100 1,100

TOTALS 602 4,155 2,403 1,100 8,260

LIMPIEZA^XLS 05/24/94
 APPENDIX D

D^íITRASTRUCTlJIlE CAPITAL ITEMS

Coroccohuayco Project

$ X OOO's
Access road 7.5 miles 340
Culverts & miscellaneous 56
10 KV powerline - Single circuit - Overhead 101
10 KV/0.4 KV Transformer & substations 66
Water supply 350
Drinking water treatment plant 20
Sewage treatment plant 34

phange house 3,200 sf 224

Field offices 2.500 sf 162
Warehousing 2,500 sf 85
3ate house 150 sf 6
irst aid station 250 sf 16
,unch room 1,200 sf 51

Communications Allow 15

:)rill core shed 1 lot 45

TOTAL $1,571

D-13
 APPENDIX E

ECONOMIC MODEL & ACQUISITION COMPARISONS

A. DISCOUNTED CASH FLOW ANALYSIS

The detailed discounted cash flow PCF)analyses for the base case of the Tintaya project
as described in Section 6 are presented in this appendix. These detailed tables include copper
pnce sensitivities (i.e., $0.85, $1.00 and $1.15) at differentdiscount rales (i.e., 11%, 13% and
15%), and the open-pit alone case.

B, EXPECTED ACQUISITION BID VALUES AND PROBABILITY DISTRIBUTIONS

A sample of 56 representative acquisitions of early stage and minable vía open-pit and
a sample of 23 producing properties, were examined to determine the expected fair market valué
of Tintaya open-pit and exploration potential resources, as well as provide Information on the
nature of the acquisition cost distribution. A log normal, population probability distribution of
the acquisition costs was calculated using simulation software and statistical information provided
by the sample, the mean and standard deviation. The resulting acquisition cost distribution
allowed the determination of the expected probability of a higher acquisition bid at varying
acquisition valúes per pound of contained copper.

A listing of the open-pit acquisitions used in the samples and their unit cost is provided
in this appendix.

E-l
TINTAYA PROJECT
Mine Life: Years 16 FirA Yetr oi Productíon
Option: I
MODEL: TINTAYAJCLS YEAR« = > Total
LME METAL PRICES
Copper USS/Lb $1.00 $1.00 Si.OO SIGO SI.OO Sl.OO $1.00 Sl.OO Sl.OO
Gold USS/Oz $375.00 S375.00 S375.00 $375.00 $375.00 $375.00 $375.00 S375.00 S375.00
Silver US$/Oz $5.00 $5.00 $5.00 $5.00 $5.00 $5.00
KEY RESULTS IRR Dͻount Q 25% 20% 15% 13% 11%
Project Retum in Pero #NUM! #NUM! N 56,783 71,431 93,687 105,828 120,548 138J34
Project Return - OfT»hore ITNUM! #NUM! 56,783 71,431 93,687 105,828 120,548 138.534
Project Retum - U.S. (TNUM! #NUM! 55,261 69,505 91,140 102,938 117,238 134.709
Ore ProceMed(MÍlling) TcHinet 51,575 2.975 3,240 3,240 3,240 3,240 3,240 3,240 3,240
Waele Toonea 109,364 16,468 21,083 18,350 13,863 12,535 11,258 2,847 1,440
Total Material Mined Tonnea 160,939 19,443 24,323
C08T PARAMETERS
Pajabl^4eta^
CoBB«L M-Lba 1.883,468 94,067 98,100 103,067 109,897 97,991 112,256 130,861 141,404
Gold M-Oz 404.755 24.502 26.684 26.684 26.017 24.683 24.683 24.016 24.683
Silver M-Oz 10,045.671 658.769 717.449 717.449 715.765 714.080 671.977 600.120 580.471
PROJECT CASH FLOW fTAX BAS
Revemiea PRICE == > SI.00 Sl.OO $1.00 $1.00 $1.00 $1.00 Sl.OO $1.00 $1.00
Copper M-US$ $1,883,468 $94,067 $98,100 $103,067 $109,897 $97.991 $112,256 $130,861 $141,404
Gold M-US$ 151,783 9,188 10,007 10,007 9,757 9,256 9,256 9,006 9,256
Silver M-US$ 50.225 3.294 3.587 1^579 2^ 3.360 3.001 2.902
Sub-Total $2,085,476 $106.549 $111,694 $116,661 $123,233 $110,817 $124,872 $142,868 $153,562
txgeiia«be^orjd_Mme
Smelting Chargea M-US$ 288,112 14,251 14,862 15,615 16,649 15,358 17,593 20,509 22,162
Refining Chargea
Copper 188,348 9,407 9,810 10,307 10,990 9,799 11,226 13,086 14,140
G^ M-US$ 2,019 123 133 133 130 123 123 120 123
Stiver M-USS 3,515 231 251 251 251 250 235 210 203
Tranaportation M-US$ 236.892 11.718 12.220 12.839 P.690 12.627 14.466 1^863 18.222
Sub-Total $718,886 $35,730 $37,276 $39,145 $41,710 $38,157 $43,643 $50,788 $54.850
MineExgenaea
Mining Coata ürüsr 353,249 13,843 16,053 13,904 11,730 15,562 17,236 21.967 27,292
Exploration Expenae M-US$ 6,000 1,800 1,600 200 200 200 200 200 200
Milling Coata M-US$ 244,843 13,507 15.422 15,422 15,422 15.422 15,422 15,422
GAA M-USS 8.600 8.100 8.100 8.100 8.100 8.100
Sub-Tola] $734,191 $37,750 $41.176 $37,626 $35,452 $39,285 $40,958 $45,689 $51,014
Eamingt before Depreciaron $632,398 $33,069 $33,242 $39,890 $46,071 $33,375 $40,271 $46,391 $47,698
Peoreciation
Sub-Total $175,804 $2,519 $5,642 $21,757 $11,296 $33,500 $30,993 $8,765 $8,336
Buaineaa Equity Tax (0%) O O O
Worker'a Participation 36,528 2,562 2,552 2,648 3,089 2,066 2,609 2,860 2,895
Taxable Incomc M-US$ $420,066 $27,989 $25,048 $15,486 $31,685 ($2,192) $6,669 $34,766 $36,467
Domiciled Tax M-US$ 127,541 8,397 7,515 4,646 9,506 1,238 1,626 10,430 10.940
Eamings añer Taxea M-US$ 292,526 19,592 17,534 10,840 22,180 (3,429) 5,043 24,336 25,527
Add Back Depreciation T^r 175,804 T5I9 5,642 TTTTST 11,296 33355" 35395" TTóT 3336
Total Capital M-USS (175,804) (12,595) (5.939) (28,540) (11,899) a7.090) (27,103) (20,886) (10,365)
Working Capital M-US$ O (2,718) (14) (546) (508) 1,044 (567) (503) (107)
PROJECT CASH FLOW M-US$ $292,526 $0 $6,798 $17,223 $3,510 $21,069 $4.025 $8,366 $11,712 $23,390
IRR = « = #NUM! NPV al 20.00% $71,431 NPV at 13.00% $105,828
TINTAYA PROJECT
IVfane Ufe: Yean Fint Year of Producbon
Opdon:
MODEL: TINTAYAJCLS YEAR==>
DIVIDEND CALCULATION(BÓÓK BASIS)
Tu Buii Eaminet before Tue« $420.066 $27,989 $25,048 $15,486 $31,685 ($2,192) $6.669 $34,766 $36,467
Book Dq>reciation J175,804 $ro59 f035 J67754 $10,643 JTOÍ7
Aad Tu DepfccfUon 175.804 5.642 21.757 11.296 33.500 30.993 8.336
Book Baeii Eeminga before Tuet $420,066 $29,458 $29,348 $30,448 $35,529 $23,762 $29,999 $32,888 $33.296
Subtrect Domiciled Tu 127,541 4,646 9,506 1,626 10,430 10,940
Deferred Tu 30% of Book Barit Eemingi 4.489 1.153 6,999
Book Bmii Eamingt efter Tuet $292,526 $20,621 $20,543 $21,314 $24,870 $14.739 $21,374 $23,022 $23,307
GroM Dividend $292,526 $6,798 $17,223 $3,510 $21,069 $4,025 $8.366 $11,712 $23,390
Subtrect Additionil Tu
Net Dividend Diatríbutioii $292,526 $6.798 $17,223 $3,510 $21,069 $4,025 $8.366 $11,712 $23,390
Capitel Diitnbuüoo
Total Diatnbution $292,526 $6.798 $17.223 $3,510 $21,069 $4,025 $8,366 $11,712 $23,390

Branch/Dividend Tu
Net Dividend (after addilional tu) $292,526 $6,798 $17,223 $3,510 $21,069 $4,025 $8,366 $11,712 $23,390
Retum of Capital
Net Cash Flow $292,526 $6.798 $17,223 $3,510 $21,069 $4,025 $8.366 $11,712 $23,390
#NUM NPVat 20.00% $71,431 NPVat 13.00% $105,828
CALCULATION OF U.S. TAXES V.V.-.•a-,V.-.VV.-.V.» A A

Book Basia Eamines before Tuca $420,066 $29,458 $29.348 $30,448 $35,529 $23,762 $29,999 $32,888 $33,296
Domiciled Tu 126.020 4.646 9.506 0.940
Income $294,046 $21.062 $21,833 $25,803 $26,023 $23.762 $28,656 $22,458 $22,356
Dividend $292,526 $6.798 $17.223 $3,510 $21.069 $4,025 $8,366 $11,712 $23,390
Domiciled Tu Diatnbuted 124.668 2.7 O 6.299 6.317 2.538 6.264
TAXABLE U.S. INCOME $417,193 $9.508 $23,521 $4.417 $27,386 $4,821 $9,638 $14,250 $29,654
Grosa Federal U.S. Tu 83,439 1,902 4,704 1,928 2,850
Grota State U.S. Tu 8,344
Leaa: Domici ed Tu Diatnbuted (82,304) (1.902) (4,704) (5,477) (1.272) (2,538) (5,931)
Lw. Branch/Dividend Tu
Net U.S. Tu 9,479
Add: Tax 'Carryback' Credit
U.S. CASH FLOW $284,182 $6,608 $16,752 $3.422 $20,521 $3,928 $8,173 $11.427 $22,797
IRR » » » S S (fNUM NPVat 20.00% $69,505 NPVat 13.00% $102.938
Exceta PTC (Limit)
U.S. Tu Credit
Cumulative Book Income 20,621 20,543 21,314 46,184 60,922 82,296 105,318 128,625
Cumulative Groaa Dividend 6,798 17,223 24,579 28.604 36,970 48,682 72,072
Dinerence 13,823 17,804 21,605 32,319 45,327 56,636 56,553
INVECTMENT RETURN Eqmty Percent '

Buy-in Capital
Share of Capítal
U.S. Caah Flow 284.182 6,608 16,752 3,422 20,521 3.928 11,427 22,797
INVEÍTMENT CASH FLOW - U.S 284,182 16,752 3,422 20,521 11,427 22,797
iTNUM! NPV at 20.00% $69,505 NPVat 15.00% $91,140
 nNTAYA PROJECl
Mine Life: Years
Option:
MODEL: TINTAYAALS YEAR==>
LME METAL PRICES
USS/Lb
USS/Oz S375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00
Silver US$/Oz
KEY RESULTS
Project Return in Peni ifNUM
Projeci Retum - Offahore iffRJM
Project Retum - U.S. mJM!
Ore Proce68ed(Mtlltn£) Tonnes 3,240 3,240 3,240 3,240 3,240 3,240 3.240 3,240
Waste Tofinet 1,440 1,440 1,440 1,440
Total Metenai Mined Toiuiei 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4.680
COST FARAMETERS
Pavable MetflJg
M-Lbs 138,303 129,622 131,207 123,045 118,651 118.651 120,079 116,267
M-Oz 24.683 24.683 24.683 24.683 24.683 24.683 24.683 30.020
Siiver M-Oz 580.471 580.471 580.471 580.471 580.471 580.471 580.471 606.295
PROJECT CASH FLOW (TAX BASIS)- PERU muiía-
mmm
Revenues PRICE « =>
M-US$ $138,303 $129,622 $131,207 $123,045 $118.651 $118,651 $120,079 $116,267
M-US$ 9,256 9,256 9,256 9,256 9,256 9,256 9,256 11.258
Silver M-US$ 2.902 2.902 2.902 2.902 2.902 2.902 2.902
Sub-Total $150,461 $141,780 $143,365 $135,203 $130,809 $130,809 $132,237 $130.556
fcxpensea bevond Mine
Smelting Charges M-US$ 21,676 20,315 19,878 18,641 17,976 17,976 17,605 17,046
Refining Charges
13,830 12,962 13,121 12,305 12,008 11,627
B5
Silver M-US$
Transportation M-USS 17.822 16.703 16.344 • 15.327 14.780 14.780 14.476 14.016
Sub-Total $53.654 $50,306 $49.669 $46.599 $44,947 $44,947 $44,415 $43,051
Mine Expenses
Mining Costa M-US$ 27,292 27,292 27,292 27,292 27,292 27,292 27,292 24,620
Exploration Expense M-US$
Milling Costa kTUsS 15,422 15,422 15,422 15,422 15,422
CAA M-US$ 8.100 8.100 8.100 8.100 8,100 8.100 8.100 8.100
Sub-Total $51,014 $51,014 $51,014 $51,014 $51,014 $51,014 $51,014 $48,143
Eamings before Dqireciation $45,793 $40,460 $42,682 $37,590 $34,848 $34,848 $36,808 $39,362
Dmreciation
Sub-Total $7,735 $7,849 $8,835 $5,058 $4,822 $4,254 $4,909 $9,534
BuBinees Equity Tax(0%)
Worker'a Participation 2,710 2,408
Taxable Income M-USS $35,348 $30,339 $31,439 $30,545 $28,236 $28,794 $29,892 $29,557
Domiciled Tax M-USS 10,604 9,432 8,638 8,968 8,867
Eamings after Taxes M-USS 24.743 21,237 22,007 21,381 19,765 20,156 20,924 20,690
Add Back Dqireciation 7^ 4,822
Total Capital M-USS (4,902) (1,689) (6,333) (1,999) (9,185) (2,064) (4,965)
Wbfking Capital M-USS 3*,025
PROJECT CASH FLOW M-USS S27,733 S27,835 $24,327 $24,859 $15,627 $22,346 $20,707 $33,000
TINTAYA PROJECT
Mine Life: Years 16
OptÍMi:
MODEL: TINTAYAJCLS |YEAR=="> 10 11 12 13 14 15 16
PIVIDEND CALCULATION (BOOK BASÍST
Tax Basifl Eamings before Taxea $35,348 $30.339 $31,439 $30,545 $28,236 $28,794 $29,892 $29,557
Book Depreciation $11,915 $12,056 $12,584 $12,750 $12,466 $12,345 $11,716 $35,975
Add TflX Depreciatióñ T73S ^849 8.835 5.058 4.822 4.254 4.909 9.534
Book Bmíb Eanúngs before Taxee $31,168 $26,132 $27,691 $22,852 $20,591 $20,703 $23,085 $3,116
Subtract Domicil^ Tax ._ ■ 10,604 9,102 9,432 9,163 8,471 8,638 8,968 8,867
Deferred Tax 30% of Book Batia Earnioir TOB) (2.308) Q.293) (2.427) Q-042)
Book Bagia Eanúnga after TaxáT $21,817 $18,292 $19,383 $15,997 $14,414 $14,492 $16,160
Grosi Dividend $27,733 $27,835 $24,327 $24,859 $15,627 $22,346 $20,707 $33,000
Subtract Additional Tax O O
Net ^vidend I^Btributíon $27,733 $27,835 $24,327 $24,859 $15,627 $22,346 $20,707 $33,000
Capital Diatribuüon O O O
Total Distribution $27,733 $27,835 $24,327 $24,859 $15,627 $22,346 $20,707 $33,000

Branch/Dividend Tax O O O O
Net Dividend (after additional tax) $27,733 $27,835 $24,327 $24,859 $15,627 $22,346 $20,707 $33,000
Retum of Capital O O O
Net Cash Flow $27,733 $27,835 $24,327 $24,859 $15,627 $22,346 $20,707 $33,000

Book Baaia Earninga before Taxea $31,168 $26,132 $27,691 $22,852 $20,591 $20,703 $23,085 $3,116
Domiciled Tax 10.604 9.102 9.163 8.638 8.968 8.867
Income $20,563 $17,030 $18,259 $13,689 $12,121 $12,065 $14,117 ($5,751)
IK>idend $27,733 $27,835 $24,327 $24,859 $15,627 $22,346 $20,707 $33,000
Domiciled Tax Distributed 8^641 9.672 9.234 10.589 7.367 llj487 11.226 29.346
TAXABLE U.S. INCOME $36,374 $37,507 $33,561 $35,448 $22,994 $33,833 $31,933 $62,346
Grosa Federal U.S. Tax 7,275 7,501 6,712 7,090 4,599 6,767 6,387 12,469
Grosa State U.S. Tax 727 750 671 709 460 677 639 1,247
Lesa: Domiciled Tax Distributed (7,275) (7,501) (6.712) (7,090) (4,599) (6.767) (6,387) (12,469)
Less: Branch/Dividend Tax O O O O O O
Net U.S. Tax 727 750 671 709 460 677 639 1.247
Addt Tax "Carryback* Credit
U.S. CASH FLOW $2^005 $27,085 $23,655 $24,150 $15,167 $21,669 $20,069 $31,753

Excesa PTC (Limit) 1,366 2,171 2,522 3,500 2,768 4,721 4,839 16,877
U.S. Tax Credit O
Cumulative Book Income 150,443 168,735 188,118 204,115 218,529 233,021 249,181 251,362
Cumulative Groas Dividend 99,805 127,640 151,967 176,826 192,453 214,798 235,506 268,505
Diíference 50,638 41,095 36,151 27,289 26,076 18,223 13,675 q7,143)
Buy-in Capital
Share of Capital
U.S. Cash Flow 27,005 27,085 23,655 24,150 15,167 21,669 20,069 31,753
INVESTMENT CASH FLOW - U.S. 27,085 23,655 1 24.150
| 15,167
| 21,669 20,069 31^53
TINTAYA PR0.1ECT 1
Mine Life: Years 16 first Year of Productíoa 1
Option: 1- . . . . . — - .- — _ .- _ _ —

MODEL: TINTAYAJCLS year==> ToUl 0 1 2 3 4 5 6 7 8

LME METAL PRICES
Copper US$/Lb $0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85
Gold US$/Oz $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00
Silver US$/Oz SS.OO S5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00
KEY RESULTS IRR Disount @ 25% 20% 15% 13% 11% 9%
Project Retum in Perú 0 513.63% N 10,732 15,519 23,450 28,007 33,692 40,829
Project Return - Ofíshore #NUM! #NUM! P 9,706 14,639 22,755 27,396 33,171 40,403
Proiéct Retum - U.S. #NUM! INÜM! V 9,225 13,938 21,704 26,151 31,687 38,623
Ore Proce88ed(MiIUnK) Tonnes 51,575 0 2,975 3,240 3,240 3,240 3,240 3,240 3,240 3,240
Waste Tonnes 109,364 16,468 21,083 18,350 13,863 12,535 11,258 2,847 1,440
Total Metería] Mined Tonnes 160,939 0 19.443 24,323 21,590 17,103 15,775 14,498 6,087 4,680
COST PARAMETERS mxmm
Pavable Metals
Ct^Tper M-Lbs 1,883,468 94,067 98,100 103,067 109,897 97,991 112,256 130,861 141,404
Gold M-Oz 404.755 24.502 26.684 26.684 26.017 24.683 24.683 24.016 24.683
Silver M-Oz 10,045.671 658.769 717.449 717.449 715.765 714.080 671.977 600.120 580.471
PROJECT CASH FLOW CTAX BAS S)- PERU
Revenues PRICE ==> S0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85
Copper M-USS Sl,600,948 $79,957 $83,385 $87,607 $93,412 $83,292 $95,418 $111,232 $120,193
Gold M-US$ 151,783 9,188 10,007 10,007 9,757 9,256 9,256 9,006 9,256
Silver M-USS 50.225 3.294 3.587 3.587 3.579 3.570 3.360 3.001 2.902
Sub-Total SI,802,956 $92,439 $96,979 $101,201 $106,748 $96,118 $108,034 $123,239 $132,351
bxoenses bevond Mine

Smeltin>t Charles M-US$ 288,112 14,251 14,862 15,615 16,649 15,358 17,593 20,509 22,162
Refíninx Charles
Copper M-USS 188,348 9,407 9,810 10,307 10,990 9,799 11,226 13,086 14,140
Gold M-USS 2,019 123 133 133 130 123 123 120 123
Silver M-USS 3,515 231 251 251 251 250 235 210 203
Transportation M-USS 236.892 11.718 12.220 12.839 13.690 12.627 14.466 16.863 18.222
Sub-Total, $718,886 $35,730 $37,276 $39,145 $41,710 $38,157 $43,643 $50,788 . $54,850
Mine ExDenses
Mininj; Costa M-USS 353,249 13,843 16,053 13,904 11,730 15,562 17,236 21,967 27,292
Exploration Expense M-USS 6,000 1,800 1,600 200 200 200 200 200 200
Mllltn^ Costa M-USS 244,843 13,507 15,422 15,422 15,422 15,422 15,422 15,422 15,422
G&A M-USS 130.100 8.600 8.100 8.100 8.100 8.100 8.100 8.100 8.100
Sub-Total $734,191 $37,750 $41,176 $37,626 $35,452 $39,285 $40.958 $45,689 $51,014
Eanún^B before Depreciation $349,878 $18,959 $18,527 $24,430 $29,586 $18,676 $23,433 $26,761 $26,488
Deoreciation
Sub-Total $175,804 $2,519 $5,642 $21,757 $11,296 $33,500 $30,993 $8,765 $8,336
Business Equity Tax(0%) 0 0 0 0 0 0 0 0 0
Worker'i Partlcipation 15,050 1,433 1,375 1,411I 1,771 890 1,262 1,289 1,198
Taxable bicorne M-USS $159,024 $15,008 $11,511 $1,262 $16,519 ($15,714) ($8,822) $16,707 $16,953
52,558 4,502 3,453 756
1 4,956 1,238 1,490 1,746 2,737
Domiciled Tax M-USS
EarmnKs añer Taxes M-USS 106,465 0 10,505 8,057 507 11,564 (16,952) (10,312) 14,961 14,216
Add Back Depreciation M-USS 175,804 2,519 5,642 11,757 11,296 33,500 30,993 8,765 8,336
Total Cf^ital M-USS (175,804) 0 (12,595) (5,939) (28,540) (11,899) (27,090) (27,103) (20,886) (10.365)
Workine Capital M-USS 0 0 (1,558) 36 (485) (424) 897 (391) a74) 22
PROJECT CASH FLOW M-USS $106,465 so ($1,129) $7,796 ($6,762) $10,537 ($9.645) ($6,813) $2,566 $12.210
IRR ====s 513.63% NPVat 20.00% =====> $15,519 NPVat 13.00% $28.007
TINTAYA PROJECT
Mine Life: Years 16 first Year of Production 1
Optíon: I
MODEL: TINTAYAJCLS year==> Total 0 1 2 3 4 5 6 7 8
DIVIDEND CALCULATION(BOOK BASIS)
Tax Baste Eenún^e before Taxee $159,024 $15,008 $11,511 $1,262 $16,519 ($15,714) ($8,822) $16,707 $16,953
Book Depreciation $175,804 $1,050 $1,343 $6.794 Í7,4á3 t7,54¿ $7,663 $10,643 $11,507
Add Tax Depreciaüoa 175.804 2.519 5.642 21.757 11.296 33.500 30.993 8.765 8.336
Book Basie Earnin^e before Taxes $159,024 $16,477 $15,810 $16,225 $20,363 $10,240 $14,508 $14,829 $13,783
Subtract Domiciled Tax 52,558 4,502 3,453 756 4,956 1,238 1,490 1,746 2,737
Deferred Tax 30% of Book Basta Eanun/^e 0 441 1.290 4.489 1.153 7.786 6.999 (563) (951)
Book Basis Eamin^s aner Taxes $106,465 $11,534 $11,067 $10,980 $14,254 $1,216 $6,019 $13,646 $11,997
Groas Dividend $106,465 $0 $0 SO $797 SO SO SO $7,962
Subtract Additional Tax 0 0 0 0 0 0 0 0 0
Net Dividend Distributíon $106,465 $0 SO SO $797 SO SO SO $7,962
Capital Uetríbution 0 0 0 0 0 0 0 0 0
Total Diatríbution $106,465 $0 SO SO $797 SO SO SO $7,962

Branch/Dividend Tax 0 0 0 0 0 0 0 0 0 0
Net Kvidend (eñer additional tax) $106,465 $0 $0 so $0 $797 so SO SO $7,962
Retum of Capital 0 0 0 0 0 0 0 0 0 0
Net Cash How $106,465 $0 so $0 so $797 $0 SO $0 $7,962
IRR ===== #NUM! NPVat 20.00% =====> $14,639 NPVat 13.00% =====> $27,396
CALCULATION OF U.S. TAXES
Book Basia Eaminga before Taxes $159,024 $16,477 $15,810 $16,225 $20,363 $10,240 $14,508 $14,829 $13,783
Domiciled Tax 47,707 4.502 3.453 379 4.956 0 0 0 2.737
Income $111,316 $11.975 $12,357 $15,846 $15,407 $10,240 $14,508 $14,829 $11,046
tHvidend $106,465 SO SO $0 $797 $0 SO SO $7,962
Domiciled Tax Distributed 43.041 0 0 0 191 0 0 0 1.196
TAXABLE U.S. INCOME $149,506 SO SO SO $988 SO SO $0 $9,159
Groas Federal U.S. Tax 29,901 0 0 0 198 0 0 0 1,832
Groas State U.S. Tax 2,990 0 0 0 20 0 0 0 183
Lesa: Domiciled Tax Distributed (28.127) 0 0 0 (191) 0 0 0 (1.196)
Less: Branch/Dividend Tax 0 0 0 0 0 0 0 0 0
Net U.S. Tax 4,764 0 0 0 27 0 0 0 819
Add: Tax "Cartyback" Credit 403 0 0 0 0 0 0 0 0
U.S. CASH FLOW $102,105 $0 $0 $0 $0 $770 $0 $0 $0 $7,144
*UeUM

Excess PTC(Umit) 0 0 i 0 (7) 0 0 0 (635)

U.S. Tax Credit 0 0 0 0 0 0 0 0
t
Cumuiative Book Income 11,534 11,067 10,980 25,234 26,450 32,469 46,115 58,112
Cumulative Groes Dividend 0 0 i0 797 797 797 797 8,760
i
Difference 11,534 11,067 10,980 24,437 25,653 31,672 45,318 49,352
INVESTMENT RETURN Equity Percent ====== 100%
Buy-in Capital 0 0
1
Share of Capital 0 0 0 0 0 0 0
U.S. Cash Flovi/ 102,105
1
0 0 0 0 770 0 0 0 7,144
INVESTMENT CASH FLOW - U.S. 102,105 0 0 0 0 770 0 0 0 7,144
IRR ===== #NUM1 NPV at 20.00% =====> $13,938 NPVat 15.00% =====> $21.704
TINTAYA PROJECT
Nfine Life: Years 16
Optíon: ^ 1_ =
—

MODEL: TINTAYAJÍLS year==> 9 10 11 12 13 14 15 16

LME METAL PRICES
C<^>per US$/Lb $0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85
Gold US$/Oz S375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00
Silver USS/Oz S5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00
KEY RESULTS
Project Return ín Peni 0
Project Return - OfTshore #NUM!
Proiect Return - U.S. ifrOJM!
Ore ProcessedCMíIling) Tonnes 3,240 3,240 3,240 3,240 3,240 3,240 3,240 3,240
Wute Tonnes 1,440 1,440 1,440 1,440 1,440 1,440 1,440 1,440
Total Material Mtned Tonnea 4,680 4,680 4,680 4,680 4,680 4,680 4,680 4,680
COCT PARAMFTERS
Pavabie Metals
Copper M-Lba 138,303 129,622 131,207 123,045 118,651 118,651 120,079 116,267
Gotd M-Oz 24.683 24.683 24.683 24.683 24.683 24.683 24.683 30.020
Silver M-Oz 580.471 580,471 580.471 580.471 580.471 580.471 580.471 606.295
PROJECT CASH FLOW CTAX BASIS)- PERU
Revenues PRICE ==> S0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85 $0.85
C<q>per M-US$ $117,558 $110,179 $111,526 $104,588 $100,853 $100,853
f $102,067 $98,827
Gold M-US$ 9,256 9,256 9,256 9,256 9,256 9,256 9,256 11,258
1
Silver M-US$ 2.902 2.902 2.902 2.902 2.902 2.902 2.902 3.031
SubrTotal S129.716 $122,337 $123,684 $116,746 $113,011 $113,011 $114,225 $113.116
1
bxoenses t>evond Mine
i
Smelting CharRea M-US$ 21,676 20,315 19,878 18,641 17,976 17,976 17,605 17,046
RefininR Charles
1
Copper M-USS 13,830 12,962 13,121 12,305 11,865 11,865 12,008 11,627
Gold M-USS 123 123 123 123 123 123 123 150
Silver M-USS 203 203 203 203
1 203 203 203 212
Transportation M-USS 17.822 16.703 16.344 15.327 14.780 14.780 14.476 14.016
Sub-Total $53,654 $50,306 $49,669 $46,599 S44,941 $44,947 $44,415 $43,051
Mine Exoensee i
Mining Coels M-USS 27,292 27,292 21,291 27,292 27,292 27,292 27,292 24,620
Exploration Expense M-USS 200 200 200 200 200 200 200 0
Milling Coste M-USS 15,422 15,422 15,422 15,422 15,422 15,422 15,422 15,422
G&A M-USS 8.100 8.100 8.100 8.100 8.100 8.100 8.100 8.100
Sub-Total $51,014 $51,014 $51,014
1 $51,014 $51.014 $51,014 $51,014 $48,143
Eamings before Depreciation $25,047 $21,016 $23,001 $19,133 $17,050 $17,050 $18,797 $21,922
Deorecíation
Sub-Total $7,735 $7.849 $8,835 $5,058 $4,822 $4,254 $4,909 $9,534
Business Equity Tax(0%) 0 0 0 0 0 0 0 0
Worker's Participation 1,051 717 833 511 367 376 566 0
Taxable Income M-USS $16,262 $12,451 $13,332 $13,565 $11,862 $12,420 $13,321 $12,388
Domiciled Tax M-USS 4,879 3,735 4,000 4,069 3,559 3,726 3,996 3,716
Earhings afler Taxea M-USS 11,383 8,716 9,333 9,495 8.303 8,694 9,325 8,672
Add Back Depreciation M-USS 7,735 7,849 8,835 5.058 4,822 4,254 4,909 9,534
Total Capital M-USS (4,902) (1,689) (6,333) (1,999) (9,185) a.064) (4,965) (250)
Working Capital M-USS 118 331 (163) 318 171 0 (144) 1,545
PROJECT CASH FLOW M-USS $14,335 $15,207 $11,672 $12,872 $4,111 $10,884 $9,125 $19,501
TINTAYA PROJECT
Mine life: Yeais 16
Option: 1
MODEL: TINTAYAJCLS YEAR==> 9 10 11 12 13 14 15 16
DIVIDEND CALCULATION (BOOi BASIS)
T« Bs8Íb EamineB before Taxes S16.262 $12,451 $13,332 $13,565 $11,862 $12,420 $13,321 $12,388
Book D^reciaüon Sil.915 $12,056 $12,584 $I2;750 $12,466 $12,345 $11,716 $á¿.975
Add Tax Depreciaüon 7.735 7.849 8.835 5.058 4.822 4.254 4.909 9.534
Book Basis Eonúngs before Taxea $12,082 $8,244 $9,584 $5,872 $4,218 $4,329 $6,514 ($14,053)
Subtract Domíciled Tax 4,879 3,735 4,000 4,069 3,559 3,726 3,996 3,716
Deferred Tax 30% oí Book Bsbib Eamiogs fl.254) Í1.262Í (1.1251 (2.3081 (2.293) (2.4271 (2.0421 (7.9321
Book Basis EaminfiB after Taxes $8.457 $5,771 $6,709 $4,110 »,952 Í3,030 Í4,560 ($9,837)
Gross Dividend $14,335 $15,207 $11,672 $12,872 $4,111 $10,884 $9,125 $19,501
Subtract Additiona] Tax 0 0 0 0 0 0 0 0
Net Dividend Dístríbution $14,335 $15,207 $11,672 $12,872 $4,111 $10,884 $9,125, $19,501
Capital Dístríbution 0 0 0 0 0 0 0 (0)
Total Dístríbution $14,335 $15,207 $11,672 $12,872 Klll $10.884 $9,125 $19,501

Branch/Dívídend Tax 0 0 0 0 0 0 0 0
Net Dividend(añer addítíonal tax) $14,335 $15,207 $11,672 $12,872 Klll $10,884 $9,125 $19,501
Retum of Capital 0 0 0 0 0 0 0 0
Net Cash Flow $14,335 $15,207 $11,672 $12,872 Klll $10,884 $9,125 $19,501

CALCULATION OF U.S. TAXES

Book Basis Eamin/;s before Taxes $12,082 $8,244 $9,584 $5,872 K218 $4,329 K514 ($14,053)
Domicited Tax 4.879 3.735 4.000 4.069 3.559 3.726 3.996 3.716
Income $7,203 $4,509 $5,584 $1,803 $659 $603 $2,518 ($17,769)
Dividend $14,335 $15,207 $11,672 $12,872 i
Klll $10,884 $9,125 $19,501
Domíciled Tax Distributed 2.674 3.300 2.915 3.833 1.443 4^463 4.269 18.757
TAXABLE U.S. INCOME $17,008 $18,507 $14,587 $16,705i$5,554 $15,346 $13,395 $38,258
Gross Federal U.S. Tax 3,402 3,701 2,917 3,341 1,111 3,069 2,679 7,652
GroBs State U.S. Tax 340 370 292 1
334 111 307 268 765
Leas: Domiciléd Tax Distributed (2.674) (3,300) (2,915) (3,341) (l.lll) (3,069) (2,679) (7,652)
I
Lese: Branch/Dividend Tax 0 0 0 0 0 0 0 0
Net U.S. Tax 1,068 771 294 334 111 307 268 765
Add: Tax "Carryback' Credit 0 401 2i 0 0 0 0 0
U.S. CASH FLOW $13066 $14,837 $11.380 $12,538 $4,000 $10,577 $8,857 $18,736
mmmmmm-
Excesi PTC (Limit) (728) (401) (2) 492 332 1,393 1,590 11,105
U.S. Tax Cre<tít 0 401 2 .0 0 0 0 0
Cumulative Book Income 66,569 72,340 79,049 83,159 86,111 89,142 93,702 83,865
Cumulative Gross Dividend 23,094 38,301 49,973 62,844 66,955 77,839 86,965 106,465
Difference 43i475 34,039 29,076 20,315 19,156 11,303 6,737 (22,601)
INVECTMENT RETURN
Buy-in Capital
Sbáre of Capital
U.S. Cash FIow 13,266 14,837 11,380 12,538 4,000 10,577 8,857 18,736
INVESTMENT CASH FLOW - U.S. 13066 14,837 11,380 12,538 4,000 10;577 8,857 18,736
TINTAYA PROJECt
IVCne Life: Vean Fint Year of Productíon
Opbon:
MODEL: TINTAYAJCLS YEÁR==>
LME METAL PRICES
USS/Lb
USS/Oz S375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00
Silvér US$/Oz
KEYRESULTS Disount
Project Retum in Pcru #NUM! iíNUM 101,577 125,910 162,291 181,927 205,584 234,316
Project Retum - OtiBliore /INUM #NUM 101,577 125,910 162,291 181,927 205,584 234.316
PWject Retum - U.S. JfNUM #NUM! 98,811 122,466 157,822 176,899 199.880 227,787
Ore ProceaBedCMilling) Tonnes 51,575 2,975 3,240 3,240 3,240 3,240 3,240
Woite Tonnea 109,364 16,468 21,083 18,350 13,863 12,535 11,258 2,847
Total Matenal Mined Tonnea 160,939 19,443 24,323 21,590 17,103 15.775 14,498 6.087 4,680
COCT PARAMETERS
PowleMe^
M-Lba 1,883,468 94,067 98,100 103,067 109,897 97,991 112,256 130,861 141,404
M-Oz 404.755 24.502 26.684 26.684 26.017 24.683 24.683 24.016 24.683
Silver M-Oz 10,045.671 658.769 717.449 717.449 715.765 714.080 671.977 600.120 580.471
PROJECT CASH FLOW basiSTperu
PRICE ==>
Copper M-US$ $2,165,988 $108,177 $112,815 $118,527 $126.382 $112,690 $129,094 $150,490 $162,615
Gold M-US$ 151,783 9,188 10,007 10,007 9,757 9,256 9.256 9,006 9.256
Silver M-USS 50.225 3.294 3.587 3.587 3.570 3.360 3.001 2.902
Sub-Total $2,367,996 $120,659 $126,409 $132,121 $139,718 $125,516 $141,710 $162,497 $174,773

Smelting Charges M-US$ 288.112 14,251 14,862 15,615 16,649 15,358 17,593 20,509 22,162
Refining Charges
Copper ÑTDsT 188,348 MO? 9,810 10,307 10,990 9,799 11,226 13,086 14,140
Gold M-USS 2,019 123 133 133 130 123 123 120 123
Silver M-US$ 3,515 231 251 251 251 250 "230" 210 203
Transportation M-US$ 236.892 11.718 12.220 12.839 13.690 12.627 14.466 16.863 18.222
Sub-Total $718,886 $35,730 $37,276 $39,145 $41,710 $38.157 $43,643 $50,788 $54,850
Mine Expenses
Mining Costa 353,249 13,843 16,053 13,904 11,730 15;562 17,236 21,967 27,292
Exploration Expense M-USS 6,000 1.800 1,600 200 200 200 200 200 200
Milling Costs M-US$ 244,843 13,507 15,422 15,422 15,422 15,422 15,422 15,422 15,422
G&A M-US$ 130.100 8.600 8.100 8.100 8.100 8.100 8.100 8.100 8.100
Sub-Total $734,191 $37,750 $41,176 $37,626 $35,452 $39,285 $40,958 $45,689 $51,014
Earninga before Depreciation $914,918 $47,179 $47,957 $55,350 $62,556 $48.074 $57,110 $66,020 $68,909
DegrMÍation_
Sub-Total $175,804 $2,519 $5,642 $21,757 $11,296 $33,500 $30,993 $8,765 $8,336
Business Equi^ Tax(0%) O O O O
Worker's Participation 59,129 3.690 3,729 3,884 4,408 3,242 3.956 4,430 4,592
Taxable Income M-US$ $679,985 $40,970 $38,586 $29,709 $46,851 $11,331 $22,161 $52,825 $55,980
Domiciled Tox M-US$ 203,995 12,291 11,576 8,913 14,055 3.399 6,648 15,847 16,794
Eamings after Taxes M-USS 475,989 28,679 27,010 20,796 32,796 7,932 15,512 36,977 39,186
Add Back Depreciation 17Í.804 2,519 5;642 21,757 11,296 33,500 30,993 8,336
Total Capital M-US$ (175,804) (12,595) (5,939) (28,540) (11,899) (27,090) (27,103) aO.886) (10,365)
Working Capital M-US$ O (3,878) (64) (608) (592) 1,190 a43) (732) (237)
PROJECT CASH FLOW M-USS $475,989 $0 $14,725 $26,649 $13,405 $31,601 $15,532 $18,660 $24,124 $36,920
IRR ===s= #NUM! NPV at 20.00% $125,910 NPV at ==== =:.>
13.00% $181,927
TINTAYAPROJECT 1
Mine Life: Years 16 First Year of Productioa 1
Optíoa: 1
MODEL: TINTAYAJCLS year==> Total 0 1 2 3 4 5 6 7 8
DIVIDEND CALCULATION(BOOK BASIS)
Tax Bssii Etrnin^B before Taxea $679,985 $40,970 $38,586 $29,709 $46,851 $11,331 $22,161 $52,825 $55,980
Book Deprecialion $175,804 $1,050 $l,á4á $6,794 $'?,455 t?.546 $7,663 $10.643 $11,507
Add Tax Depreciation 175.804 2.519 5.642 21.757 11.296 33.500 30.993 8.765 8.336
Book Basia EamiiiKS before Taxea $679,985 $42,439 $42,885 $44,672 $50,694 $37,285 $45,491 $50,947 $52,810
Subtrect Domictled Tax 203,995 12,291 11,576 8.913 14,055 3,399 6,648 15,847 16,794
Deferred Tax 30% of Book Basta Eaminga 0 441 1.290 4.489 I.I53 7.786 6.999 (5631 í95n
Book Basta EanuiiKS aner Taxea $475,989 $29,708 $30,020 $31,270 $35,486 $26,100 $31,843 $35,663 $36,967
Grosa Divídend $475,989 $14,725 $26,649 $13,405 $31,601 $15,532 $18,660 $24,124 $36,920
Subtract Additional Tax g 0 0 0 0 0 0 0 0
Net Divídend Dietríbution $475,989 $14,725 $26,649 $13,405 $31,601 $15,532 $18,660 $24,124 $36,920
Capital Diitñbution 0 0 0 0 0 0 0 0 0
Total Distiibution $475,989 $14,725 $26,649 $13,405 $31,601 $15,532 $18,660 $24,124 $36,920
PRÜJíLTTCXmiWtfmm
Branch/Dividend Tax 0 0 0 0 0 0 0 0 0 0
Net Divídend (afler additioital tax) $475,989 $0 $14,725 $26,649 $13,405 $31,601 $15,532 $18,660 $24,124 $36,920
Return of Capital 0 0 0 0 0 0 0 0 0 0
. Net Cash Flow $475,989 $0 $14,725 $26,649 $13,405 $31,601 $15,532 $18,660 $24,124 $36,920
IRR =.«^<=,= 1= #NUM! NPVat 20.00% =====> $125,910 NPVat 13.00% =====> $181,927
CALCULATION OF U.S.TAXES ^mmmm
Book Baaia Eaminaa before Taxea $679,985 $42,439 $42,885 $44,672 $50,694 $37,285 $45,491 $50,947 $52,810
Domiciled Tax 203.995 12.291 11,576 8.913 14.055 3.399 6.648 15.847 16.794
Income $475,989 $30,148 $31,309 $35,759 $36,639 $33,886 $38,843 $35,099 $36,016
Divídend $475,989 $14,725 $26,649 $13,405 $31,601 $15,532 $18,660 $24,124 $36,920
Domiciled Tax Diatributed 203.995 6.003 10.187 3.982 10.655 3.705 3.984 6.815 12.267
TAXABLE U.S. INCOME $679,985 $20,729 $36,836 $17,388 $42,256 $19,237 $22,644 $30,939 $49,187
Groas Federal U.S. Tax 135,997 4.146 7,367 3,478 8,451 3,847 4,529 6,188 9,837
Groas State U.S. Tax 13,600 415 737 348 845 385 453 619 984
Lesa; Domiciled Tax Diatributed (135,310) (4,146) (7,367) (3.478) (8,451) (3,705) (3,984) (6.188) (9,837)
Lesa: Branch/Dividend Tax 0 0 0 0 0 0 0 0 0
Net U.S. Tax 14,287 415 737 348 845 527 997 619 984
Add: Tax "Carryback" Credit 687 0 0 0 0 143 544 0 0
U.S. CASH FLOW $462,390 $0 $14,311 $25,913 $13.057 $30,756 $15,148 $18,207 $23,505 $35,936
IRR ===== #NUM! NPVat 20.00% =====> $122,466 NPVat 13.00% =====> $176,899
Excesa FTC(Umit) 1,858 2,820 505 2,204 (143) (544) 627 2,430
U.S. Tax Oedit 0 0 0 0 143 544 0 0
-
Cumulative Book Income 29,708 30,020 31,270 66,756 92,856 124,699 160,362 197,329
Cumulative Groas Divídend 14,725 26,649 13,405 45,006 60,538 79,198 103,322 140,242
Difference 14,982 3,370 17,865 21,750 32,317 45,501 57,040 57,087
INVEyrMENT RETURN Equity Percent ====== 100%
Buy-in Capital 0 0
Share of Capital 0 0 0 0 0 0 0
U.S. Cash Flow 462,390 0 14,311 25,913 13,057 30,756 15,148 18,207 23,505 35,936
INVESTMENT CASH FLOW - U.S. 462,390 0 14,311 25,913 13,057 30,756 15,148 18,207 23,505 35,936
IRR ===== ífNUM! NPVat 20.00% =====> $122,466 NPVat 15.00% =====> $157.822
 nNTAYAPROJECI
Mine Life: Years

MODEL: TINTAYAJÍLS YEAR==>

LME METAL PRICES
USS/Lb
USS/Oz $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00
Silver US$/Oz
KEYRESULTS
Rroject Retum in Peni #NUM!
Project Return - Ofighore imuM
^ÍSiSíríSS
Project Return - U.S. #NUM í3í;«í:^S
Ore Procei>8ed(Mining) Tonnee 3,240 3,240 3,240 3,240 3,240 3,240 3,240
Wute Tonnes 1,440 1,440 1,440
Total Motenal Mined Tonnea 4,680 4.680 4.680 4,680 4,680 4,680 4,680
COST PARAMETERS
Pavwl^fetoJB
M-Lba 138,303 129,622 131,207 123,045 118,651 118,651 120,079 116.267
M-Oz 24.683 24.683 24.683 24.683 24.683 24.683 24.683 30.020
Silver M-Oz 580.471 580.471 580.471 580.471 580.471 580.471 580.471 606.295
PROJECl nx)w ÍTAX BASIS)
Reyenuea PRICE ==> $1.15 $1.15 $1.15 $1.15 $1.15 $1.15 $1.15 $1.15
Copper M-US$ $159,048 $149,065 $150,888 $141,502 $136,449 $136,449 $138,091 $133,707
Gold M-US$ 9,256 9,256 9,256 9,256 9,256 9,256 9,256 11,258
Silver M-US$ 2.902 2.902 2.902 2.902 2.902 2.902 ^902 3.031
Sub-Totel $171,206 $161,223 $163,046 $153,660 $148,607 $148,607 $150,249 $147,996
'ond Mine

Smelting Chargea M-US$ 21,676 20,315 19,878 18,641 17,976 17,976 17,605 17,046
Refining Chergea
Copper 13,830 12,962 13,121 12,305 11,865 11,865 12,008 11,627
Gold M-US$ 123 123 123 123 123 123 123 150
Silver M-US$ 203 203 203 203 203 203 203 212
Transportation M-US$ 17.822 16.703 16.344 15.327 14.780 14.780 14.476 14.016
SutvTolal $53,654 $50,306 $49,669 $46,599 $44,947 $44,947 $44,415 $43,051
£^n^xgeiiíei_
Mimng Costa Ñ!W 27,292 27,292 27,292 27,292 27,292 27,292 27,292 24,620
Ezpioration Expense M-US$ 200 200 200 200 200 200 200 O
MWilling Coata M'USS 15,422 15,422 15,422 15,422 15,422 15,422 15,422 15,422
G&A ÑTDST ^100 8.100 8.100 8.100 8.100 8.100 8.100 8.100
Sub*Total $51,014 $51,014 $51,014 $51,014 $51,014 $51,014 $51,014 $48,143
Eaminge before Depreciation $66,538 $59,903 $62,363 $56,046 $52,646 $52,646 $54,820 $56,802
pnwiation
Sub-Totel $7,735 $7,849 $8.835 $5,058 $4,822 $4,254 $4,909 $9,534
Bualnegg Esuity Tax(0%) O O
Worker'a Participation 4,370 3,828 3,982 3,464 3,214 3,224 3,448 1,666
Taxable locome M-US$ $54,433 $48,226 $49,546 $47,525 $44,610 $45,168 $46,463 $45,602
Domiciled Tax M-US$ 16,330 14,468 14,864 14,258 13,383 13,550 13,939 13,681
Eamings aftcr Taxea M-US$ 38,103 33,759 34,682 33.268 31,227 31,617 32,524 31,921
A<ki back Depreciation IJTÜSr 7,849 8,835 ^82? 4,254 4,909 9,534
Total Capital M-US$ (4,902) (1,689) (6,333) (1>999) (9,185) (2,064) (4.965) (250)
Working Capital M-US$ 195 545 (202) 519 280_ O (179) 4,506
FROJECn" CASH FLOW M-USS $41.131 $40.464 $36,982 $36,845 1 $27,143 I $33,807| $32,289 $45,711
: ;
TINTAYA PROJECr
Mine Life: Yean 16
Optíon: 1
MODEL: TINTAYAJCLS year°=> 9 10 11 12 13 14 15 16
DIVIDEND CALCULATION (BOOK BASlS)
Tax Basis EtrninjtB before Taxes $54.433 $48,226 $49,546 $47,525 $44,610 $45,168 $46.463 $45,602
Book Depreciation $11.915 $1^,0^6 $12,584 $12,750 $12,466 $12,345 $11,716 $35,^5
Add Tax Depreciation 7.735 7.849 8.835 5.058 4.822 4.254 4.909 9.534
Book BobIb Eamings before Taxea $50,253 $44,019 $45,797 $39,832 $36,96T tilsni $39,656 $19,161
Subtrset Domiciled Tax 16.330 14,468 14,864 14,258 13,383 13,550 13,939 13,681
Deferred Tax 30% oíBook Baaia EaminRa n.254) n.262> (1.125) (2.308) (2.293) (2.427) (2.042) (7.932)
Book Basii Eaminxs añer Taxea $35.177 $30.814 $32,058 $27,883 $25,876 $25,954 $27,759 $13,413
Grosa Diiñdend $41.131 $40,464 $36,982 $36,845 $27,143 $33,807 $32,289 $45,711
Subtract Additíonal Tax 0 0 0 0 0 0 0 0
Net Dividend Diatribution $41.131 $40,464 $36,982 $36,845 $27,143 $33,807 $32,289 $45,711
Capital Diatribution 0 0 0 0 0 0 0 0
Total Diatribution $41,131 $40,464 $36,982 $36,845 $27,143 $33,807 $32,289 $45,711

Branch/DÍ>ídend Tax 0 0 0 0 0 0 0 0
Net Di^dend (after eddítional tax) $41.131 $40,464 $36,982 $36,845 $27,143 $33,807 $32,289 $45,711
Retum of Capital 0 0 0 0 0 0 0 0
Net Cash How $41,131 $40,464 $36,982 $36,845 $27,143 $33,807 $32,289 $45,711

CALCULATION OF U.S.TAXES
Book Baaia EaminKB before Taxea $50.253 $44,019 $45,797 $39,832 $36,965 $37,077 $39,656 $19,161
Domiciled Tax 16.330 14.468 14.864 14.258 13.383 13.550 13.939 13.681
Income $33,923 $29,552 $30,933 $25,575 $23,582 $23,527 $25,717 $5,480
IKvidend $41,131 $40,464 $36,982 $36,845 $27,143 $33,807 $32,289 $45,711
Domiciled Tax Diatributed 15.267 16.215 15.658 16.896 13.275 17.391 16.926 34.770
TAXABLE U.S. INCOME $56.398 $56,678 $52,639 $53,741 $40,417 $51.198 $49,216 $80,481
Groaa Federal U.S. Tax 11.280 11,336 10,528 10,748 8,083 10,240 9,843 16,096
Groas State U.S. Tax 1,128 1,134 1,053 1,075 808 1,024 984 1.610
Lesa: Domiciled Tax Diatributed (11,280) (11,336) (10,528) (10,748) (8,083) (10,240) (9,843) (16,096)
Leas: Branch/Dividend Tax 0 0 0 0 0 0 0 0
Net U.S. Tax 1,128 1,134 1,053 1,075 808 1,024 984 1,610
Add: Tax 'Carryback' Credit 0 0 0 0 0 0 0 0
U.S. CASH FLOW $40,003 $39,330 $35,929 $35,770 $26,335 $32,783 $31,305 $44.102

Exceaa FTC(Umit) 3,987 4,879 5,130 6,148 5,191 7,152 7,083 18,674
U.S. Tax Credit 0 0 0 0 0 0 0 0
Cumulative Book Inccme 232,506 263,320 295,378 323,261 349,136 375,090 402,849 416,262
Cumulative Groaa Dividend 181,373 221,837 258,819 295,664 322,807 356,614 388,903 434,615
Difference 51.133 41,483 36,559 27,597 26,330 18,476 13,946 (18,353)
INVECTMENT RETURN
Buy-in Capitel
Share of Capital
U.S. Caah Row 40,003 39,330 35,929 35,770 26,335 32,783 31,305 44,102
INVE^TMENT CASH FLOW - U.S. 40,003 39,330 35,929 35,770 26,335 32,783 3135 44,102
 A 1 9 c D E F G H 1 j K L
1 TINTAYA PROJECT - OPEN PTT ONLY
2 Mine Ufe: Ycan 16 First Year of Production 1
3 Optítm: 1
7 MODEL: TIN-OPENJÍLS YEAR==> Total 0 1 2 3 4 5 6 7 8
8 LME METAL PRICES
• Coppcr US$/Lb $1.00 Sl.OO $1.00 $1.00 $1.00 $1.00 $1.00 Sl.OO $1.00
11 Gold US$/Oz S37S.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00
12 Silver USS/Oz S5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00
13 KEYRESULTS IRR Disount @ 25% 20% 15% 13% 11% 9%
14 Project Return In Peni íTNUM! #NUM! N 63,495 72,105 83,165 88,519 94,554 101,405
19 Project Retum - OfTahore iTNUM! #NUM! P 63,495 72,105 83,165 88,519 94,554 101,405
16 Project Retum - U.S. #NUM! #NUM! V 61,744 70,114 80,863 86,064 91,925 98,578
23 Ore Proces8ed(Mtlling) Tonnes 24,935 0 2,975 3,240 3,240 2,880 2,520 2,160 1,440 720
25 Waste Tonnes 109,364 16,468 21,083 18,350 13,863 12,535 11,258 2,847 1,440
26 Tola] Material Mined Tonnea 134,299 0 19,443 24,323 21,590 16,743 15,055 13,418 4,287 2,160
78 COCT PARAMETERS
165 Pavoble Metala
186 Copper M-Lba 730,968 94,067 98,100 103,067 96,030 70,909 65,327 45,481 17,365
195 Gold M-Oz 197.877 24.502 26.684 26.684 23.127 19.198 16.455 10.674 5.485
203 Silver M-Oz 5,166.682 658.769 717.449 717.449 636.235 555.396 447.984 266.720 128.994
244 PROJECT CASH FLOW (TAX BASIS)-PERU
245 Revenues PRICE ==> SI.00 Sl.OO $1.00 $1.00 $1.00 $1.00 $1.00 Sl.OO $1.00
246 Coppcr M-US$ $730,968 $94,067 $98,100 $103,067 $96,030 $70,909 $65,327 $45,481 $17,365
248 Gold M-USS 74,205 9,188 10,007 10,007 8,672 7,199 6,171 4,003 2,057
249 Silver M-USS 25.834 3.294 3.587 3.587 3.181 2.777 2.240 1.334 645
250 Sub-Tolal $831,007 $106,549 $111,694 $116.661 $107,883 $80,885 $73,738 $50,818 $20,067
251 hxoenseg bevond Mine

252 Smeltinj! Charlea M-USS 111,790 14,251 14,862 15,615 14,549 11,113 10,238 7,128 2,722
253 Refining Charges
254 Copper M-USS 73,100 9,407 9,810 10,307 9,603 7,091 6,533 4,548 1,737
255 Gold M-USS 985 123 133 133 116 96 82 53 27
256 Silver M-USS 1.807 231 251 251 223 194 157 93 45
257 Transportation M-USS 91.916 11.718 12.220 12.839 11.962 9.138 8.418 5.861 2.238
260 Sub-Total $279,598 $35,730 $37,276 $39,145 $36,453 $27,632 $25.428 $17,683 $6,769
262 Mine Excensea
263 Mining Costa M-USS 79,617 13,843 16,053 13,904 7,630 7,361 5,518 3,211 1,512
277 Exploration Expense M-USS 4,500 1,700 1,500 100 100 100 100 100 100
278 Milling Costa M-USS 118,036 13,507 15,422 15,422 13,709 11,995 10,282 6,854 3,427
279 G&A M-USS 63.250 4.300 4.050 4.050 4.050 4.050 4.050 4.050 4.050
280 Sub-Total $265,403 $33,350 $37,026 $33,476 $25,488 $23,507 $19,950 $14,215 $9,089
282 Eaminga before Deprecíation $286,006 $37,469 $37,392 $44,040 $45,941 $29,747 $28,360 $18,920 $4.209
^6 Depreciation
341 Sub-Total $55,486 i $2.519 $3,223 $4,873 $9,163 $9,387 $7,570 $3,445 $2,436
343 Business Equity Tax(0%) 0 1 0 0 0 0 0 0 0 0
345 Worker's Particípatlon 18,492 1 2,914 2,884 3,361 3,503 2,200 2,080 1,192 0
346 Taxable Income M-USS $212,028 $32,037 $31,285 $35,806 $33,275 $18,160 $18,711 $14,282 $1,773
354 Domtciled Tax M-USS 63,665 9,611 9,386 10,742 9,983 5,448 5,613 4,285 589
355 Eaminga iñer Taxea M-USS 148,363 0 22,426 21,900 25,064 23,293 12,712 13,098 9,998 1,184
356 Add Back Depreciation M-USS 55,486 2,519 3,223 4,873 9,163 9,587 7,570 3,445 2,436
364 Total Capital M-USS (55,486) 0 (12,595) (3,520) (8,250) (5,490) (5.110) (5,813) (4,955) (3,203)
382 Wcrking Capital M-USS 0 0 (3,080) 6 (546) (156) 1,331 114 776 1,209
385 PROJECT CASH FLOW M-USS $148,363 so $9,270 $21,609 $21,141 $26,810 $18,320 $14,968 $9,264 $1,626
386 IRR ===== #NUM! NPV at 20.00% B =S B =^ $72,105 NPV al 13.00% =====> $88.519
 nNTAVA PROJECT - OPEN PIT ONLY
Mine Life: Yean FiRt Year of Productíra
Option:
MODEL: TIN-OPENJCLS YEAR==>
DIVIDEND CALCULATION(BOOK BASIS)
Tax Bmi Eaminga before Taxea $212.028 $32,037 $31,285 $35,806 $33,275 $18,160 $18,711 $14,282 $1,773
Book Dq)reciation $55:486 Jim $1,343
Add Tax Depreciiüoo 55.486 3.223 4.873 9.163 2.436
Book Basia Eaminga before Taxe» $212,028 $33,506 $33.166 $38,649 $40,283 $25,298 $23,915 $13,710
Subtract Domictled Tax 63,665 9,386 10,742 9,983
Defeired Tax 30% ofBook Baaie Eaminji
Book Bbbíb Eamings aftw Taxéi $148,363 $23.454 $23,216 $27,054 $28.198 $17,709 $16,741 $9,597
Groas Divtdaid $148,363 $9,270 $21,609 $21,141 $26,810 $18,320 $14,968 $9,264 $1,626
Subtract Additional Tax
Net Dividcfid Distnbution $148,363 $9,270 $21,609 $21,141 $26,810 $18,320 $14,968 $9,264 $1,626
Capital Diatribution
Total Diitnbution $148,363 $9,270 $21,609 $21,141 $26,810 $18,320 $14,968 $9,264 $1,626

Branch/Di^ddeod Tax
Net Dividrad (after adcutional tax) $148,363 $9,270 $21,609 $21,141 $26,810 $18,320 $14,968 $9,264 $1,626
Retura of Capital
Net Cash Flow $148,363 $9,270 $21,609 $21,141 $26,810 $18,320 $14,968 $9,264 $1,626
#NUM! NPVat 20.00% $72.105 NPVat 13.00% $88.519
CALCULATION OF U.S.TAXES
Book Baais Eaminea before Taxea $212,028 $33,506 $33,166 $38,649 $40,283 $25,298 $23,915 $13,710
Domictled Tax 63.608 9.386 10.742 9.983 5.448 4.285
Income $148,420 $23,895 $23,780 $27,907 $30,300 $19,850 $18,302 $9,425
Dividend $148,363 $9,270 $21,609 $21,141 $26,810 $18,320 $14,968 $9,264 $1,626
Domiciled Tax Diatributed 63.537 8.238 9.539 4.725 3.218
TAXABLE U.S. INCOME $211,899 $12,999 $30,200 $29,379 $36,348 $24,208 $19.693 $12,481 $2.230
Gróaa Federal U.S. Tax 42,380 2,600 6,040 5,876 7,270 4,842 3,939 2,496
Groas State U.S. Tax 4,238
Lesa: DomiciledTaxDiatnbuted (42,380) (2,600) (6,040) (5,876) (7,270) (4,842) (3,939) (2,496)
Leas: Branch/Dividend Tax
Net U.S. Tax
Add: Tax 'Canyback* Credit
U.S. CASH FLOW $144,125 $9,010 $21,005 $20,553 $26,083 $17.836 $9.014 $1.582
IRR ===== «ÍUM NPVat 20.00% $70,114 NPVat 13.00% $86,064
U. S. Tax Credit Available
Máximum 'Canyback' of Credit
Companaon of Credit Available to Máximum
U.S. Tax Credit
Cumulalive Book Income 23,454 23,216 27,054 55.252 72,961 89,702 99,299 99,189
Cumulative Groas Dividend 9,270 21,609 21,141 47,950 66,270 81,238 90,502 92,129
Difíerence 14,184
INVESTMENT RETURN Eqtuty Percqit =-====
Buy-in Capital
Shere of Cniital
U.S. Cash Flow 144,125 9.010 21,005 20.553 26,083 17,836 14,574
INVECTMENT CASH FLOW - U,S 144,125 21,005 26,083 17.836 14,574
IRR ==== #NUM! NPVat 20.00% $70,114 NPVat 15.00% $80.863
 TINTAVA PROJECT - OPEN PIT ONLY
Mine Life: Yeais
Opbon:
MODEL: TIN-OPENJCLS YEAR= = >
LME METAL PRICES
USS/Lb
US$/Oz S375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $375.00
Silver US$/Oz
KEYRESULTS
Proiect Retum in Peni #NUM
Project Retum - Oflabore #NUM
Project Retum - U.S. /TNUM!
Ore ProcessedíMilling) Tonnee
Waste Tonnes
Total Material Mined Tonnes 2.160 2.160 2.160 2,160 2,160
COCT PARAMETERS
Pevabl^letBlB
M-Lbs 17,365 17,365 17,578 17.578 17,578 17,578 17,790 17,790
M-Oz 5.485 5.485 5.485 5.485 5.485 5.485
St ver M-Oz 128.994 128.994 128.994 128.994 128.994 128.994 128.994 134.732
PROJECT CASH FLOW fFAX BASIS)- PERU
245 Revenues PRICE ==> $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
246 Copper M-US$ $17,365 $17,365 $17,578 $17,578 $17,578 $17,578 $17,790 $17,790
246 Gold M-US$ 2,057 2,057 2,057 2,057 2,057 2,057 2,057 2,502
249 Silver M-US$ 645 645 645 645 645 645 645 674
250 Sub-Total $20,067 $20,067 $20,280 $20,280 $20,280 $20,280 $20,492 $20,966
251 bxoenses bevond Mine

252 Smelting Charges M-US$ 2,722 2,722 2,663 2,663 2,663 2,663 2,608 2,608
253 Refining Charges
254 Copper M-US$ 1,737 1,737 1,758 1,758 1,758 1,758 1,779 1,779
255 Gold M-USS 27 27 27 27 27 27 27 33
256 Silver M-US$ 45 45 45 45 45 45 45 47
257 Transportation M-US$ 2.238 2.238 2.190 2.190 2.190 2.190 2.145 2.145
260 SuÍ>*Total $6.769 $6,769 $6.683 $6,683 $6,683 $6,683 $6,604 $6,612
262 Siine Expenses
263 Mining Costa M-US$ 1,512 1,512 1,512 1,512 1,512 1,512 1,512 0
277 Exploration Expense M-USS 100 100 100i 100 100 100 100 0
278 Milling Costs M-US$ 3,427 3,427 3,427 3,427 3,427 3,427 3,427 3,427
279 G&A M-US$ 4.050 4.050 4.050 4.050 4.050 4.050 4.050 2.250
1
280 Sub-Total $9,089 $9,089 $9,089 $9,089 $9,089 $9,089 $9,089 $5,677
282 Eamings before Deprecistion $4,209 $4,209 $4,508 i
$4,508 $4,508 $4,508 $4,799 $8,677
336 [Teorecifition
341 Sub-Total $2,296 $2,232 $2,332 $1,501 $1,020 $980 $940 $1,570
343 Business Equity Tax(0%) 0 0 0 0 0 0 0 0
345 Worker'i Participation 0 0 0 0 68 87 162 42
346 Taxable Income M-US$ $1,913 $1,977 $2,177 $3,008 $3,420 $3,441 $3,698 $7,065
354 Domiclled Tax M-US$ 574 593 653 902 1,026 1,032 1,109 2,119
355 Esmingi aOer Taxes M-USS 1,339 1,384 1,524 2,105 2,394 2,409 2,588 4,945
356 Add Back Depreciation M-US$ 2,296 2,232 2,332 1,501 1,020 980 940 1,570
364 Total Capital M-US$ (800) (800) (1,900) (800) (800) (600) (600) • (250)
382 Workíng Capital M-USS 0 0 (25) 0 0 0 a4) 394
385 PROJECT CASH FLOW M-US$ $2,835 $2,816 $1,931 $2,806 $2,614 $2,789 $2,904 $6,660
386 '
 A 1 B M N I 0 p Q R S T
1 TINTAYA PROJECT - OreN PU ONLY
2 Mine Ufe: Years 16
3 Option: 1
7 MODEL: TIN-OPENJCLS year»»> 9 10 11 12 13 14 15 16
39!) DIVIDEND CALCULATION(BOOK BASIS)
396 Tox Basis Eam]n>;a before Taxes $1.913 $1,977 $2,177 $3.008 $3,420 $3,441 $3,698 $7,065
457 Book Depreciation S4,3S1 $4,418 $4,576 $4,64$ $3,660 $3,417 $2,719 $8,148
458 Add Tax Dq)rectaÜon 2.296 2.232 2.332 I.S0I 1.020 980 940 1.570
459 Book Basta Eanunfti before Taxea (S142) ($209) ($68) ($135) $780 $1,004 $1,859 $487
460 Subtract Domiciled Tax 574 593 653 902 1,026 1,032 1,109 2,119
461 DeferredTax 30% ofBookBasia Eaminga (617) (656) (673) (943) (792) (731) (552) (1.973)
462 Book Basta Earmn^a aner Taxea ($100) ($146) ($48) ($94) $546 Í703 $1,301 $341
466 Groas Dividend $2,835 $2,816 $1,931 $2,806 $2,614 $2,789 $2,904 $6,660
467 Subtract Additional Tax 0 0 0 0 0 0 0 0
468 Net Divideitd IMstríbution $2,835 $2,816 $1,931 $2,806 $2,614 $2,789 $2,904 $6,660
469 Capital Diitribulion 0 0 0 0 0 0 0 0
)l?9 Total Distributlon $2,835 $2,816 $1,931 $2,806 $2,614 $2,789 $2.904 $6,660
472 PROJECTcAsrmowTmmsK)- Üti'SHü
473 Branch/Dividend Tax 0 0 0 0 0 0 0 0
474 Net Dividend (after additional tax) $2,835 $2,816 $1,931 $2,806 $2,614 $2,789 $2,904 $6,660
475 Retum of Capital 0 0 0 0 0 0 0 0
476 Net Cash Flow $2,835 $2.816 $1,931 $2,806 $2,614 $2,789 $2,904 $6,660
477 íííaíwjfS$«sí><K4^
w^mmi
507 CALCULATION OF U.S.TAXES
508 Book Basia Eaminjta before Taxea ($142) ($209) ($68) ($135) $780 $1,004 $1,859 $487
509 Domiciled Tax 574 593 653 902 1.026 1.032 1.109 2.119
510 Income ($716) ($802) ($721) ($1,037) ($246) ($28) $749 ($1,632)
514 Dividend $2,835 $2,816 $1,931 $2,806 $2,614 $2,789 $2,904 $6,660
515 Domiciled Tax Distiibuted 1.133 1.227 926 1.553 1.637 1.967 2.198 8.367
516 TAXABLE U.S. INCOME $3,968 $4,043 $2,857 $4,359 $4.251 $4,755 $5,103 $15,027
f
517 Groas Federal U.S. Tax 794 809 571 872 850 951 1,021 3,005
518 Groas State U.S. Tax 79 81 57 87 85 95 102 301
519 Lesa: Domiciled Tax Distríbuted a94) (809) 1(571) (872) (850) (951) (1.021) (3,005)
520 Lesa: Branch/Dividend Tax 0 0 0 0 0 0 0 0
521 Net U.S. Tax 79 81 57 87 85 95 102 301
522 Add: Tax 'Conyback' Credit 0 0 0 0 0 0 0 0
1
523 U.S. CASII FLOW $2,756 $2,735 $1,873 $2,719 $2,529 $2,693 $2,802 $6359
524 i
533 U. S. Tax Credit Available 79 81 57 87 85 95 102 301
534 Matámum 'Carryback' of Credit 0 0 0 i0 0 0 0 0
535 Comparíaon of Credit Available to Máximum 0 0 0 i
0 0 0 0 0
536 U.S. Tax Credit i
0 0 0 0 0 0 0 0
537 Cumulative Book Income 99,089 98,943 98,895 98,801 i99,347 100,050 101,351
i 101,692
538 Cumulative Grosa Dividend 94,964 97,780 99,710 102,516 105,130 107,919 110,823 117,483
539 DifTerence 4,125 1,163 (815) 1
(3.715) (5,783) (7,869) (9,472) (15,791)

Buy»mCipitaI
Share of Capital
U.S. Caah Flow 2,756 2,735 2,719 2,529 2.693 2.802
INVECTMENT CASH FLOW ■ U.S 2,735
 PROOUCER AOQUISmON PA0JECT8
tOf PRMECT CORPORATE COPPER MININO PROCesSINO COST/POUNO
LE raOJECTNAME STATUS PUACHASER STATUS ORAOE METHOOCS) HETHOO(8) CONTAINED COPPE

t9M BUm/CONTINENTAL hoduetr ASARCO SaiBcr Produear (C) 091« OpanPR Mi BOOBia
mo CANANEA ftoducw Cuprtlara CnrM SA SarVor Produear fC) OtCM OpanPH MiAS»EW Boosn
iMa CHINO ^eOjc«r PHalpa Oedga Sanier Produear (C) a7z% Opan PR 8X/EW S0041S
I9M CORP. FALCONBRIDQECOPPEfl Produnr Karr Addson Ovarslflad Produear t B4% Undartrouid IM B01B48
ISM CYPRUSUUUli Prodjcvr C)vru> MPiarMi Sanier Preduear(C) O.BO% Opan P1I SX/EWAHB B0062S
laM EL INUO(BONO INTL OOU9 PredjMT LACUnarMa Sénior Produear (<3) 250% Opan FB A Undaigouid Mi toaoM
IMt ETRSBERO ProdUesr PuMc (IPO • Fraaport Ccppar) N/A 170% Undar^ouid MI M101B
IMS nOOCREEK ^D4ue«r FMeonCndoa OerarelBad Produear 221% Uundargreund Mi B01124
1«M LACARKWO Product FIDENOME(NaSond Mnaa unerS (pnvaH) 040% OpanPfl MR 100202
1SK LES UINES SELBAIE E»M MmarM CwMda OiBOaa 1.02% Opan n / Undar^Mld Mi B00600
tMt LORNEX WININO COMPANV Produur Ke Aloom 1 Taek CPnreMad Produear / OMrdBad Pro oao% OpanPB Mi SO0820
law UA3MA COPPCR COMPANV Pro«tje«r Magma Coppar Sanor Produear (C) 04S% OpanPR Mi B001M
tM6 HORENCI / HETCALF ^educar Suwomo Matd INnlr^ DNtnWtJ Produear 073% OpanPR Mi 800431
1MB HEVES CORVO Produear RTZ Olwaitad Produear 428% Undar^oi-nd m B001M
MM O'OnEP AoAiear Odd FWds ef SeuPi ABIea Saraor Produear(6) 1 77% OpanPRI?) tm SO0081
1Mi PAIABORA MININO COHPANY Preduear Angb Amartcan / Da Baars Sarior Produear(O)/SarVor ftodUe ose% OpanPR ta 100718
IBM HAT MINES Producar ASARCO Dhandied Produear 071% Opan PR Mi 800138
1H7 RUTTAN Preduear Hudaen Bay MIrwrg A Oiiialini Divararflad Produear ie«% Undarground Mi •00178
IBM SIERRITA Produear Civrua Mnarala Stnior Produear(C) 031% OpanPR Mi 80.(SS0
IBM SIMIllKAMEEN (8IHILC0 MINES) ^educar Caaaiw MIrVng DKraralflad Produear 041% OpanPH Mi SO0081
IBM StPALAV(MAfnCALUM MININCQ Produear SpNm MHng / MImiilia Mlnkig JtaVor ENitoralcn ato% OpanPR Mi 100082
IBM T8UMEB Produear Ooid FMJa SouBt AMea SarVor Produear (O) aso% OpanPR(T) Mi S00060
IBM WHITE P1NE(COPPER RANOE) froduoar EctnB^HTM bMRnadMi ftoducar(Qt i.om Undai9«und Mi BOOIW
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