**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      DC 20549





**FORM
      10-Q/A**


**(Amendment
      No. 1)**


(Mark
      One)


**[X]**
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**For
                the quarterly period ended**April
                30, 2006**or**[
                ]**
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**For
                the transition period from _______ to
                _______


**Commission
      File Number 333-66291**




**The
                Doe Run Resources Corporation**(Exact
                name of registrant as specified in its charter)**New
                York**
            
            **13-1255630**(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification No.)**1801
                Park 270 Drive, Suite 300**
              **St.
                Louis, Missouri**
            
            **63146**(Address
                of principal executive offices)
            
            (Zip
                Code)**(314)
                453-7100**(Registrant’s
                telephone number, including area
                code)








Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.





**[
                ]**
            **Yes**
            
            **[X]**
            **No**





**Note:
      The Registrant files pursuant to an indenture, but is not otherwise subject
      to
      the reporting requirements of Section 13 or 15(d).**





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):





**[
                ]Larger accelerated filer**
            **[
                ] Accelerated filer**
            **[X]
                Non-accelerated filer**





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


**[
                ]**
            **Yes**
            
            **[X]**
            **No**





Number
      of
      shares outstanding of each of the issuer’s classes of common stock, as of
      October 19, 2006:





**Common
      stock, $.10 par value**  **1,000
      shares**








**EXPLANATORY
      NOTE**





The
      Doe
      Run Resources Corporation (the “Company”) is filing this Amendment No. 1 on Form
      10-Q/A (the “Amended Filing”) to the Company’s Form 10-Q for the fiscal quarter
      ended April 30, 2006, as filed with the Securities and Exchange Commission
      on
      August 7, 2006 (the “Original Filing”), for purpose of revising its disclosure
      of gross margin on sales under the subheading “Results of Operations” in “Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations” to reflect all costs of sales, including depreciation, depletion and
      amortization amounts attributable to cost of sales.





This
      Amended Filing also revises the Condensed Consolidated Statements of Cash Flows
      in “Item 1. Financial Statements” to reflect certain individual changes in the
      Company’s assets and liabilities.





Additionally,
      this Amended Filing clarifies the disclosure under “Item 4. Controls and
      Procedures” by stating that the Company’s disclosure controls and procedures
      were effective as of the date of the Company’s evaluation.





Finally,
      this Amended Filing corrects certain typographical errors in the Original
      Filing.





Except
      as
      described above, no other changes have been made to the Original Filing and
      this
      Amended Filing does not amend, update or change any other items or disclosures
      in the Original Filing. This Amended Filing continues to speak as of the date
      of
      the Original Filing and the Company has not updated the disclosure in this
      Amended Filing to speak to any later date.











**Part
      I. FINANCIAL INFORMATION**





**THE
                DOE RUN RESOURCES CORPORATION****Condensed
                Consolidated Balance Sheets****(Dollars
                in thousands, except share and per share data)****April
                30,**
            
            **October
                31,****2006**
            
            **2005****(unaudited)****ASSETS**Current
                assets:Cash
            
            $
            23,913
            
            $
            23,486Trade
                accounts receivable, net of allowance for doubtful accounts
            
            
            135,748
            
            
            85,740Inventories
            
            
            167,496
            
            
            105,634Prepaid
                expenses and other current assets
            
            
            27,588
            
            
            20,814Total
                current assets
            
            
            354,745
            
            
            235,674Property,
                plant and equipment, net
            
            
            262,715
            
            
            253,263Other
                noncurrent assets, net
            
            
            8,633
            
            
            5,838Total
                assets
            
            $
            626,093
            
            $
            494,775**LIABILITIES
                AND SHAREHOLDER'S DEFICIT**Current
                liabilities:Current
                maturities of long-term debt
            
            $
            113,587
            
            $
            114,947Accounts
                payable
            
            
            158,154
            
            
            92,275Accrued
                liabilities
            
            
            106,749
            
            
            87,060Total
                current liabilities
            
            
            378,490
            
            
            294,282Long-term
                debt, less current maturities
            
            
            262,639
            
            
            271,566Other
                noncurrent liabilities
            
            
            66,877
            
            
            68,337Total
                liabilities
            
            
            708,006
            
            
            634,185Series
                A redeemable preferred stock, $1,000 par value per share, 5,000 sharesauthorized;
                2,849 shares issued and outstanding as of April 30, 2006
                andOctober
                31, 2005, liquidation and redemption value
            
            
            30,276
            
            
            28,495Shareholder's
                deficit:Common
                stock, $.10 par value per share, 1,667 shares authorized;1,000
                shares issued and outstanding
            
            
            -
            
            
            -Accumulated
                deficit
            
            
            (65,644
            )
            
            (123,141
            )Accumulated
                preferred stock dividends in excess of paid in capital
            
            
            (5,038
            )
            
            (3,257
            )Accumulated
                other comprehensive losses
            
            
            (41,507
            )
            
            (41,507
            )Total
                shareholder's deficit
            
            
            (112,189
            )
            
            (167,905
            )Total
                liabilities and shareholder's deficit
            
            $
            626,093
            
            $
            494,775The
                accompanying notes are an integral part of these condensed consolidated
                financial statements.











**THE
                DOE RUN RESOURCES CORPORATION****Condensed
                Consolidated Statements of Operations (unaudited)****(Dollars
                in thousands)****Three
                Months Ended**
              **April
                30,**
            
            **Six
                Months Ended**
              **April
                30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Net
                sales
            
            $
            380,221
            
            $
            247,716
            
            $
            694,345
            
            $
            483,698Costs
                and expenses:Cost
                of sales
            
            
            306,960
            
            
            219,328
            
            
            570,347
            
            
            417,331Depreciation,
                depletion and amortization
            
            
            7,015
            
            
            5,764
            
            
            13,128
            
            
            11,901Selling,
                general and administrative
            
            
            15,461
            
            
            11,759
            
            
            28,568
            
            
            22,686Unrealized
                gain on derivative financial instruments
            
            
            (2,301
            )
            
            (463
            )
            
            (4,256
            )
            
            (1,261
            )Other
            
            
            1,808
            
            
            1,321
            
            
            3,115
            
            
            3,158Total
                costs and expenses
            
            
            328,943
            
            
            237,790
            
            
            610,902
            
            
            453,815Income
                from operations
            
            
            51,278
            
            
            10,007
            
            
            83,443
            
            
            29,883Other
                income (expense):Interest
                expense, net
            
            
            (988
            )
            
            (3,314
            )
            
            (3,725
            )
            
            (6,755
            )Other,
                net
            
            
            579
            
            
            (27
            )
            
            485
            
            
            225(409
            )
            
            (3,341
            )
            
            (3,240
            )
            
            (6,530
            )Income
                before income tax expense
            
            
            50,869
            
            
            6,666
            
            
            80,203
            
            
            23,353Income
                tax expense
            
            
            3,428
            
            
            -
            
            
            5,270
            
            
            -Net
                income
            
            $
            47,441
            
            $
            6,666
            
            $
            74,933
            
            $
            23,353Preferred
                stock dividends
            
            
            (891
            )
            
            (791
            )
            
            (1,781
            )
            
            (1,583
            )Net
                income allocable to common shares
            
            $
            46,550
            
            $
            5,875
            
            $
            73,152
            
            $
            21,770Total
                comprehensive income
            
            $
            46,550
            
            $
            6,696
            
            $
            73,152
            
            $
            23,487The
                accompanying notes are an integral part of these condensed consolidated
                financial statements.











**THE
                DOE RUN RESOURCES CORPORATION****Condensed
                Consolidated Statements of Cash Flows (unaudited)****(Dollars
                in thousands)****Six
                Months Ended****April
                30,****2006**
            
            **2005**Cash
                flows from operating activities:Net
                income
            
            $
            74,933
            
            $
            23,353Adjustments
                to reconcile net income to net cashprovided
                by operating activities:Depreciation,
                depletion and amortization
            
            
            13,128
            
            
            11,901Imputed
                interest and amortization of deferred financing costs
            
            
            307
            
            
            346Unrealized
                gain on derivative financial instruments
            
            
            (4,256
            )
            
            (1,261
            )Losses
                from impairment and disposal of long-lived assets
            
            
            793
            
            
            1,989Increase
                (decrease) resulting from changes in:Trade
                receivables
            
            
            (50,008
            )
            
            (10,130
            )Inventories
            
            
            (61,862
            )
            
            (21,704
            )Prepaid
                expenses and other current assets
            
            
            (6,381
            )
            
            5,070Accounts
                payable
            
            
            65,879
            
            
            19,236Accrued
                liabilities
            
            
            8,840
            
            
            (565
            )Other
                noncurrent assets and liabilities, net
            
            
            (4,022
            )
            
            (1,033
            )Net
                cash provided by operating activities
            
            
            37,351
            
            
            27,202Cash
                flows from investing activities:Purchases
                of property, plant and equipment
            
            
            (23,131
            )
            
            (26,614
            )Net
                proceeds from sale of investments
            
            
            -
            
            
            333Net
                cash used in investing activities
            
            
            (23,131
            )
            
            (26,281
            )Cash
                flows from financing activities:Proceeds
                from revolving loansand
                short-term borrowings, net
            
            
            455
            
            
            5,335Proceeds
                from long-term debt
            
            
            10,000
            
            
            -Payments
                on long-term debt
            
            
            (20,990
            )
            
            (14,638
            )Payments
                of financing costs
            
            
            (925
            )
            
            -Payments
                of tax dividends
            
            
            (2,333
            )
            
            (310
            )Net
                cash used in financing activities
            
            
            (13,793
            )
            
            (9,613
            )Net
                increase (decrease) in cash
            
            
            427
            
            
            (8,692
            )Cash
                at beginning of period
            
            
            23,486
            
            
            20,318Cash
                at end of period
            
            $
            23,913
            
            $
            11,626The
                accompanying notes are an integral part of these condensed consolidated
                financial statements.










**THE
      DOE RUN RESOURCES CORPORATION**





**Notes
      to Condensed Consolidated Financial Statements**


**(Dollars
      in thousands)**





**(1)**  **Summary
      of Significant Accounting Policies**





***Unaudited
      Interim Financial Statements***





These
      interim consolidated financial statements include the accounts of The Doe Run
      Resources Corporation (“Doe Run”) and its subsidiaries, including Doe Run Peru
      S.R.L. (“Doe Run Peru”, and together with Doe Run on a consolidated basis, the “
Company”). Doe Run’s issued and outstanding common stock is owned by a
      subsidiary of The Renco Group, Inc. (“Renco”). In the opinion of management, the
      interim consolidated financial statements contain all adjustments, consisting
      of
      normal recurring accruals, necessary to present fairly the consolidated
      financial position as of April 30, 2006 and the results of operations for the
      three and six-month periods ended April 30, 2006 and 2005. Interim periods
      are
      not necessarily indicative of results to be expected for the year.





***Reclassifications***





Certain
      prior period balances have been reclassified in order to conform to the current
      presentation.





**(2)**  **Financial
      Condition**





The
      Company is highly leveraged and has significant commitments both in the U.S.
      and
      Peru for environmental matters and for Environmental Remediation and Management
      Program (“PAMA”) expenditures, including the financial guarantees, that require
      it to dedicate a substantial portion of cash flow from operations to the payment
      of these obligations, which will reduce funds available for other business
      purposes (see Note 7: Asset Retirement and Environmental Obligations). These
      factors also increase the Company’s vulnerability to general adverse conditions,
      limit the Company’s flexibility in planning for, or reacting to, changes in its
      business and industry, and limit the Company’s ability to obtain financing
      required to fund working capital and capital expenditures and for other general
      corporate purposes. An unfavorable outcome to certain contingencies, discussed
      below, would have a further adverse effect on the Company’s ability to meet its
      obligations when due. The Company’s ability to meet these obligations is also
      dependent upon future operating performance and financial results which are
      subject to financial, economic, political, competitive and other factors
      affecting Doe Run, many of which are beyond the Company’s control.





Metal
      prices have risen dramatically over the past two fiscal years. Lead prices
      increased from a London Metal Exchange (“LME”) settlement monthly average of
      $911.40 per short metal ton in October 2005 to $1,061.80 per short metal ton
      in
      April 2006. The Company has benefited from this price increase in both its
      lead
      metal and lead concentrate sales.





The
      consolidated financial statements have been prepared assuming the Company will
      continue as a going concern. Doe Run Peru however has significant capital
      requirements under environmental commitments and substantial contingencies
      related to Peruvian taxes and has significant debt service obligations, each
      of
      which, if not satisfied, could result in a default under the Company’s credit
      agreements and collectively raise substantial doubt about the Company’s ability
      to continue as a going concern. Management believes that the price improvements
      seen through fiscal year 2005 and in the first two quarters of fiscal year
      2006,
      the potential revenues and cash flow enhancements from the Company’s new ferrite
      project in Peru and the approval by the Peruvian government of the application
      to extend the PAMA requirement for the construction of the sulfuric acid plants,
      will enable the Company to continue as a going concern. However, there can
      be no
      assurance that these actions will achieve the desired results.





Net
      unused availability at April 30, 2006 under the Doe Run Revolving Credit
      Facility was $34,689. Net unused availability at April 30, 2006 under the Doe
      Run Peru Revolving Credit Facility was approximately $200. In addition to the
      availability under its revolving credit facilities, the cash balance of Doe
      Run
      was $1,073 at April 30, 2006. The cash balance of Doe Run Peru was $22,840
      at
      April 30, 2006. Doe Run Peru has reached and maintained its maximum borrowing
      level under the Doe Run Peru Revolving Credit Facility due in part to the higher
      metal prices resulting in higher outlays for concentrate purchases and higher
      VAT payments funded by cash from operations.










The
      Doe
      Run Revolving Credit Facility expires on August 29, 2008. The Doe Run Peru
      Revolving Credit Facility expires on September 22, 2006 and will require
      negotiations to extend its terms. There can be no assurance that the Company
      will be successful in extending the existing credit agreement or negotiating
      a
      new credit agreement, or if it is successful, that the extended or new credit
      agreement would be at terms that are favorable to the Company.





Any
      default under the requirements of the PAMA could result in a default under
      the
      Doe Run Peru Revolving Credit Facility. A default under the requirements of
      the
      Doe Run Peru Revolving Credit Facility results in defaults under the Doe Run
      Revolving Credit Facility and the indenture governing the bonds.





**(3)**  **Inventories**





Inventories
      consist of the following:





**April
                30,**
            
            **October
                31,****2006**
            
            **2005**Finished
                metals and concentrates
            
            $
            32,066
            
            $
            18,461Metals
                and concentrates in process
            
            
            101,843
            
            
            55,681Materials,
                supplies and repair parts
            
            
            33,587
            
            
            31,492$
            167,496
            
            $
            105,634





Materials,
      supplies and repair parts are stated net of reserves for obsolescence of
      approximately $4,999 and $5,389 at April 30, 2006 and October 31, 2005,
      respectively.





**(4)**  **Income
      Taxes**





Doe
      Run
      Cayman is subject to the regulations of the Cayman Islands, which currently
      have
      no corporate income or capital gains tax. Doe Run Cayman’s subsidiaries located
      in Peru are subject to Peruvian taxation. The statutory income tax rate in
      Peru
      is 30%. Doe Run Peru has obtained a ten-year tax stabilization agreement with
      the Peruvian government, which provides for Peruvian taxation based on tax
      statutes and regulations prevailing on November 6, 1997, beginning with the
      Peruvian tax year ending on December 31, 1997 through December 31,
      2006.





On
      December 30, 1997, Doe Run Peru signed a Contract of Guarantees and Measures
      to
      Promote Investments (“Contract”) with the government of Peru.  The
      Contract, which has been modified various times through 2006, committed Doe
      Run
      Peru to making certain investments related to the improvements of its facilities
      in order to receive certain tax benefits.  The Contract provided that if
      the investments were completed according to the schedule by December 31, 2006,
      Doe Run Peru would receive an additional tax stability agreement covering the
      period beginning January 1, 2007 and ending December 31, 2021.  Doe Run
      Peru will be unable to complete the required investments and, therefore,
      requested an extension of the time, from the Ministry of Energy and Mines
      (“MEM”), for these investments that would coincide with the extended period of
      compliance for the PAMA. MEM denied the request. As a result, Doe Run Peru
      will not receive the benefits of the additional tax stabilization
      agreement.





Doe
      Run
      Peru has received income tax assessments from Peru’s tax authority (“SUNAT”) for
      tax years 1998 through 2001. The assessments primarily relate to Doe Run Peru’s
      income tax treatment of the December 1997 merger of Metaloroya S.A. into Doe
      Run
      Peru, which was purchased by Doe Run Peru in October 1997, and its effects
      on
      subsequent years’ taxable income. Under the assessment by SUNAT, the tax basis
      of Doe Run Peru’s fixed assets acquired would decrease, resulting in lower tax
      depreciation expense than originally claimed. The assessments of years 1999
      through 2001 also relate to the disallowance of the deduction of interest paid,
      the offsetting of losses on derivatives executed in the U.S. and some leaseback
      and leasing operations. The estimated assessed amount consisting of additional
      income taxes due, penalties and interest as of April 30, 2006 totals
      approximately $121,100. The Company estimates that the effect of a similar
      assessment for tax years after 2001 would be approximately $32,900. Furthermore,
      Doe Run Peru would also be required to make additional workers’ profit sharing
      payments equal to 8% of the increase in taxable income generated by the changes
      discussed above, or approximately $11,300, for calendar years 1998 through
      2005.










Doe
      Run
      Peru has also received Value Added Tax (“VAT”) assessments for the tax years
      1999 through 2001 and for the period from January through July 2004. The
      assessments primarily relate to Doe Run Peru’s exports with holding certificates
      and differences in a tax credit application. The total assessment for these
      periods, calculated with penalties and interest as of April 30, 2006 was
      approximately $48,100. SUNAT offset the amount assessed for 2004 of
      approximately $2,300 against Doe Run Peru’s VAT receivable balance from July of
      2004. Future VAT reimbursements cannot be used to offset the assessment by
      SUNAT. The Company discontinued the use of holding certificates for exports
      in
      June of 2004. The Company estimates expected additional assessments related
      to
      VAT for tax years 2002 and 2003, calculated with penalties and interest as
      of
      April 30, 2006 to total approximately $22,400 in regard to its exports with
      holding certificates.





Management
      of the Company believes that in each case Doe Run Peru has followed the
      applicable Peruvian tax statutes and intends to pursue all available
      administrative and judicial appeals. Doe Run Peru is not required to make any
      payments pending the administrative appeal process. If Doe Run Peru is not
      successful in the administrative appeal processes and were to appeal in the
      judicial system, some type of financial assurance would be required. No amounts
      have been accrued as liabilities related to these actions.





For
      the
      past several years, Doe Run Peru has generated net losses from operations that
      according to tax law may be used to offset taxable income in the future. The
      Company expects to utilize all of Doe Run Peru’s net operating loss
      carryforwards in the current fiscal year. As a result, Doe Run Peru has recorded
      $5,270 of income tax expense for the first two quarters of 2006.





Pursuant
      to the Company’s tax sharing agreement with Renco, a tax dividend is payable to
      Renco for federal and state income taxes that would be assessed if the Company
      was a C corporation. Tax dividends payable to Renco of $15,487 and $384 were
      reflected in the Company’s balance sheets at April 30, 2006 and October 31,
      2005, respectively. The dividend payable at October 31, 2005 of $384 was paid
      in
      the second quarter of 2006 along with the tax dividend for the first quarter
      of
      2006 of $1,949. The Company paid $12,842 of the dividend payable at April 30,
      2006 in the third quarter of 2006 and the remaining $2,645 will be paid during
      the fourth quarter of 2006.





**(5)**  **Employee
      Benefits**





***Defined
      Benefit Plans***





Net
      periodic benefit cost is comprised of the following:





**Three
                Months Ended**
            
            **Six
                Months Ended****April
                30,**
            
            **April
                30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Service
                cost
            
            $
            (226
            )
            $
            551
            
            $
            -
            
            $
            1,097Interest
                cost on projected benefit obligation
            
            
            2,577
            
            
            1,670
            
            
            3,412
            
            
            3,325Expected
                return on assets
            
            
            (2,426
            )
            
            (1,435
            )
            
            (3,166
            )
            
            (2,858
            )Net
                amortization and deferral of unrecognized net losses
            
            
            142
            
            
            714
            
            
            666
            
            
            1,422Net
                periodic benefit cost
            
            $
            67
            
            $
            1,500
            
            $
            912
            
            $
            2,986





The
      Company is required to make total contributions of $10,082 in 2006, of which
      $4,317 had been paid as of April 30, 2006.












***Net
      Worth Appreciation Agreements***





Certain
      current and former employees are parties to net worth agreements with Doe Run,
      pursuant to which, upon termination of each person’s employment with Doe Run,
      they are entitled to receive a fixed percentage of the increase in the net
      worth
      of the Company, as defined in such agreement, from a base date until the end of
      the fiscal quarter preceding the date of his termination or in accordance with
      the terms of the individual agreements. Such amounts are payable without
      interest in 40 equal quarterly installments, commencing three months after
      the
      termination of each person’s employment or in accordance with the terms of the
      individual agreements, and at three month intervals thereafter. The net worth
      appreciation agreements also provide that, in the event of payment of a
      dividend, other than tax dividends paid in accordance with the Company’s tax
      sharing agreement, or sale of the Company, the active participants will be
      entitled to receive a percentage of the dividend or the net proceeds of the
      sale
      equal to their maximum percentages under the agreements. The Company recorded
      $2,503 in expense during the first two quarters of 2006.





**(6)**  **Segment
      Information**





The
      Company’s operating segments are separately managed business units that are
      distinguished by products, location and production processes. The primary lead
      segment includes integrated mining, milling and smelting operations located
      in
      Missouri. The recycling operation segment, located in Missouri, recycles
      lead-bearing materials, primarily spent batteries. The fabricated products
      segment, located in Washington and Arizona, produces value-added lead products.
      Doe Run Peru produces an extensive product mix of non-ferrous and precious
      metals.





*Operating
                Segments - Revenues*
            
            **Three
                Months Ended**
              **April
                30,**
            
            **Six
                Months Ended**
              **April
                30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Revenues
                from external customers:Doe
                Run Peru
            
            $
            247,673
            
            $
            158,316
            
            $
            450,365
            
            $
            306,701Primary
                lead
            
            
            101,094
            
            
            65,143
            
            
            183,868
            
            
            129,080Recycling
                operation
            
            
            22,672
            
            
            22,432
            
            
            46,760
            
            
            40,998Fabricated
                products
            
            
            4,030
            
            
            3,386
            
            
            7,393
            
            
            7,201Total
            
            
            375,469
            
            
            249,277
            
            
            688,386
            
            
            483,980Revenues
                from other operating segments: (1)Doe
                Run Peru
            
            
            6,091
            
            
            -
            
            
            12,331
            
            
            2,724Primary
                lead
            
            
            397
            
            
            209
            
            
            1,076
            
            
            711Recycling
                operation
            
            
            100
            
            
            82
            
            
            182
            
            
            180Total
            
            
            6,588
            
            
            291
            
            
            13,589
            
            
            3,615Total
                reportable segments
            
            
            382,057
            
            
            249,568
            
            
            701,975
            
            
            487,595Metal
                sales not attributed to operating segments
            
            
            6,982
            
            
            (1
            )
            
            12,126
            
            
            2,520Realized
                losses on derivative contracts
            
            
            (2,230
            )
            
            (1,560
            )
            
            (6,167
            )
            
            (2,802
            )Intersegment
                eliminations
            
            
            (6,588
            )
            
            (291
            )
            
            (13,589
            )
            
            (3,615
            )Total
                revenues
            
            $
            380,221
            
            $
            247,716
            
            $
            694,345
            
            $
            483,698





(1)
            Transactions
                between segments consist of metal sales recorded based on sales contracts
                that are negotiated between segments on terms that management feels
                are
                similar to those that would be negotiated between unrelated
                parties.





The
      measure of segment profit and loss used by the Company is earnings of the
      segment before interest, taxes, depletion, depreciation and amortization
      (“EBITDA”), as adjusted to exclude losses from impairment and disposal of
      long-lived assets and unrealized gains (losses) on derivatives (“Adjusted
      EBITDA”). Consolidated Adjusted EBITDA also excludes accretion expense under
      Statement of Financial Accounting Standards No. 143, *Asset
      Retirement Obligations* adopted
      November 1, 2002 *.*












*Operating
                Segments - Adjusted EBITDA*
            
            **Three
                Months Ended**
              **April
                30,**
            
            **Six
                Months Ended**
              **April
                30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Doe
                Run Peru
            
            $
            21,483
            
            $
            7,238
            
            $
            33,607
            
            $
            15,714Primary
                lead
            
            
            44,797
            
            
            15,168
            
            
            76,493
            
            
            37,686Recycling
                operation
            
            
            3,328
            
            
            3,957
            
            
            7,507
            
            
            7,629Fabricated
                products
            
            
            836
            
            
            676
            
            
            1,141
            
            
            1,149Total
                reportable segments
            
            
            70,444
            
            
            27,039
            
            
            118,748
            
            
            62,178Realized
                losses on derivatives
            
            
            (2,230
            )
            
            (1,560
            )
            
            (6,167
            )
            
            (2,802
            )Other
                revenues and expenses (1)
            
            
            (1,229
            )
            
            (2,084
            )
            
            (2,191
            )
            
            (2,793
            )Corporate
                selling, general and administrative expenses
            
            
            (9,298
            )
            
            (6,856
            )
            
            (16,011
            )
            
            (13,111
            )Intersegment
                eliminations
            
            
            (44
            )
            
            (12
            )
            
            (3
            )
            
            13Consolidated
                adjusted EBITDA
            
            
            57,643
            
            
            16,527
            
            
            94,376
            
            
            43,485Depreciation,
                depletion and amortization
            
            
            (7,015
            )
            
            (5,764
            )
            
            (13,128
            )
            
            (11,901
            )Interest
                expense, net
            
            
            (988
            )
            
            (3,314
            )
            
            (3,725
            )
            
            (6,755
            )Unrealized
                gain on derivatives
            
            
            2,301
            
            
            463
            
            
            4,256
            
            
            1,261Losses
                from impairment and disposal of long-lived assets
            
            
            (668
            )
            
            (779
            )
            
            (793
            )
            
            (1,989
            )Asset
                retirement obligation accretion expense
            
            
            (404
            )
            
            (374
            )
            
            (783
            )
            
            (748
            )Other
            
            
            -
            
            
            (93
            )
            
            -
            
            
            -Income
                before income taxes
            
            $
            50,869
            
            $
            6,666
            
            $
            80,203
            
            $
            23,353





(1)
            Other
                revenues and expenses consist of the profit on metal sales not attributed
                to operating segments and expenses not allocated to operating segments,
                including environmental expenses relating to historic operations
                of $542
                and $803 for the three and six months ended April 30, 2006, respectively
                and $2,877 for the three and six months ended April 30,
                2005.





**(7)**  **Asset
      Retirement and Environmental Obligations**





The
      Company is subject to numerous federal, state, local and other government
      environmental laws and regulations governing, among other things, air emissions,
      wastewater discharges, solid and hazardous waste treatment, storage and disposal
      and remediation of releases of hazardous substances. The Company’s facilities
      are located on sites that have been used for heavy industrial purposes for
      decades and may require remediation. The Company has made and intends to
      continue making the necessary expenditures for environmental remediation and
      compliance with environmental laws and regulations. Environmental laws and
      regulations may become more stringent in the future, which could increase costs
      of compliance.




***Asset
      Retirement Obligations***




Asset
      retirement obligations (“AROs”) are recognized as liabilities when incurred,
      with the initial measurement at fair value. These liabilities will be increased
      to full value over time through charges of accretion to operating expense.
      In
      addition, an asset retirement cost is capitalized as part of the related asset’s
      carrying value and will be depreciated over the asset’s useful life. Changes in
      the ARO liability resulting from revisions to the timing or the amount of the
      original estimate of undiscounted cash flows shall be recognized as an increase
      or a decrease in the carrying amount of the liability for an ARO and the related
      asset retirement cost capitalized as part of the carrying amount of the related
      long-lived asset.




Doe
      Run’s
      mines and related processing facilities are governed by various agencies that
      have established minimum standards for reclamation. Doe Run’s primary smelter
      slag produced by and stored at the primary smelter in Herculaneum, Missouri,
      is
      currently exempt from hazardous waste regulation under the Resource Conservation
      and Recovery Act of 1976, as amended (“RCRA”), but is subject to a state closure
      permit, which requires Doe Run to contain and cover the pile upon cessation
      of
      operations. Doe Run’s mining and milling operations are subject to











Missouri
      mine waste closure permit requirements and
      lease agreements that require Doe Run to reclaim surface areas, including
      remediation of mining waste disposal areas, and to perform closure activities
      underground. These activities, which tend to be site specific, generally include
      costs for earthwork, revegetation, water treatment and demolition. Closure
      activities may be performed over time.




Doe
      Run
      has a RCRA permit addressing the closure of portions of its recycling operation.
      The majority of the cost will arise from removing hazardous materials from
      the
      facility. No ARO liability or related asset cost has been recorded because
      the
      fair value of the obligation cannot be determined due to the indeterminate
      timing. The cost of closure, based on third party estimates for bonding
      purposes, is approximately $3,200. The life of the operation is considered
      indeterminable because there is not currently a cost-effective alternative
      to
      the lead acid batteries and because battery manufacturers are required to
      recycle the batteries.




Mine
      Closure Law No. 28090 (“Law”) became effective in Peru as of October 15, 2005.
      It applies to smelters and mines. The Law establishes the obligations and
      procedures that titleholders of mining activities must follow, including a
      financial guarantee for environmental issues.   Doe Run Peru must
      submit a mine closure plan to the MEM by August 17, 2006 which must include
      a
      description of the remediation measures to be done, along with their cost and
      timing, and the expected amount of the financial guarantee. Doe Run Peru has
      hired a technical mining consultant to prepare the mine closure plans for
      Cobriza and La Oroya to insure that they will comply with the technical and
      legal requirements. The financial guarantee will not be known until the final
      mine closure plan is approved therefore, the guarantee is estimated to be
      established in January of 2007.





Doe
      Run
      Peru has AROs at its Cobriza mine related to the costs associated with closing
      the mine openings and covering acid rock. Doe Run Peru is also responsible
      for
      the eventual covering and revegetation of mixed lead and copper slag also stored
      in Huanchan, an area a short distance from the La Oroya smelter where the slag
      is currently stored.





The
      Company’s total recorded liabilities for AROs were approximately $15,945 and
      $15,188 as of April 30, 2006 and October 31, 2005, respectively.





***Environmental
      Remediation - Domestic Operations***





The
      Company had recorded liabilities of approximately $15,000 and $20,000 related
      to
      remediation obligations as of April 30, 2006 and October 31, 2005,
      respectively.




Doe
      Run
      is subject to an Administrative Order on Consent (“AOC”) with the U.S.
      Environmental Protection Agency (“ U.S. EPA”), effective May 29, 2001, to study
      and address issues related to the slag pile, plant property, community soils
      adjacent to the primary smelter in Herculaneum, Missouri, elevated blood lead
      levels in the community and lead releases from the plant. This AOC was modified
      effective on May 20, 2004 which addressed the technical requirements concerning
      the slag pile design and construction along with adjustments to the remediation
      schedule. At April 30, 2006 the estimated remaining cost of remediating the
      soils of this community was approximately $434.




Doe
      Run
      signed a settlement agreement with the State of Missouri on April 26, 2002,
      whereby it agreed to offer to purchase approximately 160 residential properties
      in an area close to the smelter if the owner requests such an offer. Offers
      totaling $10,300 have been accepted and closed. The remaining offers have
      expired except for a few with pending closing dates or special arrangements
      for
      a total of $138. The formal program under the agreement is now essentially
      completed.




The
      Company’s statements of operations reflect losses from impairment or retirement
      of long-lived assets primarily related to the residential properties owned
      in
      Herculaneum, as it is probable that the cost of the properties will not be
      recovered through future cash flows.




Doe
      Run
      has received notice that it is a potentially responsible party (“PRP”) subject
      to liability under The Comprehensive Environmental Response, Compensation and
      Liability Act of 1980, as amended (“CERCLA”), at the following sites: six sites
      in St. Francois County, Missouri, including the Big River Mine Tailings site,
      the Bonne Terre site, the Federal site, the National site, the Rivermines site
      and the Leadwood site; sites comprising areas along roads











in
      Iron, Dent and Reynolds counties in Missouri; the
      Oronogo-Durenweg site in Jasper County, Missouri; the Cherokee County site
      in
      Cherokee County, Kansas; the Tar Creek site in Ottawa County, Oklahoma; the
      Block “P” site in Cascade County and Judith County, Montana; and the Missouri
      Electric Works site in Cape Girardeau, Missouri. There are two additional sites
      in St. Francois County for which the U.S. EPA has indicated it will issue
      notice. CERCLA provides for strict and, in certain circumstances, joint and
      several liability for response costs and natural resource damages. The Company’s
      estimate of the cost of the remediation of these sites, including the two
      additional sites in St. Francois County, is included in the total liability
      for
      remediation obligations, which the Company believes is adequate based on its
      investigations to date. However, depending upon the types of remediation
      required and certain other factors, additional costs at these sites,
      individually or collectively, could have a material adverse effect on the
      results of operations, financial condition and liquidity of the
      Company.




In
      addition to being asked to conduct remediation at the above sites, the U.S.
      EPA
      may also seek reimbursement from Doe Run for response actions it has conducted
      at these sites. The U.S. Government has advised PRP’s at the Tar Creek site,
      including Doe Run, that it will seek reimbursement for approximately $125
      million of such costs. Given legal issues about Doe Run’s responsibility for
      activities of a former subsidiary, the fact that the former subsidiary’s
      activities at the site were localized and small (less than 1% of the waste),
      and
      the major involvement at the site of the U.S. Government through the Bureau
      of
      Land Management’s and the Bureau of Indian Affairs’ management of mineral
      leasing at the site, the Company is unable to estimate the expected outcome
      of
      any such potential claim.




In
      February 2004 the U.S. Department of Agriculture issued a Unilateral
      Administrative Order (“UAO”) ordering certain remediation activities by Doe Run
      at the Block “P” mill site in Montana. Doe Run has requested that other parties
      be added to the order. Doe Run will seek reimbursement from the U.S. Government
      and these other parties. The final remediation was essentially completed as
      of
      October 31, 2005.




Doe
      Run
      has completed an Engineering Evaluation/Cost Analysis (“EE/CA”) for the Bonne
      Terre site and has signed two AOCs to conduct removal actions on the west and
      east portions of the site. Work is completed on the west Bonne Terre site and
      is
      nearly finished on the east site with completion expected in the summer of
      2006.




Doe
      Run
      has completed an EE/CA for the Rivermines site and, while unable to accept
      certain financial assurance provisions of a proposed AOC, has agreed to conduct
      a removal action at the site under a UAO. Work has commenced on the removal
      action. The EPA accelerated the timeframe to complete the majority of the
      remediation effort by the summer of 2006.




Doe
      Run
      is subject to an AOC with the U.S. EPA to remediate the Big River Mine Tailings
      site. The remediation work required by the AOC has been substantially completed
      and will continue with revegetation and ongoing monitoring and maintenance
      activities.




Doe
      Run
      has also signed AOCs to perform an EE/CA on each of the National and Leadwood
      sites for remediation of mine waste areas. The National EE/CA was completed
      by
      the PRPs and was submitted to the U.S. EPA for approval. The U.S. EPA then
      had
      two EE/CA’s prepared, the last of which was accepted by them. The cost of their
      remedy is higher than that estimated by the EE/CA prepared by Doe Run. On July
      6, 2006, the U.S. EPA issued a unilateral administrative order to four parties,
      the generating company and three landowners including Doe Run. Doe Run is
      negotiating its share with the generating PRP. The Leadwood EE/CA has been
      modified and submitted to the U.S. EPA for approval and it is contemplated
      that
      a unilateral order will be issued during the fiscal year to conduct the work.
      We
      would utilize Doe Run’s internal workforce which is about to complete work at
      Elvins-Rivermines. In addition, Doe Run has signed an AOC with the U.S. EPA
      to
      conduct a Remedial Investigation/Feasibility Study (“RI/FS”) to assess potential
      off-site impacts of these site operations on groundwater, residential soils,
      several creeks and a river and the need for related remediation. The initial
      draft of the RI/FS was submitted in early March of 2002. Doe Run signed an
      order
      to conduct interim measures, which consisted of blood lead testing of young
      children, residential soil sampling and limited soil remediation as indicated
      by
      the testing and sampling results, which was terminated and replaced by an AOC
      to
      conduct certain additional soil remediation in the area and has included its
      best estimate of these efforts in its recorded liabilities. The Company believes
      the recorded liabilities related to these sites are adequate. However, should
      remediation goals or areas change, requiring substantially increased measures,
      there can be no assurance that the recorded liabilities would be
      adequate.











In
      March
      of 2004, Doe Run received notice that it is a PRP subject to liability under
      CERCLA for contamination along roads in Iron, Dent and Reynolds counties in
      Missouri, along with a number of mining companies involved in the transportation
      of concentrates. After sampling approximately 750 houses by the U.S. EPA and
      the
      Missouri Department of Natural Resources, approximately 150 houses were
      identified as potentially requiring some level of remediation. Doe Run and
      four
      other mining companies have signed an AOC to conduct soil remediation at
      approximately 40 of these houses. The five companies have completed a mediation
      session concerning the allocation of costs and, subject to resolving certain
      outstanding issues, expect to modify the agreement between them resolving the
      allocation of the completed work. They are also expected to sign an agreement
      to
      resolve the management and expenditures regarding future work on this project.
      Also, in regard to potential contamination from transportation activities in
      and
      near the City of Viburnum, Doe Run has signed an AOC to conduct sampling and
      prepare a Preliminary Assessment/Site Inspection report. The draft of that
      work
      has been completed and submitted.




Doe
      Run
      has been advised that the U.S. EPA is considering taking certain response
      actions at a mine site in Madison County, Missouri known as the Mine LaMotte
      Site. Doe Run and the owner of the other 50% share of stock in the company
      that
      mined the site have signed an AOC to conduct an RI/FS at the site. This site
      is
      substantially smaller than the sites in St. Francois County where the Company
      has been named a PRP, and the potential issues are less complex. Doe Run has
      also been advised that remediation is required at a related small satellite
      mine
      site. After conducting an investigation, Doe Run has determined that it was
      not
      involved in operations at the satellite site, but further review will be
      required before a determination can be made as to whether it has any liability
      at the main site. At this time, based on preliminary information and an
      inspection of the sites, management does not believe that any future action
      will
      result in a material adverse impact to the results of operations, financial
      condition or liquidity of the Company.




Doe
      Run’s
      recycling facility is subject to corrective action requirements under RCRA
      as a
      result of a storage permit for certain wastes initially issued in 1989. This
      will involve remediation of solid waste management units at the site, and it
      is
      expected that the plan for corrective action will be approved in fiscal 2006.
      The Company’s estimate of the cost of this corrective action is $1,000. While
      management believes that recorded liabilities are adequate based on expectations
      of the closure plan requirements, regulators could require that additional
      measures be included in the finalized plan, which could change the estimate
      of
      the costs for corrective action.




***Environmental
      Remediation - Foreign Operations***




Doe
      Run
      Peru’s La Oroya operations historically and currently exceed some of the
      applicable maximum permissible limits established by MEM pertaining to air
      emissions and wastewater effluents quality. Prior to our acquisition of La
      Oroya, Metaloroya S.A., the former owner, a subsidiary of Empresa Minera del
      Centro del Peru S.A., which we refer to as Centromin, received approval from
      the
      Peruvian Government for a PAMA. The PAMA was designed to achieve compliance
      with
      MEM’s air and wastewater limits. It consisted of an environmental impact
      analysis, monitoring plan and data mitigation measures and a closure plan.
      The
      PAMA also set forth the actions and corresponding annual investments a company
      agrees to undertake in order to achieve compliance with the maximum permissible
      limits prior to expiration of the PAMA (ten years for smelters, such as Doe
      Run
      Peru’s operations in La Oroya, and five years for mining operations, such as
      Cobriza). The PAMA projects, which are more fully discussed below, were designed
      to achieve compliance with these requirements.





On
      December 29, 2004, the Peruvian Government issued a Supreme Decree No.
      046-2004-EM (“Supreme Decree”), which recognized that exceptional circumstances
      may justify an extension of the time to complete one or more projects within
      the
      scope of a PAMA. Since Doe Run Peru expected that it would not be able to comply
      with the spending requirements of La Oroya’s PAMA investment schedule by the end
      of calendar year 2006 with respect to certain projects, Doe Run Peru applied
      for
      an extension on December 20, 2005.





On
      May
      29, 2006, MEM approved the extension of certain PAMA projects through October
      31, 2009 (the “Modified PAMA”). Pursuant to the terms of the Modified PAMA, Doe
      Run Peru is now required to complete the acid plant projects for the lead
      circuit and the copper circuit by September 30, 2008 and October 31, 2009,
      respectively and Doe Run Peru remains obligated under the original PAMA to
      implement the following projects at its La Oroya smelter by December 31,
      2006:








§  Upgrade
      the acid plant for the zinc circuit;


§  Construct
      a treatment plant for the copper refinery effluent;


§  Construct
      an industrial wastewater treatment plant for the smelter and
      refinery;


§  Improve
      the slag handling system;


§  Improve
      Huanchan lead and copper slag deposits;


§  Construct
      an arsenic trioxide deposit;


§  Improve
      the zinc ferrite disposal site;


§  Construct
      domestic wastewater treatment and domestic waste disposal; and


§  Construct
      a monitoring station.





The
      Modified PAMA also requires Doe Run Peru to comply with certain special measures
      not previously required. These measures include, but are not limited to,
      implementation of projects to reduce stack and fugitive emissions which are
      designed to meet certain air quality objectives, a continuing improvement
      provision that provides for additional pollution controls to address the
      shortfalls in meeting objectives or to further reduce risks and certain measures
      regarding protection of public health, including, among others, actions for
      the
      reduction of lead in blood levels and special health programs for children
      and
      expectant women.





MEM
      has
      also required that the cost of a planned replacement of the oxy-fuel
      reverberatory furnace with a submerged lanced reactor furnace that will reduce
      gas volume while enriching sulfurous gas feed to the copper circuit sulfuric
      acid plant be included as part of the cost of the Modified PAMA acid plant
      projects. The estimated cost of this reactor furnace is $57,000, which brings
      the total remaining investment needed to build the sulfuric acid plants to
      approximately $152,590.





Additional
      PAMA projects required for fiscal year 2006 include an upgrade of the
      ventilation system in the Sinter plant, completion of the enclosure work around
      the lead and dross furnace, the enclosure of the anode residue plant along
      with
      the elimination of its nitrous gases, and the reduction of fugitive emissions
      from the copper and lead beds. The total cost of the currently remaining
      Modified PAMA projects as f April 30, 2006 was approximately $175,000 of which
      $31,500 remains to be spent in the 2006 calendar year.





Doe
      Run
      Peru’s ability to complete the required projects by the specific deadlines
      depends in large part upon the availability of sufficient funds. Doe Run Peru
      believes that sufficient funds will be available on a timely basis, but the
      availability of sufficient funds is largely dependent upon the results of its
      business operations and the possibility of additional financing; therefore,
      there can be no assurance that sufficient funds will be available for these
      projects.





Consistent
      with the requirements of the Supreme Decree providing for the possibility of
      PAMA extensions, in addition to other terms and conditions, the Modified PAMA
      contains two separate financial security arrangements to ensure that Doe Run
      Peru fulfills its statutory obligation to complete the Modified PAMA
      projects.





First,
      Doe Run Peru has established an environmental trust account with Scotiabank
      Peru
      into which receipts from sales are required to be remitted directly in an amount
      to have cash available sufficient to pay the expenditures estimated to be
      incurred in each subsequent month by Doe Run Peru in complying with the Modified
      PAMA. Second, Doe Run Peru has provided to MEM a bank letter of guarantee in
      the
      amount of $28,641 (an amount estimated to be 20% of the projected cost of the
      Modified PAMA projects to be spent after 2006). Doe Run Peru deposited such
      amount with Standard Chartered Bank which has in turn provided for the issuance
      to MEM of the necessary bank letter of guarantee relying solely upon the funds
      so deposited. Doe Run Peru has amended the Doe Run Peru Revolving Credit
      Facility to allow for these arrangements.





Although
      not contemplated by the Supreme Decree providing for the possibility of PAMA
      extensions, as a condition of granting the Modified PAMA, MEM has provided
      that
      Doe Run Peru could lose the benefit of the extension if Doe Run Peru makes
      any
      payments to any shareholder or affiliate, which could affect the full and
      satisfactory compliance with the Modified PAMA obligations. This provision
      has
      not been agreed to by Doe Run or Doe Run Peru but was imposed under applicable
      law over their objection. Doe Run Peru was required, however, to provide a
      bank
      letter of guarantee in the amount of $4,000 which may be drawn upon to fund
      Modified PAMA projects if Doe Run Peru makes any payments to any shareholder
      or
      affiliate. Doe Run Peru satisfied this requirement











by
      depositing such amount with Standard Chartered Bank
      which has in turn provided for the issuance to MEM of the necessary bank letter
      of guarantee relying solely upon the funds so deposited.


Separately,
      Renco has confirmed to MEM that Renco understands that Doe Run Peru could lose
      the benefit of the extension if Doe Run Peru makes any payments to any
      shareholder or affiliate which could affect the full and satisfactory compliance
      with Doe Run Peru’s Modified PAMA obligations and Renco has stated that Renco
      has no intention of causing, and will not do anything to cause, Doe Run Peru
      to
      make any such payment.





In
      connection with its negotiations with MEM regarding the Modified PAMA, Doe
      Run
      voluntarily agreed to extend the maturity of Doe Run Peru’s $139,063
      intercompany note payable to Doe Run until such time as the Modified PAMA has
      been completed.





No
      assurance can be given that implementation of the projects under the Modified
      PAMA is feasible or that their implementation will achieve compliance with
      the
      applicable legal requirements by the end of the Modified PAMA period. The
      Peruvian Government may, in the future, require compliance with additional
      environmental regulations that could adversely affect Doe Run Peru’s business,
      financial condition and results of operations, as well as their ability to
      comply with the Modified PAMA. After expiration of the Modified PAMA, Doe Run
      Peru must comply with all applicable standards and requirements.





The
      Cobriza mine has a separate PAMA in which Doe Run Peru committed to complete
      projects to manage tailings, mine drainage, sewage and garbage. Doe Run Peru
      completed its own PAMA requirements with respect to Cobriza in June of 2004
      and
      is in compliance with emissions standards required by this PAMA.





In
      addition to its PAMA obligations, Doe Run Peru is responsible for the
      remediation costs relating to the zinc ferrite disposal site at La Oroya. The
      current closure plan provides for encapsulating the ferrite residues in place
      in
      Huanchan, an area a short distance from the smelter where they are currently
      stored, for which an environmental liability of $1,600 has been recorded as
      of
      April 30, 2006 and October 31, 2005.





Under
      the
      purchase agreement related to the acquisition of the La Oroya assets in October
      of 1997, Centromin, the prior owner of the La Oroya smelter and Cobriza mine,
      agreed to indemnify Doe Run Peru against environmental liability arising out
      of
      its prior operations and their apportioned share of any complaint related to
      emissions. Performance of the indemnity has been guaranteed by the Peruvian
      Government through the enactment of the Supreme Decree No. 042-97-PCM. However,
      there can be no assurance that Centromin will satisfy its environmental
      obligation and investment requirements or that the guarantee will be honored.
      Any failure by Centromin to satisfy its environmental obligations could
      adversely affect Doe Run Peru’s business, financial condition and results of
      operations.





***Environmental
      Remediation -***  ***Consolidated***




The
      Company believes its reserves for domestic and foreign environmental, mine
      closure and reclamation matters are adequate, based on the information currently
      available. Depending upon the type and extent of activities required, revisions
      to management’s estimates of costs to perform these activities are reasonably
      possible in the near term. Therefore, there can be no assurance that additional
      costs, both individually and in the aggregate, would not have a material adverse
      effect on the results of operations, financial condition and liquidity of the
      Company.




**(8)**  **Litigation** ******





Doe
      Run
      is a defendant in 29 lawsuits alleging certain damages stemming from the
      operations at the Herculaneum primary smelter. Three of these cases are class
      action lawsuits. In two cases, the plaintiffs seek to have certified a class
      of
      property owners in a certain section of Herculaneum, alleging that property
      values have been damaged due to the operations of the smelter. In another case,
      plaintiffs seek to have certified a class of children who lived in Herculaneum
      during a period of time when they were less than six years old and children
      born
      to mothers who lived in Herculaneum during their pregnancies. The remedy sought
      is medical monitoring for the class. Twenty-six of the cases are personal injury
      actions by 161 individuals who allege damages from the effects of lead due
      to
      operations at the smelter. Punitive damages also are being sought in each case.
      Doe Run is also a defendant in a wrongful death action concerning a drowning
      in
      the City of Herculaneum.











A
      resident of Herculaneum has claimed personal injuries allegedly resulting from
      exposure to emissions from the smelter. No suit has yet been filed in this
      matter.




Doe
      Run
      is a defendant in 17 lawsuits alleging certain damages from discontinued mine
      facilities in St. Francois County. Four of the cases are class action lawsuits.
      The first case seeks to have certified a class consisting of property owners
      in
      Bonne Terre, Missouri, alleging that property values have been damaged due
      to
      the tailings from the discontinued operations. In the second case plaintiffs
      seek to have certified a class of children who lived, went to school or day
      care
      in Bonne Terre, or whose mothers lived in Bonne Terre during their pregnancies.
      The third and fourth cases are class actions for property damage and medical
      monitoring concerning alleged damages caused by chat, tailings and related
      operations in six areas in St. Francois County. The remainder of the cases
      allege personal injury to 28 individuals who were exposed to lead in St.
      Francois County.




Doe
      Run
      is a defendant in a lawsuit by the BNSF Railway Company, who has alleged that
      Doe Run and other companies associated with lead mining operations in Missouri
      are responsible for property damage at certain rail yards and for contribution
      and indemnity for costs incurred by BNSF associated with settlement by BNSF
      of
      lead exposure cases. Given the early stage of this case, the Company is unable
      at this time to estimate the expected outcome and any final costs of this
      action.




Doe
      Run
      is a defendant in five lawsuits alleging certain damages from past mining
      operations in Ottawa County, Oklahoma.  Three of these suits are class
      actions alleging personal injury and property damage in Picher and Quapaw,
      Oklahoma.  One lawsuit, a consolidation of five suits, alleges injury to
      seven children living in Picher, Oklahoma.  One lawsuit, a consolidation of
      two suits, alleges injury to 42 children living in Ottawa County.




Doe
      Run,
      with several other defendants, has been named in four cases in Maryland but
      has
      not yet been joined as a defendant in any of these cases. These suits seek
      damages, alleging personal injuries as a result of lead poisoning from exposure
      to lead paint and tetraethyl lead dust. The suits seek punitive damages. Doe
      Run
      was dismissed from two similar cases in which it was joined as a defendant.
      Until Doe Run is actually joined as a defendant in one or more of these cases,
      material liability from these cases is considered remote.




Doe
      Run
      is currently a defendant in three asbestos injury suits filed in Madison County,
      Illinois, each alleging that a worker was exposed to asbestos at the premises
      of
      the St. Joe Minerals Corporation. However, Doe Run has not been properly served
      in one of these cases. Doe Run has reached a tentative settlement in another
      of
      these cases prior to going to trial. Doe Run is also a defendant in an asbestos
      case filed in Lawrence County, Pennsylvania




Doe
      Run
      is in a commercial dispute with a buyer concerning one ocean shipment of lead
      concentrates. Buyer is seeking reimbursement of expenses incurred to address
      a
      large amount of water that appeared during the voyage on top of concentrates
      in
      the forward holds. This contract dispute is in arbitration before the
      LME.




Doe
      Run
      is a defendant in a lawsuit by Korea Zinc Co. and affiliates filed on January
      19, 2006 in the Circuit Court of St. Louis County, concerning alleged violations
      of an agreement regarding the sale of zinc concentrates. Doe Run disputes the
      claim and will seek dismissal because the dispute should be subject to
      arbitration.




Doe
      Run
      is a defendant in a lawsuit filed by Nadist, LLC in U.S. District Court for
      the
      Eastern District of Missouri on June 23, 2006 concerning the Sweetwater Mine
      and
      Mill. The lawsuit purports to constitute a citizen suit alleging violations
      of
      certain U.S. environmental laws and includes certain state law
      allegations.




Doe
      Run
      has been named as a party in various lawsuits relating to certain operations
      of
      its predecessor. Fluor Corporation, the owner of Doe Run’s predecessor, retained
      the obligation for any costs of defense or claims relating to these lawsuits.
      Should Fluor Corporation become unable to fulfill its contractual obligation,
      Doe Run could be liable for any costs or claims resulting from these lawsuits.
      There is no reason at this time to believe that Fluor Corporation could not
      fulfill its contractual obligations.











Doe
      Run
      Peru is currently a defendant in 207 lawsuits in the Lima, Peru labor courts
      that allege damage to workers from industrial diseases. Doe Run Peru has made
      claims in most of the cases against Centromin and has also made claims against
      both governmental agencies and private companies that provide workers’
insurance. The average claim is $17. Of 19 previously concluded cases in this
      category, 18 were dismissed and 1 resulted in an award of $9.




Doe
      Run
      Peru is also currently a defendant in 164 lawsuits by workers alleging that
      they
      are owed certain differences in salaries and benefits. The average claim is
      $20.
      Of 38 previously concluded cases in this category, 29 were dismissed and 9
      resulted in awards totaling $19. Doe Run Peru is also a defendant in a lawsuit
      by the Yauli-La Oroya Employees Union concerning salaries and benefits. The
      claims of the 149 workers remaining in the lawsuit have been valued at a total
      of $218 according to a report by an expert appointed by the court.




Doe
      Run
      Peru is also currently a defendant in 22 lawsuits alleging various labor claims
      including indemnification for arbitrary dismissal, nullity of dismissal, moral
      damage compensation, compensatory damages from work accident and readmission
      of
      worker. The average claim is $7. Of 30 previously concluded cases in this
      category, 26 were dismissed and 4 resulted in awards totaling $21.




The
      amount of awards in the various categories of lawsuits referenced above
      represented total judgments issued by the relevant courts. For certain of these
      lawsuits, Centromin will pay a portion of the total award.




On
      January 19, 2005, Doe Run Peru was served with a lawsuit by an association
      of
      municipalities of the Junin Region of Peru against Doe Run Peru and two other
      mining companies. This lawsuit alleges environmental damages to the Mantaro
      River basin in the amount of $5 billion. On February 2, 2006, Doe Run Peru
      was
      served with a lawsuit by the municipality of Jauja. This lawsuit alleges
      environmental damages to the Mantaro River basin in the amount of $5,000.
      Material liability to Doe Run Peru, in these two actions, is believed to be
      remote based on the opinion of management and outside counsel for Doe Run Peru.
      Any potential judgment would be subject to the indemnification obligations
      of
      Centromin, which are guaranteed by the Peruvian government.




On
      December 3, 2003, Doe Run Peru filed an administrative lawsuit against the
      Yauli
      - La Oroya Provincial City Hall in order to nullify and void a number of fines
      for the amount of $2,800. Doe Run Peru was fined for not having construction
      licenses for the PAMA projects.




Since
      most of the above cases are either in the pleading or discovery stages, the
      Company is unable at this time to estimate the expected outcome and the final
      costs, except as noted, of these actions. No amounts have been accrued as
      liabilities related to these actions. There can be no assurance that these
      cases
      would not have a material adverse effect, both individually and in the
      aggregate, on the results of operations, financial condition and liquidity
      of
      the Company. The Company has and will continue to vigorously defend itself
      against such claims.




**(9)**  **Guarantor
      Subsidiaries**





The
      Guarantor Subsidiaries (Fabricated Products, Inc. (“FPI”) and DR Land Holdings,
      LLC (together with FPI, the “Domestic Guarantors”) Buick Resource Recycling
      Facility, LLC, Doe Run Cayman Ltd. (“Doe Run Cayman”) and its subsidiary Doe Run
      Peru) have jointly and severally, fully, unconditionally and irrevocably
      guaranteed the 11.75% notes of the Company. Doe Run Cayman has no operations
      separate from those of Doe Run Peru. Separate financial statements and other
      disclosures concerning certain Guarantor Subsidiaries and disclosures concerning
      non-Guarantor Subsidiaries have not been presented because management has
      determined that such information is not material to investors. Intercompany
      transactions eliminated in consolidation consist of various service and agency
      fees between Doe Run and Doe Run Peru and sales of metal to Doe Run by Doe
      Run
      Peru and to FPI by Doe Run.














**Condensed
                Consolidating Balance Sheet (unaudited)****As
                of April 30, 2006****(Dollars
                in thousands, except share and per share data)**The
                Company
            
            BuickExcluding
            
            Resource
            
            Other
            
            Doe
                RunGuarantor
            
            Recycling
            
            Domestic
            
            Cayman
                and
            
            
            
            TheSubsidiaries
            
            Facility,
                LLC
            
            Guarantors
            
            Subsidiary
            
            Eliminations
            
            Company**ASSETS**Current
                assets:Cash
            
            $
            1,072
            
            $
            -
            
            $
            1
            
            $
            22,840
            
            $
            -
            
            $
            23,913Trade
                accounts receivable, net of allowance fordoubtful
                accounts
            
            
            84,869
            
            
            -
            
            
            2,565
            
            
            55,677
            
            
            (7,363
            )
            
            135,748Inventories
            
            
            42,495
            
            
            -
            
            
            1,605
            
            
            123,436
            
            
            (40
            )
            
            167,496Prepaid
                expenses and other current assets
            
            
            4,776
            
            
            -
            
            
            40
            
            
            22,772
            
            
            -
            
            
            27,588Due
                from subsidiaries/parent
            
            
            9,023
            
            
            2,512
            
            
            -
            
            
            -
            
            
            (11,535
            )
            
            -Total
                current assets
            
            
            142,235
            
            
            2,512
            
            
            4,211
            
            
            224,725
            
            
            (18,938
            )
            
            354,745Property,
                plant and equipment, net
            
            
            75,477
            
            
            14,720
            
            
            805
            
            
            171,713
            
            
            -
            
            
            262,715Due
                from subsidiaries
            
            
            156,753
            
            
            -
            
            
            -
            
            
            -
            
            
            (156,753
            )
            
            -Other
                noncurrent assets, net
            
            
            8,300
            
            
            -
            
            
            63
            
            
            270
            
            
            -
            
            
            8,633Investment
                in subsidiaries
            
            
            27,984
            
            
            -
            
            
            -
            
            
            -
            
            
            (27,984
            )
            
            -Total
                assets
            
            $
            410,749
            
            $
            17,232
            
            $
            5,079
            
            $
            396,708
            
            $
            (203,675
            )
            $
            626,093**LIABILITIES
                AND SHAREHOLDERS' EQUITY (DEFICIT)**Current
                liabilities:Current
                maturities of long-term debt
            
            $
            67,581
            
            $
            -
            
            $
            -
            
            $
            46,006
            
            $
            -
            
            $
            113,587Accounts
                payable
            
            
            31,864
            
            
            -
            
            
            434
            
            
            133,219
            
            
            (7,363
            )
            
            158,154Accrued
                liabilities
            
            
            68,587
            
            
            -
            
            
            604
            
            
            37,558
            
            
            -
            
            
            106,749Due
                to parent/subsidiaries
            
            
            2,512
            
            
            -
            
            
            9,023
            
            
            -
            
            
            (11,535
            )
            
            -Total
                current liabilities
            
            
            170,544
            
            
            -
            
            
            10,061
            
            
            216,783
            
            
            (18,898
            )
            
            378,490Long-term
                debt, less current maturities
            
            
            258,704
            
            
            -
            
            
            -
            
            
            3,935
            
            
            -
            
            
            262,639Due
                to parent
            
            
            -
            
            
            -
            
            
            -
            
            
            156,753
            
            
            (156,753
            )
            
            -Other
                noncurrent liabilities
            
            
            63,414
            
            
            -
            
            
            3
            
            
            3,460
            
            
            -
            
            
            66,877Total
                liabilities
            
            
            492,662
            
            
            -
            
            
            10,064
            
            
            380,931
            
            
            (175,651
            )
            
            708,006Series
                A redeemable preferred stock
            
            
            30,276
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            30,276Shareholders'
                equity (deficit):Common
                stock, $.10 par value, 1,667 shares authorized,1000
                shares issued and outstanding
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Common
                stock, $1 par value, 1,000 shares authorized,issued
                and outstanding
            
            
            -
            
            
            -
            
            
            1
            
            
            -
            
            
            (1
            )
            
            -Common
                stock, $1 par value, 2,005,000 shares authorized,issued
                and outstanding
            
            
            -
            
            
            -
            
            
            -
            
            
            2,005
            
            
            (2,005
            )
            
            -Additional
                paid in capital
            
            
            -
            
            
            23,305
            
            
            1,205
            
            
            -
            
            
            (24,510
            )
            
            -Accumulated
                preferred stock dividends in excess
            
            
            
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            -of
                paid in capital
            
            
            (5,038
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (5,038
            )Retained
                earnings (accumulated deficit) and accumulatedother
                comprehensive losses
            
            
            (107,151
            )
            
            (6,073
            )
            
            (6,191
            )
            
            13,772
            
            
            (1,508
            )
            
            (107,151
            )Total
                shareholders' equity (deficit)
            
            
            (112,189
            )
            
            17,232
            
            
            (4,985
            )
            
            15,777
            
            
            (28,024
            )
            
            (112,189
            )Total
                liabilities and shareholders' equity (deficit)
            
            $
            410,749
            
            $
            17,232
            
            $
            5,079
            
            $
            396,708
            
            $
            (203,675
            )
            $
            626,093















**Condensed
                Consolidating Balance Sheet****As
                of October 31, 2005****(Dollars
                in thousands, except share and per share data)**The
                Company
            
            BuickExcluding
            
            Resource
            
            Other
            
            Doe
                RunGuarantor
            
            Recycling
            
            Domestic
            
            Cayman
                and
            
            
            
            TheSubsidiaries
            
            Facility,
                LLC
            
            Guarantors
            
            Subsidiary
            
            Eliminations
            
            Company**ASSETS**Current
                assets:Cash
            
            $
            8,916
            
            $
            -
            
            $
            1
            
            $
            14,569
            
            $
            -
            
            $
            23,486Trade
                accounts receivable, net of allowance for doubtful
                accounts
            
            
            56,454
            
            
            -
            
            
            2,202
            
            
            31,637
            
            
            (4,553
            )
            
            85,740Inventories
            
            
            35,613
            
            
            -
            
            
            1,301
            
            
            68,756
            
            
            (36
            )
            
            105,634Prepaid
                expenses and other current assets
            
            
            4,564
            
            
            -
            
            
            59
            
            
            16,191
            
            
            -
            
            
            20,814Due
                from subsidiaries
            
            
            151,617
            
            
            2,037
            
            
            -
            
            
            -
            
            
            (153,654
            )
            
            -Total
                current assets
            
            
            257,164
            
            
            2,037
            
            
            3,563
            
            
            131,153
            
            
            (158,243
            )
            
            235,674Property,
                plant and equipment, net
            
            
            74,604
            
            
            16,083
            
            
            1,013
            
            
            161,563
            
            
            -
            
            
            253,263Due
                from subsidiaries
            
            
            14,057
            
            
            -
            
            
            -
            
            
            -
            
            
            (14,057
            )
            
            -Other
                noncurrent assets, net
            
            
            5,775
            
            
            -
            
            
            63
            
            
            -
            
            
            -
            
            
            5,838Investment
                in subsidiaries
            
            
            6,708
            
            
            -
            
            
            -
            
            
            -
            
            
            (6,708
            )
            
            -Total
                assets
            
            $
            358,308
            
            $
            18,120
            
            $
            4,639
            
            $
            292,716
            
            $
            (179,008
            )
            $
            494,775**LIABILITIES
                AND SHAREHOLDERS' EQUITY (DEFICIT)**Current
                liabilities:Current
                maturities of long-term debt
            
            $
            75,126
            
            $
            -
            
            
            -
            
            $
            39,821
            
            $
            -
            
            $
            114,947Accounts
                payable
            
            
            29,007
            
            
            -
            
            
            706
            
            
            67,115
            
            
            (4,553
            )
            
            92,275Accrued
                liabilities
            
            
            55,392
            
            
            -
            
            
            468
            
            
            31,200
            
            
            -
            
            
            87,060Due
                to parent/subsidiaries
            
            
            2,037
            
            
            -
            
            
            8,554
            
            
            143,063
            
            
            (153,654
            )
            
            -Total
                current liabilities
            
            
            161,562
            
            
            -
            
            
            9,728
            
            
            281,199
            
            
            (158,207
            )
            
            294,282Long-term
                debt, less current maturities
            
            
            271,566
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            271,566Due
                to parent
            
            
            -
            
            
            -
            
            
            -
            
            
            14,057
            
            
            (14,057
            )
            
            -Other
                noncurrent liabilities
            
            
            64,590
            
            
            -
            
            
            281
            
            
            3,466
            
            
            -
            
            
            68,337Total
                liabilities
            
            
            497,718
            
            
            -
            
            
            10,009
            
            
            298,722
            
            
            (172,264
            )
            
            634,185Series
                A redeemable preferred stock
            
            
            28,495
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            28,495Shareholders'
                equity (deficit):Common
                stock, $.10 par value, 1,667 shares authorized,1,000
                shares issued and outstanding
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Common
                stock, $1 par value, 1,000 shares authorized,issued
                and outstanding
            
            
            -
            
            
            -
            
            
            1
            
            
            -
            
            
            (1
            )
            
            -Common
                stock, $1 par value, 2,005,000 shares authorized,issued
                and outstanding
            
            
            -
            
            
            -
            
            
            -
            
            
            2,005
            
            
            (2,005
            )
            
            -Additional
                paid in capital
            
            
            -
            
            
            23,305
            
            
            1,205
            
            
            -
            
            
            (24,510
            )
            
            -Accumulated
                preferred stock dividends in excessof
                paid in capital
            
            
            (3,257
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,257
            )Accumulated
                deficit and accumulated othercomprehensive
                losses
            
            
            (164,648
            )
            
            (5,185
            )
            
            (6,576
            )
            
            (8,011
            )
            
            19,772
            
            
            (164,648
            )Total
                shareholders' equity (deficit)
            
            
            (167,905
            )
            
            18,120
            
            
            (5,370
            )
            
            (6,006
            )
            
            (6,744
            )
            
            (167,905
            )Total
                liabilities and shareholders' equity (deficit)
            
            $
            358,308
            
            $
            18,120
            
            $
            4,639
            
            $
            292,716
            
            $
            (179,008
            )
            $
            494,775















**Condensed
                Consolidating Statement of Operations (unaudited)****Six
                Months Ended April 30, 2006****(Dollars
                in thousands)**The
                Company
            
            BuickExcluding
            
            Resource
            
            
            
            Doe
                RunGuarantor
            
            Recycling
            
            Domestic
            
            Cayman
                and
            
            
            
            TheSubsidiaries
            
            Facility,
                LLC
            
            Guarantors
            
            Subsidiary
            
            Eliminations
            
            CompanyNet
                sales
            
            $
            237,845
            
            $
            -
            
            $
            7,393
            
            $
            462,696
            
            $
            (13,589
            )
            $
            694,345Costs
                and expenses:Cost
                of sales
            
            
            161,435
            
            
            -
            
            
            5,248
            
            
            417,249
            
            
            (13,585
            )
            
            570,347Depletion,
                depreciation and amortization
            
            
            4,771
            
            
            1,364
            
            
            219
            
            
            6,774
            
            
            -
            
            
            13,128Selling,
                general and administrative
            
            
            15,425
            
            
            -
            
            
            1,327
            
            
            11,816
            
            
            -
            
            
            28,568Unrealized
                gain on derivative financial instruments
            
            
            (1,963
            )
            
            -
            
            
            -
            
            
            (2,293
            )
            
            -
            
            
            (4,256
            )Other
            
            
            2,028
            
            
            -
            
            
            -
            
            
            1,087
            
            
            -
            
            
            3,115Total
                costs and expenses
            
            
            181,696
            
            
            1,364
            
            
            6,794
            
            
            434,633
            
            
            (13,585
            )
            
            610,902Income
                (loss) from operations
            
            
            56,149
            
            
            (1,364
            )
            
            599
            
            
            28,063
            
            
            (4
            )
            
            83,443Other
                income (expense):Interest
                expense, net
            
            
            (2,004
            )
            
            -
            
            
            (217
            )
            
            (1,504
            )
            
            -
            
            
            (3,725
            )Other,
                net
            
            
            (487
            )
            
            475
            
            
            3
            
            
            494
            
            
            -
            
            
            485Equity
                in earnings of subsidiaries
            
            
            21,275
            
            
            -
            
            
            -
            
            
            -
            
            
            (21,275
            )
            
            -18,784
            
            
            475
            
            
            (214
            )
            
            (1,010
            )
            
            (21,275
            )
            
            (3,240
            )Income
                (loss) before income tax expense
            
            
            74,933
            
            
            (889
            )
            
            385
            
            
            27,053
            
            
            (21,279
            )
            
            80,203Income
                tax expense
            
            
            -
            
            
            -
            
            
            -
            
            
            5,270
            
            
            -
            
            
            5,270Net
                income (loss)
            
            
            74,933
            
            
            (889
            )
            
            385
            
            
            21,783
            
            
            (21,279
            )
            
            74,933Preferred
                stock dividends
            
            
            (1,781
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,781
            )Net
                income (loss) allocable to common shares
            
            $
            73,152
            
            $
            (889
            )
            $
            385
            
            $
            21,783
            
            $
            (21,279
            )
            $
            73,152















**Condensed
                Consolidating Statement of Operations (unaudited)****Three
                Months Ended April 30, 2006****(Dollars
                in thousands)**The
                Company
            
            BuickExcluding
            
            Resource
            
            
            
            Doe
                RunGuarantor
            
            Recycling
            
            Domestic
            
            Cayman
                and
            
            
            
            TheSubsidiaries
            
            Facility,
                LLC
            
            Guarantors
            
            Subsidiary
            
            Eliminations
            
            CompanyNet
                sales
            
            $
            129,015
            
            $
            -
            
            $
            4,030
            
            $
            253,764
            
            $
            (6,588
            )
            $
            380,221Costs
                and expenses:Cost
                of sales
            
            
            83,981
            
            
            -
            
            
            2,707
            
            
            226,815
            
            
            (6,543
            )
            
            306,960Depletion,
                depreciation and amortization
            
            
            2,447
            
            
            684
            
            
            109
            
            
            3,775
            
            
            -
            
            
            7,015Selling,
                general and administrative
            
            
            8,958
            
            
            -
            
            
            671
            
            
            5,832
            
            
            -
            
            
            15,461Unrealized
                gain on derivative financial instruments
            
            
            (2,278
            )
            
            -
            
            
            -
            
            
            (23
            )
            
            -
            
            
            (2,301
            )Other
            
            
            1,011
            
            
            -
            
            
            -
            
            
            797
            
            
            -
            
            
            1,808Total
                costs and expenses
            
            
            94,119
            
            
            684
            
            
            3,487
            
            
            237,196
            
            
            (6,543
            )
            
            328,943Income
                (loss) from operations
            
            
            34,896
            
            
            (684
            )
            
            543
            
            
            16,568
            
            
            (45
            )
            
            51,278Other
                income (expense):Interest
                expense, net
            
            
            (851
            )
            
            -
            
            
            (101
            )
            
            (36
            )
            
            -
            
            
            (988
            )Other,
                net
            
            
            (246
            )
            
            230
            
            
            1
            
            
            594
            
            
            -
            
            
            579Equity
                in earnings of subsidiaries
            
            
            13,642
            
            
            -
            
            
            -
            
            
            -
            
            
            (13,642
            )
            
            -12,545
            
            
            230
            
            
            (100
            )
            
            558
            
            
            (13,642
            )
            
            (409
            )Income
                (loss) before income tax expense
            
            
            47,441
            
            
            (454
            )
            
            443
            
            
            17,126
            
            
            (13,687
            )
            
            50,869Income
                tax expense
            
            
            -
            
            
            -
            
            
            -
            
            
            3,428
            
            
            -
            
            
            3,428Net
                income (loss)
            
            
            47,441
            
            
            (454
            )
            
            443
            
            
            13,698
            
            
            (13,687
            )
            
            47,441Preferred
                stock dividends
            
            
            (891
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (891
            )Net
                income (loss) allocable to common shares
            
            $
            46,550
            
            $
            (454
            )
            $
            443
            
            $
            13,698
            
            $
            (13,687
            )
            $
            46,550













**Condensed
                Consolidating Statement of Operations (unaudited)****Six
                Months Ended April 30, 2005****(Dollars
                in thousands)**The
                Company
            
            BuickExcluding
            
            Resource
            
            
            
            Doe
                RunGuarantor
            
            Recycling
            
            Domestic
            
            Cayman
                and
            
            
            
            TheSubsidiaries
            
            Facility,
                LLC
            
            Guarantors
            
            Subsidiary
            
            Eliminations
            
            CompanyNet
                sales
            
            $
            170,687
            
            $
            -
            
            $
            7,201
            
            $
            309,425
            
            $
            (3,615
            )
            $
            483,698Costs
                and expenses:Cost
                of sales
            
            
            130,709
            
            
            -
            
            
            5,240
            
            
            285,010
            
            
            (3,628
            )
            
            417,331Depletion,
                depreciation and amortization
            
            
            4,533
            
            
            1,256
            
            
            209
            
            
            5,903
            
            
            -
            
            
            11,901Selling,
                general and administrative
            
            
            12,631
            
            
            -
            
            
            1,202
            
            
            8,853
            
            
            -
            
            
            22,686Unrealized
                (gain) loss on derivative financial instruments
            
            
            (1,492
            )
            
            -
            
            
            -
            
            
            231
            
            
            -
            
            
            (1,261
            )Other
            
            
            2,840
            
            
            29
            
            
            152
            
            
            137
            
            
            -
            
            
            3,158Total
                costs and expenses
            
            
            149,221
            
            
            1,285
            
            
            6,803
            
            
            300,134
            
            
            (3,628
            )
            
            453,815Income
                (loss) from operations
            
            
            21,466
            
            
            (1,285
            )
            
            398
            
            
            9,291
            
            
            13
            
            
            29,883Other
                income (expense):Interest
                expense, net
            
            
            (5,207
            )
            
            -
            
            
            (314
            )
            
            (1,234
            )
            
            -
            
            
            (6,755
            )Other,
                net
            
            
            (438
            )
            
            446
            
            
            2
            
            
            215
            
            
            -
            
            
            225Equity
                in earnings of subsidiaries
            
            
            7,532
            
            
            -
            
            
            -
            
            
            -
            
            
            (7,532
            )
            
            -1,887
            
            
            446
            
            
            (312
            )
            
            (1,019
            )
            
            (7,532
            )
            
            (6,530
            )Income
                (loss) before income tax expense
            
            
            23,353
            
            
            (839
            )
            
            86
            
            
            8,272
            
            
            (7,519
            )
            
            23,353Income
                tax expense
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                income (loss)
            
            
            23,353
            
            
            (839
            )
            
            86
            
            
            8,272
            
            
            (7,519
            )
            
            23,353Preferred
                stock dividends
            
            
            (1,583
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,583
            )Net
                income (loss) allocable to common shares
            
            $
            21,770
            
            $
            (839
            )
            $
            86
            
            $
            8,272
            
            $
            (7,519
            )
            $
            21,770















**Condensed
                Consolidating Statement of Operations (unaudited)****Three
                Months Ended April 30, 2005****(Dollars
                in thousands)**The
                Company
            
            BuickExcluding
            
            Resource
            
            
            
            Doe
                RunGuarantor
            
            Recycling
            
            Domestic
            
            Cayman
                and
            
            
            
            TheSubsidiaries
            
            Facility,
                LLC
            
            Guarantors
            
            Subsidiary
            
            Eliminations
            
            CompanyNet
                sales
            
            $
            86,305
            
            $
            -
            
            $
            3,386
            
            $
            158,316
            
            $
            (291
            )
            $
            247,716Costs
                and expenses:Cost
                of sales
            
            
            70,671
            
            
            -
            
            
            2,290
            
            
            146,646
            
            
            (279
            )
            
            219,328Depletion,
                depreciation and amortization
            
            
            2,274
            
            
            633
            
            
            109
            
            
            2,748
            
            
            -
            
            
            5,764Selling,
                general and administrative
            
            
            6,605
            
            
            -
            
            
            615
            
            
            4,539
            
            
            -
            
            
            11,759Unrealized
                gain on derivative financial instruments
            
            
            (383
            )
            
            -
            
            
            -
            
            
            (80
            )
            
            -
            
            
            (463
            )Other
            
            
            1,319
            
            
            -
            
            
            (1
            )
            
            3
            
            
            -
            
            
            1,321Total
                costs and expenses
            
            
            80,486
            
            
            633
            
            
            3,013
            
            
            153,856
            
            
            (279
            )
            
            237,709Income
                (loss) from operations
            
            
            5,819
            
            
            (633
            )
            
            373
            
            
            4,460
            
            
            (12
            )
            
            10,007Other
                income (expense):Interest
                expense, net
            
            
            (2,528
            )
            
            -
            
            
            (158
            )
            
            (628
            )
            
            -
            
            
            (3,314
            )Other,
                net
            
            
            (359
            )
            
            222
            
            
            -
            
            
            110
            
            
            -
            
            
            (27
            )Equity
                in earnings of subsidiaries
            
            
            3,734
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,734
            )
            
            -847
            
            
            222
            
            
            (158
            )
            
            (518
            )
            
            (3,734
            )
            
            (3,341
            )Income
                (loss) before income tax expense
            
            
            6,666
            
            
            (411
            )
            
            215
            
            
            3,942
            
            
            (3,746
            )
            
            6,666Income
                tax expense
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                income (loss)
            
            
            6,666
            
            
            (411
            )
            
            215
            
            
            3,942
            
            
            (3,746
            )
            
            6,666Preferred
                stock dividends
            
            
            (791
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (791
            )Net
                income (loss) allocable to common shares
            
            $
            5,875
            
            $
            (411
            )
            $
            215
            
            $
            3,942
            
            $
            (3,746
            )
            $
            5,875















**Condensed
                Consolidating Statement of Cash Flows (unaudited)****Six
                Months Ended April 30, 2006****(Dollars
                in the thousands)**The
                Company
            
            BuickExcluding
            
            Resource
            
            
            
            Doe
                RunGuarantor
            
            Recycling
            
            Domestic
            
            Cayman
                and
            
            
            
            TheSubsidiaries
            
            Facility,
                LLC
            
            Guarantors
            
            Subsidiary
            
            Eliminations
            
            CompanyNet
                cash provided by operating activities
            
            $
            41,081
            
            $
            475
            
            $
            129
            
            $
            16,941
            
            $
            (21,275
            )
            $
            37,351Cash
                flows from investing activities:Purchases
                of property, plant and equipment
            
            
            (5,869
            )
            
            -
            
            
            (12
            )
            
            (17,250
            )
            
            -
            
            
            (23,131
            )Net
                proceeds from sales of investments
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Investment
                in subsidiaries
            
            
            (21,275
            )
            
            -
            
            
            -
            
            
            -
            
            
            21,275
            
            
            -Net
                cash used in investing activities
            
            
            (27,144
            )
            
            -
            
            
            (12
            )
            
            (17,250
            )
            
            21,275
            
            
            (23,131
            )Cash
                flows from financing activities:Proceeds
                from revolving loans andshort-term
                borrowings, net
            
            
            455
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            455Proceeds
                from long-term debt
            
            
            -
            
            
            -
            
            
            -
            
            
            10,000
            
            
            -
            
            
            10,000Payments
                on long-term debt
            
            
            (20,862
            )
            
            -
            
            
            -
            
            
            (128
            )
            
            -
            
            
            (20,990
            )Payment
                of financing costs
            
            
            -
            
            
            -
            
            
            -
            
            
            (925
            )
            
            
            
            
            (925
            )Payments
                of dividends
            
            
            (2,333
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (2,333
            )Change
                in due to/due from parent/subsidiaries
            
            
            959
            
            
            (475
            )
            
            (117
            )
            
            (367
            )
            
            -
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            (21,781
            )
            
            (475
            )
            
            (117
            )
            
            8,580
            
            
            -
            
            
            (13,793
            )Net
                increase (decrease) in cash
            
            
            (7,844
            )
            
            -
            
            
            -
            
            
            8,271
            
            
            -
            
            
            427Cash
                at beginning of period
            
            
            8,916
            
            
            -
            
            
            1
            
            
            14,569
            
            
            -
            
            
            23,486Cash
                at end of period
            
            $
            1,072
            
            $
            -
            
            $
            1
            
            $
            22,840
            
            $
            -
            
            $
            23,913















**Condensed
                Consolidating Statement of Cash Flows (unaudited)****Six
                Months Ended April 30, 2005****(Dollars
                in thousands****)**The
                Company
            
            BuickExcluding
            
            Resource
            
            
            
            Doe
                RunGuarantor
            
            Recycling
            
            Domestic
            
            Cayman
                and
            
            
            
            TheSubsidiaries
            
            Facility,
                LLC
            
            Guarantors
            
            Subsidiary
            
            Eliminations
            
            CompanyNet
                cash provided by (used in) operating activities
            
            $
            13,758
            
            $
            417
            
            $
            (709
            )
            $
            22,587
            
            $
            (8,851
            )
            $
            27,202Cash
                flows from investing activities:Purchases
                of property, plant and equipment
            
            
            (8,387
            )
            
            -
            
            
            (130
            )
            
            (18,097
            )
            
            -
            
            
            (26,614
            )Net
                proceeds from sales of investments
            
            
            333
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            333Investment
                in subsidiaries
            
            
            (8,851
            )
            
            -
            
            
            -
            
            
            -
            
            
            8,851
            
            
            -Net
                cash used in investing activities
            
            
            (16,905
            )
            
            -
            
            
            (130
            )
            
            (18,097
            )
            
            8,851
            
            
            (26,281
            )Cash
                flows from financing activities:Proceeds
                from revolving loans andshort-term
                borrowings, net
            
            
            10,535
            
            
            -
            
            
            -
            
            
            (5,200
            )
            
            -
            
            
            5,335Payments
                on long-term debt
            
            
            (14,621
            )
            
            -
            
            
            -
            
            
            (17
            )
            
            -
            
            
            (14,638
            )Payments
                of dividends
            
            
            (310
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (310
            )Change
                in due to/due from parent/subsidiaries
            
            
            1,575
            
            
            (417
            )
            
            839
            
            
            (1,997
            )
            
            -
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            (2,821
            )
            
            (417
            )
            
            839
            
            
            (7,214
            )
            
            -
            
            
            (9,613
            )Net
                decrease in cash
            
            
            (5,968
            )
            
            -
            
            
            -
            
            
            (2,724
            )
            
            -
            
            
            (8,692
            )Cash
                at beginning of period
            
            
            13,412
            
            
            -
            
            
            1
            
            
            6,905
            
            
            -
            
            
            20,318Cash
                at end of period
            
            $
            7,444
            
            $
            -
            
            $
            1
            
            $
            4,181
            
            $
            -
            
            $
            11,626




















**DOE
                RUN PERU S.R.L.**
              **Condensed
                Balance Sheets**
              **(U.S.
                dollars in thousands, except share and per share
                data)****April
                30,**
            
            **October
                31,****2006**
            
            **2005****(unaudited)****ASSETS**Current
                assets:Cash
            
            $
            22,840
            
            $
            14,569Trade
                accounts receivable, net of allowance for doubtful accounts
            
            
            55,677
            
            
            31,637Inventories
            
            
            123,436
            
            
            68,756Prepaid
                expenses and other current assets
            
            
            22,772
            
            
            16,191Total
                current assets
            
            
            224,725
            
            
            131,153Property,
                plant and equipment, net
            
            
            171,713
            
            
            161,563Other
                noncurrent assets, net
            
            
            270
            
            
            -Total
                assets
            
            $
            396,708
            
            $
            292,716**LIABILITIES
                AND SHAREHOLDERS' EQUITY (DEFICIT)**Current
                liabilities:Current
                maturities of long-term debt
            
            $
            46,006
            
            $
            39,821Accounts
                payable
            
            
            133,219
            
            
            67,115Accrued
                liabilities
            
            
            37,558
            
            
            31,200Due
                to related parties
            
            
            -
            
            
            143,063Total
                current liabilities
            
            
            216,783
            
            
            281,199Long-term
                debt, less current maturities
            
            
            3,935
            
            
            -Due
                to parent company and related parties
            
            
            156,753
            
            
            14,057Other
                noncurrent liabilities
            
            
            3,460
            
            
            3,466Total
                liabilities
            
            
            380,931
            
            
            298,722Shareholders'
                equity (deficit):Capital
                stock, $0.01 par value, 15,912,083,739 shares, fully paid
            
            
            2,005
            
            
            2,005Retained
                earnings (deficit) and comprehensive income (loss)
            
            
            13,772
            
            
            (8,011
            )Total
                shareholders' equity (deficit)
            
            
            15,777
            
            
            (6,006
            )Total
                liabilities and shareholders' equity (deficit)
            
            $
            396,708
            
            $
            292,716The
                accompanying notes are an integral part of these condensed financial
                statements.











**DOE
                RUN PERU S.R.L.**
              **Condensed
                Statements of Operations (unaudited)**
              **(U.S.
                dollars in thousands)****Three
                Months**
              **Ended
                April 30,**
            
            **Six
                Months**
              **Ended
                April 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Net
                sales
            
            $
            253,764
            
            $
            158,316
            
            $
            462,696
            
            $
            309,425Costs
                and expenses:Cost
                of sales
            
            
            226,815
            
            
            146,646
            
            
            417,249
            
            
            285,010Depletion,
                depreciation and amortization
            
            
            3,775
            
            
            2,748
            
            
            6,774
            
            
            5,903Selling,
                general and administrative
            
            
            5,832
            
            
            4,539
            
            
            11,816
            
            
            8,853Unrealized
                gain on derivative financial instruments
            
            
            (23
            )
            
            (80
            )
            
            (2,293
            )
            
            231Other
            
            
            797
            
            
            3
            
            
            1,087
            
            
            137Total
                costs and expenses
            
            
            237,196
            
            
            153,856
            
            
            434,633
            
            
            300,134Income
                from operations
            
            
            16,568
            
            
            4,460
            
            
            28,063
            
            
            9,291Other
                income (expense):Interest
                expense, net
            
            
            (36
            )
            
            (628
            )
            
            (1,504
            )
            
            (1,234
            )Other,
                net
            
            
            594
            
            
            110
            
            
            494
            
            
            215558
            
            
            (518
            )
            
            (1,010
            )
            
            (1,019
            )Income
                before income tax expense
            
            
            17,126
            
            
            3,942
            
            
            27,053
            
            
            8,272Income
                tax expense
            
            
            3,428
            
            
            -
            
            
            5,270
            
            
            -Net
                income
            
            $
            13,698
            
            $
            3,942
            
            $
            21,783
            
            $
            8,272The
                accompanying notes are an integral part of these condensed financial
                statements.














**DOE
                RUN PERU S.R.L.**
              **Condensed
                Statements of Cash Flows (unaudited)**
              **(U.S.
                dollars in thousands)****Six
                Months****Ended
                April 30,****2006**
            
            **2005**Net
                cash provided by operating activities
            
            $
            16,941
            
            $
            22,587Cash
                flows from investing activities:Purchases
                of property, plant and equipment
            
            
            (17,250
            )
            
            (18,097
            )Net
                cash used in investing activities
            
            
            (17,250
            )
            
            (18,097
            )Cash
                flows from financing activities:Proceeds
                from (payments on) revolving loans andshort-term
                borrowings, net
            
            
            -
            
            
            (5,200
            )Proceeds
                from long-term debt
            
            
            10,000
            
            
            -Payments
                on long-term debt
            
            
            (128
            )
            
            (17
            )Payments
                of financing costs
            
            
            (925
            )
            
            -Change
                in amount due to/due from related parties
            
            
            (367
            )
            
            (1,997
            )Net
                cash provided by (used in) financing activities
            
            
            8,580
            
            
            (7,214
            )Net
                increase (decrease) in cash
            
            
            8,271
            
            
            (2,724
            )Cash
                at beginning of period
            
            
            14,569
            
            
            6,905Cash
                at end of period
            
            $
            22,840
            
            $
            4,181The
                accompanying notes are an integral part of these condensed financial
                statements.








**DOE
      RUN PERU S.R.L**





**Notes
      to Financial Statements**


**(U.S.
      dollars in thousands)**





**(1)**  **Summary
      of Significant Accounting Policies**





***Unaudited
      Interim Financial Statements***





These
      interim financial statements include the accounts of Doe Run Peru S.R.L. (“Doe
      Run Peru”). In the opinion of management, the interim financial statements
      contain all adjustments, consisting of normal recurring accruals, necessary
      to
      present fairly the financial position as of April 30, 2006 and results of
      operations for the three and six-month periods ended April 30, 2006 and 2005.
      All material intercompany balances and transactions have been eliminated.
      Interim periods are not necessarily indicative of results to be expected for
      the
      year.





***Reclassifications***





Certain
      prior period balances have been reclassified in order to conform to the current
      presentation.





**(2)**  **Financial
      Condition**




Doe
      Run
      Peru is highly leveraged and has significant commitments for environmental
      matters and for Environmental Remediation and Management Program (“PAMA”)
      expenditures including the financial guarantees that require it to dedicate
      a
      substantial portion of cash flow from operations to the payment of these
      obligations, which will reduce funds available for other business purposes.
      (See
      Note 6: Asset Retirement and Environmental Obligations). These factors also
      increase Doe Run Peru’s vulnerability to general adverse conditions, limit Doe
      Run Peru’s flexibility in planning for or reacting to changes in its business
      and industry, and limit Doe Run Peru’s ability to obtain financing required to
      fund working capital and capital expenditures and for other general corporate
      purposes. An unfavorable outcome to certain contingencies, discussed below,
      would have a further adverse effect on Doe Run Peru’s ability to meet its
      obligations when due. Doe Run Peru’s ability to meet these obligations is also
      dependent upon future operating performance and financial results which are
      subject to financial, economic, political, competitive and other factors
      affecting Doe Run Peru, many of which are beyond Doe Run Peru’s control.





The
      effects of higher metal prices over the past two years have been positive.
      Comparing the first two quarters of 2006 to that of 2005, the value of the
      metal
      recovered over the amount paid for the metal has increased 33% from $13,967
      to
      $18,608. The values of by-products have also improved from $10,568 to $13,663
      or
      29%. During the first two quarters of 2006, Doe Run Peru has benefited from
      its
      ferrites floatation plant which was placed in service at the end of the prior
      fiscal year. Though the plant has not reached its full capacity, it still
      contributed $6,033 to revenues.





While
      conversion costs have risen by $10,832 over the two periods and SG&A has
      risen $2,870, management believes that Doe Run Peru’s financial condition, as a
      result of the improved market conditions discussed in the preceding paragraphs,
      is stabilizing. There still exists, however, the possibility that concentrate
      supplies will tighten again in one or more metals in the near future or that
      one
      or more of Doe Run Peru’s significant local suppliers could cease delivery of
      concentrates. Under these circumstances there is no assurance that we would
      be
      able to secure sufficient replacement at economically favorable terms. An
      interruption in the feed supply would adversely affect production at La Oroya
      and impair financial condition and liquidity.





The
      financial statements have been prepared assuming Doe Run Peru will continue
      as a
      going concern. Doe Run Peru has significant capital requirements under
      environmental commitments and guarantees and substantial contingencies related
      to taxes and has significant debt service obligations under the revolving credit
      facility, each of which, if not satisfied, could result in a default under
      Doe
      Run Peru’s credit agreement and collectively raise substantial doubt about Doe
      Run Peru’s ability to continue as a going concern. Management believes that the
      price improvements seen through fiscal year 2005 and in the first two quarters
      of fiscal year 2006, the potential revenues and cash flow enhancements from
      the
      new ferrite project and the approval obtained on May 29, 2006 to extend certain
      PAMA projects will enable Doe Run Peru to continue as a going concern. However,
      there can be no assurance that these actions will achieve the desired
      results.












Doe
      Run
      Peru continues to have substantial cash requirements in the future, including
      the maturity of the revolving credit facility on September 22, 2006 and
      significant capital requirements under environmental commitments, (see Note
      6:
      Asset Retirement and Environmental Obligation). In addition, there are
      substantial contingencies related to taxes (see Note 4: Income Taxes) and
      litigation (see Note 5: Litigation).





Net
      unused availability at April 30, 2006 under the Doe Run Peru Revolving Credit
      Facility was approximately $200. In addition to the availability under its
      revolving credit facility, the cash balance of Doe Run Peru was $22,840 at
      April
      30, 2006. Doe Run Peru has reached and maintained its maximum borrowing level
      under the Doe Run Peru Revolving Credit Facility due in part to the higher
      metal
      prices resulting in higher outlays for concentrate purchases and higher
      Value-Added Tax (“VAT”) payments funded by cash from operations.





The
      Doe
      Run Peru Revolving Credit Facility expires on September 22, 2006 and will
      require negotiations to extend its terms. There can be no assurance that Doe
      Run
      Peru will be successful in extending the existing credit agreement or
      negotiating a new agreement, or if it is successful, that the extended or new
      credit agreement would be at terms that are favorable to Doe Run Peru.





Any
      default under the requirements of the PAMA could result in a default under
      the
      Doe Run Peru Revolving Credit Facility. A default under the requirements of
      the
      Doe Run Peru Revolving Credit Facility results in defaults under the Doe Run
      Revolving Credit Facility and the indenture governing the bonds.





**(3)**  **Inventories**





Inventories
      consist of the following:





**April
                30,**
            
            **October
                31,****2006**
            
            **2005**Finished
                metals and concentrates
            
            $
            17,489
            
            $
            10,397Metals
                and concentrates in process
            
            
            90,528
            
            
            44,668Materials,
                supplies and repair parts
            
            
            15,419
            
            
            13,691$
            123,436
            
            $
            68,756





Materials,
      supplies and repair parts are stated net of reserves for obsolescence of
      approximately $1,357 and $1,162 at April 30, 2006 and October 31, 2005,
      respectively.





**(4)**  **Income
      Taxes**





Doe
      Run
      Cayman is subject to the regulations of the Cayman Islands, which currently
      have
      no corporate income or capital gains tax. Doe Run Cayman’s subsidiaries located
      in Peru are subject to Peruvian taxation. The statutory income tax rate in
      Peru
      is 30%. Doe Run Peru has obtained a ten-year tax stabilization agreement with
      the Peruvian government, which provides for Peruvian taxation based on tax
      statutes and regulations prevailing on November 6, 1997, beginning with the
      Peruvian tax year ending on December 31, 1997 through December 31,
      2006.





On
      December 30, 1997, Doe Run Peru signed a Contract of Guarantees and Measures
      to
      Promote Investments (“Contract”) with the government of Peru.  The
      Contract, which has been modified various times through 2006, committed Doe
      Run
      Peru to making certain investments related to the improvements of its facilities
      in order to receive certain tax benefits.  The Contract provided that if
      the investments were completed according to the schedule by December 31, 2006,
      Doe Run Peru would receive an additional tax stability agreement covering the
      period beginning January 1, 2007 and ending December 31, 2021.  Doe Run
      Peru will be unable to complete the required investments and, therefore,
      requested an extension of the time, from the Ministry of Energy and Mines
      (“MEM”) for these investments that would coincide with the extended period of
      compliance for the PAMA. MEM denied the request. As a result, Doe Run Peru
      will not receive the benefits of the additional tax stabilization
      agreement.












Doe
      Run
      Peru has received income tax assessments from Peru’s tax authority (“SUNAT”) for
      tax years 1998 through 2001. The assessments primarily relate to Doe Run Peru’s
      income tax treatment of the December 1997 merger of Metaloroya S.A. into Doe
      Run
      Peru which was purchased by Doe Run Peru in October 1997, and its effects on
      subsequent years’ taxable income. Under the assessment by SUNAT, the tax basis
      of Doe Run Peru’s fixed assets acquired would decrease, resulting in lower tax
      depreciation expense than originally claimed. The assessments of years 1999
      through 2001 also relate to the disallowance of the deduction of interest paid,
      the offsetting of losses on derivatives executed in the U.S. and some leaseback
      and leasing operations. The estimated assessed amount consisting of additional
      income taxes due, penalties and interest as of April 30, 2006 totals
      approximately $121,100. Doe Run Peru estimates that the effect of a similar
      assessment for tax years after 2001 would be approximately $32,900. Furthermore,
      Doe Run Peru would also be required to make additional workers’ profit sharing
      payments equal to 8% of the increase in taxable income generated by the changes
      discussed above, or approximately $11,300, for calendar years 1998 through
      2005.





Doe
      Run
      Peru has also received VAT assessments for the tax years 1999 through 2001
      and
      for the period from January through July 2004. The assessments primarily relate
      to Doe Run Peru’s exports with holding certificates and differences in a tax
      credit application. The total assessment for these periods, calculated with
      penalties and interest as of April 30, 2006, was approximately $48,100. SUNAT
      offset the amount assessed for 2004 of approximately $2,300 against Doe Run
      Peru’s VAT receivable balance from July of 2004. Future VAT reimbursements
      cannot be used to offset the assessment by SUNAT. Doe Run Peru discontinued
      the
      use of holding certificates for exports in June 2004. Doe Run Peru estimates
      expected additional assessments related to VAT for tax years 2002 and 2003,
      calculated with penalties and interest as of April 30, 2006, to total
      approximately $22,400 in regard to its exports with holding certificates.





Management
      of Doe Run Peru believes that in each case Doe Run Peru has followed the
      applicable Peruvian tax statutes and intends to pursue all available
      administrative and judicial appeals. Doe Run Peru is not required to make any
      payments pending the administrative appeal process. If Doe Run Peru is not
      successful in the administrative appeal processes and were to appeal in the
      judicial system, some type of financial assurance would be required. No amounts
      have been accrued as liabilities related to these actions.





For
      the
      past several years, Doe Run Peru has generated net losses from operations that
      according to tax law may be used to offset taxable income in the future. Doe
      Run
      Peru expects to utilize all of its net operating loss carryforwards in the
      current fiscal year. As a result, Doe Run Peru has recorded $5,270 of income
      tax
      expense for the first two quarters of 2006.





**(5)**  **Litigation**





All
      existing and pending litigations at the time of the acquisition of Doe Run
      Peru
      were retained by Centromin, the prior owner of the La Oroya smelter and Cobriza
      mine.





Doe
      Run
      Peru is currently a defendant in 207 lawsuits in the Lima, Peru labor courts
      that allege damage to workers from industrial diseases. Doe Run Peru has made
      claims in most of the cases against Centromin and has also made claims against
      both governmental agencies and private companies that provide workers’
insurance. The average claim is $17. Of 19 previously concluded cases in this
      category, 18 were dismissed and 1 resulted in an award of $9.





Doe
      Run
      Peru is also currently a defendant in 164 lawsuits by workers alleging that
      they
      are owed certain differences in salaries and benefits. The average claim is
      $20.
      Of 38 previously concluded cases in this category, 29 were dismissed and 9
      resulted in awards totaling $19. Doe Run Peru is also a defendant in a lawsuit
      by the Yauli-La Oroya Employees Union concerning salaries and benefits. The
      claims of the 149 workers remaining in the lawsuit have been valued at a total
      of $218 according to a report by an expert appointed by the court.





Doe
      Run
      Peru is also currently a defendant in 22 lawsuits alleging various labor claims
      including indemnification for arbitrary dismissal, nullity of dismissal, moral
      damage compensation, compensatory damages from work accident and readmission
      of
      worker. The average claim is $7. Of 30 previously concluded cases in this
      category, 26 were dismissed and 4 resulted in awards totaling $21.












The
      amount of awards in the various categories of lawsuits referenced above
      represented total judgments issued by the relevant courts. For certain of these
      lawsuits, Centromin will pay a portion of the total award.





On
      January 19, 2005, Doe Run Peru was served with a lawsuit by an association
      of
      municipalities of the Junin Region of Peru against Doe Run Peru and two other
      mining companies. This lawsuit alleges environmental damages to the Mantaro
      River basin in the amount of $5 billion. On February 2, 2006, Doe Run Peru
      was
      served with a lawsuit by the municipality of Jauja. This lawsuit alleges
      environmental damages to the Mantaro River basin in the amount of $5,000.
      Material liability to Doe Run Peru, in these two actions, is believed to be
      remote based on the opinion of management and outside counsel for Doe Run Peru.
      Any potential judgment would be subject to the indemnification obligations
      of
      Centromin, which are guaranteed by the Peruvian government.





On
      December 3, 2003, Doe Run Peru filed an administrative lawsuit against the
      Yauli
      - La Oroya Provincial City Hall in order to nullify and void a number of fines
      for the amount of $2,800. Doe Run Peru was fined for not having construction
      licenses for the PAMA projects.





Since
      most of the above cases are either in the pleading or discovery stages, Doe
      Run
      Peru is unable at this time to estimate the expected outcome and the final
      costs, except as noted, of these actions. No amounts have been accrued as
      liabilities related to these actions. There can be no assurance that these
      cases
      would not have a material adverse effect, both individually and in the
      aggregate, on the results of operations, financial condition and liquidity
      of
      Doe Run Peru. Doe Run Peru has and will continue to vigorously defend itself
      against such claims.





**(6)**  **Asset
      Retirement and Environmental Obligations**





***Asset
      Retirement Obligations***





Asset
      retirement obligations (“AROs”) are recognized as liabilities when incurred,
      with the initial measurement at fair value. These liabilities will be increased
      to full value over time through charges of accretion to operating expense.
      In
      addition, an asset retirement cost is capitalized as part of the related asset’s
      carrying value and will be depreciated over the asset’s useful life. Changes in
      the ARO liability resulting from revisions to the timing or the amount of the
      original estimate of undiscounted cash flows shall be recognized as an increase
      or a decrease in the carrying amount of the liability for an ARO and the related
      asset retirement cost capitalized as part of the carrying amount of the related
      long-lived asset.





Mine
      Closure Law No. 28090 (“Law”) became effective in Peru as of October 15, 2005.
      It applies to smelters and mines. The Law establishes the obligations and
      procedures that titleholders of mining activities must follow, including a
      financial guarantee for environmental issues.  Doe Run Peru must
      submit a mine closure plan to the MEM by August 17, 2006 which must include
      a
      description of the remediation measures to be done, along with their cost and
      timing, and the expected amount of the financial guarantee. Doe Run Peru has
      hired a technical mining consultant to prepare the mine closure plans for
      Cobriza and La Oroya to insure that they will comply with all the technical
      and
      legal requirements. The financial guarantee will not be known until the final
      mine closure plan is approved therefore, the guarantee is estimated to be
      established in January of 2007.





Doe
      Run
      Peru has AROs at its Cobriza mine related to the costs associated with closing
      the mine openings and covering acid rock. Doe Run Peru is also responsible
      for
      the eventual covering and revegetation of mixed lead and copper slag also stored
      in Huanchan, an area a short distance from the La Oroya smelter, where the
      slag
      is currently stored.





Doe
      Run
      Peru’s total recorded liability for AROs was approximately $1,866 as of April
      30, 2006 and October 31, 2005.





***Environmental
      Remediation***





Doe
      Run
      Peru’s La Oroya operations historically and currently exceed some of the
      applicable maximum permissible limits established by MEM pertaining to air
      emissions and wastewater effluents quality. Prior to our acquisition of La
      Oroya, Metaloroya S.A., the former owner, a subsidiary of Empresa Minera del
      Centro del Peru S.A., which we refer to as Centromin, received approval from
      the
      Peruvian Government for a PAMA. The PAMA was











designed
      to achieve compliance with MEM’s air and
      wastewater limits. It consisted of an environmental impact analysis, monitoring
      plan and data mitigation measures and a closure plan. The PAMA also set forth
      the actions and corresponding annual investments a company agrees to undertake
      in order to achieve compliance with the maximum permissible limits prior to
      expiration of the PAMA (ten years for smelters, such as Doe Run Peru’s
      operations in La Oroya, and five years for mining operations, such as Cobriza).
      The PAMA projects, which are more fully discussed below, were designed to
      achieve compliance with these requirements.


On
      December 29, 2004, the Peruvian Government issued a Supreme Decree No.
      046-2004-EM (“Supreme Decree”), which recognized that exceptional circumstances
      may justify an extension of the time to complete one or more projects within
      the
      scope of a PAMA. Since Doe Run Peru expected that it would not be able to comply
      with the spending requirements of La Oroya’s PAMA investment schedule by the end
      of calendar year 2006 with respect to certain projects, Doe Run Peru applied
      for
      an extension on December 20, 2005.





On
      May
      29, 2006, MEM approved the extension of certain PAMA projects through October
      31, 2009 (the “Modified PAMA”). Pursuant to the terms of the Modified PAMA, Doe
      Run Peru is now required to complete the acid plant projects for the lead
      circuit and the copper circuit by September 30, 2008 and October 31, 2009,
      respectively and Doe Run Peru remains obligated under the original PAMA to
      implement the following projects at its La Oroya smelter by December 31,
      2006:





§  Upgrade
      the acid plant for the zinc circuit;


§  Construct
      a treatment plant for the copper refinery effluent;


§  Construct
      an industrial wastewater treatment plant for the smelter and
      refinery;


§  Improve
      the slag handling system;


§  Improve
      Huanchan lead and copper slag deposits;


§  Construct
      an arsenic trioxide deposit;


§  Improve
      the zinc ferrite disposal site;


§  Construct
      domestic wastewater treatment and domestic waste disposal; and


§  Construct
      a monitoring station.





The
      Modified PAMA also requires Doe Run Peru to comply with certain special measures
      not previously required. These measures include, but are not limited to,
      implementation of projects to reduce stack and fugitive emissions which are
      designed to meet certain air quality objectives, a continuing improvement
      provision that provides for additional pollution controls to address the
      shortfalls in meeting objectives or to further reduce risks and certain measures
      regarding protection of public health, including, among others, actions for
      the
      reduction of lead in blood levels and special health programs for children
      and
      expectant women.





MEM
      has
      also required that the cost of a planned replacement of the oxy-fuel
      reverberatory furnace with a submerged lanced reactor furnace that will reduce
      gas volume while enriching sulfurous gas feed to the copper circuit sulfuric
      acid plant be included as part of the cost of the Modified PAMA acid plant
      projects. The estimated cost of this reactor furnace is $57,000, which brings
      the total remaining investment needed to build the sulfuric acid plants to
      approximately $152,590.





Additional
      PAMA projects required for fiscal year 2006 include an upgrade of the
      ventilation system in the Sinter plant, completion of the enclosure work around
      the lead and dross furnace, the enclosure of the anode residue plant along
      with
      the elimination of its nitrous gases, and the reduction of fugitive emissions
      from the copper and lead beds. The total cost of the currently remaining
      Modified PAMA projects as of April 30, 2006 was approximately $175,000 of which
      $31,500 remains to be spent in the 2006 calendar ear..





Doe
      Run
      Peru’s ability to complete the required projects by the specific deadlines
      depends in large part upon the availability of sufficient funds. Doe Run Peru
      believes that sufficient funds will be available on a timely basis, but the
      availability of sufficient funds is largely dependent upon the results of its
      business operations and the possibility of additional financing; therefore,
      there can be no assurance that sufficient funds will be available for these
      projects.





Consistent
      with the requirements of the Supreme Decree providing for the possibility of
      PAMA extensions, in addition to other terms and conditions, the Modified PAMA
      contains two separate financial security arrangements to ensure that Doe Run
      Peru fulfills its statutory obligation to complete the Modified PAMA
      projects.












First,
      Doe Run Peru has established an environmental trust account with Scotiabank
      Peru
      into which receipts from sales are required to be remitted directly in an amount
      to have cash available sufficient to pay the expenditures estimated to be
      incurred in each subsequent month by Doe Run Peru in complying with the Modified
      PAMA. Second, Doe Run Peru has provided to MEM a bank letter of guarantee in
      the
      amount of $28,641 (an amount estimated to be 20% of the projected cost of the
      Modified PAMA projects to be spent after 2006). Doe Run Peru deposited such
      amount with Standard Chartered Bank which has in turn provided for the issuance
      to MEM of the necessary bank letter of guarantee relying solely upon the funds
      so deposited. Doe Run Peru has amended the Doe Run Peru Revolving Credit
      Facility to allow for these arrangements.





Although
      not contemplated by the Supreme Decree providing for the possibility of PAMA
      extensions, as a condition of granting the Modified PAMA, MEM has provided
      that
      Doe Run Peru could lose the benefit of the extension if Doe Run Peru makes
      any
      payments to any shareholder or affiliate, which could affect the full and
      satisfactory compliance with the Modified PAMA obligations. This provision
      has
      not been agreed to by Doe Run or Doe Run Peru but was imposed under applicable
      law over their objection. Doe Run Peru was required, however, to provide a
      bank
      letter of guarantee in the amount of $4,000 which may be drawn upon to fund
      Modified PAMA projects if Doe Run Peru makes any payments to any shareholder
      or
      affiliate. Doe Run Peru satisfied this requirement by depositing such amount
      with Standard Chartered Bank which has in turn provided for the issuance to
      MEM
      of the necessary bank letter of guarantee relying solely upon the funds so
      deposited.





Separately,
      Renco has confirmed to MEM that Renco understands that Doe Run Peru could lose
      the benefit of the extension if Doe Run Peru makes any payments to any
      shareholder or affiliate which could affect the full and satisfactory compliance
      with Doe Run Peru’s Modified PAMA obligations and Renco has stated that Renco
      has no intention of causing, and will not do anything to cause, Doe Run Peru
      to
      make any such payment.





In
      connection with its negotiations with MEM regarding the Modified PAMA, Doe
      Run
      voluntarily agreed to extend the maturity of Doe Run Peru’s $139,063
      intercompany note payable to Doe Run until such time as the Modified PAMA has
      been completed.





No
      assurance can be given that implementation of the projects under the Modified
      PAMA is feasible or that their implementation will achieve compliance with
      the
      applicable legal requirements by the end of the Modified PAMA period. The
      Peruvian Government may, in the future, require compliance with additional
      environmental regulations that could adversely affect Doe Run Peru’s business,
      financial condition and results of operations, as well as their ability to
      comply with the Modified PAMA. After expiration of the Modified PAMA, Doe Run
      Peru must comply with all applicable standards and requirements.





The
      Cobriza mine has a separate PAMA in which Doe Run Peru committed to complete
      projects to manage tailings, mine drainage, sewage and garbage. Doe Run Peru
      completed its own PAMA requirements with respect to Cobriza in June of 2004
      and
      is in compliance with emissions standards required by this PAMA.





In
      addition to its PAMA obligations, Doe Run Peru is responsible for the
      remediation costs relating to the zinc ferrite disposal site at La Oroya. The
      current closure plan provides for encapsulating the ferrite residues in place
      in
      Huanchan, an area a short distance from the smelter where they are currently
      stored, for which an environmental liability of $1,600 has been recorded as
      of
      April 30, 2006 and October 31, 2005.





Under
      the
      purchase agreement related to the acquisition of the La Oroya assets in October
      of 1997, Centromin, the prior owner of the La Oroya smelter and Cobriza mine,
      agreed to indemnify Doe Run Peru against environmental liability arising out
      of
      its prior operations and their apportioned share of any complaint related to
      emissions. Performance of the indemnity has been guaranteed by the Peruvian
      Government through the enactment of the Supreme Decree No. 042-97-PCM. However,
      there can be no assurance that Centromin will satisfy its environmental
      obligation and investment requirements or that the guarantee will be honored.
      Any failure by Centromin to satisfy its environmental obligations could
      adversely affect Doe Run Peru’s business, financial condition and results of
      operations.












**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations.**





The
      following discussion and analysis of the three-months and the six-months ended
      April 30, 2006 compared to the three-months and the six-months ended April
      30,
      2005 should be read in conjunction with the condensed consolidated financial
      statements of The Doe Run Resources Corporation (“Doe Run” and together with its
      subsidiaries, the “Company”) and the notes thereto, and other financial
      information included herein.





***Forward-Looking
      Statements***





*The
      Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for
      forward-looking statements. The Company makes forward-looking statements in
      this
      Quarterly Report on Form 10-Q, which represent the Company’s expectations or
      beliefs about future events and financial performance. When used in this report,
      the words “expect,” “believe,” “anticipate,” “goal,” “plan,” “intend,”
“estimate,” “may,” “will” or similar words are intended to identify
      forward-looking statements. These forward-looking statements are subject to
      known and unknown risks, uncertainties and assumptions, including those referred
      to in this Quarterly Report on Form 10-Q and otherwise described in the
      Company’s periodic filings.*





*All
      predictions as to future results contain a measure of uncertainty, and
      accordingly, actual results could differ materially. Among the factors that
      could cause actual results to differ from those contemplated, projected or
      implied by the forward-looking statements (the order of which does not
      necessarily reflect their relative significance) are:*




· **
            *general
                economic and business
                conditions;*


· **
            *increasing
                industry capacity and levels of imports of non-ferrous metals or
                non-ferrous metals products;*


· **
            *industry
                trends, including the price of metals and product pricing;*


·**
            *competition;*


· **
            *currency
                fluctuations;*


·**
            *the
                loss of any significant customer or supplier;*


· **
            *availability
                of raw materials;*


·**
            *availability
                of qualified personnel;*


· **
            *effects
                of future collective bargaining agreements;*


·**
            *outcome
                of litigation;*


·**
            *historical
                environmental liabilities;*


·**
            *changing
                environmental requirements and costs, including the capital requirements
                in Peru;*


·**
            *political
                uncertainty and terrorism;*


·**
            *major
                equipment failures;*


·**
            *changes
                in accounting principles or new accounting standards;
                and*


·**
            *compliance
                with laws and regulations and other unforeseen
                circumstances.*




*In
      light of these risks, uncertainties and assumptions, the forward-looking events
      discussed may not occur. In addition, actual results could differ materially
      from those suggested by the forward-looking statements. Accordingly, investors
      are cautioned not to place undue reliance on the forward-looking statements.
      Except as required by law, the Company undertakes no obligation to publicly
      update or revise any forward-looking statements, whether as a result of new
      information, future events or otherwise. Investors should, however, review
      additional disclosures made by the Company from time to time in its periodic
      filings with the Securities and Exchange Commission.*





*This
      Quarterly Report on Form 10-Q should be read completely and with the
      understanding that the Company’s actual future results may be materially
      different from what the Company expects. All forward-looking statements made
      by
      the Company in this Quarterly Report on Form 10-Q and in the Company’s other
      filings with the Securities and Exchange Commission are qualified by these
      cautionary statements.*





***Recent
      events***





On
      May
      29, 2006, MEM approved the extension of certain PAMA projects through October
      31, 2009 (the “Modified PAMA”). Pursuant to the terms of the Modified PAMA, Doe
      Run Peru is now required to complete the acid plant projects











for
      the lead circuit and the copper circuit by September
      30, 2008 and October 31, 2009, respectively and Doe Run Peru remains obligated
      under the original PAMA to implement the following projects at its La Oroya
      smelter by December 31, 2006:


§  Upgrade
      the acid plant for the zinc circuit;


§  Construct
      a treatment plant for the copper refinery effluent;


§  Construct
      an industrial wastewater treatment plant for the smelter and
      refinery;


§  Improve
      the slag handling system;


§  Improve
      Huanchan lead and copper slag deposits;


§  Construct
      an arsenic trioxide deposit;


§  Improve
      the zinc ferrite disposal site;


§  Construct
      domestic wastewater treatment and domestic waste disposal; and


§  Construct
      a monitoring station.





The
      Modified PAMA also requires Doe Run Peru to comply with certain special measures
      not previously required. These measures include, but are not limited to,
      implementation of projects to reduce stack and fugitive emissions which are
      designed to meet certain air quality objectives, a continuing improvement
      provision that provides for additional pollution controls to address the
      shortfalls in meeting objectives or to further reduce risks and certain measures
      regarding protection of public health, including, among others, actions for
      the
      reduction of lead in blood levels and special health programs for children
      and
      expectant women.





MEM
      has
      also required that the cost of a planned replacement of the oxy-fuel
      reverberatory furnace with a submerged lanced reactor furnace that will reduce
      gas volume while enriching sulfurous gas feed to the copper circuit sulfuric
      acid plant be included as part of the cost of the Modified PAMA acid plant
      projects. The estimated cost of this reactor furnace is $57,000, which brings
      the total remaining investment needed to build the sulfuric acid plants to
      approximately $152,590.





Additional
      PAMA projects required for fiscal year 2006 include an upgrade of the
      ventilation system in the Sinter plant, completion of the enclosure work around
      the lead and dross furnace, the enclosure of the anode residue plant along
      with
      the elimination of its nitrous gases, and the reduction of fugitive emissions
      from the copper and lead beds. The total cost of the currently remaining
      Modified PAMA projects as of April 30, 2006 was $175,000 of which $31,500remains
      to be spent in the 2006 calendar year.





Doe
      Run
      Peru’s ability to complete the required projects by the specific deadlines
      depends in large part upon the availability of sufficient funds. Doe Run Peru
      believes that sufficient funds will be available on a timely basis, but the
      availability of sufficient funds is largely dependent upon the results of its
      business operations and the possibility of additional financing; therefore,
      there can be no assurance that sufficient funds will be available for these
      projects.





Consistent
      with the requirements of the Supreme Decree providing for the possibility of
      PAMA extensions, in addition to other terms and conditions, the Modified PAMA
      contains two separate financial security arrangements to ensure that Doe Run
      Peru fulfills its statutory obligation to complete the Modified PAMA
      projects.





First,
      Doe Run Peru has established an environmental trust account with Scotiabank
      Peru
      into which receipts from sales are required to be remitted directly in an amount
      to have cash available sufficient to pay the expenditures estimated to be
      incurred in each subsequent month by Doe Run Peru in complying with the Modified
      PAMA. Second, Doe Run Peru has provided to MEM a bank letter of guarantee in
      the
      amount of $28,641 (an amount estimated to be 20% of the projected cost of the
      Modified PAMA projects to be spent after 2006). Doe Run Peru deposited such
      amount with Standard Chartered Bank which has in turn provided for the issuance
      to MEM of the necessary bank letter of guarantee relying solely upon the funds
      so deposited. Doe Run Peru has amended the Doe Run Peru Revolving Credit
      Facility to allow for these arrangements.





Although
      not contemplated by the Supreme Decree providing for the possibility of PAMA
      extensions, as a condition of granting the Modified PAMA, MEM has provided
      that
      Doe Run Peru could lose the benefit of the extension if Doe Run Peru makes
      any
      payments to any shareholder or affiliate, which could affect the full and
      satisfactory compliance with the Modified PAMA obligations. This provision
      has
      not been agreed to by Doe Run or Doe Run Peru but was imposed under applicable
      law over their objection. Doe Run Peru was required, however, to provide a
      bank
      letter of guarantee in the amount of $4,000 which may be drawn upon to fund
      Modified PAMA projects if Doe Run Peru makes any payments to any shareholder
      or









affiliate.
      Doe Run Peru satisfied this requirement
      by depositing such amount with Standard Chartered Bank which has in turn
      provided for the issuance to MEM of the necessary bank letter of guarantee
      relying solely upon the funds so deposited.




Separately,
      Renco has confirmed to MEM that Renco understands that Doe Run Peru could lose
      the benefit of the extension if Doe Run Peru makes any payments to any
      shareholder or affiliate which could affect the full and satisfactory compliance
      with Doe Run Peru’s Modified PAMA obligations and Renco has stated that Renco
      has no intention of causing, and will not do anything to cause, Doe Run Peru
      to
      make any such payment.





In
      connection with its negotiations with MEM regarding the Modified PAMA, Doe
      Run
      voluntarily agreed to extend the maturity of Doe Run Peru’s $139,063
      intercompany note payable to Doe Run until such time as the Modified PAMA has
      been completed.





No
      assurance can be given that implementation of the projects under the Modified
      PAMA is feasible or that their implementation will achieve compliance with
      the
      applicable legal requirements by the end of the Modified PAMA period. The
      Peruvian Government may, in the future, require compliance with additional
      environmental regulations that could adversely affect Doe Run Peru’s business,
      financial condition and results of operations, as well as their ability to
      comply with the Modified PAMA. After expiration of the Modified PAMA, Doe Run
      Peru must comply with all applicable standards and requirements.





Doe
      Run
      Peru had obtained a ten-year tax stabilization agreement with the Peruvian
      government, which provides for Peruvian taxation based on tax statutes and
      regulations prevailing on November 6, 1997, beginning with the Peruvian tax
      year ending on December 31, 1997 through December 31, 2006. On December 30,
      1997, Doe Run Peru signed a Contract of Guarantees and Measures to Promote
      Investments with the government of Peru.  This contract, which has been
      modified various times through 2006, committed Doe Run Peru to making certain
      investments related to the improvements of its facilities in order to receive
      certain tax benefits.  This contract provided that if the investments were
      completed according to the schedule by December 31, 2006, Doe Run Peru would
      receive an additional tax stability agreement covering the period beginning
      January 1, 2007 and ending December 31, 2021.  Doe Run Peru will be unable
      to complete the required investments and as a result Doe Run Peru will not
      receive the benefits of the additional tax stabilization agreement through
      2021.





Doe
      Run
      received a notice from the U.S Environmental Protection Agency of a potential
      unilateral order concerning transportation matters under the Resource
      Conservation and Recovery Act of 1976, section 7003 on July 5, 2006. It included
      an offer to negotiate the terms to a voluntary agreement. The Company is
      evaluating the issues presented in the letter and has arranged to meet with
      the
      agency to explore the matter. It is too early to understand any impact such
      an
      agreement will have.





On
      June
      19, 2006 Doe Run Peru, the Ministry of Health and the Regional Government of
      Junin signed a cooperation agreement for the implementation of the plan to
      reduce contamination at La Oroya. This agreement is an extension of a previous
      one signed between Doe Run Peru and the Ministry of Health in 2003. In the
      agreement Doe Run Peru commits to support the Ministry of Health’s environmental
      health clinic, supplemental educational program, family environmental health
      training, and community cleaning programs. Doe Run Peru will continue to make
      certain building space and equipment available and provide specified
      professional and support personnel.





On
      July
      31, 2006, the majority warrantholders exercised their right to require Doe
      Run
      to repurchase all of the warrants as promptly as practicable in the manner
      specified by the Warrant Agreement dated October 29, 2002 between Doe Run and
      State Street Bank and Trust, as Warrant Agent. Doe Run is in the process of
      engaging an appraiser to value the warrants.










***Results
      of Operations***





*Metals
      Pricing*





The
      following table sets forth average London Metal Exchange prices for lead, copper
      and zinc and the average London Bullion Market Association price for silver
      for
      the periods indicated:





**Three
                Months Ended**
            
            **Six
                Months Ended****April
                30,**
            
            **April
                30,****Average
                Prices**
            
            **2006**
            
            **2005**
            
            **2006**
            
            **2005**Lead
                ($/ton)
            
            $
            1,100.80
            
            $
            898.00
            
            $
            1,062.80
            
            $
            886.80Copper
                ($/ton)
            
            
            4,937.20
            
            
            3,033.60
            
            
            4,513.00
            
            
            2,942.60Zinc
                ($/ton)
            
            
            2,312.60
            
            
            1,210.80
            
            
            1,984.60
            
            
            1,136.20Silver
                ($/troy ounce)
            
            
            10.76
            
            
            7.13
            
            
            9.63
            
            
            7.11





These
      prices reflect the continued tightening in the worldwide metal supply and the
      effect of other macroeconomic factors such as exchange rates, interest rates,
      and oil prices.





*Production*





All
      references to “ton” are in short tons.





The
      following table sets forth the Company’s production statistics for the periods
      indicated:








**Three
                Months Ended**
            
            **Six
                Months Ended****April
                30,**
            
            **April
                30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**U.S.
                OperationsLead
                metal - primary (tons)
            
            
            39,158
            
            
            39,943
            
            
            81,093
            
            
            80,359Lead
                metal - secondary (tons)
            
            
            34,008
            
            
            32,812
            
            
            67,072
            
            
            66,510Lead
                concentrates (metal content, tons)
            
            
            67,841
            
            
            71,497
            
            
            136,641
            
            
            136,645Ore
                grade (lead)
            
            
            5.20
            %
            
            5.40
            %
            
            5.38
            %
            
            5.38
            %Doe
                Run Peru OperationsRefined
                copper (tons)
            
            
            16,657
            
            
            15,594
            
            
            33,548
            
            
            31,508Refined
                lead (tons)
            
            
            33,126
            
            
            33,135
            
            
            66,070
            
            
            64,895Refined
                zinc (tons)
            
            
            11,122
            
            
            11,088
            
            
            22,630
            
            
            27,316Refined
                silver (thousands of troy ounces)
            
            
            9,200
            
            
            8,727
            
            
            18,418
            
            
            16,966Refined
                gold (thousands of troy ounces)
            
            
            18
            
            
            15
            
            
            36
            
            
            30Copper
                concentrates (metal content, tons)
            
            
            4,649
            
            
            3,607
            
            
            9,098
            
            
            7,379Ore
                grade (copper content)
            
            
            1.05
            %
            
            0.96
            %
            
            1.03
            %
            
            0.98
            %





The
      metal
      contained in lead concentrates produced at the Company’s primary lead
      operation’s mines in the 2006 second quarter was 5% lower than the 2005 second
      quarter, but was the same production when comparing the 2006 six-month period
      with the 2005 six-month period. The lower 2006 second quarter lead concentrate
      production was due to the ore grade being about 4% lower than the corresponding
      2005 second quarter, but the ore grade for the 2006 six-month period was
      identical to the 2005 six-month period. The volume of ore processed for the
      2006
      second quarter and 2006 six month period were essentially at plan.











Development
      of the drift connecting the south end of the Fletcher mine to a new ore body
      called RC West Fork is continuing at the planned pace, with ore production
      expected to begin in the fourth calendar quarter of 2006.





In
      the
      2006 second quarter, the Herculaneum primary smelter operation’s lead metal
      production was about 2% lower than in the 2005 second quarter, but the 2006
      six-month period was 1% higher than the 2005 six-month period. Lead metal
      production was at plan for the 2006 second quarter, but 7% below plan for the
      2006 six-month period due to the necessary replacement of a major component
      in
      the acid plant in December.





Doe
      Run
      is subject to a State Implementation Plan (“SIP”) with the Missouri Department
      of Natural Resources and the Missouri Air Conservation Commission to attain
      and
      maintain compliance with the ambient air quality standard for lead promulgated
      under the federal Clean Air Act for the city of Herculaneum. The plan was
      included in a consent judgment entered into by Doe Run and has been approved
      at
      the state level and by the U.S. EPA. The air quality monitors reflected
      attainment of the lead standard for 11 of the last 15 quarters, including the
      second quarter of the 2006 calendar year. However, once the air quality monitors
      reflected two quarters of non-compliance, the permitted annual capacity of
      the
      Herculaneum primary smelter decreased from 250,000 to 200,000 tons. This
      decrease in permitted capacity does not affect results at current production
      levels. Further non-compliance could result in SIP revisions that could have
      a
      material adverse financial impact on the Company. Management is in discussions
      with the Missouri Department of Natural Resources to explore options intended
      to
      improve the smelter’s ability to attain and maintain compliance in the
      future.




Lead
      production at the Company’s U.S. recycling operation was almost 4% and 1% higher
      in the 2006 second quarter and 2006 six-month period, respectively, than in
      the
      2005 second quarter and 2006 six-month period, but was 8% lower than planned
      for
      the 2006 six-month period. The production increases are the result of process
      changes made to the desulphurization circuit and to the furnace operations
      to
      allow the facility to handle feeds with higher levels of sulfur in an effort
      to
      further increase production regardless of the sulfur content of available feed.
      The recycling operation continues to make other adjustments to the processes
      in
      an effort to further increase production with the high sulfur
      feeds.





During
      the 2006 second quarter, Doe Run Peru’s copper, silver and gold production
      increased 6.8%, 5.4% and 17.6%, respectively, compared to the 2005 second
      quarter. These increases were due, principally, to factors that occurred during
      the 2005 second quarter that no longer affected operations in the 2006 second
      quarter. These factors included:





·
            maintenance
                on the oxy-fuel furnace that limited the availability of blister
                copper
                for the copper refinery which had lead to a reduction in copper slimes
                from which precious metal products, including silver and gold ore,
                are
                derived; and





·
            gold
                content in copper concentrates acquired in the 2006 second quarter
                exceeded the content in the 2005 second
                quarter.





The
      metal
      content in the copper concentrates produced at Doe Run Peru’s Cobriza mine in
      the 2006 second quarter was approximately 29% higher than the 2005 second
      quarter due to the correction of mine stability problems, improved mine
      preparation and development, and increased recoveries from pillars and sills.
      Production of lead remained essentially unchanged from the 2005 quarter to
      the
      2006 quarter.





*Results
      of Operations*





**Gross
      Margin** increased from $22.8 million in the 2005 second quarter to $66.5 million in
      the
      2006 second quarter and gross margin for the 2005 six-month period and 2006
      six-month period increased from $54.9 million in the 2005 six-month period
      to
      $111.3 million in the 2006 six-month period. Gross margin for Doe Run’s U.S.
      operations increased from $13.9 million in the 2005 second quarter to $43.3
      million in the 2006 second quarter and Doe Run’s U.S. operations’ gross margin
      for the 2005 six-month period and 2006 six-month period increased from $36.4
      million in the 2005 six-month period to $72.6 million in the 2006 six-month
      period. Gross margin for Doe Run Peru increased from $9.0 million in the 2005
      second quarter to $23.2 million in the 2006 second quarter and Doe Run Peru’s
      gross margin for the 2005 six-month period and 2006 six-month period increased
      from $18.5 million in the 2005 six-month period to $38.7 million in the 2006
      six-month period.










Gross
      margin is net sales less cost of sales, including depreciation, depletion and
      amortization attributable to cost of sales as disclosed in the table
      below.




**Depreciation,
                  Depletion and Amortization Attributable to Cost of
                  Sales**(Dollars
                  in the Millions)Second
                  Quarter
              
              Six-month
                  Period2006
              
              2005
              
              2006
              
              2005U.S.
                  operations
              
              $
              3.0
              
              $
              2.8
              
              $
              6.0
              
              $
              5.6Doe
                  Run Peru
              
              
              3.8
              
              
              2.7
              
              
              6.7
              
              
              5.9Consolidated
              
              $
              6.8
              
              $
              5.5
              
              $
              12.7
              
              $
              11.5




The
      increases in gross margin for our U.S. operations for the 2006 second quarter
      and 2006 six-month period are due in part to increases in sales of approximately
      $43.1 million and $67 million, respectively. Of these increases, $7.4 million
      and $19.7 million, respectively, were a result of a 14.7% and 18.6% increase
      in
      our U.S. operations’ realized prices for lead metal, fueled by a 22.6% and 19.8%
      increase in London Metal Exchange prices and higher premiums achieved over
      the
      London Metal Exchange for the 2006 second quarter and 2006 six-month period
      compared to the 2005 second quarter and 2005 six-month period, respectively.
      Additionally, an increase in lead concentrate sales volume and increases in
      copper and zinc prices contributed $2.6 million and $31.2 million in sales,
      respectively, in the 2006 six-month period and $1.7 million and $26.2 million,
      respectively for the 2006 second quarter. The 2006 six-month increase was
      partially offset by a decrease in copper concentrate volume of $1.9 million.
      These increases in sales for the 2006 second quarter and 2006 six-month period
      were offset by higher production costs at Doe Run’s primary operations,
      primarily due to slightly higher production, higher salaries, wages and employee
      benefits and maintenance and fuel costs and increased conversion costs at the
      recycling operation, due to higher metallurgical coke and propane costs, which
      were partially offset by improved feed costs per unit of metal
      produced.





The
      $14.2
      million increase in Doe Run Peru’s gross margin from the 2005 second quarter to
      the 2006 second quarter and the $20.2 million increase in Doe Run Peru’s gross
      margin from the 2005 six-month period to the 2006 six-month period were
      primarily the result of an improvement in the treatment charges received for
      processing concentrates and higher metal prices, offset by a LIFO inventory
      adjustment.





**Selling,
      General and Administrative costs** increased $3.7 million in the 2006 second quarter over the 2005 second quarter
      and $5.9 million in the 2006 six-month period over the 2005 six-month period.
      The increase was due primarily to increased salaries and employee benefit costs,
      legal fees, and professional fees related to software
      implementation.





**Unrealized
      Gains** on
      derivative financial instruments ** are ** related
      to the change in fair market value of derivative financial instruments that
      are
      a part of the Company’s risk management strategy. The change from an unrealized
      gain of $1.3 million in the 2005 six-month period to an unrealized gain of
      $4.3
      million in the 2006 six-month period and the increase from $0.5 million to
      $2.3
      million in the 2006 second quarter versus 2005 second quarter is primarily
      the
      result of the settled 2006 positions. These gains were overcome by realized
      losses included in net sales. Also see “Item 3. Quantitative and Qualitative
      Disclosures About Market Risk.”





**Other
      Expenses** increased $0.5 million from the 2005 second quarter to the 2006 second quarter
      and remained essentially unchanged from the 2005 six-month period to the 2006
      six-month period.





The
      Renco
      Group, Inc., the parent company of Doe Run’s sole shareholder (referred to as
      Renco), has elected for the Company to be treated as a qualified subchapter
      S
      subsidiary for U.S. federal tax purposes. Most states in which the Company
      operates will follow similar tax treatment. Subchapter S status requires the
      ultimate shareholders to include their pro rata share of the Company’s income or
      loss in their individual tax returns. As a result of the Company’s tax status in
      the U.S., the Company is not generally subject to U.S. federal and most state
      income taxes, however, under a tax sharing agreement with Renco, the Company
      is
      liable to Renco for pro forma federal and state income taxes as defined in
      the
      agreement and our costs are shown as tax dividends.












***Liquidity
      and Capital Resources***





*Overview*





Our
      auditors issued unqualified opinions on the 2005 audited consolidated financial
      statements of the Company and the 2005 audited financial statements of Doe
      Run
      Peru that expressed substantial doubt about the Company’s and Doe Run Peru’s
      ability to continue as going concerns. Doe Run Peru has significant capital
      requirements under environmental commitments, substantial contingencies related
      to Peruvian taxes and has significant debt service obligations, each of which,
      if not satisfied, could result in a default under the Company’s credit
      agreements and collectively raise substantial doubt about the Company’s ability
      to continue as a going concern. These commitments require Doe Run Peru to
      dedicate a substantial portion of cash flow from operations to the payment
      of
      these obligations which includes future expenditures of approximately $175
      million under the terms of the Modified PAMA. These commitments will reduce
      funds available for other business purposes. In addition, the Company is highly
      leveraged. These factors also increase the Company’s vulnerability to general
      adverse conditions, limit our flexibility in planning for or reacting to changes
      in its business and industry, and limit the Company’s ability to obtain
      financing required to fund working capital and capital expenditures and for
      other general corporate purposes. An unfavorable outcome to lawsuits and tax
      assessments in Peru would have a further adverse effect on the Company’s ability
      to meet its obligations when due.




The
      period for Doe Run Peru’s compliance with the PAMA requiring the construction of
      sulfuric acid plants at its La Oroya smelter was due to expire on December
      31,
      2006. On May 29, 2006, the Peruvian Ministry of Energy and Mines issued a
      resolution, pursuant to Supreme Decree No. 046-2004-EM, extending the completion
      dates of certain PAMA projects to October 31, 2009. The sulfuric acid plant
      projects for the zinc circuit, the lead circuit and the copper circuit are
      required to be completed by December 31, 2006, September 30, 2008 and October
      31, 2009, respectively. They were all originally required to be completed by
      December 31, 2006. Management believes the Modified PAMA compliance period,
      in
      addition to high metal prices and other revenue enhancements will enable the
      Company to continue as a going concern. The Company’s ability to meet
      obligations after 2006 could be affected by future operating performance and
      financial results, which are subject to financial, economic, political,
      competitive and other factors affecting the Company, many of which are beyond
      the Company's control, or an unfavorable outcome to the items noted above,
      and,
      accordingly, no assurance can be given that it will be able to meet such
      obligations.





*Capital
      Resources and Debt Instruments*





Net
      unused availability at April 30, 2006 under the Doe Run Revolving Credit
      Facility was approximately $34.7 million and under the Doe Run Peru Revolving
      Credit Facility was $0.2 million at April 30, 2006. In addition to the
      availability under these revolving credit facilities, cash balances at Doe
      Run
      and Doe Run Peru were $1.1 million and $22.8 million, respectively, at April
      30,
      2006. In Peru, continued high metal prices have resulted in outlays for
      concentrate purchases and value-added tax payments being funded by cash from
      operations, as Doe Run Peru has reached its maximum borrowing level under the
      Doe Run Peru Revolving Credit Facility. Accounts payable have increased during
      the 2006 six-month period due, in part to the high metal prices for materials
      and, in part to Doe Run Peru extending its payment terms with certain suppliers
      in response to the lack of borrowing availability.




The
      Company’s term note of $8 million has been paid, however, the Company still has
      substantial debt service requirements in the future, including interest payments
      of $12.9 million in October of 2006 for the Company’s 11.75% notes which are due
      in 2008. The Doe Run Peru Revolving Credit Facility expires on September 22,
      2006 and will require negotiations to extend its terms. There can be no
      assurance that the Company will be successful in extending the existing credit
      agreement or negotiating a new credit agreement, or if it is successful, that
      the extended or new credit agreement would be at terms that are favorable to
      the
      Company.




During
      the period beginning on October 29, 2005 and ending on October 29, 2012, the
      majority warrantholders, pursuant to the Warrant Agreement dated as of October
      29, 2002 between Doe Run and State Street Bank and Trust Company, as Warrant
      Agent, will have the right to require Doe Run to repurchase all, but not less
      than all, of the warrants and any outstanding shares issued upon the exercise
      thereof at a price equal to the fair market value of the warrants, as determined
      by a third party appraisal. Management
      engaged a nationally recognized valuation firm to calculate the fair value
      of
      the









warrants.
Management’s
      estimate of the fair value of the warrantsbased
      on
      the valuationis
      approximately $0.6 million at April 30, 2006.




*Tax
      Commitments*





Income
      tax assessments from Peru’s tax authority, SUNAT, for the tax years 1998 through
      2001, show an assessed amount due from Doe Run Peru, consisting of additional
      income taxes due, penalties and interest as of April 30, 2006, of approximately
      $121,100. Value-added tax, referred to as VAT, assessments for tax years 1999
      through 2001 and for the period from January through July 2004, calculated
      with
      penalties and interest as of April 30, 2006, show a total assessment amount
      of
      approximately $48,100. SUNAT offset the amount assessed for 2004 of
      approximately $2,300 against Doe Run Peru’s VAT receivable balance from July
      2004. In addition, the Company estimates that the effect of similar assessments
      for periods not yet assessed would be approximately $32,900 and $22,400 for
      the
      income tax and VAT matters, respectively. Furthermore, Doe Run Peru would also
      be required to make additional workers’ profit sharing payments equal to 8% of
      the increase in taxable income generated by the changes discussed above, or
      approximately $11,300 for calendar years 1998 through 2005.





Management
      of the Company believes that in each case Doe Run Peru has followed the
      applicable Peruvian tax statutes and intends to pursue all available
      administrative and judicial appeals. Doe Run Peru is not required to make any
      payments pending the administrative appeal process. If Doe Run Peru is not
      successful in the administrative appeal processes and were to appeal in the
      judicial system, some type of financial assurance would be required, which
      would
      have a significant adverse effect on liquidity.




**Item
      4. Controls and Procedures.**





As
      of the
      end of the period covered by this report, an evaluation was performed by our
      management, under the supervision and with the participation of our Chief
      Executive Officer, the principal executive officer, and Chief Financial Officer,
      the principal financial officer, of the effectiveness of the design and
      operation of our disclosure controls and procedures (as defined in Rules
      13a-5(e) and 15(d-15(e) promulgated under the Securities and Exchange Act of
      1934, as amended (the “Exchange Act”). Based upon this evaluation, our Chief
      Executive Officer and Chief Financial Officer concluded that such disclosure
      controls and procedures were effective as of the end of the period covered
      by
      this report to ensure that information required to be disclosed by the Company
      in the reports that it files or submits under the Exchange Act is (a) recorded,
      processed, summarized and reported within the time periods specified in the
      Securities and Exchange Commission’s rules and forms and (b) is accumulated and
      communicated to the Company’s management, including its principal executive and
      principal financial officers, or persons performing similar functions, as
      appropriate to allow timely decisions regarding required disclosure.





No
      change
      in our internal control over financial reporting occurred during the period
      covered by this report that has materially affected, or is reasonably likely
      to
      materially affect, our internal control over financial reporting.








**PART
      II. OTHER INFORMATION**





**Item
      6. Exhibits.**





31.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.31.2
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.32.2
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.








**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.








**THE
                DOE RUN RESOURCES CORPORATION**
              (Registrant)Date:
                October 19, 2006
            /s/
                Theodore P. Fox, IIITheodore
                P. Fox, IIIChief
                Financial Officer(duly
                authorized officer and principal financial
                officer)