Use these links to rapidly review the documentTHE DOE RUN RESOURCES CORPORATION INDEX TO FORM 10-K Part IV



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-K

|(Mark One)                                                    |                                                                                         
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                             | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934    
|For the fiscal year ended October 31, 2003                   
|or                                                           
|o                                                             | 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 333-52285

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(Address of principal executive offices) |  | 63146(Zip Code)                  

(Registrant's
telephone number, including area code)(314) 453-7100

Securities registered pursuant to Section 12(b) of the Act:

|Title of Each Class |  | Name of Each Exchange on Which Registered
|------------------- |  | -----------------------------------------
|None                |  | Not Applicable                           

Securities
registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

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.
o Yes     ý 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 if disclosure of delinquent filers pursuant to ITEM 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ý

Number of shares outstanding of each of the issuer's classes of common stock, as of June 2, 2004: Common stock, $.10 par
value                    1,000 shares

Aggregate market value of the voting stock held by non-affiliates of the registrant: $0; all shares of the voting stock of the registrant are owned by its parent,
DR Acquisition Corp.

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THE DOE RUN RESOURCES CORPORATION  INDEX TO FORM 10-K



|         |               | 
|-------- | ------------- | 
|Part I   |               | 
|         | Item 1.       | 
|         | Item 2.       | 
|         | Item 3.       | 
|         | Item 4.       | 
|Part II  |               | 
|         | Item 5.       | 
|         | Item 6.       | 
|         | Item 7.       | 
|         | Item 7A.      | 
|         | Item 8.       | 
|         | Item 9.       | 
|         | Item 9A.      | 
|Part III |               | 
|         | Item 10.      | 
|         | Item 11.      | 
|         | Item 12.      | 
|         | Item 13.      | 
|Part IV  |               | 
|         | Item 15.      | 
|         | Signatures   
|         | Exhibit Index

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Part I

Item 1. Business

Overview

The Doe Run Resources Corporation (Doe Run and together with its subsidiaries, the Company) is a producer of non-ferrous and precious metals with
operations in the United States and Peru. The Company is the largest integrated lead producer in North America and the largest primary lead producer in the western world. The Company's business in the
United States includes an integrated primary lead operation, a secondary lead operation and lead fabrication operations. In Peru, Doe Run's indirect subsidiary, Doe Run Peru S.R.L. (Doe Run Peru),
operates the La Oroya smelter (La Oroya), one of the largest polymetallic processing facilities in the world producing an extensive product mix of non-ferrous and precious metals,
including silver, copper, zinc, lead and gold. Doe Run Peru also has a copper mining and milling operation (Cobriza) in Peru. These operations will be discussed in greater detail in the "Overview"
sections below. See "Item 8. Financial Statements and Supplementary DataNote 17 to the Company's Consolidated Financial Statements", for detailed operating segment information. The
Company's business does not involve significant: 1) seasonal fluctuations, 2) unusual working capital requirements, 3) order backlog or 4) federal contracting.

Financial Condition

The Company's auditors have issued unqualified opinions on the 2003 audited financial statements of the Company and of Doe Run Peru that express doubt about the
Company's and Doe Run Peru's
ability to continue as going concerns due to, among other things, liquidity concerns, defaults under loan agreements, uncertainties related to environmental and litigation matters, as well as
recurring losses that are discussed in "Item 8. Financial Statements and Supplementary DataNote 2 to the Company's Consolidated Financial Statements" and "Item 8. Financial
Statements and Supplementary DataNote 18 to Doe Run Peru's Consolidated Financial Statements".

The
Company continues to deal with challenges posed by the market for its metal products and feed supply shortages in Peru. In the U.S., a declining demand for lead, mainly due to the
movement of lead consuming industries from the U.S. to lower labor cost areas of the world, particularly China, has affected the domestic metal market. Imports of lead-acid batteries from
Mexico, China, South Korea, and Brazil, displacing U.S. production, are expected to continue into 2004. These challenges also include the effects of increasing metal production in China, which has
affected the global demand for concentrates. These challenges have affected the results of operations and liquidity for the U.S. and Doe Run Peru. See discussion of market issues and their impact in
"Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity." See discussion of feed supply
issues in "Doe Run PeruRaw Materials".

Restructuring

On October 29, 2002, Doe Run completed a consensual restructuring (the Restructuring) of its previously outstanding 11.25% Senior Notes due 2005, Floating
Interest Rate Senior Notes due 2003 and 11.25% Senior Secured Notes due 2005 (collectively, Old Notes) by exchanging notes with a principal amount of $294.8 million for new notes with a face
amount of $175.8 million due November 1, 2008 (the Notes) and issuing warrants entitling holders of the Notes to purchase approximately 39% of the aggregate outstanding common stock of
Doe Run (the Warrants). The Warrants expire on October 29, 2012 and are exercisable at any time after November 1, 2008. The effect of the Restructuring was to reduce the face amount of
notes outstanding by $119.0 million and defer principal and interest payments. See "Item 7. Management's Discussion of Financial Condition and Results of
OperationsRestructuring and Long-Term Debt" for a discussion of the Restructuring. Pursuant to the Restructuring, Doe Run's
Board of Directors was expanded from one to three with one

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(the
Independent Director) selected by holders of the majority of the Warrants (Majority Warrantholders) pursuant to an Investor Rights Agreement. The powers granted to the Independent Director by the
Investor Rights Agreement may have a significant impact on the operation of the Company's business as well as its strategic direction. See "Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters" for a discussion of the Investor Rights Agreement and "Item 10. Directors and Executive Officers of the Registrant" for information on the Directors.

Corporate structure

All of Doe Run's issued and outstanding capital stock is indirectly owned by The Renco Group, Inc. (Renco). Renco is owned by trusts established by
Mr. Ira Leon Rennert, Renco's Chairman and Chief Executive Officer, for himself and members of his family. As a result of such ownership, Mr. Rennert controls the Company and its
subsidiaries, subject to the provisions of the Investor Rights Agreement discussed above.

Doe
Run owns 100% of Doe Run Cayman Ltd. (Doe Run Cayman), a Cayman Islands corporation. Doe Run Cayman owns in excess of 99% of the interest in Doe Run Peru, with a de minimisnumber of shares owned
by present and former employees of both Doe Run Peru and Empresa Minera del Centro del Peru S.A. (Centromin) as
required by Peruvian law. Centromin is the Peruvian government entity whose subsidiary previously owned La Oroya. That subsidiary was purchased on October 23, 1997 by Doe Run Peru.

OverviewU.S. Operations

The Company's primary lead operation in the U.S. consists of two primary smelters, which obtain concentrates from the Company's four operating mills, supplemented
from time to time with concentrates purchased in the open market. The Company indefinitely suspended operations at one of these smelters in November 2003. (See further discussion in "Item 7.
Management's Discussion and AnalysisRecent Events".) The mills are supplied with ore mined from five production shafts along approximately
40 miles of the Viburnum Trend in southeastern Missouri, one of the world's most productive lead deposits. As of October 31, 2003, the Company's U.S. ore reserves consisted of approximately
48 million proven and probable tons, containing average grades of 5.51% lead, 1.25% zinc and .29% copper.

The
Company also operates in southeastern Missouri the world's largest secondary lead smelter where it produces lead metal from recycled lead-acid batteries and other lead
bearing materials.

The
Company, through its subsidiary, Fabricated Products, Inc. (FPI), produces value-added lead products such as lead oxide, lead sheet and lead bricks at facilities in Arizona,
Washington and Texas. These operations permit the Company to participate in and manage the entire lead life cycle from mining lead ore, to producing refined lead metal, to fabricating value-added lead
products, to recycling batteries and other materials containing lead. See discussion in "Item 7. Management's Discussion and AnalysisRecent
Events" for discussion of the status of certain of these operations subsequent to the end of the fiscal year.

In
fiscal 2003, the Company's U.S. operations delivered approximately 424,000 tons of refined lead metal and lead alloy products, including lead recycled for customers (tolling),
representing approximately 21% of North American consumption and 7% of western world consumption.

Approximately
64% of the U.S. operation's sales for the fiscal year ended October 31, 2003 (2003) were to battery manufacturers or their suppliers. Historically the
lead-acid battery has been the dominant technology for automotive and other starting, lighting and ignition (SLI) batteries. Management believes this will continue to be the case for the
foreseeable future because of its cost competitiveness, recyclability and existing infrastructure. Refined lead is also used in products such as

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computer
and television screens, ammunition, and stationary batteries used as backup power sources and rolled and extruded lead products used in radiation shielding and roofing materials.

Fluctuations
in lead and other non-ferrous metal prices can have a material effect on the results of operations, financial condition and liquidity of the Company. These
prices are affected by numerous factors beyond the Company's control, including expectations for inflation, speculative activities, global and regional demand and production, political and economic
conditions and production costs in major producing regions. The aggregate effect of these factors is impossible for the Company to predict. See"Item 7.
Management's Discussion and Analysis of Financial Condition and Results of OperationsResults of Operations" for a detailed discussion of
the markets for lead and other metals affecting the Company's results of operations. The Company, by taking advantage of its extensive polymetallic ore resources and smelting assets, is somewhat able
to reduce the impact of metal price volatility through adjustments to its mining, milling and smelting plans. In addition, sales from tolling services, by-products and fabricated products
provide the Company with sources of revenue largely independent of lead prices.

OverviewDoe Run Peru

The Doe Run Peru operations consist of the La Oroya smelting complex, acquired in October 1997, and the Cobriza copper mine and mill acquired in
August 1998. La Oroya's unique combination of non-ferrous metal smelters, refineries and by-product circuits enable it to process complex polymetallic concentrates and
to produce high quality finished metals and by-products. In 2003, La Oroya was one of Peru's largest exporters, exporting approximately 91% of its total sales to North America, Europe and
Asia, as well as other Latin American countries. Its customers include end-users of non-ferrous and precious metals and metal by-products, as well as international
metal trading companies.

La
Oroya's operations smelt and refine complex concentrates obtained from Cobriza and from unaffiliated mining operations. La Oroya typically purchases concentrate feedstock pursuant to
contracts under which the cost of concentrates is based on a percentage of the non-ferrous metal and precious metal content of the concentrates, reduced by treatment and refining charges
to process the concentrates and penalties for impurities within the concentrates, such as arsenic, antimony and bismuth, which the smelter can process and sell as by-products.
Non-ferrous metal prices are generally established by reference to international metal markets, primarily the London Metal Exchange (LME). Treatment charges are negotiated with concentrate
sellers, generally based on world terms. They are affected by numerous factors beyond the Company's control including: expectations for inflation, global and regional demand for smelter capacity,
availability and quality of concentrates and production costs in major producing regions. The aggregate effect of these factors is impossible for the Company to predict. La Oroya's ability to process
the impurities in copper and lead concentrates allows Doe Run Peru to charge a penalty for processing these concentrates. These penalties are significant to Doe Run Peru, and La Oroya is one of only
four smelters in the western world that can process these types of concentrates.

La
Oroya derives its operating profit primarily from treatment charges, refining charges and penalties on concentrates purchased. The smelter pays for the majority of the metal contained
in the concentrates purchased, but metallurgical recoveries are typically greater than the percentage of metal content paid for. Therefore, it generates a portion of its operating profit from sales of
the metals produced from these excess recoveries. Additional operating profit is generated from the sale of by-products, as well as from premiums over market prices received on its refined
metal sales.

The
markets for La Oroya's products are global and demand depends upon world wide economic conditions. Given the diversity of its products and by-products, Doe Run Peru's
financial performance is not solely dependent upon any single product or by-product. Also, because the La Oroya smelter is

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primarily
a processor of complex concentrates that are purchased based on market prices, its financial performance is less sensitive than the Company's U.S. operations to the volatility of metal
prices. However, La Oroya's operating results are sensitive to the level of treatment and refining charges and penalties received for concentrates processed and the availability of economically
suitable concentrate feed. See "Doe Run Peru OperationsRaw Materials"for a discussion of treatment charges and difficulties encountered in obtaining
adequate feed supply.

Doe
Run Peru's financial condition and results of operations could be adversely affected by changes in economic or other policies of the Peruvian government, including reversal of the
trend toward privatization, or other political or economic developments in Peru.

Recently,
Peru has experienced a certain level of political unrest and, if this political unrest were to increase significantly, Doe Run Peru's financial condition and results of
operations may be adversely affected.

The Company's U.S. Operations

Products and Services

The principal products produced by the Company's U.S. operations include refined lead from primary and secondary sources, lead, zinc and copper concentrates,
fabricated lead products and other by-products. Historically, the majority of lead concentrates produced have been used to feed Doe Run's primary smelters. The Company also generates
revenue from tolling fees received for recycling spent lead-acid batteries and other lead-bearing materials for its customers. The following table sets forth net sales for the
Company's products and services:

|                         |             | Year Ended October 31,
|------------------------ | ----------- | ----------------------
|
|
|Primary lead metal sales |             | $                     
|Secondary lead:          |             |                       
|                         | Tolling     |                       
|                         | Metal sales |                       
|                         | Other       |                       
|Zinc concentrates        |             |                       
|Copper concentrates      |             |                       
|Fabricated products      |             |                       
|Other                    |             |                       
|                         |             |                       
|                         | Total       |                       
|                         |             |                       

For
the year ended October 31, 2003, exports represented approximately 6% of the U.S. operations' net sales. For the years ended October 31, 2002, and 2001, exports were
approximately 1% of the U.S. operations' net sales.

Customers

The Company's U.S. operations had approximately 150 lead metal customers including the six largest lead-acid battery manufacturers in the world. These
six customers accounted for approximately 33% of U.S. net sales in fiscal 2003. The loss of any of the Company's large customers or curtailment of purchases by these customers could have a material
adverse effect on the results of operations, financial condition and liquidity of the Company.

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Competition

The Company is the largest integrated lead producer in North America and the largest primary producer in the western world. It is also the third largest secondary
lead producer in North America and the fourth largest in the world. The Company's U.S operations compete primarily in the North American market where its major competitors are three primary lead
producers and nine secondary lead producers. Competition within the North American market is based primarily on quality, price, service, timely delivery and reliability. Because lead is generally sold
on a delivered basis with freight charges included, the Company's central U.S. location typically allows it to have transportation costs significantly lower than its major competitors with operations
outside of North America. Due to its location, the Company also is able to provide its customers just-in-time delivery at a lower cost than most of its competitors. In
addition, management believes the Company's primary and secondary production capacities and focus on the lead business as its core business provide the Company with additional competitive advantages.
In response to a declining domestic metal market, as battery manufacturers move production overseas, Doe Run has reduced its lead metal production and is selling some of its production as lead
concentrates, and competing in the global market for concentrates. See discussion of operation changes in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of
OperationsRecent Events" and a discussion of the current market for metal and concentrates in "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of OperationsResults of Operations."

Raw Materials

Lead concentrates are supplied by the Company's mining operations and, from time to time, purchased from third parties. For a discussion of the Company's mineral
reserves, see "Item 2. PropertiesOre Reserves." At current production levels, the Company's U.S. mining operations produce all of the
concentrates required by its primary smelter. The Company's U.S. operations utilize various other raw materials, principally spent batteries, coke, chemicals and reagents, which are secured from
external sources, primarily on the basis of competitive bid. The Company believes that it has adequate sources of these raw materials to meet its present production needs.

Power

The primary electric power source for the majority of the Company's U.S. operations is Ameren UE, a public utility headquartered in St. Louis, Missouri. The
Viburnum-35 mine and Glover primary smelter obtain their electric power from Black River Electric Cooperative, a public utility located in Southeastern Missouri. Natural gas and propane
are secured from external sources, primarily under contracts that are awarded on the basis of competitive bidding, whose prices fluctuate with the market for natural gas and petroleum, respectively.
The Company believes that it has adequate power sources to meet its present production needs.

Environmental Matters

The Company's U.S. operations are subject to numerous federal, state and local environmental laws and regulations governing, among other things, air emissions,
wastewater discharge, solid and hazardous waste treatment, storage, and disposal and remediation of releases of hazardous substances. In common with much of the mining industry, the Company's
facilities are located on sites that have been used for heavy industrial purposes for decades and may require remediation. Environmental laws and regulations may become more stringent in the future
which could increase costs of compliance. See "Item 8. Financial Statements and Supplementary DataNote 20 to the Company's Consolidated Financial Statements".

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Exploration

The Company continues to explore for additional reserves within the Viburnum Trend, located in southeastern Missouri, one of the world's most productive lead ore
districts. Current exploration is focused on surface and underground drilling in and adjacent to the operating mines for the purpose of discovering new ore reserves, as well as delineating previously
drilled ores for mining purposes. In addition, drilling work is being pursued in most of the mines to access ore beyond the present mining areas. The Company, also holds exploration tracts outside the
Viburnum Trend in the U.S. and through a subsidiary, in the Republic of South Africa. In Missouri, 50 miles east of the Viburnum trend, the Company has conducted pre-development work on a
lead-zinc-cobalt deposit. In South Africa, the Company has conducted pre-feasibility work on a lead and zinc deposit approximately 100 miles from Kimberly, in the
Northern Cape province. These properties are currently being held with minimal cost pending further economic evaluation. In fiscal 2003, 2002 and 2001, the Company's U.S. operations spent
$3.8 million, $3.0 million and $3.8 million, respectively, on exploration activities, including $2.7 million, $1.6 million and $2.4 million, respectively,
outside the Viburnum Trend.

Safety

Throughout its operations, the Company strongly emphasizes providing employees a safe working environment through extensive training to ensure safe work practices
and worker knowledge of proper equipment operation. In the U.S., the Company's mining and milling operations are regulated by the Mine Safety and Health Administration of the Department of Labor
(MSHA) and its smelting and fabricating operations are regulated by the Occupational Safety and Health Administration of the
Department of Labor (OSHA). The Company believes it has achieved safety results that are among the best in its industry classifications. In 2003, the employees of the mining and milling operations
continued their outstanding safety performance. The internal lost-time injury rate was about 2.5 times better than the national average for the underground metal mining industry. In fiscal
2003, the Fletcher mine, the Herculaneum smelter and FPI completed the year with no lost time injuries.

Employees

As of October 31, 2003, the Company had 325 active salaried employees and 1,033 active hourly employees in the United States, of which Local 7450 of the
United Steelworkers of America (USWA) represented 137 hourly employees at the Company's Glover smelter. Doe Run has a three-year agreement with the union that expires in
May 2005. An election was held February 13, 14 and 15, 2003 to determine whether approximately 465 hourly and non-exempt salaried employees at the mining operations
would be represented by the United Mine Workers of America. On February 24, 2003, the National Labor Relations Board certified that the mining operations' employees chose not to be represented
by the United Mine Workers of America. Doe Run received a notice on March 31, 2004 that a petition had been filed under the National Labor Relations Act by the United Mine Workers of America to
represent the hourly employees at the mining operations. An election was held May 17 - 20, 2004. The Company was advised on May 24, 2004 that the mining
operations' employees chose not to be represented by the United Mine Workers of America.

Doe Run Peru

Products

La Oroya's principal products are refined silver, copper, zinc, lead and gold. In addition, La Oroya produces a variety of by-products, including
bismuth, indium, tellurium, antimony, cadmium, selenium, sulfuric acid, zinc-silver concentrate, zinc sulfate, copper sulfate, arsenic trioxide and others. The

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following
table sets forth net sales, excluding sales to Doe Run, for each of La Oroya's principal products.

Year Ended October 31,2003

2002

2001(dollars in thousands)Silver

$
167,698

$
156,437

$
153,993Copper


104,987


98,498


106,772Zinc


58,376


59,934


76,039Lead


55,884


56,922


59,165Gold Bullion


28,496


27,917


22,756By-Products


20,065


18,578


15,611Total

$
435,506

$
418,286

$
434,336


Customers

La Oroya had approximately 332 customers in 2003, including a wide variety of industrial and international trading companies, of which the five largest accounted
for approximately 45% of its net sales. In 2003, approximately 91% of net sales were exported, with sales to North American countries representing approximately 37% of net sales, followed by Latin
America, Asia and Europe with approximately 19%, 18% and 16% of net sales, respectively. Substantially all of La Oroya's 2003 metal sales were pursuant to contractual agreements, typically one year or
less. Such contracts generally set forth minimum volumes and pricing mechanisms. Substantially all of La Oroya's sales are denominated in U.S. dollars.

Competition

La Oroya's unique combination of non-ferrous metal smelters, refineries and by-product circuits are capable of processing complex
concentrates into high quality base and precious metals. Only three other facilities in the western world have the capability to treat lead and copper concentrates containing high antimony, arsenic,
bismuth and precious metal values in addition to a variety of residues. Chinese smelters, who can also process complex concentrates, are competing with Doe Run Peru in the market for
concentratessee discussion of market below in "Raw Materials".

Raw Materials

La Oroya's primary raw material is concentrate feedstock. In addition, Doe Run Peru's process consumes various other raw materials, principally coal and fluxes.

Copper.During 2003, approximately 64% of the copper concentrates processed at La Oroya were obtained from the Peruvian
domestic market. Approximately 27% of La Oroya's total copper concentrate feed comes from Cobriza. In fiscal 2004, La Oroya expects to obtain approximately 69% of its copper concentrates from the
Peruvian domestic market, with Cobriza supplying approximately 27% of the total requirement. The balance is expected to be obtained primarily from neighboring Latin American countries. La Oroya
requires approximately 81,000 tons of copper metal contained in concentrates to produce at capacity.

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Zinc.All of the zinc concentrates processed at La Oroya, during 2003, were secured from the Peruvian domestic market. La
Oroya requires approximately 90,000 tons of zinc metal contained in concentrates per year to maximize production capacity.

Lead.Approximately 95% of La Oroya's 2003 lead concentrates were obtained from the Peruvian domestic market. The smelter
requires approximately 137,000 tons of lead contained in concentrates per year to produce at capacity.

Feed Supply.Low lead, zinc and copper prices over the past five years have reduced available concentrate supplies as miners
have cutback production in response to the low price environment, making concentrate supplies very tight. Smelters competing for concentrates in this tight market have driven treatment charges and
penalties down significantly in recent years. Most of La Oroya's copper, lead and zinc concentrate feed supplies are secured from a small number of suppliers in the Peruvian domestic market. Due to
the proximity of the smelter to these suppliers, it is economically advantageous for Doe Run Peru to acquire its concentrates from Peruvian suppliers. However, tightness in the global market for
concentrates has caused intense competition from buyers outside of Peru, especially China, for all concentrates, including the complex concentrates which may have been previously undesireable for some
smelters. This intense competition has adversely affected concentrate availability and treatment charges received. In addition, the effects of low metals prices have caused some of La Oroya's
suppliers to suffer financial distress, which in some cases has led to production shortfalls and negatively impacted raw material supply at the smelter. Currently, La Oroya has secured approximately
86% of its concentrate requirements for fiscal 2004, through material supplied by Cobriza and contracts with independent suppliers. For the year ended October 31, 2003, approximately 27% of the
La Oroya smelter's copper concentrate requirements were met by Cobriza, representing 100% of Cobriza's output. While La Oroya has contracted for 86% of its concentrate requirements for fiscal 2004,
and recent metal price improvements and other factors have improved the financial condition of the smelter's traditional suppliers, in light of current market conditions, it remains possible that the
smelter could experience difficulties obtaining economically suitable concentrate feed supply. Failure to secure economically suitable concentrate could have a material impact on La Oroya's
performance.

Water.Water for the La Oroya facility is obtained from three main sources: the Mantaro River, the Tishgo River and the
Cuchimachay Spring. Management believes these three sources, in addition to numerous adjacent springs and wells provide adequate water supplies for the facility.

Power.La Oroya receives electric power from Empresa de Electricidad de los Andes S.A., (Electroandes), a local electric
power company owned by PSGE Global Inc. The smelting complex consumes approximately 63 megawatts of ongoing load, which represents approximately
one-third of the capacity of Electroandes. La Oroya has a supply contract with Electroandes, which expires in July 2008. Management believes this agreement provides sufficient power
at satisfactory rates. Most of Cobriza's electrical power is also provided by Electroandes. Cobriza's requirements do not represent a significant portion of Electroandes' capacity. Electroandes is not
the only source of electricity in the areas where Doe Run Peru operates.

Other.At La Oroya, an oxygen plant supplies oxygen for the oxy-fuel burners of the reverberatory furnace of the
copper smelter and for the blast furnaces of the lead smelter. The oxygen plant was installed in 1994 with a capacity of 344 tons per day. It was owned by a local bank and leased to Doe Run Peru under
a sale and leaseback agreement, which ended in February 2004. At that time, ownership of the plant reverted back to Doe Run Peru pursuant to a bargain purchase option. Coal is imported to
produce coke used in the lead circuit blast furnaces. Fluxes consumed in the smelting process are supplied primarily by Doe Run Peru controlled mining concessions near La Oroya. Doe Run Peru also
purchases silica and pyrite fluxes containing precious metals. Management believes that its sources of these materials are adequate to support operations for the foreseeable future.

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Environmental Matters

Modern environmental legislation has been introduced only in the last decade in Peru. For mining and metallurgical activities, the Ministry of Energy and Mines
(MEM) is the principal regulatory authority. The MEM has issued "maximum permissible limits" for liquid effluent and air emissions. In addition, the National Environmental Council coordinates
government regulations and policies, including the air quality standards for Peru. The Directorate General of Environmental Health (DIGESA), a division of the Ministry of Health, issues wastewater
discharge permits based on standards governing receiving water quality. Peruvian law requires all new mining or metallurgical operations, and existing operations that are undergoing an expansion of
over 50% of installed capacity, to submit to the MEM an Environmental Impact Study.

For
mining and metallurgical operations in existence prior to 1994, concession holders (i.e. owner/operators) were required to submit to the MEM a Preliminary Environmental Assessment
(EVAP) that identified environmental impacts after twelve months of baseline monitoring. Based on the results of the EVAP, the operator submitted to the MEM an Environmental Remediation and Management
Program (PAMA) that consisted of an environmental impact analysis, monitoring plan and data, mitigation measures and closure plan. The PAMA also sets forth the actions and corresponding annual
investments the concession holder agrees to undertake in order to achieve compliance with the applicable standards prior to expiration of the PAMA (ten years for smelters, such as La Oroya's
operations, and five years for any other type of mining or metallurgical operation, like Cobriza). Once approved, the PAMA functions as the equivalent of an operating permit with which the operator
must comply. After expiration of the PAMA, the operator must comply with all applicable standards and requirements. Mining, metallurgical and processing operators must present annual sworn
statements to the MEM that describe their operations and resultant emissions. In addition, Peruvian environmental law allows operators to sign with the Peruvian government an Environmental Stability
Agreement, which allows operators to be exempt from changes in environmental regulations, particularly permissible limits of emission, during the life of the PAMA, except for certain closure
requirements.

La
Oroya's operations historically and currently exceed some of the applicable MEM maximum permissible limits pertaining to air emissions, and wastewater effluent quality. The PAMA
projects, which are more fully discussed below, have been designed to achieve compliance with these requirements prior to the expiration of the PAMA on December 31, 2006. No assurance can be
given that implementation of the PAMA projects is feasible or that their implementation will achieve compliance with the applicable legal requirements by the end of the PAMA period. In
January 2002, Doe Run Peru received permission from the MEM to change certain PAMA projects and the timing of their completion. However, there can be no assurance that the Peruvian government
will not, in the future, require compliance with additional environmental regulations that could adversely affect Doe Run Peru's business, financial condition or results of operations.

Under
the Subscription Agreement, pursuant to which Doe Run Peru acquired La Oroya, Centromin agreed to indemnify Doe Run Peru against environmental liability arising out of its prior
operations and their apportioned share of any other complaint related to emissions. Performance of the indemnity has been guaranteed by the Peruvian government through the enactment of Supreme Decree
No. 042-97-PCM. However, there can be no assurance that Centromin will satisfy its environmental obligations and investment requirements, including those in its PAMA, 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 or results of operations.

As
part of the acquisitions of La Oroya and Cobriza, Doe Run Peru entered into certain agreements with MEM to expand and modernize their operations, including expenditures to comply with
environmental regulations in Peru, such as those governing the treatment, handling and disposal of solid wastes, liquid effluent discharges and gaseous emissions. Principal projects related to

9

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environmental
matters at the La Oroya smelter include: 1) building sulfuric acid plants for the metal circuits,including some process changes that may be necessary to ensure
compliance, 2) water and sewage treatment facilities, and 3) slag and slimes handling equipment and disposal facilities. Expenditures related to the projects specified in the PAMA and
related process changes are currently estimated to be $168.3 million for fiscal 2004 through fiscal 2007.

The
PAMA provides a specific plan for achieving the applicable MEM maximum permissible limits pertaining to air emissions and wastewater effluent quality. However, the specific projects
included in the PAMA may be modified and amended as to the actual design and timing to be implemented, provided compliance with the applicable maximum permissible limits is achieved by
December 31, 2006. Although the PAMA currently requires Doe Run Peru to construct certain sulfuric acid plants
estimated to cost approximately $107.5 million in order to reduce emissions, Doe Run Peru is also proceeding with efforts to identify alternative methods of achieving compliance. These efforts
include, but are not limited to, reducing or curtailing production from a portion of the plant thus eliminating the need for the equipment presently contemplated and replacing it with another
alternative. These efforts must take into consideration the impacts on profitability and liquidity, as well as other economic impacts. Doe Run Peru intends to submit a request to MEM in the second
quarter of 2004 to modify the requirements of the existing PAMA for the La Oroya Smelter. There can be no assurance that the Peruvian government will approve these alternatives or that they will
achieve compliance in the timeframe required by the PAMA. If the La Oroya smelter does not operate within the current PAMA limits after December 31, 2006, Doe Run Peru could be forced to cease
operations at the La Oroya smelter.

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 has spent approximately
$10.0 million under the PAMA as of October 31, 2003. On July 3, 2002, the government of Peru enacted the Supreme Decree No. 022-2002-EM, extending
the PAMA for all companies not yet in compliance with their PAMA for a period of not less than 12 months, and up to 18 months if approved by MEM. Companies not in compliance at the end
of the extension period would have an additional period to close their operations. Doe Run Peru has received approval from MEM to extend the date of required compliance with the PAMA to April of 2004
and has a request pending to extend the compliance period for the full 18 months allowed under the Supreme Decree. Doe Run Peru now believes that it will complete its PAMA requirements by June
of 2004 including a mine water treatment system and by making a surface paste fill from tailings. If the extension is not granted, Doe Run Peru may be subject to legal redress most likely in the form
of fines, which, Doe Run Peru believes will not be material. Ore reserves are now estimated to be approximately 4 years at current production rates and space has been identified to store the
associated tailings.

Exploration

Current mine exploration is focused on underground drilling in the operating mines for the purpose of discovering new ore reserves. Regional exploration is
ongoing on Doe Run Peru landholdings in the Cobriza region. Geological mapping, surface sampling, as well as airborne and ground geophysical methods are being utilized in the search for new ore
bodies.

Safety

In Peru, the MEM is responsible for regulations enacted to minimize accidents. It conducts annual inspections to ensure compliance with numerous safety standards.
The Peruvian operations maintain a high regard for safety and health. Doe Run Peru's Cobriza operation completed the fiscal year with no lost time accidents and by October 31, 2003, the La
Oroya smelter had completed nearly five million employee hours without a lost time accident.

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During
2003, the Cobriza mine experienced a fatal accident that involved a contractor's employee. Management has thoroughly investigated this incident and reinforced the appropriate
safety procedures with the workforce and its contractors.

Employees

As of October 31, 2003, Doe Run Peru's employees included 841 active salaried employees, 2,296 active hourly employees, and 957 contractors. Management
believes its relations with employees are good. There are three unions for hourly employees and three unions for salaried employees. The principal union representing 66% of the hourly employees is the
Sindicato de Trabajadores Metalúrgicos La Oroya (La Oroya Metallurgic Workers Union). The Sindicato de Trabajadores Ferroviarios La Oroya (La Oroya Railway Workers Union) and the
Sindicato de Trabajadores Cobriza (Cobriza Workers Union) represent 3% and 12%, respectively, of the hourly workers. The remaining hourly workers, 19%, are not affiliated with a union. On
July 26, 2003, Doe Run Peru entered into a five-year labor agreement with the hourly unions at La Oroya. The salaried employees are represented by the Sindicato de Empleados
Yauli-La Oroya (Yauli-La Oroya Employees Union), representing 34% of the salaried employees and by the Sindicato de Empleados Ferroviarios La Oroya (La Oroya Railway Employees
Union), representing 3% of salaried employees and by the Sindicato de Empleados Cobriza (Cobriza Employees Union), representing 4% of salaried employees. The remaining salaried employees, 59%, are not
affiliated with a union. On January 6, 2003, Doe Run Peru entered into five-year labor agreements with the two unions representing the salaried employees at La Oroya. On
July 21, 2003, Doe Run Peru entered into a five-year labor agreement with the two unions representing the salaried and hourly employees at Cobriza.

Item 2. Properties

U.S. Operations

Mining Operations

The Company's Missouri mining operations currently have eight production shafts that form a north-south line along approximately 40 miles of the Viburnum
Trend ore body. Three production shafts, Viburnum-28, Viburnum-29 and Viburnum-35, lie within a five-mile radius east, north and south, respectively, of
Viburnum, Missouri, which is located approximately 125 miles southwest of St. Louis, Missouri. The Buick, Brushy Creek, Fletcher, West Fork and Sweetwater production shafts are within thirty miles of
Viburnum. Five of the production shafts are currently operating. The Viburnum-29 and West Fork production shafts are on care and maintenance status and mining at the
Viburnum-28 production shaft ended permanently on November 20, 2003.

The
Company also has available five grinding/flotation mills located near its production shafts. Four of the mills are currently operating. The West Fork mill is on care and maintenance
status, where production at the facility is temporarily suspended, but certain maintenance activities are continued. All of the mining and milling facilities are accessible by state or county roads or
Company-owned haul roads. Products are shipped by truck over public roads or by rail.

The
production capacities of the Company's mills are as follows:

Mill

Milling Capacity
(Tons of Ore Per Day)Buick

7,200Fletcher

5,000Brushy Creek

5,000West Fork

4,000Sweetwater

6,800


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The
Company owns the property where the necessary surface structures for mining and milling are located. The mineral rights are held either by fee title or mineral leases with either
private landowners or the federal government. There are also numerous prospecting permits, most of which are for exploration of new mineral ore deposits. Five of the production leases are private
leases and 11 are government leases. Doe Run makes royalty payments under these leases. The mineral leases with private landowners have no expiration periods. The government leases are for a period of
either 10 or 20 years and are renewable at Doe Run's option, if no default exists under the agreement, subject to negotiation of specific terms of the lease, including royalty rates. Although
no assurance can be given, management anticipates that these leases will be renewed at rates that do not exceed the current levels.

Doe
Run's producing leases from the federal government consist of the following:

Location

Number of
Producing Leases

Expiration
DateViburnum

5

March 31, 2018Fletcher

2

May 31, 2013Buick

1

October 31, 2014Brushy Creek

2

May 31, 2013West Fork

1

January 31, 2013


The
following table sets forth the mineable reserves, as of October 31, 2003 for the Viburnum Trend mineral deposits and the Higdon deposit, which is outside the Viburnum Trend.
The reserve estimate presented below has been audited by the mining consulting firm of Pincock Allen & Holt, a division of Hart Crowser, Inc. Pincock Allen & Holt reviewed the
methodology and cost basis used in the reserve calculation, as discussed in their report dated January 29, 2004, and approved the resulting reserve calculation.

Mineable Reserves  As of October 31, 2003

|         |                           |        |        | Grade |     
|-------- | ------------------------- | ------ | ------ | ------ | ----
|
|
|Proven   |                           | 11,561 |        | 7.64   | %   
|Probable |                           | 36,125 |        | 4.83   | %   
|         |                           |        |        |        |     
|         | Total Proven and Probable |        | 47,686 |        | 5.51
|         |                           |        |        |        |     

The
term "reserve" means that part of a mineral deposit that could be economically and legally extracted or produced at the time of the reserve determination. The term "proven (measured)
reserves" means reserves for which: 1) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of
detailed sampling and 2) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of
reserves are well-established. The term "probable (indicated) reserves" means reserves for which quantity and grade and/or quality are computed from information similar to that used for
proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately

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spaced.
The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.

Smelting Operations

The Herculaneum primary lead smelter is located approximately 35 miles south of St. Louis on the Mississippi River in Herculaneum, Missouri. It has a capacity of
250,000 tons per year and is currently producing approximately 150,000 tons annually. The smelter, which began operations in 1892, is the largest primary lead smelter in North America and the second
largest in the world.

Located
in Glover, Missouri, approximately 20 miles southeast of the Sweetwater production shaft, the Glover primary smelter, which began operations in 1968, operated at its capacity of
approximately 136,000 tons per year during fiscal 2003. The Glover primary smelter was placed on care and maintenance status (see description above inMining
Operations) in the first quarter of fiscal 2004 due to decreased U.S. demand for lead, see further discussion in "Item 7. Management's Discussion and
AnalysisRecent Events".

The
secondary lead recycling smelter, located in Boss, Missouri, approximately ten miles south of Viburnum, began recycling operations in 1991 and currently has an annual capacity of
approximately 165,000 tons. The facility operates under a Resource Conservation and Recovery Act (RCRA) permit allowing it to handle waste, primarily lead-bearing material. The smelter is
currently permitted for 152,410 tons of furnace production annually, however, the facility can recycle lead metal scrap materials that are not required to go through the furnaces in order to achieve
additional metal production.

The
Company owns its two primary smelters and its secondary smelter.

FPI
operates in leased facilities located in Casa Grande, Arizona, Vancouver, Washington, and Houston, Texas. The Company ended production at FPI's Lone Star Lead Construction facility
in Houston, Texas in December 2003.

Substantially
all of the assets of the Company's U.S. operations are pledged as collateral under various financing agreements. See "Item 7. Management's Discussion of Financial Condition
and Results of OperationsRecent Events" for a discussion of these agreements.

Peruvian Operations

Smelting Operations

La Oroya's operations are located in the central Peruvian Andes town of La Oroya, approximately 110 miles east of the Peruvian capital of Lima and at an altitude
of approximately 12,000 feet above sea level. The complex is linked to port facilities by highway and railroad service. Most supply sources also have rail service. Doe Run Peru owns the facilities,
which consist of a copper smelter, lead smelter, copper refinery, lead refinery, copper fabricating plant, zinc refinery, precious metals refinery, antimony plant, arsenic plant, coke plant, cadmium
plant, maintenance shops and other support facilities. Current production capacities of primary products are as follows:

Product

Annual CapacityCopper (short tons)

81,000Lead (short tons)

133,000Zinc (short tons)

87,000Silver (thousands of troy ounces)

39,000Gold (thousands of troy ounces)

87


During
2003, La Oroya produced at less than capacity primarily due to insufficient availability of suitable feed materials; see discussion in "Item 1. Business, Doe Run Peru
operationsRaw Materials".

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See
production levels for 2003 in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations"Results of
Operations".

Mining Operations

The Cobriza mine is located approximately 250 miles southeast of Lima in the district of San Pedro de Coris, Churcampa Province. Access to the site is by improved
unpaved road through rugged terrain. Concentrates produced at the mine are trucked 130 miles over unpaved road to Huancayo and then an additional 70 miles over paved road to the La Oroya smelter.
Cobriza's mill has a capacity of 10,000 short tons per day and its current throughput is approximately 4,710 short tons per day.

Landholdings
at Cobriza include approximately 2,700 acres of surface ownership and approximately 128,000 acres of mining concessions. The current mining operation is located on a portion
of the area held. Economic mineralization outside the existing mining area has not been confirmed as of October 31, 2003. Doe Run Peru's estimates, which have not been audited, indicate
mineable proven and probable ore reserves of approximately 5.6 million short tons containing approximately 1.21% copper.

Item 3. Legal Proceedings

In addition to the items discussed below, Doe Run and its subsidiaries are involved in various litigation and claims, government investigations, and other legal
proceedings that arise from time to time in the ordinary course of business. While management does not believe any of these matters will have a material adverse effect on the Company's financial
position, litigation is inherently unpredictable, and
excessive verdicts do occur. Although management believes valid defenses exist in these matters, Doe Run or any of its subsidiaries could in the future incur judgments or enter into settlements of
claims that could have a material adverse effect on its financial condition, liquidity or results of operations.

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Doe Run is a defendant in ten lawsuits alleging certain damages from lead emissions stemming from the operations at the Herculaneum smelter. The cases brought in the Circuit Court
23rd Judicial Circuit at Hillsboro, Jefferson County, Missouri are:Enos Green v. The Doe Run Resources Corp. et al., filed
November 30, 1999 andState of Missouri v. Enos Greenfiled May 9, 2003 (third party complaint against Doe Run filed June 13,
2003). The cases brought in the Circuit Court of the City of St. Louis are:Mitchell, et al. v. Fluor Corporation, et al., Doyle, et al. v. Fluor Corporation, et
al.,Figge, et al. v. Fluor Corporation et al., all filed
July 9, 2001;Gross v. Fluor Corporation et al., filed May 9, 2002;Warden, et al. vs. Fluor Corporation et
al., filed September 12, 2002;Cross v. Fluor Corporation et al., filed January 10, 2003; and Johnson, et al. v. Fluor Corporation, et
al.andBrowning, et al. v. Fluor Corporation, et al.filed
September 9, 3003.

TheDoyle, Mitchell, and Johnsoncases are class action lawsuits. In theDoyleand Johnsoncases, 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 theMitchellcase, plaintiffs seek to have certified a class of children who lived in Herculaneum
during a period of time when they were six years old or younger and children born to mothers who lived in Herculaneum during their pregnancies. The remedy sought is medical monitoring for the class.

TheFigge, Gross, Warden, CrossandBrowningcases are personal injury actions by 24
individuals who allege damages from the effects of lead poisoning they attribute to operations at the smelter and seek punitive damages.

In
the twoEnos Greencases, Mr. Green is seeking damages for the alleged disposal of lead contaminated fill material on
Mr. Green's property. The Green cases have been settled.

Doe
Run is a party to a number of orders with various regulatory agencies that require ongoing expenditures for compliance. See "Item 8. Financial Statements and Supplementary
DataNotes 20 and 22 to the Company's Consolidated Financial Statements" for a discussion of these matters.

On
April 11, 2002, a report in the media contained allegations by former employees of improper disposal of hazardous materials on the Herculaneum smelter site. The Company does
not believe that there has been any violation of law and is cooperating with State and federal agencies in their investigations into the allegations, including having provided equipment and an
operator to the government to excavate various areas of the Herculaneum smelter site, which excavations failed to turn up any evidence of illegal toxic dumping.

Doe
Run is a defendant in five lawsuits alleging certain damages from past mining operations in St. Francois County. On July 9, 2001Dowd, et al. v. Fluor
Corporation, et al.was filed in the Circuit Court of the City of St. Louis, Missouri. The case alleges injury to two children living in St. Francois County, Missouri as a
result of emissions from tailings, chat piles and other wastes from past mining operations. On December 13, 2001 Doe Run was served regardingLee Ann Stotler and Keely
Stotler v. Fluor Corporation, et al.This case, which was filed in the Circuit Court of the City of St. Louis, Missouri, seeks a class action for property damages in Bonne
Terre, caused by tailings and related operations. On December 14, 2001 Doe Run was served regardingLayne Stotler v. Fluor Corporation, et al.This case, which was filed in the Circuit Court of the City of St. Louis, Missouri, seeks a class action for medical monitoring for minors who lived, went to school, or went to day care in Bonne
Terre, or whose mothers lived in Bonne Terre when they were pregnant. The action alleges damages caused by tailings and related operations. On April 29, 2002, Doe Run was served regarding Charles Mullins v. The Doe Run
Resources CorporationandCharles Mullins II v. The Doe Run Resources
Corporation, filed in the Circuit Court of the City of St. Louis, Missouri, class actions for property damage and medical monitoring, respectively, concerning alleged damages
caused by chat, tailings, and related operations in six areas in St. Francois County, Missouri.

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Doe
Run, with several other defendants, was named in several lawsuits alleging personal injuries as a result of lead poisoning from exposure to lead paint and tetraethyl lead dust. While
filed in the summer of 2000, these suits have not been served on Doe Run:Hall v. Lead Industries Association, Inc. et al., Hart v. Lead Industries Association, Inc. et
al.,Williams v. Lead Industries Association, Inc. et
al.andRandle v. Lead Industries Association, Inc. et al. The suits were all filed in the Circuit Court of Baltimore,
Maryland and seek damages, including punitive damages.

On
January 26, 2000,City of St. Louis v. Lead Industries Association, Inc. et alwas filed in the Circuit Court of the City
of St. Louis, Missouri. Doe Run and several other parties were named defendants in the suit for costs allegedly incurred and to be incurred by the plaintiff for the care of lead-poisoned
persons, education programs for children injured by exposure to lead and the abatement of lead hazards purportedly created by the defendants in the City of St. Louis. The complaint alleges that the
defendants made material misrepresentations and intentional omissions of material facts to the City and/or its residents regarding the nature of lead and lead products, such as paint. The suit also
seeks punitive damages.

On
November 1, 2000 one hundred and seven individual cases, four of which were later dismissed, were filed in the Circuit Court of the City of St. Louis, Missouri, that list Doe
Run among the defendants, alleging that the employees or ex-employees of Burlington Northern and Santa Fe Railway Co. (BNSF) who filed the cases were exposed to lead from the hauling of
lead concentrates by the railroad. An additional suit was filed on April 8, 2002, nine additional cases were filed on May 14, 2002, and an additional case was filed on May 20,
2002 for a total of one hundred and fourteen cases.Harris v. Terminal Rail Road Assn., et al.was filed in the Circuit Court of the City of St. Louis,
Missouri and Doe Run was served on November 9, 2001. This is an individual action for damages by an
ex-employee of Terminal Rail Road alleging exposure to lead from hauling concentrates, similar to the one hundred and fourteen cases discussed above. One hundred and thirteen of the BNSF
cases and theHarriscase were settled on April 2, 2003. The last remaining BNSF railway worker case was settled on August 22, 2003.

Doe
Run is a defendant in lawsuits alleging certain damages from past mining operations in Ottawa County, Oklahoma.Herd v. Asarco, Inc. et al., Reeves v.
Asarco, Inc., et al., Carr v. Asarco, Inc., et al., Edens v. Asarco, Inc., et al., Giveswater v. Asarco, Inc., et al, Eby v. Asarco, Inc., et
al., andLee Anna Smith v. Asarco Inc., et al., each alleging injury to a child living in Ottawa County, Oklahoma as a
result of lead contamination, were filed in the District Court of Ottawa County, Oklahoma on November 5, 2001, January 10, 2002, February 5, 2002, and May 30, 2002,
June 5, 2002, June 24, 2002 and July 1, 2002 respectively. All of these cases were subsequently removed to the U.S. District Court for the Northern District of Oklahoma. The Giveswatercase was dismissed without prejudice on October 28, 2002.Herd, Reeves, Carr, Edens,
EbyandLee Anna Smithwere settled August 1, 2003. Two class action suits,Cole et al. v.
Asarco, Inc., et al., filed on May 14, 2003, andEvans et al. v. Asarco Inc. et al., filed on
February 9, 2004 in the U.S. District Court for the Northern District of Oklahoma alleging personal injury and property damage in Picher, Oklahoma and Quapaw, Oklahoma respectively. Barr, et al. v. Asarco, Inc., et
al., Brewer, et al. v. Asarco, Inc., et al., Crawford, et al. v. Asarco, Inc., et al., Kloer, et al. v.
Asarco, Inc., et al., andRhoten, et al. v. Asarco, Inc., et al., were filed on July 8, 2003 and Hayworth, et al. v. Asarco, Inc., et
al., Moss, et al. v. Asarco, Inc., et al., Nowlin, et al. v. Asarco, Inc., et al., Sargent, et al. v.
Asarco, Inc., et al.,andSouth, et al. v. Asarco, Inc., et al.were filed July 29, 2003 in the District
Court of Ottawa County, Oklahoma and allege personal injury to children living in Picher, Oklahoma. These cases were subsequently removed to the U.S. District Court for the Northern District of
Oklahoma. Another class action suit,The Quapaw Tribe of Oklahoma, et al. v. Asarco, Inc. et al., was filed in the U.S. District Court for the
Northern District of Oklahoma on December 10, 2003 against seven companies, including Doe Run. This action alleges damage to natural resources and to property of members of the Quapaw Tribe.

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Taracorp Industries, Inc.(Taracorp)v. Fabricated Products, Inc., filed on
March 21, 2000, in the Circuit Court of the City of St. Louis, Missouri. The suit alleges that FPI sold impure lead to the plaintiff, who used the lead to manufacture a product commercially
used in radiation shielding aprons. A judgment based on breach of implied warranty was entered against FPI in the amount of $4.3 million dollars on January 13, 2003. FPI and Taracorp
reached a settlement of this judgment in February 2004.

On
February 25, 2003,Straussner v. Union Carbide Corporation, et al., was filed in the Circuit Court of Madison County, Illinois
against 62 defendants, including Doe Run, alleging that a contractor was injured by exposure to asbestos while working at the defendants' locations, including the St. Joe Minerals Corporation
premises. Doe Run was served on May 13, 2003. A similar suit,Priesmeyer v. Union Carbide, et al.was filed in the Circuit Court of Madison
County, Illinois May 16, 2002, but Doe Run has not been properly served. Doe Run received notice of another similar suit,Hawrylik v. Allied Glove Corp., et
al.in the Court of Common Pleas of Lawrence County, Pennsylvania; however, no actual complaint has yet been served.

A
law firm in Lima, Peru has initiated a large number of lawsuits in the Lima labor courts against various mining companies in Peru. All lawsuits allege that workers have contracted lung
disease from working at the mining facilities. Currently, Doe Run Peru has 44 cases pending, with all claims totaling approximately $0.7 million. Only one case has resulted in a judgment of
approximately $8.0 thousand against Doe Run Peru that was upheld on appeal.

Because
most of the above cases are either in the pleading or discovery stages, the Company is unable at this time, except as noted, to estimate the expected outcome and the final costs
of these actions. Therefore, 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. The Company has and will continue to vigorously defend itself against these claims.

Centromin
retained all existing litigation involving La Oroya at the time of the acquisition. Doe Run Peru is involved in various claims and lawsuits incidental to the ordinary course of
its business that are not expected to have a material adverse effect on the business, financial condition and results of operations of Doe Run Peru.

Item 4. Submission of Matters to a Vote of Security Holders

On October 29, 2002, Doe Run's stockholder elected Ira L. Rennert and Dennis A. Sadlowski, Esq. to Doe Run's Board of Directors, approved the amendment of
Doe Run's Certificate of Incorporation and approved the adoption of amended and restated by-laws of Doe Run.

On
January 13, 2003, Doe Run's stockholder elected Thomas Krasner to Doe Run's Board of Directors.

Part II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

All of Doe Run's issued and outstanding 1,000 shares of common stock, $.10 par value, are owned by a single stockholder, DR Acquisition Corp. (DRAC), a wholly
owned subsidiary of Renco. There is no established public trading market for these shares. Renco is owned by trusts established by Mr. Ira Leon Rennert, Renco's Chairman and Chief Executive
Officer, for himself and members of his family. As a result of such ownership, Mr. Rennert controls Doe Run and its subsidiaries, subject to the provisions of the Investors Rights Agreement
discussed below.

Pursuant
to the Restructuring, Doe Run issued the Warrants to purchase 644.7813 shares of its common stock, representing approximately 39% of Doe Run's common stock on a fully diluted
basis, to holders of Old Notes who received the Notes in the Restructuring. The Warrants expire on October 29,

17

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2012
and are exercisable at any time after November 1, 2008. During the period beginning on October 29, 2005 and ending on October 29, 2012, the Majority Warrantholders 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 (the Put Feature). Doe Run and Renco each have the right to call all, but not less than all, of the warrants and any outstanding shares issued upon
their exercise, at any time after the borrowings under a new credit facility (See discussion in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of
OperationsRestructuring and Long Term Debt") are repaid and prior to the expiration of the warrants, except that, if exercised by Doe Run
within 48 months of the Restructuring, the Notes issued in the Restructuring must be redeemed by Doe Run at the applicable redemption prices. The call price will be the greater of
$10.0 million or the fair market value of the warrants at such time, as determined by a third party appraisal. See Item 7 "Management's Discussion and Analysis of Financial Condition and
Results of OperationsRestructuring and Long Term Debt".

Pursuant
to the Restructuring, Doe Run adopted new by-laws that expand the number of seats on the Board of Directors to three, including the one currently held by
Mr. Rennert. The Investor Rights Agreement provides that DRAC may elect two of these directors and the Majority Warrantholders may appoint one. The Independent Director nominated by the
Majority Warrantholders to serve on Doe Run's Board of Directors could have significant influence over the operations of Doe Run's business. The Majority Warrantholders may, upon the occurrence of a
major default, as defined in such agreement (which includes a payment default under the Term Note), appoint a Special Director to Doe Run's Board of Directors who would have super-majority voting
powers and be able to require Doe Run to undertake certain transactions. The Special Director will be entitled to cast a majority of the votes at all meetings of directors. Doe Run will be required to
take any of the following actions if approved by the Special Director: (i) sell all of its capital stock or of any of its subsidiaries, (ii) merge or consolidate itself or any of its
subsidiaries with any other entity, and (iii) sell off any or all of its assets
or any of its subsidiaries and apply the proceeds of such sale to cure any payment default with respect to the Exchange Notes. The Independent Director and the Special Director, if elected to Doe
Run's Board of Directors by the Majority Warrantholders, could have a significant impact on the operation of Doe Run's business as well as its strategic direction. Pursuant to the Investor Rights
Agreement, Doe Run may not take, nor permit any of its subsidiaries to take, certain actions without the approval of the Independent Director. These actions include filing a voluntary bankruptcy
petition, merging or consolidating with another entity, issuing capital stock or securities convertible into capital stock, making certain changes to its charter documents or incurring certain levels
of indebtedness.

The
indentures governing the Notes and Old Notes and Doe Run's credit facilities restrict its ability to pay dividends on its outstanding capital stock.

Item 6. Selected Financial Data

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables set forth historical consolidated financial data of The Doe Run Resources Corporation and subsidiaries for the five fiscal years ended
October 31, 2003, which have been derived from the Company's audited consolidated financial statements. It is important that the selected historical consolidated financial data presented below
be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and the

18

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Company's
audited financial statements and the accompanying notes included elsewhere in this document.

|                              |                                                                                       | Year Ended October 31, |       
|----------------------------- | ------------------------------------------------------------------------------------- | ---------------------- | ------
|
|
|Statement of Operations Data: |                                                                                       |                        |       
|                              | Net sales                                                                             |                        | $     
|                              | Cost of sales                                                                         |                        |       
|                              | Depletion, depreciation and amortization                                              |                        |       
|                              | Selling, general and administrative expenses                                          |                        |       
|                              | Exploration expense                                                                   |                        |       
|                              | Losses from impairment and disposal of long-lived assets                              |                        |       
|                              | Unrealized (gain) loss on derivative financial instruments                            |                        |       
|                              |                                                                                       |                        |       
|                              | Operating income (loss)                                                               |                        |       
|                              | Interest expense                                                                      |                        |       
|                              | Interest income                                                                       |                        |       
|                              | Loss on retirement/restructure of long term debt                                      |                        |       
|                              | Other income (expense)                                                                |                        |       
|                              |                                                                                       |                        |       
|                              | Income (loss) before income tax expense and cumulative change in accounting principle |                        |       
|                              | Income tax expense                                                                    |                        |       
|                              |                                                                                       |                        |       
|                              | Loss before cumulative change in accounting principle                                 |                        |       
|                              | Cumulative effect of change in accounting principle net of income tax benefit         |                        |       
|                              |                                                                                       |                        |       
|Net loss                      |                                                                                       | $                      | (1,410
|                              |                                                                                       |                        |       

|                    |                                        | As of October 31, |  
|------------------- | -------------------------------------- | ----------------- | -
|
|
|Balance Sheet Data: |                                        |                   |  
|                    | Cash                                   |                   | $
|                    | Working capital                        |                   |  
|                    | Property, plant and equipment, net     |                   |  
|                    | Total assets                           |                   |  
|                    | Total debt (including current portion) |                   |  
|                    | Redeemable preferred stock             |                   |  
|                    | Shareholder's equity (deficit)         |                   |  

19

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the consolidated financial statements of the Company and the notes thereto, and other
financial information included herein.

Restructuring and Long-Term Debt

On October 29, 2002, Doe Run consummated the Restructuring, pursuant to the terms of its Amended and Restated Exchange Offer, Consent Solicitation and
Solicitation of Acceptances (the Exchange Offer). Under the Exchange Offer, debt holders exchanged Old Notes with a principal amount of $294.8 million, or 97% of the $305.0 million of
Old Notes outstanding, plus unpaid accrued interest of $37.5 million, for the Notes with a principal amount of $175.8 million, and the Warrants described below. In addition to the
reduction of principal, the Notes provide two other important features that improve Doe Run's liquidity. The first is that the principal maturity is extended to November 1, 2008. The second is
that the Notes have a pay in kind feature whereby, through October 15, 2005, interest may be paid, at the option of Doe Run, at an annual rate of either 3% in cash and 11.5% paid in kind or
8.5% paid in cash. After October 15, 2005, interest will accrue at the rate of 11.75% per annum and will be payable in cash.

After
giving effect to the Exchange Offer, Doe Run had outstanding $10.2 million aggregate principal amount of its Old Notes, with maturities of $2.7 million paid in
March 2003, which retired the Floating Interest Rate Senior Notes, and $7.5 million in March 2005 on the 11.25% Senior Notes and the 11.25% Senior Secured Notes.

In
connection with the Exchange Offer, each holder of Old Notes who received Notes pursuant to Doe Run's restructuring received a pro rata share of the Warrants exercisable for
approximately 39%, in the aggregate, of Doe Run's common stock. See description of the Warrants in Item 5. "Market for Registrant's Common Equity and Related Stockholder Matters".

In
conjunction with the Exchange Offer, Doe Run entered into a credit facility with institutional investors pursuant to which it borrowed $15.5 million, at a discount of
$.5 million, under a three-year term note (the Term Note) and it received $20.0 million from the issuance of
redeemable preferred stock to Renco. The proceeds from these transactions were used to pay down the balance on its U.S. revolving credit facility (the Doe Run Revolving Credit Facility), to pay
certain transaction fees and to pay interest and penalties due on the outstanding notes that were not exchanged. Renco purchased the Term Note March 21, 2003.

The
redeemable preferred stock accrues dividends at a rate of 12.5% annually, which are payable only in kind as long as the Term Note or Warrants are outstanding. The redeemable
preferred stock has an aggregate liquidation value of $20.0 million, plus unpaid dividends of $2.5 million at October 31, 2003.

On
October 29, 2002, in conjunction with the Exchange Offer, Doe Run entered into an Amended and Restated Loan and Security Agreement governing the Doe Run Revolving Credit
Facility. Similar to the previous facility, this credit facility provides for advances by the lenders to a maximum of $75.0 million less outstanding letters of credit, based on specific
percentages of eligible receivables and inventories. The new agreement waived existing defaults resulting from Doe Run's failure to maintain consolidated net worth and EBITDA for U.S. operations, as
required by the agreements governing the previous revolving credit facility. The Doe Run Revolving Credit Facility has a three-year term and may be renewed annually thereafter.

Also
on October 29, 2002, Renco entered into a Junior Participation Agreement with the Doe Run Revolving Credit Facility lenders. Pursuant to this agreement, advances in excess of
the amounts otherwise available under the Doe Run Revolving Credit Facility (Supplemental Loans) up to an aggregate amount of $15.0 million will be made to Doe Run, when Doe Run's availability
is less than

20

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$2.5 million
for 5 consecutive days, and the Doe Run Revolving Credit Facility lenders have received cash from Renco in the amount of the Supplemental Loans. No loans had been made under this
agreement as of the date hereof.

On
September 12, 2002, Doe Run tendered the $125.0 million that it had on deposit with a foreign bank (the Special Term Deposit) in payment of Doe Run Peru's outstanding
$125.0 loan from a foreign bank. Simultaneously, Doe Run Peru issued a $139.1 million non-interest bearing subordinated promissory note to Doe Run (the Intercompany Note) for the
principal of $125.0 million plus accrued interest of $14.1 million. Obligations under the Intercompany Note are subordinate to Doe Run Peru's obligations under the Doe Run Peru's
revolving credit facility, discussed below.

On
September 25, 2002, Doe Run Peru entered into an amended and restated revolving credit facility with a Peruvian bank (the Doe Run Peru Revolving Credit Facility). This facility
provides for borrowing up to a maximum amount of $40.0 million based on a borrowing base consisting of eligible accounts receivable and inventories. The $40.0 million maximum includes a
$5.0 million letter of credit sub-facility. Under the provisions of the amended agreement, lending rates on certain receivables and inventories were improved compared to the
previous revolving credit facility.

Substantially
all of the Company's U.S. assets and the accounts receivable and inventory of Doe Run Peru are pledged as collateral to secure the above obligations. The Doe Run Revolving
Credit Facility is secured by substantially all of the accounts receivable and inventory relating to the Company's U.S. operations. The Doe Run Peru Revolving Credit Facility is secured by the
accounts receivable and inventory of Doe Run Peru. The holder of the Term Note has a second priority security interest in the accounts receivable and inventory pledged under the Doe Run Revolving
Credit Facility and a first priority security interest in the remainder of the assets of the Company's U.S. operations, except for certain assets that secure the remaining 11.25% Senior Secured Notes
due 2005, including the Intercompany Note and the equity interest in Doe Run Peru. The Notes have a second priority interest in substantially all of the assets related to U.S. operations, except for
accounts receivable and inventory pledged under the Doe Run Revolving Credit Facility.

On
March 21, 2003 Renco and the Term Note lenders entered into an Assignment and Acceptance Agreement whereby Renco purchased all of the rights of the agent and lenders under the
Term Note. Accordingly, Renco became the agent and lender under the Term Note with the identical rights to payment of interest, principal and fees and to the same collateral as had the previous
lenders. Furthermore, Renco, in its capacity as agent and lender under the credit facility waived certain existing and impending defaults, including, among other things, Doe Run's failure to provide
the lender with certain reports and failure to comply with a financial covenant.

Effective
March 27, 2003 the Company entered into an amendment to the loan agreement governing the Doe Run Revolving Credit Facility, which reduced the level of consolidated net
worth that the Company is required to maintain. Pursuant to the amendment, the lenders waived an event of default resulting from the failure of Doe Run to maintain a financial covenant and an event of
default resulting from the failure of Doe Run to deliver timely financial reports.

On
October 29, 2002, pursuant to Doe Run's Restructuring, Doe Run entered into an Asset Transfer Agreement with The Buick Resource Recycling Facility LLC ("Buick"), a wholly owned
subsidiary of Doe Run. Pursuant to this agreement, Doe Run transferred the assets of its recycling facility to Buick on April 23, 2003 consisting of all fixed assets (including certain
contractual rights) pertaining to the recycling facility. Buick's assets (other than those pledged to the lenders under the Doe Run Revolving Credit Facility) and the membership interest in Buick are
pledged as collateral to secure Doe Run's obligations arising under the Term Note and under the indenture governing the Notes.

21

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Recent Events

During fiscal 2003, subsequent to the waivers and amendments discussed above, Doe Run failed to meet certain financial and reporting covenant requirements
contained in the Doe Run Revolving Credit Facility and the Term Note. On April 9, 2004 Doe Run entered into an amendment of its Doe Run Revolving Credit Facility. The amendment waives existing
defaults and lowers the net worth requirement. The amendment became effective when waivers of default under the Term Note were received, as discussed below. On April 30, 2004 Doe Run entered
into an amendment of the Term Note. The amendment waives existing defaults and amends various covenant requirements, among other things. The amendment also requires that certain information be
delivered to the lender at various times within 30 days after the amendment date, which dates have subsequently been extended. Based on current projections, assuming metal prices continuing
higher than those experienced during fiscal 2003, management expects to remain in compliance under the Doe Run Revolving Credit Facility and the Term Note, as amended, through October 31, 2004.
As a result of these defaults, the balance under the Term Note is reflected in current maturities of long-term debt in the Company's balance sheet at October 31, 2003. Because the
agreement governing the Doe Run Revolving Credit Facility requires a lockbox for cash receipts and contains a subjective acceleration clause, loans are classified as current in the balance sheet for
all periods presented. Prior periods balances in "Item 6. Selected Financial Data" have been reclassified to conform to this presentation.

On
May 7, 2004, Doe Run received a notice of default from the trustee of the Notes that it is in default of the indenture requirements. The notice gives Doe Run 30 days
from the date of receipt of the notice to remedy such defaults by filing its quarterly and annual reports for the 2003 fiscal year with the SEC and to provide a written statement from the Company's
independent certified public accountants indicating whether any defaults have come to their attention. If the defaults are not remedied within 30 days of receipt of the notice, the trustee may
declare all unpaid principal and interest immediately payable. Management intends to remedy the defaults in the timeframe required.

In
fiscal 2003, Doe Run Peru failed to meet certain financial and reporting covenant requirements contained in the Doe Run Peru Revolving Credit Facility. On February 16, 2004,
Doe Run Peru entered into an amendment of the Doe Run Peru Revolving Credit Facility. The amendment lowered the levels of net worth Doe Run Peru must comply with from the date of the amendment through
September 30, 2004, among other things. Based on current forecasted results, assuming metal prices higher than those experienced during fiscal 2003, management expects to remain in compliance
with all covenants relating to the Doe Run Peru Revolving Credit Facility for the foreseeable future. The amendment does not cure or waive defaults in existence before the date of the amendment. The
amendment also limits payment of fees to Doe Run through September 30, 2004 to $2.8 million. To the extent Doe Run Peru's net worth would fall to a level lower than the requirement at
the quarterly reporting dates, the amendment permanently reduces the amount available under the Doe Run Peru Revolving Credit Facility by the amount of the difference between the required and the
actual net worth.

In
response to a decreasing domestic market for lead, the Company indefinitely suspended operations at its Glover smelter in November, 2003. The Company will sell any concentrates on the
open market that are not required to maintain production at the Herculaneum smelter. The decision should improve the Company's net sales premiums at current market conditions.

On
December 26, 2003, the Peru tax authority, SUNAT notified Doe Run Peru of an income tax assessment for the 1998 tax year. The assessment primarily relates to Doe Run Peru's
income tax treatment of the December 1997 merger of Doe Run Peru and Metaloroya S.A., which was purchased by Doe Run Peru in October 1997. 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 and additional income taxes due. Under the assessment, the reduction in
depreciation would result in

22

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additional
taxes of approximately $6.6 million, plus penalties and interest of $9.6 million to date for the 1998 tax year. For tax years after 1998, the Company estimates that additional
taxes of approximately $5.7 million would be due related to the decrease in the amount of depreciation originally claimed plus penalties and interest of approximately $20.0 million to
date in the event SUNAT would prevail. Interest would also be assessed on the prepayments of taxes that were not made as a result of the depreciation deductions taken by Doe Run Peru in the years
affected, estimated at approximately $5.8 million. 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 change discussed above, or approximately $3.5 million.

Management
of the Company believes that Doe Run Peru has followed the applicable Peruvian 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 appeals process and were to appeal in the judicial system, some
type of financial assurance would be required.

If
Doe Run Peru is not successful with its administrative appeal of the tax assessment discussed above, the lender can, at its discretion, require that the amount of the assessment
reduce net worth as defined in the Doe Run Peru Revolving Credit Facility amendment. Such reduction along with other factors, including metal prices and results of operations, could affect Doe Run
Peru's ability to comply with the net worth requirement.



Low metal prices and declining treatment charges over the past five years, coupled with the Company's substantial debt service requirements prior to the
Restructuring, have severely impacted the Company's liquidity. As a result, the Company's auditors have issued unqualified opinions on the 2003 audited financial statements of the Company and of Doe
Run Peru that express doubt about the Company's and Doe Run Peru's ability to continue as going concerns due to liquidity and other issues related to defaults under loan agreements, uncertainties
related to environmental and litigation matters, as well as
the Company's recurring losses that are discussed in "Item 8. Financial Statements and Supplementary DataNote 2 to the Company's Consolidated Financial Statements". Based on
current projections, assuming metal prices continuing higher than those experienced in fiscal 2003, management expects that Doe Run and Doe Run Peru will continue as going concerns through
October 31, 2004.

The
Company's primary available sources of liquidity are cash provided by operating activities and the two revolving credit facilities discussed above. In addition to the amount
available under the Doe Run Revolving Credit Facility, Supplemental Loans up to an aggregate amount of $15.0 million will be made to Doe Run under the Doe Run Revolving Credit Facility when Doe
Run's availability is less than $2.5 million for 5 consecutive days and the Revolving Credit Facility lenders have received cash from Renco in the amount of the Supplemental Loans. No
Supplemental Loans have been received. At October 31, 2003, net unused availability under the Doe Run Revolving Credit Facility was $14.1 million. Net unused availability was
$26.3 million under the Doe Run Revolving Credit Facility at October 31, 2002, primarily resulting from the pay down of the balance outstanding under the Doe Run Revolving Credit
facility from the net proceeds of the Term Note and the issuance of preferred stock, less certain transactions costs. The decrease is due primarily to the effect of operating losses on cash flows and
an increase in the amount due from Doe Run Peru in fiscal 2003. Net unused availability under the Doe Run Peru Revolving Credit Facility was $3.8 million and $0.2 million at
October 31, 2003 and October 31, 2002, respectively. Doe Run Peru had cash balances of $16.8 million and $7.0 million at October 31, 2003 and 2002, respectively. The
reason for the increase is a reduction of interest payments due to the pay down of the loan to a foreign bank with the Special Term Deposit discussed above in "Restructuring
and Long Term Debt".

23

---



While
liquidity was significantly improved at the Restructuring date, Doe Run remains highly leveraged and market prices for lead, zinc and copper, as well as treatment charges earned on
the processing of concentrates at Doe Run Peru, remained low during most of 2003. Significant recovery of metal prices began during the fourth quarter of 2003, and the improvement has continued into
fiscal 2004. As a result of the low metal prices over the past five years however, trade credit continues to be restricted. The deterioration of liquidity has adversely affected Doe Run's operating
and financial results. As a result of extending accounts payable in order to conserve cash, procurement of materials, supplies and equipment has become more difficult and at times more costly.
Suppliers have requested prepayments, discounts are being foregone, late charges are being incurred and in some cases Doe Run is not able to obtain normal trade credit or purchase from the low cost
supplier.

If
current price levels continue, Doe Run's cash flow from operations should significantly improve along with liquidity. This improvement is expected in the second quarter of 2004, once
certain fixed price forward sales commitments are fulfilled and outstanding derivative contracts, discussed below, expire in the first quarter of 2004. Based on current projections, at price levels
lower than those at the end of the first quarter of 2004, Doe Run and Doe Run Peru expect adequate liquidity to continue operations through October 31, 2004. Availability was
$17.7 million under the Doe Run Revolving Credit Facility and $5.4 million under the Doe Run Peru Revolving Credit Facility at April 30, 2004.

The
Company employs a commodity price risk management strategy using forward sales commitments, futures and commodity put and call option contracts to manage its exposure to fluctuations
in the prices of lead, copper, zinc, silver, and gold. See discussion in "Item 7A. Quantitative and Qualitative Disclosures About Market Risk". The Company's commodity hedging activity has been
significantly reduced as a result of the cancellation of credit lines by a number of counterparties. As a result of the cancellation of credit, and the increase in the LME price for lead in the fourth
quarter of 2003, the Company's liquidity was adversely affected by margins paid to brokers totaling $4.3 million at October 31, 2003 to cover mark to market losses on outstanding
derivatives contracts. Further price increases may result in additional margin payments.

A
significant portion of La Oroya's feed supply is currently secured from the Peruvian domestic market. The effects of low metals prices have caused some of Doe Run Peru's current
suppliers to suffer financial distress. If one or more of the local producers were to significantly reduce or cease delivery of concentrates, there can be no assurance Doe Run Peru would be able to
secure sufficient replacement feedstock at economically acceptable terms. A significant interruption in feed supply could result in shutdown or a material reduction in the production of metals from La
Oroya, which would likely have a significant adverse effect on Doe Run Peru's results of operations, financial condition and liquidity. This in turn, would affect Doe Run Peru's ability to fulfill its
obligations under its guarantee of the Notes and ability to pay contractual annual management fees to Doe Run, currently limited by the Doe Run Peru Revolving Credit Facility to $2.8 million.
The recent metal price improvements and other factors have improved the financial condition of the smelter's traditional suppliers, which should improve the availability of economically suitable
concentrates.

The
Company's commitments under agreements with regulatory agencies for environmental activities are significant. Spending requirements may change based on the activities required. See
discussion of U.S. commitments in "Item 8. Financial Statements and Supplementary DataNote 20 to the Company's Consolidated Financial Statements" and see a discussion of Peru
requirements in "Capital Resources".

Consolidated Financial Position



The Restructuring was accounted for in accordance with Statement of Financial Accounting Standard No. 15Accounting by Debtors and Creditors
for Troubled Debt Restructurings ("Statement

24

---



No. 15").
Under Statement No. 15, a debtor may not change the carrying amount of the payable at the time of restructuring unless the total future cash payments, including interest,
specified by the new terms are less than the carrying amount of the payable at the time of restructuring. Under the terms of the Notes, total future payments are expected to be greater than the
carrying amount of the Old Notes exchanged, primarily due to the extended maturities and increased interest rate, assuming the paid in kind option of the Notes will be exercised. In accordance with
Statement No. 15 Doe Run recorded the new notes on its balance sheet at a carrying amount equal to the carrying amount of the notes exchanged, plus unpaid accrued interest, reduced by deferred
issue costs related to the notes exchanged and the fair value of the warrants issued. As a result, the related carrying amount on Doe Run's balance sheet at October 31, 2002 of
$325.6 million exceeded the $175.8 million face amount by $149.8 million. The effect of this accounting is that Doe Run will recognize substantially less interest expense related
to the Notes during their term than is reflected in the stated rate of interest, because the majority of the interest payments are reflected in the carrying amount of the Notes.

The
following table is provided to illustrate the reduction in principal amount of debt achieved by the Restructuring and related transactions and the impact of Statement No. 15
on the carrying amounts of debt on the Company's balance sheet:

|                                                    |                                    | October 31, 2002
|--------------------------------------------------- | ---------------------------------- | ----------------
|
|
|Doe Run Revolving Credit Facility                   |                                    | $               
|Doe Run Peru Revolving Credit Facility              |                                    |                 
|Term Note                                           |                                    |                 
|Notes (b)                                           |                                    |                 
|Old Notes                                           |                                    |                 
|                                                    | Unsecured Senior Notes             |                 
|                                                    | Floating Rate Senior Secured Notes |                 
|                                                    | Secured Senior Notes               |                 
|Other                                               |                                    |                 
|                                                    |                                    |                 
|Total Long-Term Debt (including current maturities) |                                    | $               
|                                                    |                                    |                 

25

---



Changes in Long-Term Debt (including current maturities)

Year Ended
October 31, 2002(dollars in thousands)Revolving credit facilitiesIncrease in borrowings, net (excluding Restructuring)

$
18,825Pay down of Doe Run Revolving Credit Facility at Restructuring


(32,298
)Retirement of Doe Run Peru bank loan


(125,000
)Reduction of face amount of notes at Restructuring


(119,008
)Adjustment to reflect the Notes at carrying amount of Old Notes plus accrued interest less issue costs pursuant to Statement No. 15


151,617Borrowing on Term Note


15,500Imputed interest and other


(3,398
)Reduction of Long-Term Debt (including current maturities)

$
(93,762
)


Financial Position

During 2003, net cash provided by operating activities was $19.5 million. Cash used by investing activities was $15.3 million, primarily for capital
expenditures. Cash provided by financing activities was $5.5 million in 2003, which reflects proceeds from the revolving loan less payments on long-term debt. The Company made all
scheduled principal and interest payments on its
long-term debt balances in fiscal 2003. During 2003, interest on the Notes was paid at the 3% rate, and additional notes totaling approximately $20.0 million were issued. The
Company's working capital fell $94.8 million in 2003 due primarily to the current classification of maturities of long-term debt due to the defaults on the loan covenants discussed
in "Recent Events", a reduction of inventories and receivables, margin payments to brokers discussed in "Liquidity" and an increase in the current pension contribution liability to
$15.2 million at October 31, 2003 from $2.8 million at October 31, 2002. The Company reduced concentrate inventories and supplies in Peru and work in process inventories in
the U.S. in an effort to improve cash flows. Doe Run Peru's receivables decreased approximately $8.3 million, resulting from efforts to improve the documentation process on export sales in
order to accelerate collections.

Results of Operations



The Company reported a net loss for 2003 and for the twelve months ended October 31, 2002 (2002), reflecting continuing low metal prices and treatment
charges. The Company's U.S. operations reported a net loss of $34.1 million (excluding intercompany fees) for 2003 compared to $57.8 million in 2002. The improvement is due to an
increase in gross margins of $7.9 million and a decrease in net interest expense and restructuring costs, partially offset by unrealized losses on derivative financial instruments.

Doe
Run Peru reported a net loss of $11.1 million in 2003 versus $13.1 million in 2002. The decreased loss in 2003 is primarily due to lower interest expense resulting from
the pay down of the loan from a foreign bank discussed above in "Restructuring and Long-Term Debt" at October 29, 2002, and decreased
losses on the impairment and disposal of long-lived assets, partially offset by lower gross margins, which are primarily the result of lower treatment charges for concentrates processed.

26

---



The
Company's results for the year ended October 31, 2003 reflect modest increases in the market prices of lead, copper, zinc, and silver compared to 2002. The following table
sets forth average London Metal Exchange (LME) prices for lead, copper and zinc and the average London Bullion Market Association (LBMA) price for silver for the periods indicated:

|               |                       | Year Ended October 31,
|-------------- | --------------------- | ----------------------
|
|Average Prices |                       |                       
|               | Lead ($/short ton)    |                       
|               | Copper ($/short ton)  |                       
|               | Zinc ($/short ton)    |                       
|               | Silver ($/troy ounce) |                       

The
average annual LME lead price has declined approximately 38% from 1996 through 2003 as new mines have been developed in Australia and Ireland, and as China has increased its lead
metal production and exports. The fourth quarter of fiscal 2003 saw substantial improvements in lead prices in addition to the modest price improvements seen in the first three quarters. The recent
price increase reflects a significant tightening in the worldwide lead supply. In 2003, six Western World lead smelters either closed or temporarily suspended operations resulting in a slight decline
in world wide production.

Average
metal prices increased modestly in 2003 from recent historic lows experienced earlier in the year. The improvements reduced but did not stem the operating loss generated by the
Company's U.S. operations in 2003. The Company has implemented changes to its operations, described below, in an effort to mitigate the impact of low metal prices. These actions reduced production
costs and mitigated a portion of the margin deterioration caused by low prices.

In
the U.S., a declining demand for lead, mainly due to the movement of lead consuming industries from the U.S. to lower labor cost areas of the world, had exacerbated the price
situation. See
discussion of changes made in operations and marketing to combat the decline in U.S. demand in "Recent Events". Imports of lead-acid
batteries from Mexico, China, South Korea, and Brazil, displacing U.S. production, are expected to continue into 2004. A weaker U.S. dollar may make lead acid battery imports less attractive, but the
long-term outlook is uncertain. U.S. lead consumption was down 9.4% in 2002 versus 2001, and down an additional 4.5% in 2003 versus 2002.

Metal
prices rose sharply during the fourth quarter of 2003 and have continued their increase into the first quarter of fiscal 2004. The recent upturn in the lead price has been mainly
supply driven. LME lead prices have increased by 74% from the lowest monthly (April) average in 2003. LME lead inventories declined by approximately 75,000 tons in calendar 2003, another indication
that lead demand exceeds current lead supply.

Zinc
prices also have recovered from the low in 2002, to improve slightly in fiscal 2003. In January 2004, zinc prices were over $925/short ton. The bulk of the improvement in
zinc prices reflects a weak U.S. dollar rather than strong fundamentals. LME zinc inventories actually increased by approximately 90,000 tons in calendar 2003 and, in January 2004, were at the
same levels as in November 2002.

The
average LME copper price was higher in 2003 compared to 2002. In mid-January, 2004, the copper price was 41% higher than the fiscal 2003 average price. Increased demand,
mainly from China, coupled with supply problems have contributed to the rise in the copper price. LME copper inventories declined by over 400,000 tons in calendar 2003.

Low
lead, zinc and copper prices in the preceding five years have induced mine closures and cutbacks and slowed development of new copper, zinc and lead projects. In addition, new
smelting

27

---



capacity
has come on stream in China and India, increasing demand for concentrates. As a result, supplies of lead, zinc and copper concentrates have been very tight. Smelters competing for
concentrates in this tight market have driven treatment charges and penalties down significantly and this decline has negatively impacted profitability of Doe Run Peru's La Oroya smelter.

The
tight market conditions for lead, zinc and copper concentrates are expected to continue into 2004, when higher metal prices are expected to induce producers to increase output.

28

---





Most of La Oroya's feed supply is secured from the Peruvian domestic market. The effects of low metals prices in the preceding five years have caused some of Doe Run Peru's suppliers to
suffer financial distress, which in some cases caused production shortfalls. As a result, deliveries of lead, copper and zinc concentrates to La Oroya from a major Peruvian supplier were significantly
below the contracted amounts during the 2003 period. Doe Run Peru replaced a portion of this shortfall with concentrates from other suppliers, but the total receipts of lead, zinc and copper
concentrates for the period were less than the planned amounts. In addition, the resulting changes in concentrate mix and erratic deliveries adversely affected metal production and the cost of spot
purchases increased La Oroya's feed cost. With improved metal prices, the financial condition of La Oroya's traditional suppliers has improved and concentrate receipts for fiscal year 2004 are
expected to meet planned levels. However, current market conditions remain tight, and it is possible that the smelter could experience difficulties obtaining economically suitable concentrate feed.

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

|                    |                                                 | Year Ended October 31, |        
|------------------- | ----------------------------------------------- | ---------------------- | -------
|
|U.S. Operations     |                                                 |                        |        
|                    | Lead metalprimary (short tons)                 |                        | 281,531
|                    | Lead metalsecondary (short tons)               |                        | 149,616
|                    | Lead concentrates (metal content, short tons)   |                        | 295,581
|                    | Ore Grade                                       |                        | 6.53   
|Peruvian Operations |                                                 |                        |        
|                    | Refined copper (short tons)                     |                        | 68,958 
|                    | Refined lead (short tons)                       |                        | 122,946
|                    | Refined zinc (short tons)                       |                        | 80,679 
|                    | Refined silver (thousands of troy ounces)       |                        | 35,305 
|                    | Refined gold (thousands of troy ounces)         |                        | 82     
|                    | Copper concentrates (metal content, short tons) |                        | 17,944 
|                    | Ore Grade (copper content)                      |                        | 1.10   

In
response to the poor lead metal market conditions over the past several years, the Company has implemented operational and organizational changes at its U.S. primary
lead division since 2001. The key elements of this plan were that the Company's Herculaneum primary smelter reduced its annual refined metal production by reducing blast furnace and sinter plant
operating time. The Company eliminated purchases of lead concentrates and reduced production of concentrates at its southeast Missouri mining operations, while improving ore grades in order to reduce
unit production costs. The Company reduced total concentrate production at all of its mines, and placed the No. 29 mine on care and maintenance status resulting in reduced ore production during
2002 of approximately 284,000 tons or 5%. Ore grade improved over the prior year which partially offset the impact of reduced ore tonnage, resulting in only a slight reduction in lead metal contained
in concentrates in 2002, compared to 2001. A similar production strategy in 2003 resulted in reductions in ore production and slightly higher ore grades.

These
production changes necessitated reductions in the workforce. Approximately 280 hourly positions were eliminated which involved both terminations and an early retirement
program, completed in the first quarter of 2002. In the fourth quarter of 2002, the company eliminated 22 salaried positions and approximately 60 contract labor positions at the Herculaneum smelter.
Overtime has been significantly reduced as well.

Doe
Run also applied for a royalty rate reduction on its leases with government agencies and identified other savings in raw materials, supplies, and equipment costs. However, at the
time of this

29

---



filing
Doe Run has not been granted the royalty rate reductions it has requested so no reductions in royalties were recognized in 2003.

Despite
Doe Run's lower production levels, cost per ton of primary metal sold remained about the same as in 2002, as a result of net spending reductions related to lower headcount and
other cost reductions related to salaries and benefits, noted above, offset by higher energy costs.

In
response to a decreasing domestic market for lead, the Company announced the indefinite suspension of operations at its Glover smelter, effective December 1, 2003. The Company
will sell any concentrates that are not required to maintain production at the Herculaneum smelter. The decision is expected to improve the Company's net sales premiums at current market conditions.
Severance benefits associated with this action totaled $1.4 million, which will be paid mostly in fiscal 2004.

Production
at the Company's Buick secondary smelter decreased in 2003, compared to the prior year, primarily due to an effort to conserve cash by reducing work in process inventories,
while continuing to meet environmental standards. The very low lead content of these inventories resulted in reduced lead metal production when these items were recycled.

In
September 2003, in an effort to reduce costs, Doe Run Peru announced a work force reduction of 10% primarily at La Oroya, which was achieved by December 2003. Total
severance benefits accrued in fiscal 2003 were $3.2 million, of which $1.4 million was paid during fiscal 2003 and the remainder will be paid in 2004 and 2005.

At
the La Oroya metallurgical complex, production of copper, lead, zinc and gold in 2003 was less than in 2002. These declines did not result from operational problems, but were
attributable to the difficulties in obtaining economically suitable feed concentrate material discussed above. Silver production increased compared to the prior year primarily due to Doe Run Peru's
successful effort to decrease in-process inventories. Unit conversion costs at La Oroya increased compared to the prior year, primarily due to the decreased production rate, higher fuel
costs and severance costs associated with the workforce reduction discussed above.

At
the Cobriza copper mining operation, ore production for 2003 declined by 5% compared to 2002. Ore grade improved by 8% and, as a result, production of metal contained in concentrates
improved by approximately 4%, compared to the 2002 period. Operating costs for 2003 were 6% lower than the
prior year, due to the reduced ore production and Doe Run Peru's continuing efforts to reduce operating costs. The combination of increased metal production and reduced operating cost resulted in a
decline in unit production costs.

The
following tables set forth the separate operating results, sales volumes and realized prices for the Company's U. S. and Doe Run Peru (excluding intercompany transactions) for the
periods indicated:

30

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Results of U.S. Operations

|                                                    |                                                                                        | Year Ended October 31,   |        
|--------------------------------------------------- | -------------------------------------------------------------------------------------- | ------------------------ | -------
|
|Net sales (a)                                       |                                                                                        | $                        | 249,109
|Costs and expenses:                                 |                                                                                        |                          |        
|                                                    | Cost of sales (a)                                                                      |                          |        
|                                                    | Depletion, depreciation and amortization                                               |                          |        
|                                                    | Selling, general and administrative                                                    |                          |        
|                                                    | Exploration                                                                            |                          |        
|                                                    | Losses from impairment and disposal of long-lived assets                               |                          |        
|                                                    | Unrealized (gain) loss on derivative financial instruments                             |                          |        
|                                                    |                                                                                        |                          |        
|                                                    |                                                                                        | Total costs and expenses |        
|                                                    |                                                                                        |                          |        
|                                                    |                                                                                        | Loss from operations     |        
|Other income (expense):                             |                                                                                        |                          |        
|                                                    | Interest expense                                                                       |                          |        
|                                                    | Interest income                                                                        |                          |        
|                                                    | Loss on retirement/restructure of long-term debt                                       |                          |        
|                                                    | Other, net                                                                             |                          |        
|                                                    |                                                                                        |                          |        
|                                                    |                                                                                        |                          | (11,116
|                                                    |                                                                                        |                          |        
|                                                    | Loss before income tax expense and cumulative effect of change in accounting principle |                          |        
|Income tax expense                                  |                                                                                        |                          |       
|                                                    |                                                                                        |                          |        
|                                                    | Loss before cumulative effect of change in accounting principle                        |                          |        
|Cumulative effect of change in accounting principle |                                                                                        |                          | (3,848 
|                                                    |                                                                                        |                          |        
|                                                    | Net loss                                                                               |                          | $      
|                                                    |                                                                                        |                          |        

---



|                                 | Net sales         |  | $ | 9,550   |  | $ | 9,078   |  | $ | 10,210 
|-------------------------------- | ----------------- |  | - | ------- |  | - | ------- |  | - | -------
|                                 | Cost of sales     |  |   | 174     |  |   |        |  |   | 888    
|Sales volumes (short tons)       |                   |  |   |         |  |   |         |  |  
|                                 | Lead metal        |  |   | 337,846 |  |   | 345,722 |  |   | 416,249
|                                 | Tolling           |  |   | 86,123  |  |   | 83,539  |  |   | 73,320 
|                                 | Zinc concentrates |  |   | 81,625  |  |   | 86,994  |  |   | 93,253 
|Realized Prices ($/short ton)(b) |                   |  |   |         |  |   |         |  |  
|                                 | Lead metal        |  | $ | 498.00  |  | $ | 491.66  |  | $ | 523.42 
|                                 | Tolling           |  | $ | 347.98  |  | $ | 344.96  |  | $ | 354.65 
|                                 | Zinc concentrates |  | $ | 241.56  |  | $ | 218.38  |  | $ | 258.75 

---

31

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Results of Peruvian Operations

|                        |                                                                                                           | Year Ended October 31,        |        
|----------------------- | --------------------------------------------------------------------------------------------------------- | ----------------------------- | -------
|
|Net sales (a)           |                                                                                                           | $                             | 435,506
|Costs and expenses:     |                                                                                                           |                               |        
|                        | Cost of sales (a)                                                                                         |                               |        
|                        | Depletion, depreciation and amortization                                                                  |                               |        
|                        | Selling, general and administrative (a)                                                                   |                               |        
|                        | Exploration                                                                                               |                               |        
|                        | Losses from impairment and disposal of long-lived assets                                                  |                               |        
|                        | Unrealized (gain) loss on derivative financial instruments                                                |                               |        
|                        |                                                                                                           |                               |        
|                        |                                                                                                           | Total costs and expenses      |        
|                        |                                                                                                           |                               |        
|                        |                                                                                                           | Income (loss) from operations |        
|Other income (expense): |                                                                                                           |                               |        
|                        | Interest expense                                                                                          |                               |        
|                        | Interest income                                                                                           |                               |        
|                        | Other, net                                                                                                |                               |        
|                        |                                                                                                           |                               |        
|                        |                                                                                                           |                               | (3,174 
|                        |                                                                                                           |                               |        
|                        | Income (loss) before income tax expense (benefit) and cumulative effect of change in accounting principle |                               |        
|Income tax expense      |                                                                                                           |                               |       
|                        |                                                                                                           |                               |        
|                        | Income (loss) before cumulative effect of change in accounting principle                                  |                               |        
|                        | Cumulative effect of change in accounting principle                                                       |                               |        
|                        |                                                                                                           |                               |        
|                        | Net income (loss)                                                                                         |                               | $      
|                        |                                                                                                           |                               |        



|                    | Net sales                                   |                                   | $ | 707   |          | $ |      |          | $ |     
|------------------- | ------------------------------------------- | --------------------------------- | - | ----- | -------- | - | ----- | -------- | - | -----
|                    | Cost of sales                               |                                   |   | 508   |          |   |      |          |   |     
|                    | Selling, general and administrative expense |                                   |   | 9,550 |          |   | 9,078 |          |   | 9,322
|Sales Volumes       |                                             |                                   |   |       |          |   |       |          |  
|                    |                                             | Copper (short tons)               |   |       | 68,822   |   |       | 71,105   |   |      
|                    |                                             | Lead (short tons)                 |   |       | 122,260  |   |       | 133,204  |   |      
|                    |                                             | Zinc (short tons)                 |   |       | 80,375   |   |       | 85,229   |   |      
|                    |                                             | Silver (thousands of troy ounces) |   |       | 35,269   |   |       | 34,352   |   |      
|                    |                                             | Gold (thousands of troy ounces)   |   |       | 82       |   |       | 93       |   |      
|Realized Prices (b) |                                             |                                   |   |       |          |   |       |          |  
|                    |                                             | Copper ($/short ton)              |   | $     | 1,525.47 |   | $     | 1,385.25 |   | $    
|                    |                                             | Lead ($/short ton)                |   | $     | 457.09   |   | $     | 427.33   |   | $    
|                    |                                             | Zinc ($/short ton)                |   | $     | 726.30   |   | $     | 703.21   |   | $    
|                    |                                             | Silver ($/troy ounce)             |   | $     | 4.75     |   | $     | 4.55     |   | $    
|                    |                                             | Gold ($/troy ounce)               |   | $     | 348.17   |   | $     | 298.85   |   | $    

---

32

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Results of operations for the years ended October 31, 2003, 2002, and 2001 include the results of the Company's U.S. operations and Doe Run Peru. In order to provide a more
meaningful analysis, the results of operations attributable to Doe Run Peru will be noted and discussed separately under "Results of Doe Run Peru."

Net salesincreased in 2003 from 2002, primarily due to the results of Doe Run Peru. U.S. net sales increased slightly in 2003, compared
to 2002, primarily due to higher realized prices for lead metal and copper, zinc, and lead concentrates, partially offset by lower volume of lead metal, due to the soft domestic market and the
reduction of production. As discussed above, the LME average lead price increased during 2003, with the majority of this increase occurring in the fourth quarter. Should the LME price remain at this
level for an extended period, the Company should benefit from further increased net realized prices in the coming quarters.

Cost of salesincreased as a result of Doe Run Peru. U.S. cost of sales in 2003 was slightly less than 2002, primarily due to lower lead
metal and zinc concentrate sales volumes along with operating cost reductions at the primary lead operations, driven by lower headcount and reduced overtime, partially offset by higher energy costs.
More efficient production due to higher ore grades also contributed to the lower costs.

Selling, general and administrative costsdecreased from 2002 primarily from the results of U.S. operations largely due to an increase of
$1.3 million in insurance reimbursements in 2003 for legal fees incurred in prior years. The Company has received the majority of its reimbursements for legal fees incurred in previous fiscal
years, but will continue to receive reimbursements for a portion of its ongoing legal fees.

Losses from impairment and disposal of long-lived assetsdecreased primarily at Doe Run Peru. In 2003, the U.S. operations
wrote down the value of properties purchased in Herculaneum, near the Company's primary smelter. (See discussion of purchase plan in "Item 8. Financial Statements and Supplementary
DataNote 20 to the Company's Consolidated Financial Statements"). The loss in 2002 relates to the write-down of Herculaneum properties in addition to the permanent
cessation of operation of a blast furnace at the Herculaneum smelter that was dismantled in 2003. The impairment loss relating to the Herculaneum properties was recognized due to the current lack of
approval from regulatory agencies regarding the reoccupancy of these properties.

Unrealized (gain)/loss on derivativesrelates to the change in fair market value of derivative financial instruments pursuant to
FAS 133. In 2003 the Company experienced an unrealized loss, compared to an
unrealized gain in 2002. In the U.S., the loss was primarily the result of the substantial increase in the LME price at the end of 2003. These unrealized losses required the payment of margin to
brokers. See discussion in "Liquidity".

Interest expensedecreased in 2003 compared to 2002 in the results of Peruvian and U.S. operations. In the U.S. operations, interest
expense was substantially lower in 2003 as a result of the Restructuring and the related accounting for the transaction. See discussion in "Consolidated Financial PositionAccounting for
Restructuring".

Interest incomedecreased in 2003 due primarily to the loss of U.S. operation's interest income on the $125 million Special Term
Deposit used to collateralize Doe Run Peru's note payable to a foreign bank. On September 12, 2002, The Special Term Deposit was tendered to repay the note, see discussion above in
"Restructuring".

Loss on retirement/restructure of long-term debtrepresents costs related to the issuance of the Notes and the Term Note in
accordance with Statement No. 15. See "Item 8. Financial Statements and Supplementary DataNote 2 to the Company's Consolidated Financial Statements" for a discussion of
Statement No. 15.

33

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Income tax expensereflects the provision for the Company's Peruvian subsidiaries. Renco has elected for the Company to be treated as a
qualified subchapter S subsidiary (QSSS) for federal tax purposes. Most states in which the Company operates will follow similar tax treatment. QSSS 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 generally not subject to federal and
most state income taxes.

Cumulative effect of change in accounting principlerelates to the adoption of Statement of Financial Accounting Standard No. 143, Accounting for Asset Retirement Obligations. See "Item 8. Financial Statements and Supplementary DataNote 20 to the Company's
Consolidated Financial Statements for a discussion of Statement No. 143.



Net salesfor 2002 decreased compared to 2001 due mainly to the U.S. operations' lower volume of lead metal, lower realized prices for
lead metal and zinc concentrates and lower revenues from oxide at FPI, partially offset by an increase in toll volume. Due to the unfavorable market conditions production was reduced in an effort to
minimize operating losses. As a result, lead metal sales volume was down in 2002, compared to the prior year, accounting for a $36.9 million decrease in net sales. As discussed in
"OverviewU.S. Operations" the LME average lead price declined during 2002. Because of the market conditions in the U.S., the Company's premiums were lower as well, resulting in a decline
in the net realized price for lead metal, which reduced net sales by $11.0 million. Oxide sales declined $9.0 million as FPI began charging its main oxide customer a processing fee to
covert the customer's lead metal into oxide (tolling), rather than purchasing metal and selling the oxide to the customer, pursuant to a new contract. As a result, oxide revenues have been reduced to
the fee that the Company receives for converting metal into oxide rather than the full value of the oxide product and cost of sales reduced to the conversion costs. Zinc concentrate net sales were
lower in 2002, compared to 2001, primarily due to a decrease in the LME average zinc price and lower sales volume associated with the lower production levels discussed previously. These changes were
partially offset by an increase in toll lead volume.

Cost of salesin 2002 decreased compared to 2001 due primarily to the U.S. operations' reduced lead metal volume, discussed above which
accounts for $37.1 million of this decrease. A decrease of approximately $16.0 million is the result of cost reductions at the primary and secondary lead production facilities. This
amount includes a savings of approximately $4.1 million resulting from lower energy costs, as natural gas and propane prices declined significantly from the abnormally high prices experienced
in 2001, and a savings of about $2.9 million resulting from lower feed costs at the Buick recycling facility. The remaining $9.0 million reduction is attributable to efficiency
improvements at all three primary operating facilities and at the secondary smelter resulting from ongoing efforts to reduce operating costs. Lower feed cost for oxide production resulting from the
tolling, discussed above, also contributed to the decrease in cost of sales. These cost decreases were partially offset by a $5.0 million non-cash charge to adjust environmental
reserves, primarily for historic properties and the Herculaneum smelter, resulting from a comprehensive review of the Company's environmental liabilities.

Selling, general and administrative costsdecreased in 2002 compared to 2001 due mainly to Doe Run Peru. Increases in the U.S. operations'
professional fees were, offset by increased insurance reimbursements for legal defense costs and a decrease in pension and healthcare expenses. Professional fees increased by $2.5 million in
2002 due primarily to costs related to extensive discovery activity on two groups of personal injury lawsuits. Offsetting this increase were anticipated insurance reimbursements totaling
$1.9 million during 2002 for recovery of legal expenditures covered by insurance, compared to $0.8 million in 2001. A California court ruling clarified amounts to be

34

---



reimbursed,
relating to costs that have been disputed by the insurance company, which precipitated the recording of the previously unrecorded disputed costs. Pension and health care costs were lower
in 2002 because 2001 included special termination charges of $2.6 million associated workforce reductions.

Exploration expensedecreased in 2002 for the U.S. operations due to the Company's continuing efforts to conserve cash.

Losses from impairment and disposal of long-lived assetsin 2002 related primarily to Doe Run Peru. The results of the U.S.
operations reflect a write down of the value of properties owned near the Herculaneum smelter and the permanent cessation of operations of a blast furnace at the Herculaneum smelter. See discussion in
"Item 8. Financial Statements and Supplementary DataNote 20 to the Company's Consolidated Financial Statements". In 2001, the $1.0 million loss is primarily due to the
demolition of two dross furnaces due to a change in the production process at Herculaneum.

Unrealized gain on derivativeswas mainly in the U.S. operations, primarily due to a reduction in the quantities of metal under futures
contracts outstanding, related to credit line reductions. This resulted in the realization of gains in revenues that were previously unrealized.

Interest expensefor 2002 was lower due mainly to U.S. operations, resulting from lower interest rates on the Company's floating interest
rate notes and the Doe Run Revolving Credit Facility, and due to a $4.3 million decrease in the average outstanding balance on the Doe Run Revolving Credit Facility. These declines were
partially offset by penalty interest recorded on overdue interest on the Company's Old Notes.

Interest incomedecreased in 2002 due primarily to the loss of U.S. operations interest income on the $125 million Special Term
Deposit used to collateralize Doe Run Peru's note payable to a foreign bank. On September 12, 2002, The Special Term Deposit was tendered to repay the note. See discussion above in
"Restructuring and Long Term Debt".

Loss on retirement/restructure of long-term debtrepresents costs related to the issuance of the Notes and the Term Note in
accordance with Statement No. 15. See "Item 8. Financial Statements and Supplementary DataNote 3 to the Company's Consolidated Financial Statements" for a discussion of
Statement No. 15.

Other, net expensefor U.S. operations was a net expense in 2002, compared to net income in 2001. This change was primarily due to a
reduction of rental income on the helicopter used for Doe Run Peru operations, which was sold in the third quarter of 2001.

Income tax expensereflects the provision for the Company's Peruvian subsidiaries. As a result of the Company's tax status in the U.S.,
the Company is generally not subject to federal and most state income taxes.

Cumulative effect of change in accounting principlerelates to the adoption of Statement of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities. See "Item 8. Financial Statements and Supplementary DataNote 19 to the
Company's Consolidated Financial Statements" for a discussion of Statement No. 133.

Results of Doe Run Peru



Net salesfor 2003 increased compared to 2002 primarily due to higher realized prices for all major metals and an increase in sales volume
for silver, partially offset by a decrease in sales volume for copper, lead, zinc and gold. Compared to 2002, realized prices for all metals rose, reflecting similar increases in LME prices, and
contributing $26.2 million to the net sales increase. Higher sales volumes

35

---



for
silver, reflecting higher production levels, and an increase in byproduct sales also contributed to the increased sales in 2003. These increases were partially offset by lower sales volume for all
major metals except silver resulting from the reduced feed available at La Oroya discussed previously.

Cost of salesincreased for 2003 from 2002, due primarily to higher feed cost, and the higher unit conversion costs at La Oroya, partially
offset by improved unit production cost at Cobriza and reduced production volume. Feed costs were higher due to the increases in market prices for copper, zinc, silver, and gold and to significantly
lower treatment charges for concentrates purchased. Lead, zinc and copper concentrate treatment charges declined 14%, 13% and 17% respectively, in 2003, due to the very tight supply situation in the
world market and the resultant competition for concentrates by smelters.

Losses from impairment and disposal of long-lived assetsdecreased in 2003. The loss recorded in 2002 relates to the write off
of the backfill plant at the Cobriza mining operation, which was determined to be uneconomical to complete and operate.

Interest expensedecreased in the 2003 period, compared to the prior year, due primarily to the reduction of Doe Run Peru's
long-term debt resulting from Doe Run's Special Term Deposit being tendered to repay the note, see discussion above in "Restructuring and Long Term
Debt".

Other, net incomewas decreased in 2003, primarily due to exchange losses on transactions denominated in Peruvian soles as a result of the
effect of an increase in the value of soles against the U.S. dollar.

Income tax expensewas $0 in 2003 and 2002 reflecting management's belief that sufficient uncertainty exists regarding the realization of
certain deferred tax assets, which requires that a valuation allowance be established.



Net salesfor 2002 decreased compared to 2001 due to lower realized prices for zinc, copper, and lead and lower sales volumes, partially
offset by increased realized prices for silver and gold and higher gold volume. The realized price decline for zinc reduced net sales by $14.0 million and lower realized prices for copper and
lead decreased net sales by $10.0 million. Reduced production volume due to feed supply problems resulted in lower production and sales volumes for all major metals except gold, which reduced
net sales by $3.4 million. These reductions were partially offset by higher realized prices for silver and gold and increased volumes of gold sales and toll services. Doe Run Peru increased its
copper concentrate tolling volume in response to market conditions, which have limited the availability of concentrates for purchase.

Cost of salesfor 2002 increased compared to 2001 due primarily to increased concentrate feed costs, partially offset by lower conversion
costs and sales volumes. Feed costs increased approximately $8.2 million in 2002, compared to 2001, primarily due to significantly lower treatment charges for lead, zinc and copper concentrates
resulting from the very tight supply situation in the concentrate market. The effect of lower treatment charges was partially offset by lower market prices for lead, zinc and copper. Unit conversion
costs at La Oroya decreased which in turn reduced cost of sales by $4.8 million, compared to the prior year. This improvement was primarily due to cost containment efforts and resultant
reductions in contract labor, maintenance, and indirect operating costs. Workers profit sharing cost was lower as well due to net losses incurred by Doe Run Peru. Despite the impact of lower ore
grade, unit production costs at the Cobriza copper mining operation were slightly lower in 2002, compared to 2001, due to reduced operating costs.

36

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Selling, general and administrative costsdecreased for 2002, compared to the prior year, primarily due to reduced professional fees and
expenses associated with Doe Run Peru's helicopter, which was sold during the third quarter of 2001, partially offset by increased insurance costs.

Losses from impairment and disposal of long-lived assetsincreased in 2002 compared to 2001 due primarily to the write off of
the backfill plant at the Cobriza mining operation in 2002. Because of the continuing low copper prices and the inability to establish significant new ore reserves, Doe Run Peru has determined that it
will not be economically feasible to complete and operate the backfill plant.

Unrealized gain on derivativesrelates to the change in fair market value of derivative financial instruments pursuant to Statement
No. 133. Losses in 2002 resulted from a reduction in the quantities of metal under futures contracts outstanding, due primarily to credit line reductions. This resulted in the realization of
losses through revenues that were previously unrealized. Gains for 2001 resulted primarily from the effect of falling copper prices on sold metal futures contracts.

Interest expensedecreased for 2002, compared to the prior year, primarily dulne to lower interest on the $125.0 note payable to a foreign
bank, which was retired on September 12, 2002, as discussed above. In addition, lower interest rates on the Doe Run Peru Revolving Credit Facility, increased capitalized interest and lower
outstanding balances on capital lease obligations contributed to the reduction in interest expense.

Interest incomedecreased in 2002, compared to the prior year, primarily due to lower interest on income taxes due to Doe Run Peru, which
was received during 2001, lower average cash balances and lower interest rates on those cash balances.

Income tax expensewas $0 in 2002 reflecting Management's belief that sufficient uncertainty exists regarding the realization of certain
deferred tax assets and that a valuation allowance is required. Tax expense in 2001 resulted primarily from an increase in the valuation allowance resulting from management's assessment of the
Company's ability to use loss carry forwards in the future.

Cumulative effect of change in accounting principlerelates to the adoption of Statement No. 133. See "Item 8. Financial Statements
and Supplementary DataNote 19 to Doe Run Peru's Financial Statements" for a discussion of Statement No.133.

Capital Resources

Doe Run has substantial indebtedness. As of October 31, 2003, on a consolidated basis, the Company's balance sheet reflected $408.7 million of total
debt in accordance with Statement No. 15. The face amount of indebtedness outstanding at October 31, 2003 was $279.5 million, an increase of $27.1 million from
October 31, 2002.

The
Doe Run Revolving Credit Facility, the Doe Run Peru Revolving Credit Facility, the Term Note and the indenture governing the Notes contain numerous covenants and restrictions. They
include certain requirements with respect to net worth, working capital, earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), and debt to earnings ratios. These
agreements also place limitations on capital expenditures, dividend payments and other outside borrowings. The Doe Run Peru Revolving Credit Facility also contains covenants which, pursuant to the
amendment
discussed in "Recent Events", restrict through September 2004 Doe Run Peru's ability to make distributions to Doe Run in excess of a
$2.8 million management fee.

The
ability of Doe Run to meet its debt service requirements and to comply with these covenants is dependent upon 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

37

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the
Company's control. The Company has been in default of several loan covenants. See discussion in "Recent Events".

The
Company had capital expenditures of $15.3 million in 2003 and has projected capital expenditures of approximately $27.4 million for fiscal 2004. In the U.S., the
Company had capital expenditures of $6.1million in 2003 and has projected total capital expenditures of approximately $11.2 million for fiscal 2004, primarily to support ongoing operations and
for operational and environmental improvements, including expenditures required pursuant to an AOC that established a residential property purchase plan in Herculaneum, see "Item 8. Financial
Statements and Supplementary DataNote 20 to the Company's Consolidated Financial Statements". In addition to these capital investments, the Company's U.S. operations expended
approximately $51.3 million, $52.0 million and $58.8 million on repairs and maintenance for fiscal years 2003, 2002 and 2001 respectively. As a result of these expenditures, the
Company believes that it operates and will continue to maintain modern and efficient facilities.

As
part of the acquisition of its Peruvian operations, Doe Run Peru committed to an investment program, in part to satisfy an investment commitment of $120.0 million as set forth
in the purchase agreement. On February 13, 2003, Doe Run Peru received notice from Centromin that it had met its investment commitment with total approved expenditures of $120.2 million
through October 23, 2002.

Doe
Run Peru had capital expenditures of $9.3 million in 2003 and has projected capital expenditures of approximately $16.2 million for fiscal 2004, primarily for PAMA
projects and to support ongoing operations.

Although
Doe Run Peru's PAMA currently requires construction of certain sulfuric acid plants at the La Oroya smelter estimated to cost $107.5 million during the remaining PAMA
period, Doe Run Peru is also proceeding with efforts to identify alternative methods of achieving emission compliance. Potential alternatives include, but are not limited to, reducing production from
a portion of the plant, thus eliminating the need for the equipment presently contemplated and replacing it with another alternative. This evaluation must take into consideration the impacts on
profitability and liquidity, as well as other economic impacts. In 2004, Doe Run Peru intends to submit a request to MEM to modify the requirements of the existing PAMA. There can be no assurance that
these efforts will be approved by the Peruvian government or that they will achieve compliance in the timeframe required by the
PAMA. If the La Oroya smelter does not operate within the current PAMA limits after December 31, 2006, Doe Run Peru could be forced to cease operations at the La Oroya smelter. See discussion
of PAMA requirements and compliance in Item 1. "Business, The Doe Run Peru OperationsEnvironmental".

Contractual Obligations

The following table summarizes Doe Run's contractual obligations and commercial commitments at October 31, 2003. For a discussion of environmental and
reclamation obligations, see "Item 8. Financial Statements and Supplementary DataNote 20 to the Company's Consolidated Financial Statements". The Company's recorded liability for
environmental matters and asset retirement obligations was $31.5 million at October 31, 2003. Timing of the related spending is dependent upon a number of factors, including required
completion date of reclamation work under agreements with regulatory agencies and date of facility closures. These obligations are not included in the table below. The table also does not include
costs related to Doe Run Peru's PAMA (see discussion in "Item 1. Business, Doe Run PeruEnvironmental Matters".The PAMA provides a specific
plan for achieving the applicable MEM maximum permissible limits pertaining to air emissions and wastewater effluent quality. However, the specific projects included in the PAMA may be modified and
amended as to the

38

---



actual
design and timing to be implemented, provided compliance with the applicable maximum permissible limits is achieved by December 31, 2006.

|                           |       |   |       | Payments Due By Period
($ millions) |  
|-------------------------- | ----- | - | ----- | ----------------------------------- | -
|
|
|Revolving lines of Credit  |       | $ | 59.1  |                                     | $
|Long-term Debt(a)          |       |   | 218.8 |                                     |  
|Redeemable Preferred Stock |       |   | 22.5  |                                     |  
|Operating Leases           |       |   | 21.2  |                                     |  
|Capital Leases             |       |   | 1.6   |                                     |  
|Royalties                  |       |   | 3.4   |                                     |  
|Purchase Obligations(b)    |       |   | 604.7 |                                     |  
|Pension funding            |       |   | 15.2  |                                     |  
|                           |       |   |       |                                     |  
|                           | Total |   | $     | 946.5                               |  
|                           |       |   |       |                                     |  

---

Significant Accounting Policies

The consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation.
Significant accounting policies and estimates that most impact the consolidated financial statements are those related to revenue recognition, mineral interests, impairment of long-lived
assets, estimated liabilities for environmental and legal claims, income taxes, pension benefits, and derivative instruments.

Sales
are recorded as products are shipped to customers and title transfers or as tolling services are performed. Concentrate and certain smelter product sales are recorded based upon
estimated weights and metal contents and metal prices in effect at time of shipment. Revenues are adjusted between month of shipment and month of settlement based on changes in market prices.
Adjustments

39

---



with
respect to such sales are recorded based on final settlement weights, metal contents and metal prices pursuant to applicable customer agreements.

Mineral
interests are amortized using the units of production method. The Company's ore reserves are based on geological studies and test hole drillings conducted by the Company's
geologists. These estimates are reviewed and certified periodically by an independent mining consultant. The most recent independent report on the Company's ore reserves was issued in
January 2004. Ore reserves can and do fluctuate with the underlying market price or prices of the metals to be mined. As such, there can be no assurances that the reserves currently reported
would be economical to mine in the future.

Long-lived
assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the
estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the
amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the
carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate
asset and liability sections of the balance sheet.

The
Company accrues for loss contingencies, including costs associated with environmental remediation obligations, when it is probable that a liability has been incurred and can be
reasonably estimated. Liability estimates for environmental remediation obligations are based on an evaluation of, among other factors, currently available facts, existing technology, presently
enacted laws and regulations, the Company's experience in remediation, the Company's status as a potentially responsible party (PRP), and the ability of other PRPs to pay their allocated portions.
Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of costs from other parties are recorded as assets when their receipt is
deemed probable, as is consistent with the American Institute of Certified Public Accountants Statement of Position 96-1,Environmental Remediation
Liabilities. However, there can be no assurance established liabilities will be sufficient to cover the costs of the actual commitments or that in the future, new commitments
will not arise that could have a material adverse effect on the results of operations, financial condition and liquidity of the Company. See "Item 8. Financial Statements and Supplementary
DataNotes 20 and 21 to the Company's Consolidated Financial Statements" for a more detailed discussion of environmental and litigation matters.

As
of November 1, 2002, the Company adopted Statement No. 143, which addresses financial accounting and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the
acquisition, construction, development and (or) normal use of the asset. Prior to the adoption of Statement No. 143 the Company accrued for mine and other closure obligations at their
estimated, undiscounted cost. Statement No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life
of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company
will recognize a gain or loss on settlement.

The
cumulative effect related to the adoption of Statement No. 143 was a loss of $3,940, a net decrease to plant, property and equipment of $2,088, and an increase of $1,852 to
the liability for asset

40

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retirement
obligations. Accretion expense was approximately $1.5 million for the year ended October 31, 2003.

Renco
has elected for the Company to be treated as a qualified subchapter S subsidiary (QSSS) for federal tax purposes. Most states in which the Company operates will follow similar tax
treatment. QSSS status requires the ultimate shareholders to include their pro rata share of the Company's income or loss in their individual tax returns. The election does not affect foreign income
taxes related to the Company's foreign subsidiaries.

Deferred
tax assets and liabilities are recognized in foreign jurisdictions for the future tax consequences attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and the respective tax bases of these assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. Management believes that sufficient uncertainty exists regarding the realization of certain deferred
tax assets such that a valuation allowance is required.

Doe
Run sponsors a noncontributory defined benefit plan for its U.S. employees. Benefits provided to salaried employees under the defined benefit plan are based on final average
compensation and years of service. The Company has also adopted a supplemental defined benefit plan, the Supplemental Employee Retirement Plan (SERP), effective November 1, 1996. The SERP
provides benefits to those participants of the defined benefit plan whose benefits under the plan are limited by Sections 401(a)(17) or 415 of the Internal Revenue Code. Changes in the assumptions
used to calculate Doe Run's accumulated benefit obligation and periodic pension cost can have a significant effect on the Company's results of operations.

The
Company carries all derivative instruments in the balance sheet at fair value. The accounting for changes in the fair value (that is, gains and losses) of a derivative instrument
depends on whether it has been designated and qualifies as part of a hedging relationship, and if so, whether the derivative instrument is designated as a hedge of exposures to changes in fair value
or cash flows. If the hedged exposure is an exposure to changes in the fair value of a fixed commitment, the gain (loss) is recognized in earnings in the period of change, with an equal and offsetting
(loss) gain recognized on the change in value of the hedged item. If the hedged exposure is an exposure to changes in forecasted cash flows, the effective portion of the gain (loss) is reported as a
component of other comprehensive income (outside earnings) until the forecasted hedged transaction affects earnings, when it is reclassified into earnings.

Forward-Looking Statements

This report includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 which involve known and unknown
risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such risks, uncertainties, and other important factors include, among others: general economic and business conditions; increasing
industry capacity and levels of imports of non-ferrous metals or non-ferrous metals products; industry trends, including product pricing; competition; currency fluctuations;
the loss of any significant customer or suppliers; availability of qualified personnel; effects of future collective bargaining agreements; outcome of litigation; changing environmental requirements,
political uncertainty, terrorism and major equipment failures. These forward-looking statements speak only as of the date of this report. The Company expressly disclaims any obligation or undertaking
to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions,
or circumstances on which any such statement is based.

41

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of its business, the Company has used in the past, and may use in the future, forward sales commitments and commodity put and call option
contracts to manage its exposure to fluctuations in the prices of lead, copper, zinc, silver, and gold. Contract positions are designed to ensure that the Company will receive a defined minimum price
for certain quantities of its production. None of the aforementioned activities have been entered into for speculative purposes. See "Item 8.
Financial Statements and Supplementary DataNote 19 to the Company's Consolidated Financial Statements" for a more detailed discussion of the Company's use of Hedging and Derivative
Financial Instruments. A 10% increase in metal prices would result in additional losses of approximately $7.0 million to the Company related to open contracts at October 31, 2003, which
would be offset by higher prices on the Company's sales of physical metal.

Item 8. Financial Statements and Supplementary Data

Financial statements and supplementary data follow immediately and are listed in Item 15 of Part IV of this report.

42

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Report of Independent Registered Public Accounting Firm

The
Board of Directors
The Doe Run Resources Corporation:

We
have audited the accompanying consolidated balance sheets of The Doe Run Resources Corporation and subsidiaries (the Company) as of October 31, 2003 and 2002, and the related consolidated
statements of operations, comprehensive losses and shareholder's deficit, and cash flows for each of the years in the three-year period ended October 31, 2003. These consolidated
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Doe Run Resources Corporation and subsidiaries as of
October 31, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended October 31, 2003 in conformity with
U.S. generally accepted accounting principles.

The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial
statements, the Company has suffered recurring net losses, has a net capital deficiency, and has liquidity concerns that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard
to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As
discussed in Notes 1 and 20 to the consolidated financial statements, the Company adopted the provisions of SFAS No. 143,Accounting for Asset Retirement
Obligations, as of November 1, 2002.

/s/
KPMG LLP

February 2,
2004, except as to Note 22,
    which is as of May 7, 2004

43

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THE DOE RUN RESOURCES CORPORATION        Consolidated Balance Sheets        (Dollars in thousands, except per share amounts)

|                                                                                                                                               |                                                                                                                                   | October 31,
2003                            |         | October 31,
2002 |         
|---------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ------- | ---------------- | --------
|ASSETS                                                                                                                                         |                                                                                                                                   |                                             |         |                  |         
|Current assets:                                                                                                                                |                                                                                                                                   |                                             |         |                  |         
|                                                                                                                                               | Cash                                                                                                                              |                                             | $       | 16,794           |         
|                                                                                                                                               | Trade accounts receivable, net of allowance for doubtful accounts of $1,479 and $1,160 at October 31, 2003 and 2002, respectively |                                             |         | 56,659           |         
|                                                                                                                                               | Inventories                                                                                                                       |                                             |         | 95,680           |         
|                                                                                                                                               | Prepaid expenses and other current assets                                                                                         |                                             |         | 21,531           |         
|                                                                                                                                               |                                                                                                                                   |                                             |         |                  |         
|                                                                                                                                               |                                                                                                                                   | Total current assets                        |         |                  | 190,664 
|Property, plant and equipment, net                                                                                                             |                                                                                                                                   |                                             | 230,367 |                  |         
|Other noncurrent assets, net                                                                                                                   |                                                                                                                                   |                                             | 5,496   |                  |         
|                                                                                                                                               |                                                                                                                                   |                                             |         |                  |         
|                                                                                                                                               |                                                                                                                                   | Total assets                                |         | $                | 426,527 
|                                                                                                                                               |                                                                                                                                   |                                             |         |                  |         
|LIABILITIES AND SHAREHOLDER'S DEFICIT                                                                                                          |                                                                                                                                   |                                             |         |                  |         
|Current liabilities:                                                                                                                           |                                                                                                                                   |                                             |         |                  |         
|                                                                                                                                               | Short-term borrowings and current maturities of long-term debt                                                                    |                                             | $       | 78,117           |         
|                                                                                                                                               | Accounts payable                                                                                                                  |                                             |         | 48,392           |         
|                                                                                                                                               | Accrued liabilities                                                                                                               |                                             |         | 84,483           |         
|                                                                                                                                               |                                                                                                                                   |                                             |         |                  |         
|                                                                                                                                               |                                                                                                                                   | Total current liabilities                   |         |                  | 210,992 
|Long-term debt, less current maturities                                                                                                        |                                                                                                                                   |                                             | 330,579 |                  |         
|Other noncurrent liabilities                                                                                                                   |                                                                                                                                   |                                             | 71,508  |                  |         
|                                                                                                                                               |                                                                                                                                   |                                             |         |                  |         
|                                                                                                                                               |                                                                                                                                   | Total liabilities                           |         |                  | 613,079 
|Series A redeemable preferred stock, $1,000 par value, 5,000 authorized, 2,000 shares issued and outstanding; liquidation and redemption value |                                                                                                                                   |                                             | 22,514  |                  |         
|Shareholder's deficit:                                                                                                                         |                                                                                                                                   |                                             |         |                  |         
|                                                                                                                                               | Common stock, $.10 par value, 1,667 shares authorized, 1,000 shares issued and outstanding                                        |                                             |         |                 |         
|                                                                                                                                               | Additional paid-in capital                                                                                                        |                                             |         | 2,724            |         
|                                                                                                                                               | Accumulated deficit                                                                                                               |                                             |         | (173,523         | )       
|                                                                                                                                               | Accumulated other comprehensive losses                                                                                            |                                             |         | (38,267          | )       
|                                                                                                                                               |                                                                                                                                   |                                             |         |                  |         
|                                                                                                                                               |                                                                                                                                   | Total shareholder's deficit                 |         |                  | (209,066
|                                                                                                                                               |                                                                                                                                   |                                             |         |                  |         
|                                                                                                                                               |                                                                                                                                   | Total liabilities and shareholder's deficit |         | $                | 426,527 
|                                                                                                                                               |                                                                                                                                   |                                             |         |                  |         

The
accompanying notes are an integral part of these consolidated financial statements.

44

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THE DOE RUN RESOURCES CORPORATION        Consolidated Statements of Operations        (Dollars in thousands)

|                        |                                                                                | Year Ended October 31,                                                                 |        
|----------------------- | ------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------- | -------
|
|Net sales               |                                                                                | $                                                                                      | 684,615
|Costs and expenses:     |                                                                                |                                                                                        |        
|                        | Cost of sales                                                                  |                                                                                        |        
|                        | Depreciation, depletion and amortization                                       |                                                                                        |        
|                        | Selling, general and administrative                                            |                                                                                        |        
|                        | Exploration                                                                    |                                                                                        |        
|                        | Losses from impairment and disposal of long-lived assets                       |                                                                                        |        
|                        | Unrealized (gain)/loss on derivative financial instruments                     |                                                                                        |        
|                        |                                                                                |                                                                                        |        
|                        |                                                                                | Total costs and expenses                                                               |        
|                        |                                                                                |                                                                                        |        
|                        |                                                                                | Income (loss) from operations                                                          |        
|Other income (expense): |                                                                                |                                                                                        |        
|                        | Interest expense                                                               |                                                                                        |        
|                        | Interest income                                                                |                                                                                        |        
|                        | Loss on retirement/restructure of long-term debt                               |                                                                                        |        
|                        | Other, net                                                                     |                                                                                        |        
|                        |                                                                                |                                                                                        |        
|                        |                                                                                |                                                                                        | (14,290
|                        |                                                                                |                                                                                        |        
|                        |                                                                                | Loss before income tax expense and cumulative effect of change in accounting principle |        
|Income tax expense      |                                                                                |                                                                                        |       
|                        |                                                                                |                                                                                        |        
|                        | Loss before cumulative effect of change in accounting principle                |                                                                                        |        
|                        | Cumulative effect of change in accounting principle, net of income tax benefit |                                                                                        |        
|                        |                                                                                |                                                                                        |        
|                        |                                                                                | Net loss                                                                               |        
|                        |                                                                                | Cumulative preferred stock dividends                                                   |        
|                        |                                                                                |                                                                                        |        
|                        |                                                                                | Net loss allocable to common shares                                                    |        
|                        |                                                                                |                                                                                        |        

The
accompanying notes are an integral part of these consolidated financial statements.

45

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THE DOE RUN RESOURCES CORPORATION        Consolidated Statements of Comprehensive Losses and Shareholder's Deficit        (Dollars in thousands)

|                                                                |                                                                          | Year Ended October 31, |         
|--------------------------------------------------------------- | ------------------------------------------------------------------------ | ---------------------- | --------
|
|Net loss                                                        |                                                                          | $                      | (44,898 
|Unrealized gain (loss) on derivative financial instruments:     |                                                                          |                        |         
|                                                                | Unrealized gain (loss) on derivative financial instruments during period |                        |         
|                                                                | Less: reclassification adjustment for amounts included in net loss       |                        |         
|                                                                |                                                                          |                        |         
|Unrealized gain (loss) on derivative financial instruments, net |                                                                          |                        | (1,854  
|Unrealized gain (loss) on available-for-sale investments        |                                                                          |                        | 242     
|Minimum pension liability                                       |                                                                          |                        | (12,871 
|                                                                |                                                                          |                        |         
|                                                                | Comprehensive loss                                                       |                        |         
|                                                                | Preferred stock dividends                                                |                        |         
|                                                                |                                                                          |                        |         
|Change in shareholder's deficit                                 |                                                                          |                        | (61,895 
|Shareholder's deficit beginning of year                         |                                                                          |                        | (147,171
|                                                                |                                                                          |                        |         
|Shareholder's deficit, end of year                              |                                                                          | $                      | (209,066
|                                                                |                                                                          |                        |         

The
accompanying notes are an integral part of these consolidated financial statements.

46

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THE DOE RUN RESOURCES CORPORATION        Consolidated Statements of Cash Flows        (Dollars in thousands)

|                                                  |                                                                                 | Year Ended October 31,                                        |                                             
|------------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------------------------------------------- | --------------------------------------------
|
|Cash flows from operating activities:             |                                                                                 |                                                               |                                             
|                                                  | Net loss                                                                        |                                                               | $                                           
|                                                  | Cumulative effect of change in accounting principle                             |                                                               |                                             
|                                                  | Adjustments to reconcile net loss to net cash provided by operating activities: |                                                               |                                             
|                                                  |                                                                                 | Depreciation, depletion and amortization                      |                                             
|                                                  |                                                                                 | Imputed interest and amortization of deferred financing costs |                                             
|                                                  |                                                                                 | Unrealized (gain)/loss on derivative financial instruments    |                                             
|                                                  |                                                                                 | Losses from impairment and disposal of long-lived assets      |                                             
|                                                  |                                                                                 | Deferred income taxes                                         |                                             
|                                                  |                                                                                 | Accrued interest refinanced in debt restructuring             |                                             
|                                                  |                                                                                 | Loss on retirement/restructure of long term debt              |                                             
|                                                  |                                                                                 | Increase (decrease) resulting from changes in:                |                                             
|                                                  |                                                                                 |                                                               | Trade accounts receivable                   
|                                                  |                                                                                 |                                                               | Inventories                                 
|                                                  |                                                                                 |                                                               | Prepaid expenses and other current assets   
|                                                  |                                                                                 |                                                               | Accounts payable                            
|                                                  |                                                                                 |                                                               | Accrued liabilities                         
|                                                  |                                                                                 |                                                               | Other noncurrent assets and liabilities, net
|                                                  |                                                                                 |                                                               |                                             
|                                                  |                                                                                 |                                                               |                                             
|Cash flows from investing activities:             |                                                                                 |                                                               |                                             
|                                                  | Special term deposit                                                            |                                                               |                                             
|                                                  | Purchases of property, plant and equipment                                      |                                                               |                                             
|                                                  | Net proceeds from (expenses of) disposal of assets                              |                                                               |                                             
|                                                  |                                                                                 |                                                               |                                             
|                                                  |                                                                                 |                                                               |                                             
|Cash flows from financing activities:             |                                                                                 |                                                               |                                             
|                                                  | Proceeds from (repayments on) revolving loans and short term borrowings, net    |                                                               |                                             
|                                                  | Proceeds from long-term debt                                                    |                                                               |                                             
|                                                  | Payments on long-term debt                                                      |                                                               |                                             
|                                                  | Issuance of preferred stock                                                     |                                                               |                                             
|                                                  | Payment of financing costs                                                      |                                                               |                                             
|                                                  |                                                                                 |                                                               |                                             
|                                                  |                                                                                 |                                                               |                                             
|                                                  |                                                                                 |                                                               |                                             
|                                                  |                                                                                 |                                                               |                                             
|Cash at beginning of period                       |                                                                                 |                                                               | 7,018                                       
|                                                  |                                                                                 |                                                               |                                             
|Cash at end of period                             |                                                                                 | $                                                             | 16,794                                      
|                                                  |                                                                                 |                                                               |                                             
|Supplemental disclosure of cash flow information |                                                                                 |                                                               |                                             
|                                                  | Cash paid during the period for:                                                |                                                               |                                             
|                                                  |                                                                                 |                                                               | Interest, net of capitalized interest       
|                                                  |                                                                                 |                                                               |                                             
|                                                  |                                                                                 |                                                               | Income taxes                                
|                                                  |                                                                                 |                                                               |                                             

The
accompanying notes are an integral part of these consolidated financial statements.

47

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THE DOE RUN RESOURCES CORPORATION        Notes to Consolidated Financial Statements  October 31, 2003, 2002 and 2001  (Dollars in thousands)

(1) Summary of Significant Accounting Policies



These consolidated financial statements include the accounts of The Doe Run Resources Corporation (Doe Run) and its wholly owned subsidiaries (on a consolidated
basis, the Company). All material intercompany balances and transactions have been eliminated.



Certain balances have been reclassified from their previous presentation in order to conform to the current year presentation.



The principal domestic business of the Company is the exploration, development, mining and processing of non-ferrous metals, primarily lead, and
recycling of lead-acid batteries and other lead-bearing materials. Doe Run has mines in southern Missouri, primary smelters in Herculaneum and Glover, Missouri, and a recycling
facility in Boss, Missouri. Fabricated Products, Inc. (FPI), a subsidiary, fabricates lead products used in radiation, X-ray shielding and nuclear shielding; and is a leader in the
production of shaped anodes and anode sheets for those applications. In Peru, Doe Run Peru S.R.L (Doe Run Peru) is engaged in the mining, smelting and refining of polymetallic concentrates, producing
mainly copper, lead, zinc, silver and gold which are sold as refined metals primarily to customers located outside of Peru. Doe Run's issued and outstanding common stock is owned by a subsidiary of
The Renco Group, Inc. (Renco).



The functional currency of the Company's foreign subsidiaries is the U.S. Dollar. Accordingly, foreign currency transaction gains and losses are included in
determining net income (loss).



The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.



Finished metals and concentrates, metals and concentrates in process and raw materials are stated at the lower of cost or market. The last-in,
first-out (LIFO) method of
determining cost is used for the majority of the Company's inventories. Supplies and repair parts are principally stated at average cost, net of reserves for obsolescence.

Inventory
costs include labor, material and other production costs.

48

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Property, plant and equipment are recorded at cost. In accordance with Statement of Financial Accounting Standards Statement No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets," (Statement No. 144) long-lived assets, such as
property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.

Recoverability
of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value
of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer
depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

Major
additions and improvements to property, plant and equipment are capitalized, at cost, when they significantly increase the productive capacity or the life of the asset. Repair and
maintenance expenditures which are routine, unanticipated, or for which the timing cannot be estimated, and which do not extend the useful life or increase the productive capacity of the asset, are
charged to operations as incurred. Major expenditures required to maintain the originally anticipated productive capacity and life of the asset (such as furnace rebuilds), for which both the amount
and timing can be reasonably estimated, are accrued and charged to operations over the period through the next anticipated maintenance date.

Costs
to treat environmental contamination are capitalized when they extend the life, increase the capacity, or improve the safety or efficiency of the property; when they mitigate or
prevent future environmental contamination or when they are incurred in preparing property for sale.

Mineral
interests are amortized using the units of production method.

Depreciation
is computed using the straight-line method over the estimated useful lives of the assets, as follows:

Buildings and improvements

3 to 20 yearsMachinery and equipment

2 to 15 years


Facilities
at which operations have temporarily ceased may be placed on a standby care and maintenance basis. The Company continues to depreciate the related assets during the standby
period.



Exploration costs and development costs incurred to maintain production at operating mines are charged to operations as incurred. Development expenditures for
mining properties that are considered to be commercially feasible, but are not yet producing, and major development expenditures at

49

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operating
mines that are expected to benefit future production are capitalized and amortized using the units of production method over the estimated proven ore reserves to be benefited.



The Company's mines and related processing facilities are subject to governance by various agencies that have established minimum standards for reclamation.

As
of November 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 143,Accounting for Asset Retirement
Obligations(Statement No. 143), which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition,
construction, development and (or) normal use of the asset.

Prior
to the adoption of Statement No. 143 the Company accrued for mine and other closure obligations at their estimated, undiscounted cost. Statement No. 143 requires that
the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability
is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through
charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement.

The
cumulative effect related to the adoption of Statement No. 143 was a loss of $3,940, a net decrease to plant, property and equipment of $2,088, and an increase of $1,852 to
the liability for asset retirement obligations.



The Company accrues for loss contingencies, including costs associated with environmental remediation obligations, when it is probable that a liability has been
incurred and can be reasonably estimated. Liability estimates for environmental remediation obligations are based on an evaluation of, among other factors, currently available facts, existing
technology, presently enacted laws and regulations, the Company's experience in remediation, the Company's status as a potentially responsible party (PRP), and the ability of other PRPs to pay their
allocated portions. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of costs from other parties are recorded as assets when
their receipt is deemed probable, as is consistent with the American Institute of Certified Public Accountants Statement of Position 96-1,Environmental Remediation
Liabilities.



Sales are recorded as products are shipped to customers and title transfers or as tolling services are performed. Concentrate and certain smelter product sales
are recorded based upon estimated weights and metal contents and metal prices in effect at time of shipment. Revenues are adjusted

50

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between
month of shipment and month of settlement based on changes in market prices. Adjustments with respect to such sales are recorded based on final settlement weights, metal contents and metal
prices using applicable customer agreements.



Statement of Financial Accounting Standards No. 133,Accounting for Derivative Instruments and Hedging
Activities, was issued by the Financial Accounting Standards Board in June 1998, and amended by Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133, issued in June 2000
(collectively, Statement No. 133). Under Statement No. 133, the Company carries all derivative instruments in the balance sheet at fair value. The accounting for changes in the fair
value (that is, gains and losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, and if so, whether the derivative instrument is
designated as a hedge of exposures to changes in fair value or cash flows. If the hedged exposure is an exposure to changes in the fair value of a fixed commitment, the gain (loss) is recognized in
earnings in the period of change, with an equal and offsetting (loss) gain recognized on the change in value of the hedged item. If the hedged exposure is an exposure to changes in forecasted cash
flows, the effective portion of the gain (loss) is reported as a component of other comprehensive income (outside earnings) until the forecasted hedged transaction affects earnings, when it is
reclassified into earnings.

The
Company adopted Statement No. 133 as of November 1, 2000, in the first quarter in which it was required by the standard, as amended. The adoption of Statement
No. 133 resulted in a net transition loss of $3,774, net of income tax benefit of $480, and a gain recorded in other comprehensive income of $70.



Research and development costs are expensed when incurred and are included in selling, general and administrative expenses on the statements of operations.
Research and development costs are not significant.



Renco has elected for the Company to be treated as a qualified subchapter S subsidiary (QSSS) for federal tax purposes. Most states in which the Company operates
will follow similar tax treatment. QSSS status requires the ultimate shareholders to include their pro rata share of the Company's income or loss in their individual tax returns. The election does not
affect foreign income taxes related to the Company's foreign subsidiaries.

Deferred
tax assets and liabilities are recognized in foreign jurisdictions for the future tax consequences attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and the respective tax bases of these assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled.

51

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(2) Financial Condition

The Company has had recurring losses over several years, primarily the result of the declining treatment charges discussed below and low metal prices, a condition
exacerbated by the Company's significant interest costs prior to the restructuring discussed in Note 3. Doe Run's liquidity has been affected by these factors, as well as Doe Run Peru's
liquidity. As noted in Note 9, the Company failed to meet certain financial covenant requirements contained in its revolving credit agreements and a term note (the Term Note) during fiscal
2003, which defaults continued into fiscal 2004. As discussed in Notes 20 and 21, the Company has uncertainties related to environmental and litigation matters. These issues combined raise substantial
doubt about the Company's ability to continue as a going concern.

Doe
Run Peru's results of operations and liquidity have been severely impacted by declining treatment charges that Doe Run Peru receives for processing raw materials resulting from a
shortage in the global supply of concentrates. The effects of low metals prices for the past several years have also caused some of Doe Run Peru's current suppliers of concentrates to suffer financial
distress, which has affected the availability of concentrate feed. During 2003, deliveries of lead and zinc concentrates to La Oroya from a major Peruvian supplier were below contracted amounts. While
Doe Run Peru was able to replace a portion of this shortfall with concentrates from other suppliers, total concentrate receipts were less than expected and the resulting changes in concentrate mix and
interruptions in delivery schedules adversely affected Doe Run Peru's metal production and results of operations. If one or more of Doe Run Peru's significant local suppliers were to cease delivery of
concentrates, there could be no assurance La Oroya would be able to secure sufficient replacement feedstock at economically acceptable terms. If such shortages resulted in a significant interruption
in feed supply, a material reduction in the production of metals from La Oroya or an interruption of production in the lead and zinc circuits could result, which could have a significant adverse
effect on the Company's results of operations, financial condition and liquidity.

As
discussed in Note 20 (see terms defined therein), Doe Run Peru is proceeding with efforts to identify alternative methods of achieving compliance with environmental
requirements. These efforts include, but are not limited to, reducing or curtailing production from a portion of the plant thus eliminating the need for the equipment presently contemplated and
replacing it with another alternative. These efforts must take into consideration the impacts on profitability and liquidity, as well as other economic impacts. Doe Run Peru intends to submit a
request in 2004 to modify its existing requirements. There can be no assurance that the alternatives will be approved by the Peruvian government or that they will achieve compliance in the timeframe
required. If the La Oroya smelter does not operate within the required limits after December 31, 2006, Doe Run Peru could be forced to cease operations at the La Oroya smelter.

Doe
Run Peru has implemented cost savings, including a reduction of approximately 10% of its workforce, acceleration of cash receipts, as well as other measures, to improve its
liquidity. In addition, the retirement of Doe Run Peru's loan from a foreign bank, discussed in Note 9, reduced Doe Run Peru's interest payments by approximately $14,000 per year. These changes
improved Doe Run Peru's cash flow and availability in 2003. The cash balance and net unused availability under Doe Run Peru's revolving credit facility were approximately $16,800 and $3,800 at
October 31, 2003, respectively.

Doe
Run Peru's ability to pay fees to Doe Run is currently limited by Doe Run Peru's revolving credit facility to $2,800 through September 2004, unless Doe Run Peru meets an
excess cash flow test.

52

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As
a result of Doe Run Peru's unfavorable results of operations and limited availability, only $1,394 was paid to Doe Run during 2003. In addition, beginning in 2003, Doe Run will not receive
approximately $14,000 per year in interest income from a deposit that was surrendered to retire Doe Run Peru's loan from a foreign bank. The deposit, plus unpaid interest, was replaced in
September 2002 by an intercompany note that does not bear interest during the term of Doe Run Peru's revolving credit facility. These factors along with five years of low metals prices have
affected Doe Run's liquidity.

Doe
Run has implemented cost savings measures over the last several years to mitigate the impact of lower metal prices, including: reductions of production levels, changes in mine plans
and the elimination of hourly and salaried positions. These efforts succeeded in reducing Doe Run's costs over the last several years. Management will continue to assess market and operating
conditions to maximize its operating profit or limit losses, while allowing Doe Run to fulfill its environmental obligations. Metal prices began rising in the latter part of the fourth quarter of
2003. See discussion in Note 22 regarding recent changes in market conditions and primary smelting operations.

Doe
Run and Doe Run Peru were in the process of negotiating amendments to agreements governing the revolving credit facilities and the Term Note at October 31, 2003, and
amendments to the revolving credit facilities were finalized subsequent to October 31, 2003. See Note 22 for discussion.

Based
on the factors discussed above, management expects that both Doe Run and Doe Run Peru will continue as going concerns through October 31, 2004.

53

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(3) Debt Restructuring

On October 29, 2002, Doe Run consummated a consensual restructuring of most of its previously outstanding notes by exchanging notes with a principal amount
of $294,840, plus unpaid accrued interest of $37,473, for stock warrants (Warrants) exercisable for an aggregate of approximately 39% of the fully diluted common stock of Doe Run and new notes with a
principal amount of $175,832 (the 11.75% Notes). In connection with the completion of the exchange offer, Doe Run borrowed $15,500 under the Term Note and received $20,000 from the sale of redeemable
preferred stock to Renco, and used the proceeds from these transactions to pay down the balance on a revolving credit facility, pay certain fees related to the transaction and pay interest due and
unpaid, plus penalties, on the outstanding notes that were not exchanged.

The
restructuring was accounted for in accordance with Statement of Financial Accounting Standards No. 15,Accounting by Debtors and Creditors for Troubled
Debt Restructurings(Statement No. 15). Under Statement No. 15, a debtor may not change the carrying amount of the payable at the time of restructuring unless the
total future cash payments, including interest, specified by the new terms are less than the carrying amount of the payable at the time of restructuring. Under the terms of the 11.75% Notes, total
expected payments, including all amounts contingently payable, will be greater than the carrying amount of the notes exchanged. In accordance with Statement No. 15 the 11.75% Notes are recorded
on the balance sheet at a carrying amount equal to the carrying amount of the notes exchanged, including unpaid accrued interest, reduced by deferred issue costs related to the notes exchanged and the
fair value of the warrants issued. Therefore, the related carrying amounts on balance sheet exceeded the outstanding face amount due on these obligations on the date of the restructuring as follows:

Face Amount

Amount Recorded
Under Statement No. 1511.75% Notes at October 29, 2002

$
175,832

$
325,592


The effect of this accounting treatment is that substantially less interest expense will be recognized related to the 11.75% Notes during their term, because the
majority of the interest payments are reflected in the carrying amount of the 11.75% Notes. In addition, Statement No. 15 requires that all costs of restructuring be expensed when incurred.
Because contingent amounts payable are assumed payable in the application of Statement No. 15, a gain may result in future periods if contingent amounts payable are not paid. See Note 9
for discussion of contingent amounts payable under various debt agreements.

In
conjunction with the restructuring, the Company recognized a loss of $550 and $7,439 in the years ended October 31, 2003 and 2002, respectively, representing the costs of
restructuring.

(4) Related Party Transactions

Doe Run has entered into a management consulting agreement with Renco. Under the agreement, Renco will provide Doe Run with management services for an annual fee.
The agreement is automatically renewed every three years, unless either party gives six months prior notice, with the current term ending October 31, 2006. Fees expensed under this agreement
were $2,400 in each of the years ended October 31, 2003, 2002, and 2001. Fees outstanding and unpaid were $6,400 and $4,000 at

54

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October 31,
2003 and 2002, respectively. The indenture for the 11.75% Notes limits the payment of fees to $1,200 per year unless defined earnings before interest, taxes, depreciation and
amortization for the Company, less that for Doe Run Peru exceeds $35,000, in which case an additional $1,200 is allowed.

On
October 29, 2002 Doe Run issued 2,000 shares of Series A Redeemable Preferred Stock to Renco for $20,000. See Note 11.

On
October 29, 2002, Renco signed a Junior Participation Agreement with the lender of Doe Run's revolving credit facility (Doe Run Revolving Credit Facility) to provide credit
support for supplemental loans to Doe Run. The agreement requires Renco to participate with the lenders in supplemental loans in an amount up to $15,000 when availability is less than $2,500 for five
consecutive days and the Doe Run Revolving Credit Facility lenders have received cash from Renco in the amount of the supplemental loans. As of October 31, 2003 and October 31, 2002 no
supplemental loans had been made.

On
October 29, 2002, Doe Run and Renco signed a tax sharing agreement, see discussion in Note 14.

At
times, to obtain the advantages of volume, Renco purchased certain insurance policies for a number of its subsidiaries, including the Company. The actual cost of such policies,
without markup, is reimbursed by the covered subsidiaries. For the years ended October 31, 2003, 2002 and 2001, the Company made payments to Renco of approximately $23, $299 and $1,822,
respectively, under the Renco insurance program.

During
2003, Renco purchased the Term Note. See further discussion in Note 9.

(5) Inventories

Inventories consist of the following:

October 31,2003

2002Finished metals and concentrates

$
12,466

$
14,660Metals and concentrates in process


56,399


59,814Materials, supplies and repair parts


26,815


28,872$
95,680

$
103,346


Materials,
supplies and repair parts are stated net of reserves for obsolescence of $5,220 and $5,157 at October 31, 2003 and 2002, respectively.

The
FIFO cost of inventories valued under the LIFO cost method were approximately $77,534 and $71,326 at October 31, 2003 and 2002, respectively. If the FIFO cost method had been
used to determine cost, inventories would have been $8,830 higher at October 31, 2003 and $4,989 lower at October 31, 2002.

55

---



As
a result of reducing certain inventory quantities valued on the LIFO basis, inventory costs prevailing in previous years were charged to cost of sales in 2003, 2002 and 2001. The
Company calculates the effect of LIFO liquidations on results of operations based on the current cost method. The effects of these liquidations on the results of operations in the years ended
October 31, 2003, 2002 and 2001 were not significant.

(6) Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following:

October 31,2003

2002Land

$
12,516

$
12,421Buildings and improvements


86,689


75,460Machinery and equipment


287,241


282,856Mineral interests


31,313


31,313Construction in progress


27,183


33,872444,942


435,922Less accumulated depreciation and depletion


214,575


186,255Property, plant and equipment, net

$
230,367

$
249,667


Depreciation
and depletion expense are as follows:

Year Ended October 31,2003

2002

2001Depreciation

$
28,285

$
28,739

$
28,350Depletion

$
2,122

$
2,102

$
2,055


The
net book value of the Company's mineral interests was $12,456 and $14,577 at October 31, 2003 and 2002, respectively.

The
implementation of Statement No. 143 resulted in a decrease to the cost of plant, property and equipment of $3,137, and a decrease to accumulated depreciation of $1,049 as of
November 1, 2002. Changes to the estimates of expected cash flows related to asset retirement obligations resulted in an additional decrease to plant, property and equipment of $691 as of
October 31, 2003. See additional disclosures related to Statement No. 143 in Note 20.

Losses
from impairment or retirement of long-lived assets for the year ended October 31, 2003 includes an impairment loss of $1,255 relating to residential properties
purchased under a residential property purchase plan in the town of Herculaneum, where one of the Company's primary smelters is located, for which approval to rent is pending from regulatory agencies.
See further discussion of the residential property purchase plan in Note 20. Losses from impairment or retirement of long-lived assets for the year ended October 31, 2002
includes an impairment loss of $7,849 related to the Cobriza backfill plant project. This project represents an engineering plant that was designed to enable

56

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the
Company to put tailings produced from the mining process back into the mine. In fiscal year 2002, due to the lack of success in identification of new ore reserves at its Cobriza mine, the decrease
in exploration activities as a result of the Company's financial condition, the outlook for continued low copper prices and higher costs than were originally anticipated to complete the project, the
Company made the decision to cease its construction on the project, determining that the asset will most likely never be completed. The impairment loss represents the total cost of the asset of
$8,450, less estimated salvage value of $601. Also in fiscal 2002, the Company also recognized a loss of $784 related to a blast furnace that it dismantled in fiscal 2003 at one of its primary
division smelters and a loss of $1,801 was recognized related to the residential property purchase plan.

Rental
expense applicable to minimum rentals under operating leases was $7,725, $8,766, and $9,206 for the years ended October 31, 2003, 2002, and 2001, respectively. Contingent
rental payments, based primarily on equipment usage, were $666, $353, and $520 for the years ended October 31, 2003, 2002, and 2001, respectively.

The
Company's operating leases relate primarily to operating equipment, office facilities and office equipment. The minimum rental commitments under noncancellable leases, with terms in
excess of one year are as follows:

Fiscal year ending October 31:2004

$
4,6472005


3,1472006


2,0822007


1,7412008


1,278Thereafter


8,313$
21,208


57

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(7) Valuation and Qualifying Accounts

|                                     |                                         | Year ended October 31, |  
|------------------------------------ | --------------------------------------- | ---------------------- | -
|
|Allowance for doubtful accounts      |                                         |                        |  
|                                     | Balance at beginning of year            |                        | $
|                                     | Amounts charged to costs and expenses   |                        |  
|                                     | Deductionswrite-offs against allowance |                        |  
|                                     |                                         |                        |  
|                                     | Balance at end of year                  |                        | $
|                                     |                                         |                        |  
|Allowance for inventory obsolescence |                                         |                        |  
|                                     | Balance at beginning of year            |                        | $
|                                     | Amounts charged to costs and expenses   |                        |  
|                                     | Deductionswrite-offs against allowance |                        |  
|                                     |                                         |                        |  
|                                     | Balance at end of year                  |                        | $
|                                     |                                         |                        |  
|Accrual for major maintenance:       |                                         |                        |  
|                                     | Balance at beginning of year            |                        | $
|                                     | Amounts charged to costs and expenses   |                        |  
|                                     | Deductionswrite-offs against allowance |                        |  
|                                     |                                         |                        |  
|                                     | Balance at end of year                  |                        | $
|                                     |                                         |                        |  

58

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(8) Accrued Liabilities

Accrued liabilities consist of the following:

October 31,2003

2002Payroll, related taxes and employee benefits

$
21,877

$
19,302Accrued pension benefit liability (see Note 15)


15,232


20Fair value of derivatives


11,004


1,372Reclamation and environmental (see Note 20)


5,321


5,386Other


31,049


28,988$
84,483

$
55,068


(9) Debt

Long-term debt consists of the following:

October 31,2003

2002Revolving credit facilities

$
59,126

$
44,90211.75% secured notes due November 1, 2008 (face amount of $195,803 and $175,832 at October 31, 2003 and 2002, respectively)


324,958


325,61211.25% unsecured senior notes due March 15, 2005


5,750


5,750Floating interest rate unsecured senior notes due March 15, 2003, effective rate of 8.12% at October 31, 2002





2,66011.25% secured senior notes due March 15, 2005, less unamortized discount of $40 and $67 at October 31, 2003 and 2002, respectively


1,710


1,683Term note, due October 29, 2005


15,500


15,500Note payable, no stated interest rate, monthly payments of $9 through July 2004


93


142Sale and leaseback and capital lease obligations


1,559


5,969408,696


402,218Less current maturities


78,117


16,342Long-term debt, less current maturities

$
330,579

$
385,876


The
Company has available two revolving credit facilities. The first facility (the Doe Run Revolving Credit Facility) allows Doe Run and certain U.S. subsidiaries to borrow up to $75,000
and expires October 29, 2005. The availability of loans under the Doe Run Revolving Credit Facility is limited to a percentage of eligible U.S. accounts receivable and inventories, less any
outstanding loans and letters of credit. The Doe Run Revolving Credit Facility bears interest at the prime rate plus 1% per annum for an effective rate of 5.00% at October 31, 2003, and
requires an unused line fee equal to .25% on the amount by which the maximum credit of $75,000 exceeds the average daily balance of outstanding loans

59

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and
letters of credit. All cash received by Doe Run's domestic operations is transferred by wire daily to the financial institutions to pay down the outstanding loan balance, if any. Revolving loans
outstanding under this facility were $23,126 and $8,202 at October 31, 2003 and 2002, respectively. Actual availability was $14,373 at October 31, 2003. Because the agreement requires a
lockbox for cash receipts and contains a subjective acceleration clause, loans under this agreement are classified as current in the balance sheet.

Effective
March 27, 2003, Doe Run entered into an amendment to the loan agreement governing the Doe Run Revolving Credit Facility which reduced the consolidated net worth
measurement that the Company is required to maintain and waived certain events of default. Pursuant to the amendment the lenders waived events of default at that time resulting from the failure of Doe
Run to maintain financial covenants and waived the event of default resulting from the failure of Doe Run to deliver timely financial reports.

The
second facility (the Doe Run Peru Revolving Credit Facility) allows Doe Run Peru to borrow up to $40,000 and expires September 23, 2005. The Doe Run Peru Revolving Credit
Facility provides for working capital loans up to $40,000, with a limit on letters of credit of $5,000, but the total commitments may not exceed the maximum line of $40,000. The Doe Run Peru Revolving
Credit Facility bears interest at LIBOR (1-month, 3-month or 6-month rate, depending on the term of the loan) plus 3.5% per annum. The effective rate was 4.89% at
October 31, 2003. An unused line fee of .375% per annum on the average unused portion of the line is payable quarterly, in arrears. Availability of loans under the Doe Run Peru Revolving Credit
Facility is limited to a percentage of Doe Run Peru's eligible accounts receivable and inventories, less any outstanding loans and letters of credit. Revolving loans outstanding under this facility
were $36,000 and $36,700 at October 31, 2003 and 2002, respectively. Actual availability was $3,830 at October 31, 2003.

The
11.25% unsecured senior notes (the Unsecured Notes) and 11.25% senior secured notes (the Secured Notes) are guaranteed by certain subsidiaries of the Company. Interest on the Secured
and Unsecured notes is payable semi-annually in arrears on March 15 and September 15.

In
accordance with Statement No. 15 the Company has recorded the 11.75% Notes on its balance sheet at a carrying amount equal to the carrying amount of the notes exchanged,
including unpaid accrued interest, reduced by deferred issue costs related to the notes exchanged and the fair value of the warrants issued. The face amount of the 11.75% Notes, plus accrued interest
since issuance, was $196,986 at October 31, 2003. Interest on the 11.75% Notes is paid semi-annually in arrears on April 15 and October 15, except that on each payment
date occurring on or prior to October 15, 2005, Doe Run, at its option, may pay interest by either a) a cash payment of accrued interest at an annual rate of 3% and issuance of
additional notes with a principal amount equal to interest accrued since the last payment date at a rate of 11.5% or b) a cash payment of accrued interest at an annual rate of 8.5%. During
2003, interest was paid at the 3% rate, and additional notes totaling $19,971 were issued. Doe Run may redeem the notes prior to maturity at a premium dependent on the date of redemption. Renco has
the right, at any time, to purchase all or part of the then outstanding notes at a price equal to the price (including accrued interest) that Doe Run would have to pay to redeem such notes at that
time. The 11.75% Notes are guaranteed by certain subsidiaries of Doe Run.

60

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The
Term Note was incurred in connection with the restructuring discussed in Note 3, pursuant to a credit facility (Senior Credit Facility). The Senior Credit Facility allows for
loans and letters of credit up to $35,500, as agreed to by Doe Run and the lender. Interest is paid monthly at the rate of 11.25% per annum, plus contingent interest based on the date of repayment of
the loan as follows: $1,500 if paid between October 30, 2003 and October 29, 2004, inclusive or $3,000 if paid on any date thereafter. The contingent interest is due on the earlier of
the repayment date of the loan or April 29, 2005. Interest is accrued ratably over the life of the Term Note assuming the maximum amount of contingent interest will be paid. In addition, an
annual anniversary fee of $75 is payable on each anniversary prior to the maturity date and at maturity. The loan matures on October 29, 2005, but requires prepayments based on an annual cash
flow measurement after the annual financial statements are provided to the lender. No prepayment is required from the measurement for the year ended October 31, 2003. Effective March 21,
2003 Renco and the Term Note lenders entered into an Assignment and Acceptance Agreement whereby Renco purchased all of the rights of the agent and lenders under the Term Note. Accordingly, Renco
became the agent and lender under the Term Note with the identical rights to payment of interest, principal and fees and to the same collateral, as had the previous lenders. On March 27, 2003
Renco, in its capacity as agent and lender under the Term Note, waived existing and impending defaults, including, among other things, Doe Run's failure to provide the lender with certain reports and
Doe Run's failure to comply with financial covenants.

The
Company's sale and leaseback transactions have been accounted for as financing arrangements. The weighted average rate applicable to these transactions and capital leases is 11.86%.

In
2002, Doe Run tendered a deposit made in 1998 (the Special Term Deposit) in payment of a loan made to Doe Run Peru by a foreign bank, and, in return, Doe Run Peru delivered an
intercompany note to Doe Run in an equivalent amount, plus accrued and unpaid interest, for an aggregate balance of $139,063. This intercompany note will not bear interest during the term of the Doe
Run Peru
Revolving Credit Facility. Obligations under the intercompany note are subordinate to Doe Run Peru's obligations under its revolving credit facility.

The
aggregate estimated amounts of long-term debt maturing after October 31, 2003 are as follows:

Fiscal year ending October 31:2004

$
78,1172005


9,8562006


24,5182007


24,8512008


25,188Thereafter


246,166$
408,696


Substantially
all of the Company's U.S. assets and the accounts receivable and inventory of Doe Run Peru are pledged as collateral to secure the Company's debt obligations. The Company's
revolving credit facility for its U.S. operations is secured by substantially all of the accounts receivable and

61

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inventory
relating to the Company's U.S. operations. Doe Run Peru's revolving credit facility is secured by the accounts receivable and inventory of Doe Run Peru. The lender of the Term Note has a
second priority security interest in the accounts receivable and inventory pledged under the Company's revolving credit facility for its U.S. operations and a first priority security interest in the
remainder of the Company's assets of its U.S. operations, except for the assets that secure the Secured Notes. The 11.75% Notes have a second priority interest in substantially all of the assets
related to U.S. operations, except for accounts receivable and inventory pledged under the Doe Run Revolving Credit Facility.

The
Company's various debt agreements contain certain requirements with respect to net worth, working capital, earnings before interest, taxes, depreciation, depletion and amortization
(EBITDA), and debt to earnings ratios. These agreements also place limitations on capital expenditures, dividend payments and other outside borrowings. The Doe Run Peru Revolving Credit Facility
limits Doe Run Peru's ability to make distributions to Doe Run. See Note 22 for revised limits on distributions to Doe Run in the discussion of an amendment to this agreement.

Subsequent
to the waivers and amendments discussed above, certain financial and reporting covenant requirements contained in the revolving credit agreements and the Term Note were not
met and the defaults continued at October 31, 2003. The Company is in the process of negotiating amendments to these agreements, and while management believes it will be successful in doing so,
there can be no assurance that the Company will obtain waivers and amendments that will cure existing defaults. See discussion in Note 22 regarding an amendment of the Doe Run Revolving Credit
Facility and the Doe Run Peru Revolving Credit Facility. As a result of these defaults, the related loan balances under the Doe Run Peru Revolving Credit Facility and the Term Note are reflected in
current maturities of long-term debt at October 31, 2003. As discussed above, the Doe Run Revolving Credit Facility is classified as current in all periods presented.

(10) Redeemable Preferred Stock (per share data not in thousands)

The outstanding 2,000 shares of Series A Redeemable Preferred Stock (Redeemable Preferred Stock) were issued to Renco for $20,000 in conjunction with the
restructuring described in Note 3. The Redeemable Preferred Stock is redeemable only by the holder of the shares after May 1, 2009. The shares have a par value of $1,000 per share and a
liquidation and redemption value of $10,000 per share plus accrued and unpaid dividends of $2,514 at October 31, 2003. Dividends of 12.5% of the liquidation value per share per annum accrue and
are payable only in kind as long as obligations under the Senior Credit Facility or Warrants remain outstanding. Because the Company has an accumulated deficit, dividends have been recorded as a
reduction to additional paid-in capital.

The
Redeemable Preferred Stock's dividend rights and liquidation preference rank prior and in preference to the Company's common stock. The holder of the Redeemable Preferred Stock has
voting rights with respect to matters of mergers, issuance of debt or equity securities, stock transactions, and reorganization.

(11) Warrants

In conjunction with the restructuring described in Note 3, Warrants were issued to holders of the 11.75% Notes. The Warrants entitle warrant-holders to
purchase 644.7813 shares of common stock,

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representing
approximately 39% of the common stock outstanding on a diluted basis, at the initial exercise price of $5,997 per share beginning November 1, 2008 until October 29, 2012.
The Warrants may be converted into common stock whereby the holders will be entitled to receive a number of shares whose fair value is equal to the fair value of the shares the holder would receive in
exercise less the exercise value of the those shares. The Warrants may not be exercised or converted unless a majority of Warrant holders vote in favor of such, and then all Warrants must be exercised
or converted.

The
Warrants are also subject to a call and a put feature. Either Doe Run or Renco may, at any time, call all (but not less than all) of the Warrants and any outstanding shares of stock
issued upon exercise thereof at a price equal to the greater of $10 million or the appraised fair market value of the Warrants, provided that in the event that this call option is exercised by
Doe Run during the first forty eight months after the Warrants are issued, Doe Run will be required to, at the same time, redeem the 11.75% Notes at the applicable redemption prices. Doe Run will not
be able to call the Warrants without the prior or concurrent repayment in full of the Senior Credit Facility. Holders of the Warrants may, at any time beginning October 29, 2005, require Doe
Run to repurchase all (but not less than all) of the Warrants at a price equal to the appraised fair market value of the Warrants. If this option is exercised by the Warrant Holders, Doe Run may,
under certain circumstances, defer the payment of the purchase price to the Holders of the Warrants. Such a deferral of the purchase price would require interest to accrue on any unpaid amounts and,
upon the third anniversary of the exercise of the put option with such purchase price still unpaid, the holders of the Warrants will have the right to cause the Doe Run's stockholders to elect a
special director to serve on Doe Run's board of directors for the remainder of the period such purchase price remains unpaid.

The
fair value of the Warrants of $639 at October 31, 2003 and October 31, 2002 was reflected in other noncurrent liabilities. This amount reduced the carrying amount of
the notes exchanged in the restructuring. Changes in the fair market value of the Warrants will be recorded in the Company's results of operations.

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(12) Accumulated Other Comprehensive Losses

Accumulated other comprehensive losses consist of the following:

October 31,2003

2002Minimum pension liability (see Note 15)

$
36,386

$
23,515Unrealized loss on available-for-sale investments


27


269Unrealized loss on derivative financial instruments
(see Note 19)


1,854


Accumulated other comprehensive losses

$
38,267

$
23,784


(13) Fair Value of Financial Instruments

At October 31, 2003 and 2002, the fair values of the Company's financial instruments, except for long-term debt, were not materially different
from their carrying amounts. The fair value of the Company's long-term debt was approximately $256,662 and $248,433 at October 31, 2003 and 2002, respectively. The fair values of
the Company's long-term debt were based on the estimates of incremental borrowing rates for similar types of borrowing arrangements or dealer quotes.

(14) Income Taxes

Renco has elected for the Company to be treated as a qualified subchapter S subsidiary (QSSS). Most states in which the Company operates will follow similar tax
treatment. QSSS status requires the ultimate shareholders to include their pro rata share of the Company's income or loss in their individual tax returns. The election does not affect foreign income
taxes related to the Company's foreign subsidiaries.

Doe
Run is subject to a tax sharing agreement with Renco, effective October 29, 2002, as amended. Pursuant to the agreement, Doe Run is required to make quarterly payments based
on a pro forma federal and state income tax liability, assuming that the Company is not and never was a subsidiary of Renco (subject to certain limitations), and amounts reasonably determined by Renco
to cover tax liabilities of current or prior years not reflected in the Company's pro forma tax calculations. The pro forma income tax liabilities will assume that Doe Run became a C corporation under
the Internal Revenue Code of 1986 (the Code) on the day after the restructuring discussed in Note 3, and will include no income attributable to any cancellation of indebtedness prior to the
restructuring or any effect of such cancellation on the basis of the assets of the Company.

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.

As
a result of the Company's status as a QSSS, the Company was not subject to federal income taxation for the years ended October 31, 2003, 2002 and 2001, and recognized no state
or federal

64

---



income
tax expense during that period. For 2001, foreign income tax expense totaled $8,226, of which $555 was current tax expense and $7,671 was deferred tax expense. There was no foreign income tax
expense for the years ended October 31, 2003 and 2002, due to tax losses and an increase in the valuation allowance against deferred tax assets, as discussed below.

The
tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

October 31,2003

2002Deferred tax assets:Inventories

$
3,051

$
1,075Property, plant and equipment


6,206


13,655Accrued liabilities


2,207


1,877Tax loss carryforwards


33,652


29,277Other noncurrent assets and liabilities


1,454


3,36246,570


49,246Less valuation allowance


(40,007
)

(34,534
)Total deferred tax assets


6,563


14,712Deferred tax liabilities:Property, plant and equipment


(6,563
)

(14,712
)Total deferred tax liabilities


(6,563
)

(14,712
)Net deferred tax assets

$


$



The
deferred tax balances as of October 31, 2003 and 2002 relate solely to the Company's Peruvian subsidiaries. The deferred tax assets and liabilities related to property, plant
and equipment are principally due to differences in book and tax allocations of the excess of the fair value of the sum of assets acquired, less liabilities assumed over the purchase price paid and
accelerated depreciation methods used for tax purposes.

Net
operating loss carryforwards in Peru are available for use for four years beginning with the first year the Company has taxable income against which it can take a credit.

Management
believes that sufficient uncertainty exists regarding the realization of certain deferred tax assets such that a valuation allowance is required. The valuation allowance
increased $5,473, $4,375, and $4,256 in the years ended October 31, 2003, 2002, and 2001 respectively.

See
Note 22 for discussion of a tax assessment received by Doe Run Peru subsequent to October 31, 2003.

65

---



(15) Employee Benefits

Domestic Plans



The Company sponsors a noncontributory defined benefit plan for its U.S. employees. Benefits provided to salaried employees under the defined benefit plan are
based on final average compensation and years of service. Benefits provided to hourly employees are based on a flat rate and years of service. The Company has also adopted a supplemental defined
benefit plan, The Supplemental Employee Retirement Plan (SERP), effective November 1, 1996. The SERP provides benefits to those participants of the defined benefit plan whose benefits under the
plan are limited by Sections 401(a)(17) or 415 of the Internal Revenue Code. Benefits under the SERP represent the amount by which the benefits under the defined benefit plan, if such benefits were
not limited, exceed those benefits the participants are entitled to receive. The SERP plan is unfunded.

Net
periodic pension expense is comprised of the following:

|                                                         |                              | Year ended October 31, |       
|-------------------------------------------------------- | ---------------------------- | ---------------------- | ------
|
|Service cost                                             |                              | $                      | 1,952 
|Interest cost on projected benefit obligation            |                              |                        | 5,742 
|Expected return on assets                                |                              |                        | (4,344
|Net amortization and deferral of unrecognized net losses |                              |                        | 1,605 
|Special termination benefits                             |                              |                        |      
|                                                         |                              |                        |       
|                                                         | Net periodic pension expense |                        | $     
|                                                         |                              |                        |       

The
special termination benefits relate to an early retirement incentive that was offered to certain eligible employees retiring between November 1, 2001 and January 1,
2002. The early retirement incentive provided an enhanced retirement benefit based on years of benefit service and age compared to the benefits normally provided by the plan.

The
following assumptions were used in the determination of net periodic pension expense:

|                                            |  | Year ended October 31, |  
|------------------------------------------- |  | ---------------------- | -
|
|Discount rates                              |  | 6.25                   | %
|Rate of increase in compensation levels     |  | 3.00                   | %
|Expected long-term rate of return on assets |  | 9.00                   | %

66

---



The
following table sets forth the funded status of the Company's defined benefit plan:

October 31,2003

2002Change in benefit obligation:Beginning of year

$
81,818

$
76,817Service cost


1,952


1,889Interest cost


5,742


5,534Actuarial (gains)/losses


18,231


2,598Benefits paid


(5,445
)

(5,020
)End of year(a)

$
102,298

$
81,818


---

Change in plan assets:Beginning of year at fair value

$
50,240

$
55,062Actual return on plan assets


7,264


(2,861
)Employer contributions


2,790


3,059Benefits paid


(5,445
)

(5,020
)End of year at fair value

$
54,849

$
50,240Reconciliation of funded status:Plan assets (projected benefit obligation) in excess of projected benefit obligation (plan assets)

$
(47,449
)
$
(31,578
)Unamortized net transition asset


467


507Unrecognized actuarial (gains) losses


42,750


29,037Unrecognized prior service cost


84


51Net amount recognized

$
(4,148
)
$
(1,983
)Amounts recognized in the balance sheet:Prepaid benefit costnoncurrent

$


$
358Intangible asset


1,024


1,110Accrued benefit liability  current


(15,232
)

(20
)Accrued benefit liabilitynoncurrent


(26,326
)

(26,946
)Accumulated other comprehensive income


36,386


23,515Net liability at end of year

$
(4,148
)
$
(1,983
)


The
Company is a member of a controlled group with other Renco-owned companies. Accordingly the Company is jointly and severally liable with all other members of the controlled group
under Title IV of the Employee Retirement Income Security Act (ERISA) for obligations of other members of the controlled group that could include certain pension funding and excise taxes in the event
that any

67

---



member
of the controlled group does not satisfy certain of its pension obligations arising pursuant to ERISA.

In
such an event, statutory liens would arise in favor of the Pension Benefit Guaranty Corporation (the PBGC) upon the assets of the other members of the controlled group not in
bankruptcy, and the PBGC may seek to obtain court approval to terminate the plan (a PBGC Termination) and may require the other members of the controlled group to satisfy such pension plan
obligations. In the event that a PBGC Termination occurs, and the PBGC requires that the Company satisfy such pension plan obligations, such requirements could have a materially adverse effect on the
Company's financial condition and liquidity.

Postretirement Benefit Plans

The Company sponsors three postretirement medical plans for its U.S. employees. Two of these plans are self-insured plans. The plans generally cover
medical expenses subject to deductibles, copayments and limits on specified coverage. For persons retired on or before January 1, 1992, the retiree's contribution to the cost of these plans
varies primarily based upon the date of retirement and the respective plan. The Company's contribution to the cost of coverage of employees retiring after that date decreased gradually, until 1997,
when retirees began to pay 100% of the cost of coverage. The Company maintains stop-loss insurance for claims exceeding $175 per person under the age of 65 in any calendar year for those
plans that are self-insured.

Net
periodic postretirement benefit cost includes the following components:

|                                                |                                          | Year ended October 31, |     
|----------------------------------------------- | ---------------------------------------- | ---------------------- | ----
|
|Service cost                                    |                                          | $                      | 48  
|Interest cost                                   |                                          |                        | 619 
|Amortization of gains                           |                                          |                        | (164
|Amortization of unrecognized prior service cost |                                          |                        | 19  
|Special termination benefits                    |                                          |                        |    
|                                                |                                          |                        |     
|                                                | Net periodic postretirement benefit cost |                        | $   
|                                                |                                          |                        |     

68

---



The
postretirement benefit plans are unfunded. The following illustrates the Company's postretirement benefit obligation:

|                                 |                                                       | October 31,                         |  
|-------------------------------- | ----------------------------------------------------- | ----------------------------------- | -
|
|Change in benefit obligation:    |                                                       |                                     |  
|                                 | Beginning of year                                     |                                     | $
|                                 | Service cost                                          |                                     |  
|                                 | Interest cost                                         |                                     |  
|                                 | Actuarial (gains)/losses                              |                                     |  
|                                 | Benefits paid                                         |                                     |  
|                                 |                                                       |                                     |  
|                                 | End of year                                           |                                     | $
|                                 |                                                       |                                     |  
|Reconciliation of funded status: |                                                       |                                     |  
|                                 | Projected benefit obligation in excess of plan assets |                                     | $
|                                 | Unrecognized prior service cost                       |                                     |  
|                                 | Unrecognized actuarial gains                          |                                     |  
|                                 |                                                       |                                     |  
|                                 |                                                       | Accrued postretirement benefit cost |  
|                                 |                                                       |                                     |  
|                                 | Current portion                                       |                                     | $
|                                 | Noncurrent portion                                    |                                     | $

The
weighted average annual assumed rate of increase in the per capita cost of covered benefits (that is, health care cost trend rate) for the medical plans was 6.25% for fiscal 2003,
with a decrease to 5%
over 5 years, remaining level thereafter. A one percentage point increase/(decrease) in each year would increase/(decrease) the accumulated postretirement benefit obligation and the net
periodic postretirement benefit cost by $578/$(516) and $36/$(32), respectively.

The
special termination benefits during the year ended October 31, 2001 related to the early retirement incentive discussed above with respect to the defined benefit plan. Most of
the employees who accepted the incentive received healthcare coverage benefits for up to seven years at a cost that would not normally be available to retirees, a portion of which will be covered by
the Company.



The Company sponsors a 401(k) plan that covers substantially all U.S. employees. Participants can contribute up to 50% of compensation on a before-tax
basis subject to certain restrictions. The Company's mandatory match under the plan is 25% of the first 6% of a participant's before-tax contribution. The Company may make additional
contributions at management's discretion. For the fiscal year ended October 31, 2001, the Company increased the match to 40% of the first 6% of a participant's before-tax
contribution. The Company's expense representing its matching contribution was $535, $545, and $1,101 for the years ended October 31, 2003, 2002 and 2001, respectively. Plan assets consist
primarily of investments in common stock and debt securities.

69

---



The
Company has a profit sharing program, which covers substantially all U.S. employees. The program provides for a distribution to employees equal to 15% of U.S. income before income
tax expense, plus any extraordinary items, excluding the related tax effect. At management's discretion, a portion of the distribution may be made in the form of a contribution to the 401(k) plan. The
remainder is paid in cash to employees. The Company had no expense under this program for the years ended October 31, 2003, 2002 and 2001 as a result of losses before income tax expense in the
U.S.



Doe Run Peru is required to make monthly deposits into a bank account for severance indemnity benefits for Peruvian employees under Peruvian government
regulations. The balance in the account represents the full benefit due to such employees upon termination. The Company accrues for the
additional amount that would be contributed to the account since the last deposit date as if all such employees were to terminate as of the balance sheet date. The Company's expense related to
severance indemnity benefits was $3,974, $3,456 and $2,946 for the years ended October 31, 2003, 2002 and 2001, respectively.

In
accordance with government regulations in Peru, employees are entitled to receive 8% of Doe Run Peru's taxable income, 50% of which is distributed to employees based on number of days
worked, and the remaining distributed in proportion to their salaries. Such profit sharing, which is tax deductible, is limited to 18 times the annual salary for each worker. Any excess is to be
reserved and used for training of the workers. The Company had no expense relating to workers' profit sharing payments for the years ended October 31, 2003, 2002 and 2001, due to tax losses in
those years.

(16) Business and Credit Concentrations

Metal prices fluctuate and are affected by numerous factors beyond the Company's control, including expectations for inflation, speculative activities, the
relative exchange rate of the U.S. dollar, global and regional demand and production, political and economic conditions and production costs in major producing regions. The aggregate effect of these
factors makes it impossible for the Company to predict metal prices. Fluctuations in metal prices can have a material adverse effect on the results of operations, financial condition and liquidity of
the Company.

70

---





For
the years ended October 31, 2003, 2002 and 2001, approximately 64%, 64% and 67% respectively, of the Company's U.S. operations' revenues from unaffiliated customers were from
U.S. battery manufacturers (primarily automotive) or their suppliers. At October 31, 2003 and 2002, the accounts receivable balances related to these U.S. battery manufacturers were $28,735 and
$27,666, respectively.

No
single customer accounted for greater than 10% of consolidated revenues for the years ended October 31, 2003, 2002 and 2001.

(17) Segment Information

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

The
accounting policies of the segments are the same as those described in the summary of significant accounting policies, except that the primary lead, secondary lead and fabricated
products segments value finished metals and concentrates, work in process and raw materials inventories at FIFO cost. Certain functions are performed at the Company's corporate office for the primary
lead and secondary lead segments, such as sales and billing, as well as the general administration of the Company. Related accounts receivable and corporate overhead expenses are not allocated to
operating segments.

71

---





Year Ended October 31,2003

2002

2001Revenues from external customers:Peruvian operations

$
435,506

$
418,286

$
434,336Primary lead


164,324


160,434


194,934Secondary lead


67,453


67,288


78,121Fabricated products


14,866


17,877


25,271Total


682,149


663,885


732,662Revenues from other operating segments: (1)Peruvian operations


707





Primary lead


1,035


1,995


3,386Secondary lead


655


565


541Total


2,397


2,560


3,927Total reportable segments


684,546


666,445


736,589Other revenues (2)


2,466


(96
)

4,820Intersegment eliminations


(2,397
)

(2,560
)

(3,927
)Total revenues

$
684,615

$
663,789

$
737,482


---



Year Ended October 31,2003

2002

2001United States

$
397,776

$
363,900

$
418,915Peru


38,888


43,159


46,892Japan


57,034


26,958


55,848Brazil


56,994


61,765


67,052Switzerland


25,188


27,728


22,454United Kingdom


6,793


63,494


54,039Other


101,942


76,785


72,282Total revenues

$
684,615

$
663,789

$
737,482


---

72

---





|                                                         |                                                                                  | Year Ended October 31,       |        
|-------------------------------------------------------- | -------------------------------------------------------------------------------- | ---------------------------- | -------
|
|Peruvian operations                                      |                                                                                  | $                            | 3,798  
|Primary lead                                             |                                                                                  |                              | 12,281 
|Secondary lead                                           |                                                                                  |                              | 12,413 
|Fabricated products                                      |                                                                                  |                              | 731    
|                                                         |                                                                                  |                              |        
|                                                         |                                                                                  | Total reportable segments    |        
|Other revenues and expenses (4)                          |                                                                                  |                              | (226   
|Corporate selling, general and administrative expenses   |                                                                                  |                              | (15,584
|                                                         | Intersegment eliminations                                                        |                              |        
|                                                         |                                                                                  |                              |        
|                                                         |                                                                                  | Consolidated adjusted EBITDA |        
|Depreciation, depletion and amortization                 |                                                                                  |                              | (30,407
|Interest income                                          |                                                                                  |                              | 29     
|Interest expense                                         |                                                                                  |                              | (13,270
|Unrealized gain (loss) on derivatives                    |                                                                                  |                              | (7,220 
|Losses from impairment and disposal of long-lived assets |                                                                                  |                              | (1,409 
|Asset retirement obligation accretion expense            |                                                                                  |                              | (1,530 
|Loss on retirement/restructure of long-term debt         |                                                                                  |                              | (550   
|                                                         |                                                                                  |                              |        
|                                                         | Loss before income taxes and cumulative effect of change in accounting principle |                              | $      
|                                                         |                                                                                  |                              |        

---

73

---





October 31,2003

2002Peruvian operations

$
230,148

$
242,208Primary lead


101,379


116,363Secondary lead


27,573


29,969Fabricated products


5,959


9,245Total reportable segments


365,059


397,785Unallocated corporate assets (5)


198,972


205,093Intersegment eliminations


(137,504
)

(152,682
)Total assets

$
426,527

$
450,196


---

(18) Commitments and Contingencies



The Company has entered into tolling arrangements with major battery manufacturers whereby the manufacturers will deliver spent lead-acid batteries
and other lead-bearing material to the Company's recycling facility and, for a processing fee, the Company will return finished lead metal. The largest of these contracts expire in
September 2004 and December 2005. The agreements cover approximately 25% (unaudited)of the Company's anticipated combined primary and
secondary lead metal production for the 2004 fiscal year.



The Company has commitments to sell approximately 65% (unaudited) of its anticipated 2004 lead metal production
and 85% (unaudited), 100% (unaudited) and 100%
(unaudited) of its lead, zinc, and copper concentrates, respectively. Metal sales agreements are usually less than one year; concentrate sales
agreements are typically evergreen with a one-year cancellation. Metal sales prices are generally based on the average quoted exchange prices for the month of shipment, plus a premium.
Concentrate sales terms are based on average quoted exchange prices less a treatment charge. Treatment charges are usually based on a world bench-mark.



At October 31, 2003, the Company had outstanding irrevocable standby letters of credit totaling $6,108 in connection with the Company's insurance and
bonding activities. The Company also had outstanding customs bonds of $102 relating to raw materials and other purchases.



The Company has employment agreements with a number of its senior executives through October 31, 2005, with automatic renewal annually thereafter unless
written notice is given at least three months prior to the expiration date.

74

---





(19) Hedging and Derivative Financial Instruments

A significant portion of the Company's sales contracts are priced based on an average London Metal Exchange (LME) or other exchange price for the respective metal
plus a negotiated premium. As such, the prices of the Company's products fluctuate due to factors in the market that are beyond the Company's control. These price changes expose the Company to
variability in its cash receipts. The purpose of the Company's price risk management program is to limit the Company's risk to acceptable levels, while enhancing revenue through the receipt of option
premiums.

The
Company's price risk management program uses various derivative instruments in its attempt to mitigate commodity price risks. The Company may use purchased futures contracts as a
fair value hedge of the change in fair value of inventory related to firm sales commitments with customers or as a cash flow hedge to lock in the price of lead purchases for its fabricated products
subsidiary. In fair value hedges, the futures contracts are established at terms (quantities, prices and timing) that mirror those of the firm commitments. The Company uses sold futures contracts as a
cash flow hedge to lock in the price of a portion of forecasted lead metal sales and to lock in the price of by-product sales whose prices are based on an average for a period after they
are shipped.

The
Company writes call options that, if exercised, will create sold futures contracts that are economic hedges of forecasted lead metal sales. The options generate premiums that enhance
revenues. Because these instruments do not meet the requirements for hedge accounting, the changes in fair value of these instruments are recorded in results of operations as unrealized (gain) loss on
derivative financial instruments.

For
derivative instruments designated as hedges (futures contracts), the Company assesses effectiveness by comparing the changes in fair value or cash flows relating to the hedged
transaction with all changes in the fair values or cash flows of the related derivative contract. Because the futures contracts fluctuate by the same amount as the hedged transaction (the change in
the LME price), the hedges are considered effective.

The
fair value of the Company's derivative financial instruments reflected in the Company's balance sheets as of October 31, 2003 and 2002 is the difference between quoted prices
at the balance sheet date and the contract settlement value. The fair market value represents the estimated net cash the Company would receive (pay) if the contracts were cancelled on the balance
sheet date.

75

---



The
Company's open derivative financial instruments at October 31, 2003 were:



|Metal                 |  | Quantity      |  | Weighted
Average Price |  | Fair Value |            | Period
|--------------------- |  | ------------- |  | ---------------------- |  | ---------- | ---------- | ------
|Lead                  |  | 6,476 tons    |  | $465.26/ton            |  | $          | (841,313   | )     
|                      |  | (6,476) tons  |  | $453.92/ton            |  |            | 914,740    |       
|Leadcash flow hedges |  | 17,417 tons   |  | $489.00/ton            |  |            | (1,853,855 | )     
|Copper                |  | 4,171 tons    |  | $1,816.18/ton          |  |            | (243,305   | )     
|Zinc                  |  | 1,102 tons    |  | $805.58/ton            |  |            | (77,890    | )     
|                      |  | (1,102) tons  |  | $798.32/ton            |  |            | 74,500     |       
|Silver                |  | 850,175 oz.   |  | $5.21/oz.              |  |            | 507,548    |       
|                      |  | (987,300) oz. |  | $5.47/oz.              |  |            | (841,410   | )     
|Gold                  |  | 6,472 oz.     |  | $262.08/oz.            |  |            | (572,985   | )     
|                      |  | (6,198) oz.   |  | $292.53/oz.            |  |            | 359,996    |       



|Metal  |  | Quantity      |  | Price Range                    |  | Fair Value |            | Period
|------ |  | ------------- |  | ------------------------------ |  | ---------- | ---------- | ------
|Lead   |  | 69,363 tons   |  | $430.91/ton to $544.31/ton     |  | $          | (7,474,861 | )     
|       |  | (5,512) tons  |  | $566.99/ton                    |  |            | 156,802    |       
|Copper |  | 1,650 tons    |  | $1,680.00/ton to $1,780.00/ton |  |            | (296,022   | )     
|Zinc   |  | 8,984 tons    |  | $771.11ton to $816.47/ton      |  |            | (824,212   | )     
|Silver |  | 351,040 oz.   |  | $5.65/oz. to $5.47/oz.         |  |            | (42,658    | )     
|       |  | (109,700) oz. |  | $4.88/oz. to $5.01/oz.         |  |            | 2,926      |       



|Metal |  | Quantity      |  | Price Range                |  | Fair Value |         | Period
|----- |  | ------------- |  | -------------------------- |  | ---------- | ------- | ------
|Lead  |  | 20,117 tons   |  | $385.55/ton to $439.98/ton |  | $          | (9,687  | )     
|      |  | (24,251) tons |  | $462.66/ton                |  |            | 132,004 |       

The
Company's open derivative financial instruments at October 31, 2002 were:



|Metal  |  | Quantity      |  | Weighted
Average Price |  | Fair Value |            | Period
|------ |  | ------------- |  | ---------------------- |  | ---------- | ---------- | ------
|Lead   |  | (2,976) tons  |  | $479.00/ton            |  | $          | (240,840   | )     
|Copper |  | (213) tons    |  | $1,641.00/ton          |  |            | (43,988    | )     
|Silver |  | 850,175 oz.   |  | $5.16/oz.              |  |            | 897,063    |       
|       |  | (987,200) oz. |  | $5.38/oz.              |  |            | (1,261,800 | )     
|Gold   |  | (6,198) oz.   |  | $288.00/oz.            |  |            | 13,779     |       

76

---





|Metal  |  | Quantity     |  | Price Range                    |  | Fair Value |          | Period
|------ |  | ------------ |  | ------------------------------ |  | ---------- | -------- | ------
|Lead   |  | 11,236 tons  |  | $408.00/ton to $463.00/ton     |  | $          | (188,772 | )     
|       |  | (1,929) tons |  | $476.00/ton                    |  |            | 17       |       
|Copper |  | 2,235 tons   |  | $1,520.00/ton to $1,600.00/ton |  |            | (73,300  | )     
|Silver |  | 263,280 oz.  |  | $4.28/oz. to $4.60/oz.         |  |            | (20,804  | )     
|Gold   |  | 6,472 oz.    |  | $260.00/oz.                    |  |            | (199,632 | )     



|Metal  |  | Quantity     |  | Price Range                |  | Fair Value |          | Period
|------ |  | ------------ |  | -------------------------- |  | ---------- | -------- | ------
|Lead   |  | 15,543 tons  |  | $399.00/ton to $440.00/ton |  | $          | (405,401 | )     
|       |  | (4,960) tons |  | $430.00/ton to $433.00/ton |  |            | 161,104  |       
|Silver |  | 153,580 oz.  |  | $3.65/oz. to $3.87/oz.     |  |            | (9,473   | )     
|Gold   |  | (1,207) oz.  |  | $264.00/oz. to $283.00/oz. |  |            | 6,499    |       

At
October 31, 2003 and 2002, the Company had recorded an asset of $86 and $242 respectively, and a liability of $11,004 and $1,608, respectively, related to the fair market
values of these instruments.

The
Company does not obtain collateral or other security to support hedge instruments subject to credit risk, but assesses the reliability and reputation of its counterparties before
contracts are established.

(20) Asset Retirement and Environmental Obligations

The Company is subject to numerous federal, state and local 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.



On November 1, 2002 the Company adopted Statement No. 143"Accounting for Asset Retirement
Obligations."With the adoption of this Statement, asset retirement obligations (AROs) are recognized as liabilities when incurred, with the initial measurement at fair value.
These liabilities will be accreted to full value over time through charges to income. In addition, an asset retirement cost was capitalized as part of the related asset's carrying value and will be
depreciated over the asset's useful life.

The
Company's mines and related processing facilities are subject to governance by various agencies that have established minimum standards for reclamation. The Company's primary smelter

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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 activities to contain and cover the pile. The Company's mining and milling operations are subject to Missouri mine waste closure permit
requirements and lease agreements which require the Company 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.

Doe
Run Peru also has AROs at its Cobriza mine, related to the costs associated with closing the mine openings and covering acid rock. In October 2003, the Peruvian government
enacted a law relating to mine closure. The law indicates the necessity of preparing a mine closure plan for each operation and requires financial assurance to guarantee the completion of the plan.
The government has yet to establish regulations that put the law into effect, and as such, the Company cannot yet determine the effect that this law will have on its closure obligations. Doe Run Peru
is also responsible for the covering and revegetation of mixed lead and copper slag stored in Huanchan, an area a short distance from the smelter where the slag is currently stored.

The
following table summarizes the balance sheet impact associated with the adoption of Statement No. 143:

|                                                    |  | October 31,
2002
As Reported |          | Statement
No. 143
Adoption
Impact |   | November 1,
2002
After
Adoption |  
|--------------------------------------------------- |  | ---------------------------- | -------- | --------------------------------- | - | ------------------------------- | -
|Property, plant and equipment                       |  | $                            | 435,922  |                                   | $ | (3,137                          | )
|Accumulated depreciation                            |  |                              | (186,255 | )                                 |   | 1,049                           |  
|Plant, property and equipment, net                  |  |                              | 249,667  |                                   |   | (2,088                          | )
|Liability for AROs                                  |  |                              | 12,059   |                                   |   | 1,852                           |  
|Cumulative effect of change in accounting principle |  |                              |         |                                   |   | (3,940                          | )

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The
pro forma effects of the application of Statement No. 143 as if it had been adopted on November 1, 2000 are presented below:

|                                                                            |  | Year Ended October 31, 2003 |        
|--------------------------------------------------------------------------- |  | --------------------------- | -------
|
|Loss before cumulative effect of change in accounting principle as reported |  | $                           | (40,958
|Additional accretion and depreciation expense, net of tax                   |  |                             |       
|                                                                            |  |                             |        
|Pro formaloss before cumulative effect of change in accounting principle    |  | $                           | (40,958
|                                                                            |  |                             |        
|Net loss as reported                                                        |  | $                           | (44,898
|Pro formanet loss                                                           |  | $                           | (40,958

The
pro forma ARO liability balances as if Statement No. 143 had been adopted on November 1, 2000 are as follows:

Pro formaARO liability
November 1, 2000

$
11,037Pro formaARO liability
October 31, 2001

$
12,322


The
following illustrates the activity pertaining to the AROs for the year ended October 31, 2003.

|AROs as of October 31, 2002     |  | $ | 12,059 |  
|------------------------------- |  | - | ------ | -
|Transition adjustment           |  |   | 1,852  |  
|Liabilities settled             |  |   | (128   | )
|Accretion expense               |  |   | 1,530  |  
|Changes in estimated cash flows |  |   | (691   | )
|                                |  |   |       
|AROs as of October 31, 2003     |  | $ | 14,622 |  
|                                |  |   |       

For
the year ended October 31, 2003, the effects of adopting Statement No. 143 on the primary lead segment was an increase to the loss before cumulative effect of change in
accounting principle of $1,372 for accretion expense and a loss from the cumulative effect of change in accounting principle of $3,848. The effect on Peruvian operations was an increase to the loss
before cumulative effect of change in accounting principle of $158 resulting from accretion expense and a loss from cumulative effect of change in accounting principle of $92.

The
Company has a RCRA permit addressing the closure of portions of the Buick recycling facility. The majority of the cost will arise from removing hazardous materials from the facility.
The cost of closure, based on third party estimates for bonding purposes, is approximately $3,000. No ARO liability or related asset cost has been recorded, because the fair value of the obligation
cannot be determined. The life of the operation is considered indeterminable because there is not currently a

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cost-effective
alternative to the lead acid battery and because battery manufacturers are required to recycle the batteries.



Doe Run is subject to a voluntary Administrative Order on Consent (AOC), 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, elevated blood lead levels in the community and lead releases from the plant.

Under
this AOC Doe Run completed additional soil testing in the area within a mile radius of the smelter, and subsequently signed a second AOC with the U.S. EPA on December 21,
2001, which has essentially been completed. The Company signed a modification to the May 29, 2001 AOC on January 16, 2004. This modification calls for soil replacement in an estimated
129 properties where the lead content exceeds 800 ppm. The estimated costs of remediating these properties is approximately $1,740 to be spent in 2004, and $380 in the following year, which is
reflected in the Company's balance sheet as of October 31, 2003. The estimated costs for the properties to be completed after 2004 assumes the use of phosphate treatment to stabilize them. If
the use of such treatment is not accepted by the EPA, costs of remediation will be higher than those currently estimated.

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. Under the terms of the residential property purchase plan, Doe Run immediately extended offers to the owners of twenty properties having children
less than 72 months old living in them. Of the remaining 140 homeowners, those that request an offer will be extended offers by the end of 2004. The amount paid to the homeowners who accept an
offer is based on an appraisal of the property's value at August 31, 2001, plus, if a replacement property is purchased, an amount for owner-occupied residences representing the lesser of the
difference between the appraisal amount and the cost of a similar property in another designated community or the difference between the appraisal amount and the replacement property. The cost
associated with the residential property purchase plan could be as high as $10,000 if all qualifying homeowners request an offer and accept the purchase offer. All but two of the twenty owners of
homes with children living in them have accepted Doe Run's offer. Of the seventy-one properties whose owners were given the opportunity to request purchase in calendar 2003, fifty-seven
owners have requested an appraisal, and twenty-five of forty-nine offers have been accepted. Management believes that it is highly unlikely that all of the qualifying
homeowners will accept the offer, but it cannot currently be estimated how many of the remaining homeowners will accept the buyout offer, or, if the buyout offer is accepted, what price will be paid
for the property.

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The
following summarizes the activity as of October 31, 2003 relating to the residential property purchase plan since its inception:

|                                      |  | Number |  | Total Cost
|------------------------------------- |  | ------ |  | ----------
|Properties purchased                  |  | 28     |  | $         
|Offers accepted and not yet purchased |  | 7      |  |           
|Outstanding offers *                  |  | 20     |  |           

---

*
This group of offers includes an offer for a trailer park for $200

Doe
Run will attempt to rent out certain purchased properties, once approval is received by the regulatory agencies. The properties must remain vacant while owned by Doe Run until
regulators and the city agree that re-occupancy is not a risk to human health. Management believes that there is current evidence that no health risk exists as a result of smelter
operations, due to soil remediation efforts and low concentrations of lead in the air in the buyout area, and that other sources of lead contamination could be remedied. Based on an analysis of
information currently available, Doe Run believes it should ultimately be able to rent or sell the properties. If Doe Run does not comply with the material property purchase provisions of the
settlement agreement, Doe Run will be subject to a $1,000 penalty.

The
Company's statement of operations reflects an impairment loss of $1,255 and $1,801 in the year ended October 31, 2003 and 2002, respectively, related to properties owned in
Herculaneum, as approval for reoccupancy of the properties has not yet been received and it cannot be assured that the cost of the properties will be recovered through future cash flows. If the cost
of the property cannot be recovered through future cash flows, additional impairment losses will be recognized as properties are purchased. The Company's accrual for remediation at October 31,
2003 does not include any future costs relating to the residential property purchase plan.

On
April 11, 2002, a report in the media contained allegations by former employees of improper disposal of hazardous materials on the Herculaneum site. Doe Run does not believe
that there has been any violation of law and is cooperating with state and federal agencies in their investigations into the allegations, including having provided equipment and an operator to the
government to excavate various areas of the Herculaneum smelter site, which excavations failed to turn up any evidence of illegal toxic dumping. The investigation is still officially open.

Doe
Run, working with the Missouri DNR and the Missouri Air Conservation Commission, has developed a plan to bring the Herculaneum smelter in compliance with the ambient air quality
standard for lead promulgated under the federal Clean Air Act. 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. Minimal
capital expenditures were required in 2003 to complete the project, and the plan has been essentially implemented, and the air quality monitors reflected compliance for six consecutive quarters
through calendar 2003.

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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; 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, Montana; and the Missouri Electric Works site in Cape Girardeau, Missouri. There are two additional sites in St. Francois County for which the 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 has a liability recorded as of
October 31, 2003 of approximately $9,300 for these sites, including the two additional sites in St. Francois County, which the Company believes is adequate based on its investigations to date.
However, depending upon the types of remediation required and certain other factors, 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.

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 underway on the East side with completion expected in 2005.

Doe
Run is subject to a voluntary AOC with the EPA to remediate the Big River Mine Tailings site. The remediation work required by the AOC has been substantially completed, and is
followed by revegetation and ongoing monitoring and maintenance activities.

Doe
Run has also signed AOCs to perform an EE/CA on each of the National, Rivermines, and Leadwood sites for remediation of the mine waste areas at these sites. The National EE/CA is
complete, the Rivermines EE/CA is under public review and has been submitted to the EPA for approval, and the Leadwood EE/CA is due by the end of fiscal 2004 with a draft submitted to the EPA in
October 2003. In addition, Doe Run has signed an AOC with the EPA to conduct a Remedial Investigation/Feasibility Study (RI/FS) to assess potential off-site impacts of these site
operations on and the need for remediation regarding groundwater, residential soils, several creeks and a river. The initial draft of the RI/FS was submitted in early March 2002. Doe Run has
signed an order to conduct interim measures through April 2004, consisting of blood lead testing of young children, residential soil sampling, and limited soil remediation as indicated by the
testing and sampling results and has signed an AOC to conduct certain additional soil remediation in the area and has included its best estimate of these efforts in its recorded liabilities as of
October 31, 2003. 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.

Doe
Run has been advised that the 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

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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 this 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.

The
Buick recycling facility is subject to corrective action requirements under RCRA as a result of a storage permit for certain wastes issued in 1989. This will involve remediation of
solid waste management units at the site, although the plan for corrective action is not expected to be finalized until April 2004. The Company's liabilities as of October 31, 2003
reflect approximately $2,000 for this corrective action. The storage area is also covered under the permit, but management does not believe the cost of closure is significant. 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.

The
domestic operating facilities have wastewater discharge permits issued under the federal Clean Water Act, as amended. Doe Run currently meets the effluent limits under these permits,
but if compliance were not maintained, additional improvements to its treatment facilities could be required.

During
the year ended October 31, 2003, Doe Run's environmental remediation obligations were increased $3,000 with a corresponding charge to cost of sales, and were decreased by
spending of $1,216.



Metaloroya S.A., the former owner of the La Oroya smelter, at the time a subsidiary of Centromin, received approval from the Peruvian government for an
Environmental Adjustment and Management Program (PAMA) that consisted of an environmental impact analysis, monitoring plan and data, mitigation measures and closure plan. Doe Run Peru assumed the
obligations under the PAMA. The PAMA also sets forth the actions and corresponding annual investments the concession holder 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 any other type of mining or metallurgical operation like
Cobriza). Once approved, the PAMA, as modified from time to time, functions as the equivalent of an operating permit with which the operator must comply. After expiration of the PAMA, the operator
must comply with all applicable standards and requirements. Future changes in legal rules and maximum permissible levels would not be applicable to Doe Run Peru for the remaining period of the PAMA,
except for certain closure requirements. Because these costs improve the property or prevent future environmental contamination, they are capitalized.

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Doe
Run Peru has committed under its PAMA to implement the following projects at its La Oroya smelter through December 31, 2006:



Through
October 31, 2003, Doe Run Peru had spent approximately $37,800 on projects under the La Oroya PAMA.

Estimated
annual spending on a calendar year basis for the projects approved in the La Oroya PAMA, as amended, most recently on January 25, 2002, are as follows:

Year

Estimated
Cost2004


12,8002005


53,5002006


67,700$
134,000


The
current estimate for the total to be expended on environmental projects under the PAMA and on additional related process changes for Doe Run Peru is approximately $168,000 for the
remaining term of the PAMA. The PAMA provides a specific plan for achieving the applicable Ministry of Energy and Mines (MEM) maximum permissible limits pertaining to air emissions and wastewater
effluent quality. The PAMA may be modified and amended as to the actual design and timing of projects to be implemented, provided compliance with the applicable maximum permissible limits is achieved
by December 31, 2006. Although the PAMA currently requires Doe Run Peru to construct certain sulfuric acid plants, estimated to cost approximately $107,500, in conjunction with a portion of the
PAMA in order to reduce emissions, Doe Run Peru is also proceeding with efforts to identify alternative methods of achieving compliance. These efforts include, but are not limited to, reducing or
curtailing production from a portion of the plant thus eliminating the need for the equipment presently contemplated and replacing it with another alternative. These efforts must take into
consideration the impacts on profitability and liquidity, as well as other economic impacts. Doe Run Peru intends to submit a request to MEM in 2004 to modify the requirements of the existing PAMA.
There can be no assurance that the

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Peruvian
government will approve the alternatives or that they will achieve compliance in the timeframe required by the PAMA. If the La Oroya smelter does not operate within the current PAMA limits
after December 31, 2006, Doe Run Peru could be forced to cease operations at the La Oroya smelter.

Doe
Run Peru's operations historically and currently exceed some of the applicable MEM maximum permissible limits pertaining to air emissions, ambient air quality and wastewater effluent
quality. The PAMA projects have been designed to achieve compliance with such requirements prior to the expiration of the PAMA on December 31, 2006. No assurance can be given that
implementation of the PAMA projects is feasible or that their implementation will achieve compliance with the applicable legal requirements by the end of the PAMA period. Further, there can be no
assurance that the Peruvian government will not in the future require compliance with additional or different environmental obligations that could adversely affect Doe Run Peru's business, financial
condition or results of operations. Under the purchase agreement related to the acquisition of the La Oroya assets in October 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 other 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 obligations and investment requirements, including those in its PAMA, 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 or results of operations.

The
Cobriza mine has a separate PAMA in which Doe Run Peru has committed to complete projects to manage tailings, mine drainage, sewage and garbage. Doe Run Peru had spent approximately
$10,000 under the PAMA as of October 31, 2003. On July 3, 2002, the government of Peru enacted the
Supreme Decree No. 022-2002-EM, extending the PAMA for all companies not yet in compliance with their PAMA for a period of not less than 12 months, and up to
18 months if approved by MEM. Companies not in compliance at the end of the extension period would have an additional period to close their operations. Doe Run Peru has received approval from
MEM to extend the date of required compliance with the PAMA to April of 2004, and has a request pending to extend the compliance period for the full 18 months allowed by the Supreme Decree. Doe
Run Peru expects that it will complete its PAMA requirements by June 2004 including a mine water treatment system and by making a surface paste fill from tailings. If the extension is not
granted, Doe Run Peru may be subject to legal redress in the form of fines, which management does not believe will be material. Ore reserves are now estimated to be approximately four years at current
production levels and space has been identified to store the associated tailings.

Doe
Run Peru is responsible for the remediation costs relating to a zinc ferrite disposal site. The current closure plan provides for encapsulating the ferrite residues in place at
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.

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The Company believes its liabilities 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.

(21) Litigation

Doe Run is a defendant in ten lawsuits alleging certain damages stemming from the operations at the Herculaneum 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. Five of the cases are personal injury actions by
24 individuals who allege damages from the effects of lead due to operations at the smelter. Punitive damages also are being sought in each case.

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 five 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 fifth
case alleges personal injury against two children living in St. Francois County.

A
railroad carrier has communicated to Doe Run that it intends to seek contribution from Doe Run for cleanup actions at a rail car clean-out area that the carrier was ordered
to take by the federal government. The carrier pled guilty to a felony and paid a criminal fine for its actions. It is Doe Run's position that Doe Run cannot be held liable for another's criminal
actions. No lawsuit has been filed.

This
railroad carrier has also threatened Doe Run with possible legal action for claims for indemnity allegedly arising out of contracts with Doe Run or its predecessors for payments
that the railroad has made in regard to personal injury claims against the railroad by railway workers and others, including those made in 114 cases previously settled by Doe Run. Doe Run is currently
in the process of investigating these claims.

Doe
Run is a defendant in lawsuits alleging certain damages from past mining operations in Ottawa County, Oklahoma. Ten lawsuits have been filed alleging personal injury to
twenty-five children

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and
one adult living in Ottawa County against eight companies, including Doe Run, who allegedly, either through predecessors or subsidiaries, mined lead and zinc in Ottawa County or commercially used
the chat or tailings in Ottawa County. One case is a class action lawsuit for personal injury and property damage 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 and several other parties have been named defendants in a suit brought by the City of St. Louis, Missouri for costs allegedly incurred and to be incurred by the plaintiff for the
care of lead-poisoned persons, education programs for children injured by exposure to lead and the abatement of lead hazards purportedly created by the defendants in the City of St. Louis.
The complaint alleges that the defendants made material misrepresentations and intentional omissions of material facts to the City and/or its residents regarding the nature of lead and lead products,
such as paint. The suit also seeks punitive damages.

FPI
received a judgment against it in a breach of contract/warranty action for damages arising from the sale of allegedly impure lead. The amount of the judgment was $4,300, including
interest. See Note 22 for discussion of a settlement reached with the plaintiffs.

Doe
Run has been named in asbestos injury suits by two individuals against numerous companies, alleging that they were exposed to asbestos, including at the St. Joe Minerals Corporation
premises. Doe Run was served a Writ of Summons in a third case filed in Pennsylvania in May 2003 but has not yet been served with a complaint, so few details of the case are known, including
the alleged location of the exposure.

Doe
Run has been named in a suit claiming alleged damages to the property of a small business in the vicinity of Doe Run's recycling facility. Because the facility meets the required
national ambient air standard for lead and given the scope of any potential economic loss as measured by property values in the area, it is not probable that such a claim would have a material impact
on Doe Run.

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.

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A
law firm in Lima, Peru has initiated a large number of lawsuits in the Lima labor courts against various mining companies in Peru. All lawsuits allege that workers have contracted lung
disease from working at the mining facilities. Currently, Doe Run Peru has 44 cases pending, with all claims totaling approximately $714. Only one case has resulted in a judgment of approximately $8
against Doe Run Peru that was upheld on appeal.

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. Therefore, 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.

(22) Subsequent Events



An additional class action lawsuit for damages to natural resources and land owned by members of the Quapaw Tribe was filed on December 10, 2003 against
seven companies, including Doe Run.

In
February 2004, FPI settled the judgment received in the breach of contract/warranty case. The settlement is reflected in the balance sheet as of October 31, 2003.

Six
individuals filed an additional class action lawsuit against six companies, including Doe Run, in Ottawa County, Oklahoma on February 9, 2004. The Company is unable at this
time to estimate the expected outcome and any final costs of this action.

In
March 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 and trucking companies involved in the transportation of concentrates. Approximately 412 houses were identified as potentially requiring remediation. Doe Run expects that its share
of the potential remediation costs will not be significant.

In
February 2004 the U.S. Department of Agriculture issued a Unilateral Administrative Order ordering certain remediation activities by Doe Run at the Block "P" millsite,
discussed in Note 20. 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.



In November 2003, the Company indefinitely suspended operations at its Glover smelter. The Company will sell concentrates on the open market that are not
required to maintain production at the Herculaneum smelter. The decision should improve the Company's net sales premiums at current market conditions. The Company recorded a severance liability of
approximately $1,400 at October 31, 2003. No impairment loss was recognized with respect to this suspension of operations, as cash flows with respect to the primary lead segment should improve
with the decision.

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Metal
prices have improved significantly since October 31, 2003. Although the Company's operating results in 2004 should not reflect substantial improvement until the second
quarter, once certain fixed price contracts are fulfilled and derivative contracts expire in the first quarter, cash flow and financial position should improve, provided the higher metals prices
remain in effect.

The
recent increases in metal prices and other factors have improved the financial condition of Doe Run Peru's concentrate suppliers, which should improve the availability of
economically suitable concentrates.

On
December 26, 2003, the Peru tax authority, SUNAT notified Doe Run Peru of an income tax assessment for the 1998 tax year. The assessment primarily relates to Doe Run Peru's
income tax treatment of the December 1997 merger of Doe Run Peru and Metaloroya S.A., which was purchased by Doe Run Peru in October 1997. 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 and additional income taxes due.

Under
the assessment, the reduction in depreciation would result in additional taxes of approximately $6,600, plus penalties and interest of $9,600 to date for the 1998 tax year. For tax
years after 1998, the Company estimates that additional taxes of approximately $5,700 would be due related to the decrease in the amount of depreciation originally claimed plus penalties and interest
of approximately $20,000 to date in the event SUNAT would prevail. Interest would also be assessed on the prepayments of taxes that were not made as a result of the depreciation deductions taken by
Doe Run Peru in the years affected, estimated at approximately $5,800.

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 change discussed
above, or approximately $3,500.

Management
of the Company believes that Doe Run Peru has followed the applicable Peruvian 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 appeals process and were to appeal in the judicial system, some
type of financial assurance would be required.

On
February 16, 2004, Doe Run Peru entered into an amendment of the Doe Run Peru Revolving Credit Facility. The amendment lowered the levels of net worth Doe Run Peru must comply
with from the date of the amendment through September 30, 2004, among other things. Based on current forecasted results, assuming metal prices higher than those experienced in fiscal 2003,
management expects to remain in compliance with all covenants relating to the Doe Run Peru Revolving Credit Facility for the foreseeable future. The amendment does not cure or waive defaults in
existence before the date of the amendment. The amendment also limits payment of fees to Doe Run through September 30, 2004 to $2,800. In the event Doe Run Peru's net worth would fall to a
level lower than the requirement at the quarterly reporting dates, the amendment permanently reduces the amount available under the Doe Run Peru Revolving Credit Facility by the amount of the
difference between the required and the actual net worth. If Doe Run Peru is not successful with its administrative appeal of the tax assessment discussed above, the lender can, at its discretion,
require that the amount of the

89

---



assessment
reduce net worth as defined in the Doe Run Peru Revolving Credit Facility amendment. Such reduction along with other factors, including metal prices and results of operations, could affect
Doe Run Peru's ability to comply with the net worth requirement.

On
April 9, 2004 Doe Run entered into an amendment of the Doe Run Revolving Credit Facility. The amendment waives existing defaults and lowers the net worth requirement. The
amendment became effective when waivers of default under the Term Note were received, as discussed below. Based on current projections, assuming metal prices continuing higher than those experienced
during fiscal 2003, management expects to remain in compliance under the Doe Run Revolving Credit Facility, as amended, through October 31, 2004.

On
April 30, 2004 Doe Run entered into an amendment of the Term Note. The amendment waives existing defaults and amends various covenant requirements, among other things. The
amendment also requires that certain information be delivered to the lender at various times within 30 days after the amendment date, which dates have subsequently been extended. Based on
current projections, assuming metal prices continuing higher than those experienced during fiscal 2003, management expects to remain in compliance under the Term Note, as amended, through
October 31, 2004.

On
May 7, 2004, Doe Run received a notice of default from the trustee of the 11.75% Notes that it is in default of the indenture requirements. The notice gives Doe Run
30 days from the date of receipt of the notice to remedy such defaults by filing its quarterly and annual reports for the 2003 fiscal year with the SEC and to provide a written statement from
the Company's independent certified public accountants indicating whether any defaults have come to their attention. If the defaults are not remedied within 30 days of receipt of the notice,
the trustee may declare all unpaid principal and interest immediately payable. Management intends to remedy the defaults in the timeframe required.

(23) Guarantor Subsidiaries

The Guarantor Subsidiaries (Fabricated Products, Inc. (FPI) and DR Land Holdings, LLC (together, 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 Unsecured Notes, Secured
Notes and 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.

90

---



Condensed Consolidating Balance Sheet    As of October 31, 2003

|                                               |                                                                                          | The Company
Excluding
Guarantor
Subsidiaries |   | Buick
Resource
Recycling
Facility, LLC |          | Domestic
Guarantors |        | Doe Run
Cayman and
Subsidiary |   | Eliminations |        | The
Company |        
|---------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------- | - | -------------------------------------- | -------- | ------------------- | ------ | ----------------------------- | - | ------------ | ------ | ----------- | -------
|ASSETS                                         |                                                                                         
|Current assets:                                |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|                                               | Cash                                                                                     |                                              | $ |                                       |          | $                   |       |                               | $ |             |        | $           | 16,794 
|                                               | Trade accounts receivable, net of allowance for doubtful accounts                        |                                              |   | 37,310                                 |          |                     |       |                               |   | 2,590        |        |             | 16,982 
|                                               | Inventories                                                                              |                                              |   | 40,432                                 |          |                     |       |                               |   | 1,202        |        |             | 54,081 
|                                               | Prepaid expenses and other current assets                                                |                                              |   | 13,093                                 |          |                     |       |                               |   | 86           |        |             | 8,352  
|                                               | Due from subsidiaries/parent                                                             |                                              |   | 26,642                                 |          |                     | 371    |                               |   |             |        |             |       
|                                               |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|                                               |                                                                                          | Total current assets                         |   |                                        | 117,477  |                     |        | 371                           |   |              | 3,878  |             |        
|                                               | Property, plant and equipment, net                                                       |                                              |   | 80,086                                 |          |                     | 14,312 |                               |   | 2,286        |        |             | 133,683
|                                               | Due from subsidiaries                                                                    |                                              |   | 139,063                                |          |                     |       |                               |   |             |        |             |       
|                                               | Other noncurrent assets, net                                                             |                                              |   | 5,174                                  |          |                     |       |                               |   | 66           |        |             | 256    
|                                               | Investment in subsidiaries                                                               |                                              |   | (13,506                                | )        |                     |       |                               |   |             |        |             |       
|                                               |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|                                               |                                                                                          | Total assets                                 |   | $                                      | 328,294  |                     | $      | 14,683                        |   | $            | 6,230  |             | $      
|                                               |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) |                                                                                         
|Current liabilities:                           |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|                                               | Short-term borrowings and current maturities of long-term debt                           |                                              | $ | 40,558                                 |          | $                   |       |                               | $ |             |        | $           | 37,559 
|                                               | Accounts payable                                                                         |                                              |   | 16,569                                 |          |                     |       |                               |   | 621          |        |             | 31,425 
|                                               | Accrued liabilities                                                                      |                                              |   | 59,258                                 |          |                     |       |                               |   | 2,207        |        |             | 23,018 
|                                               | Due to parent/subsidiaries                                                               |                                              |   | 371                                    |          |                     |       |                               |   | 7,604        |        |             | 19,038 
|                                               |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|                                               |                                                                                          | Total current liabilities                    |   |                                        | 116,756  |                     |        |                              |   |              | 10,432 |             |        
|                                               | Long-term debt, less current maturities                                                  |                                              |   | 330,579                                |          |                     |       |                               |   |             |        |             |       
|                                               | Due to parent                                                                            |                                              |   |                                       |          |                     |       |                               |   |             |        |             | 139,063
|                                               | Other noncurrent liabilities                                                             |                                              |   | 67,511                                 |          |                     |       |                               |   | 760          |        |             | 3,237  
|                                               |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|                                               |                                                                                          | Total liabilities                            |   |                                        | 514,846  |                     |        |                              |   |              | 11,192 |             |        
|                                               | Preferred stock                                                                          |                                              |   | 22,514                                 |          |                     |       |                               |   |             |        |             |       
|Shareholders' equity (deficit):                |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|                                               | Common stock, $1 par value, 1,667 shares authorized, 1,000 shares issued and outstanding |                                              |   |                                       |          |                     |       |                               |   | 1            |        |             |       
|                                               | Common stock, $1 par value, 2,005,000 shares authorized, issued and outstanding          |                                              |   |                                       |          |                     |       |                               |   |             |        |             | 2,005  
|                                               | Additional paid in capital                                                               |                                              |   | 2,724                                  |          |                     | 16,062 |                               |   | 1,205        |        |             |       
|                                               | Accumulated deficit and accumulated other comprehensive loss                             |                                              |   | (211,790                               | )        |                     | (1,379 | )                             |   | (6,168       | )      |             | (25,197
|                                               |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|                                               |                                                                                          | Total shareholders' deficit                  |   |                                        | (209,066 | )                   |        | 14,683                        |   |              | (4,962 | )           |        
|                                               |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        
|                                               |                                                                                          | Total liabilities and shareholders' deficit  |   | $                                      | 328,294  |                     | $      | 14,683                        |   | $            | 6,230  |             | $      
|                                               |                                                                                          |                                              |   |                                        |          |                     |        |                               |   |              |        |             |        

91

---





Condensed Consolidating Balance Sheet    As of October 31, 2002

|                                               |                                                                                          | The Company
Excluding
Guarantor
Subsidiaries |         | Domestic
Guarantors |          | Doe Run
Cayman and
Subsidiary |        | Eliminations |         | The
Company |        
|---------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------- | ------- | ------------------- | -------- | ----------------------------- | ------ | ------------ | ------- | ----------- | -------
|ASSETS                                         |                                                                                         
|Current assets:                                |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|                                               | Cash                                                                                     |                                              | $       |                    |          | $                             |       |              | $       | 7,018       |        
|                                               | Trade accounts receivable, net of allowance for doubtful accounts                        |                                              |         | 35,428              |          |                               | 4,247  |              |         | 25,261      |        
|                                               | Inventories                                                                              |                                              |         | 42,931              |          |                               | 1,226  |              |         | 59,211      |        
|                                               | Prepaid expenses and other current assets                                                |                                              |         | 7,665               |          |                               | 109    |              |         | 11,819      |        
|                                               | Due from subsidiaries                                                                    |                                              |         | 19,558              |          |                               |       |              |         |            |        
|                                               |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|                                               |                                                                                          | Total current assets                         |         |                     | 105,582  |                               |        | 5,582        |         |             | 103,309
|                                               | Property, plant and equipment, net                                                       |                                              |         | 107,375             |          |                               | 3,782  |              |         | 138,510     |        
|                                               | Due from subsidiaries                                                                    |                                              |         | 139,063             |          |                               |       |              |         |            |        
|                                               | Other noncurrent assets, net                                                             |                                              |         | 5,254               |          |                               | 151    |              |         | 389         |        
|                                               | Investment in subsidiaries                                                               |                                              |         | (5,849              | )        |                               |       |              |         |            |        
|                                               |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|                                               |                                                                                          | Total assets                                 |         | $                   | 351,425  |                               | $      | 9,515        |         | $           | 242,208
|                                               |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) |                                                                                         
|Current liabilities:                           |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|                                               | Short-term borrowings and current maturities of long-term debt                           |                                              | $       | 11,932              |          | $                             |       |              | $       | 4,410       |        
|                                               | Accounts payable                                                                         |                                              |         | 21,645              |          |                               | 600    |              |         | 26,789      |        
|                                               | Accrued liabilities                                                                      |                                              |         | 32,821              |          |                               | 1,640  |              |         | 20,607      |        
|                                               | Due to parent                                                                            |                                              |         |                    |          |                               | 8,986  |              |         | 10,572      |        
|                                               |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|                                               |                                                                                          | Total current liabilities                    |         |                     | 66,398   |                               |        | 11,226       |         |             | 62,378 
|                                               | Long-term debt, less current maturities                                                  |                                              |         | 347,617             |          |                               |       |              |         | 38,259      |        
|                                               | Due to parent                                                                            |                                              |         |                    |          |                               |       |              |         | 139,063     |        
|                                               | Other noncurrent liabilities                                                             |                                              |         | 64,581              |          |                               | 1,424  |              |         | 5,200       |        
|                                               |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|                                               |                                                                                          | Total liabilities                            |         |                     | 478,596  |                               |        | 12,650       |         |             | 244,900
|                                               | Preferred stock                                                                          |                                              |         | 20,000              |          |                               |        |              |         |             |        
|Shareholders' equity (deficit):                |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|                                               | Common stock, $1 par value, 1,667 shares authorized, 1,000 shares issued and outstanding |                                              |         |                    |          |                               | 1      |              |         |            |        
|                                               | Common stock, $1 par value, 2,005,000 shares authorized, issued and outstanding          |                                              |         |                    |          |                               |       |              |         | 2,005       |        
|                                               | Additional paid in capital                                                               |                                              |         | 5,238               |          |                               | 1,205  |              |         |            |        
|                                               | Accumulated deficit and accumulated other comprehensive loss                             |                                              |         | (152,409            | )        |                               | (4,341 | )            |         | (4,697      | )      
|                                               |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|                                               |                                                                                          | Total shareholders' deficit                  |         |                     | (147,171 | )                             |        | (3,135       | )       |             | (2,692 
|                                               |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        
|Total liabilities and shareholders' deficit    |                                                                                          | $                                            | 351,425 |                     | $        | 9,515                         |        | $            | 242,208 |             | $      
|                                               |                                                                                          |                                              |         |                     |          |                               |        |              |         |             |        

92

---





Consolidating Statement of Operations    Year Ended October 31, 2003

|                        |                                                          | The Company
Excluding
Guarantor
Subsidiaries                             |         | Buick
Resource
Recycling
Facility, LLC |         | Domestic
Guarantors |       | Doe Run
Cayman and
Subsidiary |        | Eliminations |        | The
Company |        
|----------------------- | -------------------------------------------------------- | ------------------------------------------------------------------------ | ------- | -------------------------------------- | ------- | ------------------- | ----- | ----------------------------- | ------ | ------------ | ------ | ----------- | -------
|Net sales               |                                                          | $                                                                        | 245,483 |                                        | $       |                    |       | $                             | 14,866 |              | $      | 436,213     |        
|Costs and expenses:     |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        
|                        | Cost of sales                                            |                                                                          |         | 212,013                                |         |                     |      |                               |        | 12,608       |        |             | 421,655
|                        | Depletion, depreciation and amortization                 |                                                                          |         | 15,435                                 |         |                     | 1,721 |                               |        | 1,442        |        |             | 11,809 
|                        | Selling, general and administrative                      |                                                                          |         | 15,146                                 |         |                     |      |                               |        | 1,843        |        |             | 19,837 
|                        | Exploration                                              |                                                                          |         | 1,078                                  |         |                     |      |                               |        |             |        |             |       
|                        | Losses from impairment and disposal of long-lived assets |                                                                          |         | 1,234                                  |         |                     | 29    |                               |        | 58           |        |             | 88     
|                        | Unrealized loss on derivatives                           |                                                                          |         | 7,162                                  |         |                     |      |                               |        |             |        |             | 58     
|                        |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        
|                        |                                                          | Total costs and expenses                                                 |         |                                        | 252,068 |                     |       | 1,750                         |        |              | 15,951 |             |        
|                        |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        
|                        |                                                          | Income (loss) from operations                                            |         |                                        | (6,585  | )                   |       | (1,750                        | )      |              | (1,085 | )           |        
|Other income (expense): |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        
|                        | Interest expense                                         |                                                                          |         | (10,544                                | )       |                     |      |                               |        | (619         | )      |             | (2,564 
|                        | Interest income                                          |                                                                          |         | 465                                    |         |                     |      |                               |        |             |        |             | 21     
|                        | Loss on retirement/restructure of long term debt         |                                                                          |         | (550                                   | )       |                     |      |                               |        |             |        |             |       
|                        | Other, net                                               |                                                                          |         | (116                                   | )       |                     | 371   |                               |        | (123         | )      |             | (631   
|                        | Equity in earnings of subsidiaries                       |                                                                          |         | (23,720                                | )       |                     |      |                               |        |             |        |             |       
|                        |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        
|                        |                                                          |                                                                          | (34,465 | )                                      |         | 371                 |       |                               | (742   | )            |        | (3,174      | )      
|                        |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        
|                        |                                                          | Income (loss) before income tax expense                                  |         |                                        | (41,050 | )                   |       | (1,379                        | )      |              | (1,827 | )           |        
|                        | Income tax expense                                       |                                                                          |         |                                       |         |                     |      |                               |        |             |        |             |       
|                        |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        
|                        |                                                          | Income (loss) before cumulative effect of change in accounting principle |         |                                        | (41,050 | )                   |       | (1,379                        | )      |              | (1,827 | )           |        
|                        | Cumulative effect of change in accounting principle      |                                                                          |         | (3,848                                 | )       |                     |      |                               |        |             |        |             | (92    
|                        |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        
|                        |                                                          | Net loss                                                                 |         |                                        | (44,898 | )                   |       | (1,379                        | )      |              | (1,827 | )           |        
|                        |                                                          | Cumulative preferred stock dividends                                     |         |                                        | (2,514  | )                   |       |                              |        |              |       |             |        
|                        |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        
|                        |                                                          | Net loss allocable to common shares                                      |         | $                                      | (47,412 | )                   | $     | (1,379                        | )      | $            | (1,827 | )           | $      
|                        |                                                          |                                                                          |         |                                        |         |                     |       |                               |        |              |        |             |        

93

---





Consolidating Statement of Operations    Year Ended October 31, 2002

|                        |                                                          | The Company
Excluding
Guarantor
Subsidiaries                                   |         | Domestic
Guarantors |         | Doe Run
Cayman and
Subsidiary |        | Eliminations |         | The
Company |        
|----------------------- | -------------------------------------------------------- | ------------------------------------------------------------------------------ | ------- | ------------------- | ------- | ----------------------------- | ------ | ------------ | ------- | ----------- | -------
|Net sales               |                                                          | $                                                                              | 239,264 |                     | $       | 17,877                        |        | $            | 418,286 |             | $      
|Costs and expenses:     |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        | Cost of sales                                            |                                                                                |         | 214,659             |         |                               | 14,976 |              |         | 387,492     |        
|                        | Depletion, depreciation and amortization                 |                                                                                |         | 18,015              |         |                               | 1,493  |              |         | 11,339      |        
|                        | Selling, general and administrative                      |                                                                                |         | 16,588              |         |                               | 1,948  |              |         | 18,611      |        
|                        | Exploration                                              |                                                                                |         | 828                 |         |                               |       |              |         | 244         |        
|                        | Losses from impairment and disposal of long-lived assets |                                                                                |         | 2,610               |         |                               | (10    | )            |         | 8,006       |        
|                        | Unrealized (gain)/loss on derivatives                    |                                                                                |         | (1,445              | )       |                               | (7     | )            |         | 44          |        
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Total costs and expenses                                                       |         |                     | 251,255 |                               |        | 18,400       |         |             | 425,736
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Income (loss) from operations                                                  |         |                     | (11,991 | )                             |        | (523         | )       |             | (7,450 
|Other income (expense): |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        | Interest expense                                         |                                                                                |         | (40,513             | )       |                               | (636   | )            |         | (14,778     | )      
|                        | Interest income                                          |                                                                                |         | 12,809              |         |                               |       |              |         | 57          |        
|                        | Loss on retirement/restructure of long term debt         |                                                                                |         | (7,439              | )       |                               |       |              |         |            |        
|                        | Other, net                                               |                                                                                |         | (485                | )       |                               | 21     |              |         | 25          |        
|                        | Equity in earnings of subsidiaries                       |                                                                                |         | (23,280             | )       |                               |       |              |         |            |        
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          |                                                                                | (58,908 | )                   |         | (615                          | )      |              | (14,696 | )           |        
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Income (loss) before income tax expense                                        |         |                     | (70,899 | )                             |        | (1,138       | )       |             | (22,146
|                        | Income tax expense                                       |                                                                                |         |                    |         |                               |       |              |         |            |        
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Loss before cumulative effect of change in accounting principle                |         |                     | (70,899 | )                             |        | (1,138       | )       |             | (22,146
|                        |                                                          | Cumulative effect of change in accounting principle, net of income tax benefit |         |                     |        |                               |        |             |         |             |       
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Net loss                                                                       |         | $                   | (70,899 | )                             | $      | (1,138       | )       | $           | (22,146
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        

94

---





Consolidating Statement of Operations    Year Ended October 31, 2001

|                        |                                                          | The Company
Excluding
Guarantor
Subsidiaries                                   |         | Domestic
Guarantors |         | Doe Run
Cayman and
Subsidiary |        | Eliminations |         | The
Company |        
|----------------------- | -------------------------------------------------------- | ------------------------------------------------------------------------------ | ------- | ------------------- | ------- | ----------------------------- | ------ | ------------ | ------- | ----------- | -------
|Net sales               |                                                          | $                                                                              | 291,124 |                     | $       | 25,271                        |        | $            | 434,336 |             |        
|Costs and expenses:     |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        | Cost of sales                                            |                                                                                |         | 263,592             |         |                               | 21,132 |              |         | 384,471     |        
|                        | Depletion, depreciation and amortization                 |                                                                                |         | 18,688              |         |                               | 1,587  |              |         | 10,186      |        
|                        | Selling, general and administrative                      |                                                                                |         | 16,321              |         |                               | 2,030  |              |         | 20,697      |        
|                        | Exploration                                              |                                                                                |         | 1,602               |         |                               |       |              |         |            |        
|                        | Losses from impairment and disposal of long-lived assets |                                                                                |         | 930                 |         |                               |       |              |         | 66          |        
|                        | Unrealized (gain)/loss on derivatives                    |                                                                                |         | (573                | )       |                               | 7      |              |         | (1,198      | )      
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Total costs and expenses                                                       |         |                     | 300,560 |                               |        | 24,756       |         |             | 414,222
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Income (loss) from operations                                                  |         |                     | (9,436  | )                             |        | 515          |         |             | 20,114 
|Other income (expense): |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        | Interest expense                                         |                                                                                |         | (41,929             | )       |                               | (831   | )            |         | (17,998     | )      
|                        | Interest income                                          |                                                                                |         | 14,980              |         |                               |       |              |         | 656         |        
|                        | Loss on retirement/restructure of long term debt         |                                                                                |         | (159                | )       |                               |       |              |         |            |        
|                        | Other, net                                               |                                                                                |         | 517                 |         |                               | (24    | )            |         | (1,173      | )      
|                        | Equity in earnings of subsidiaries                       |                                                                                |         | (8,044              | )       |                               |       |              |         |            |        
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          |                                                                                | (34,635 | )                   |         | (855                          | )      |              | (18,515 | )           |        
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Income (loss) before income tax expense                                        |         |                     | (44,071 | )                             |        | (340         | )       |             | 1,599  
|                        | Income tax expense                                       |                                                                                |         | 59                  |         |                               |       |              |         | 8,167       |        
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Loss before cumulative effect of change in accounting principle                |         |                     | (44,130 | )                             |        | (340         | )       |             | (6,568 
|                        |                                                          | Cumulative effect of change in accounting principle, net of income tax benefit |         |                     | (2,649  | )                             |        |             |         |             | (1,125 
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        
|                        |                                                          | Net loss                                                                       |         | $                   | (46,779 | )                             | $      | (340         | )       | $           | (7,693 
|                        |                                                          |                                                                                |         |                     |         |                               |        |              |         |             |        

95

---





Condensed Consolidating Statement of Cash Flows    Year Ended October 31, 2003

|                                                    |                                                              | The Company
Excluding
Guarantor
Subsidiaries        |         | Buick
Resource
Recycling
Facility, LLC |        | Domestic
Guarantors |     | Doe Run
Cayman and
Subsidiary |       | Eliminations |        | The
Company |       
|--------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------- | ------- | -------------------------------------- | ------ | ------------------- | --- | ----------------------------- | ----- | ------------ | ------ | ----------- | ------
|Net cash provided by (used in) operating activities |                                                              | $                                                   | (19,517 | )                                      | $      | (371                | )   | $                             | 1,387 |              | $      | 15,703      |       
|Cash flows from investing activities:               |                                                              |                                                     |         |                                        |        |                     |     |                               |       |              |        |             |       
|                                                    | Purchases of property, plant and equipment                   |                                                     |         | (6,061                                 | )      |                     |    |                               |       | (5           | )      |             | (9,283
|                                                    | Net proceeds from disposal of assets                         |                                                     |         | 54                                     |        |                     |    |                               |       |             |        |             |      
|                                                    | Investment in subsidiaries                                   |                                                     |         | 22,340                                 |        |                     |    |                               |       |             |        |             |      
|                                                    |                                                              |                                                     |         |                                        |        |                     |     |                               |       |              |        |             |       
|                                                    |                                                              | Net cash provided by (used in) investing activities |         |                                        | 16,333 |                     |     |                              |       |              | (5     | )           |       
|                                                    | Proceeds from revolving loans and short-term borrowings, net |                                                     |         | 14,924                                 |        |                     |    |                               |       |             |        |             | (700  
|                                                    | Payments on long-term debt                                   |                                                     |         | (3,735                                 | )      |                     |    |                               |       |             |        |             | (4,410
|                                                    | Payment of financing costs                                   |                                                     |         | (550                                   | )      |                     |    |                               |       |             |        |             |      
|                                                    | Due to/due from parent/subsidiaries                          |                                                     |         | (7,455                                 | )      |                     | 371 |                               |       | (1,382       | )      |             | 8,466 
|                                                    |                                                              |                                                     |         |                                        |        |                     |     |                               |       |              |        |             |       
|                                                    |                                                              | Net cash provided by (used in) financing activities |         |                                        | 3,184  |                     |     | 371                           |       |              | (1,382 | )           |       
|                                                    |                                                              |                                                     |         |                                        |        |                     |     |                               |       |              |        |             |       
|                                                    |                                                              | Net increase in cash                                |         |                                        |       |                     |     |                              |       |              |       |             |       
|Cash at beginning of period                         |                                                              |                                                     |        |                                        |        |                    |     |                               |      |              |        | 7,018       |       
|                                                    |                                                              |                                                     |         |                                        |        |                     |     |                               |       |              |        |             |       
|Cash at end of period                               |                                                              | $                                                   |        |                                        | $      |                    |     | $                             |      |              | $      | 16,794      |       
|                                                    |                                                              |                                                     |         |                                        |        |                     |     |                               |       |              |        |             |       

96

---





Condensed Consolidating Statement of Cash Flows  Year Ended October 31, 2002

|                                                    |                                                              | The Company
Excluding
Guarantor
Subsidiaries        |       | Domestic
Guarantors |          | Doe Run
Cayman and
Subsidiary |        | Eliminations |        | The
Company |        
|--------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------- | ----- | ------------------- | -------- | ----------------------------- | ------ | ------------ | ------ | ----------- | -------
|Net cash provided by (used in) operating activities |                                                              | $                                                   | 2,704 |                     | $        | 1,324                         |        | $            | (6,597 | )           | $      
|Cash flows from investing activities:               |                                                              |                                                     |       |                     |          |                               |        |              |        |             |        
|                                                    | Special term deposit                                         |                                                     |       | 125,000             |          |                               |       |              |        |            |        
|                                                    | Purchases of property, plant and equipment                   |                                                     |       | (8,638              | )        |                               | (144   | )            |        | (19,982     | )      
|                                                    | Net proceeds from (expenses of) disposal of assets           |                                                     |       | (62                 | )        |                               | 10     |              |        |            |        
|                                                    | Investment in subsidiaries                                   |                                                     |       | 23,280              |          |                               |       |              |        |            |        
|                                                    |                                                              |                                                     |       |                     |          |                               |        |              |        |             |        
|                                                    |                                                              | Net cash provided by (used in) investing activities |       |                     | 139,580  |                               |        | (134         | )      |             | (19,982
|                                                    | Proceeds from revolving loans and short-term borrowings, net |                                                     |       | (29,173             | )        |                               |       |              |        | 15,700      |        
|                                                    | Proceeds from long-term debt                                 |                                                     |       | 15,035              |          |                               |       |              |        |            |        
|                                                    | Payments on long-term debt                                   |                                                     |       | (105                | )        |                               |       |              |        | (129,102    | )      
|                                                    | Issuance of redeemable preferred stock                       |                                                     |       | 20,000              |          |                               |       |              |        |            |        
|                                                    | Payment of financing costs                                   |                                                     |       | (8,095              | )        |                               |       |              |        | (400        | )      
|                                                    | Due to/due from parent/subsidiaries                          |                                                     |       | (139,946            | )        |                               | (1,190 | )            |        | 141,136     |        
|                                                    |                                                              |                                                     |       |                     |          |                               |        |              |        |             |        
|                                                    |                                                              | Net cash provided by (used in) financing activities |       |                     | (142,284 | )                             |        | (1,190       | )      |             | 27,334 
|                                                    |                                                              |                                                     |       |                     |          |                               |        |              |        |             |        
|                                                    |                                                              | Net increase in cash                                |       |                     |         |                               |        |             |        |             | 755    
|Cash at beginning of period                         |                                                              |                                                     |      |                     |          |                              |        |              | 6,263  |             |        
|                                                    |                                                              |                                                     |       |                     |          |                               |        |              |        |             |        
|Cash at end of period                               |                                                              | $                                                   |      |                     | $        |                              |        | $            | 7,018  |             | $      
|                                                    |                                                              |                                                     |       |                     |          |                               |        |              |        |             |        

97

---





Condensed Consolidating Statement of Cash Flows  Year Ended October 31, 2001

|                                                    |                                                                            | The Company
Excluding
Guarantor
Subsidiaries        |        | Domestic
Guarantors |       | Doe Run
Cayman and
Subsidiary |     | Eliminations |        | The
Company |        
|--------------------------------------------------- | -------------------------------------------------------------------------- | --------------------------------------------------- | ------ | ------------------- | ----- | ----------------------------- | --- | ------------ | ------ | ----------- | -------
|Net cash provided by (used in) operating activities |                                                                            | $                                                   | (8,765 | )                   | $     | (478                          | )   | $            | 38,463 |             | $      
|Cash flows from investing activities:               |                                                                            |                                                     |        |                     |       |                               |     |              |        |             |        
|                                                    | Purchases of property, plant and equipment                                 |                                                     |        | (12,720             | )     |                               |    |              |        | (11,817     | )      
|                                                    | Net proceeds from (expenses of) disposal of assets                         |                                                     |        | 4,999               |       |                               |    |              |        |            |        
|                                                    | Investment in subsidiaries                                                 |                                                     |        | 8,044               |       |                               |    |              |        |            |        
|                                                    |                                                                            |                                                     |        |                     |       |                               |     |              |        |             |        
|                                                    |                                                                            | Net cash provided by (used in) investing activities |        |                     | 323   |                               |     |             |        |             | (11,817
|                                                    | Proceeds from (payments on) revolving loans and short-term borrowings, net |                                                     |        | 12,484              |       |                               |    |              |        | (21,316     | )      
|                                                    | Payments on long-term debt                                                 |                                                     |        | (5,233              | )     |                               |    |              |        | (5,318      | )      
|                                                    | Proceeds from sale/leaseback transactions                                  |                                                     |        |                    |       |                               |    |              |        |            |        
|                                                    | Due to/due from parent/subsidiaries                                        |                                                     |        | 1,566               |       |                               | 478 |              |        | (2,044      | )      
|                                                    | Payment of financing costs                                                 |                                                     |        | (375                | )     |                               |    |              |        |            |        
|                                                    |                                                                            |                                                     |        |                     |       |                               |     |              |        |             |        
|                                                    |                                                                            | Net cash provided by (used in) financing activities |        |                     | 8,442 |                               |     | 478          |        |             | (28,678
|                                                    |                                                                            |                                                     |        |                     |       |                               |     |              |        |             |        
|                                                    |                                                                            | Net decrease in cash                                |        |                     |      |                               |     |             |        |             | (2,032 
|Cash at beginning of period                         |                                                                            |                                                     |       |                     |       |                              |     |              | 8,295  |             |        
|                                                    |                                                                            |                                                     |        |                     |       |                               |     |              |        |             |        
|Cash at end of period                               |                                                                            | $                                                   |       |                     | $     |                              |     | $            | 6,263  |             | $      
|                                                    |                                                                            |                                                     |        |                     |       |                               |     |              |        |             |        

98

---





REPORT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

To
the Shareholders
Doe Run Peru S.R.L.:

We
have audited the accompanying consolidated balance sheets of Doe Run Peru S.R.L. (a Peruvian Company) as of October 31, 2003 and 2002, and the related consolidated statements of operations,
changes in shareholders' equity and cash flows for each of the years in the three-year period ended October 31, 2003. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Doe Run Peru S.R.L. as of October 31, 2003 and 2002,
and the results of their operations and their cash flows for each of the years in the three-year period ended October 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.

As
discussed in Note 4 to the financial statements, the Company adopted FAS 143 beginning November 1, 2002. The cumulative effect related to the adoption of Statement
No. 143 was a loss of $92, a net decrease to plant, property and equipment of $1,613, and a decrease of $1,521 to the liability for asset retirement obligations.

The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Notes 13 and 18 to the consolidated financial
statements, the Company has jointly and severally, fully, unconditionally guaranteed notes issued by Doe Run Resources. Also, the Company has suffered recurring losses and has a net capital
deficiency. These conditions, along with other matters as set forth in Notes 13 and 19, indicate the existence of material uncertainties that raises substantial doubt about its ability to continue as
going concern. Management's plans in regards to these matters are also described in Note 18. The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Lima,
Peru

February 4,
2004 except as to Note 19 which is as of February 16, 2004

|Countersigned by:                                                                                 |  | 
|------------------------------------------------------------------------------------------------- |  | 
|Caipo y Associados                                                                                |  | 
|/s/JUAN JOSE CÓRDOVAJuan José Córdova (Partner)
Peruvian Public Accountant
Registration No. 18869 |  | 

99

---





DOE RUN PERU S.R.L.        Consolidated Balance Sheets        (U.S. Dollars in thousands, except share amounts)

|                                        |                                                                                                  | October 31,                                 |        
|--------------------------------------- | ------------------------------------------------------------------------------------------------ | ------------------------------------------- | -------
|
|ASSETS                                  |                                                                                                  |                                             |        
|Current assets:                         |                                                                                                  |                                             |        
|                                        | Cash                                                                                             |                                             | $      
|                                        | Trade accounts receivable, net of allowance for doubtful accounts of $838 and $500, respectively |                                             |        
|                                        | Inventories                                                                                      |                                             |        
|                                        | Prepaid expenses and other current assets                                                        |                                             |        
|                                        |                                                                                                  |                                             |        
|                                        |                                                                                                  | Total current assets                        |        
|Property, plant and equipment, net      |                                                                                                  |                                             | 133,683
|Other noncurrent assets, net            |                                                                                                  |                                             | 256    
|                                        |                                                                                                  |                                             |        
|                                        |                                                                                                  | Total assets                                |        
|                                        |                                                                                                  |                                             |        
|LIABILITIES AND SHAREHOLDERS' EQUITY    |                                                                                                  |                                             |        
|Current liabilities:                    |                                                                                                  |                                             |        
|                                        | Current maturities of long-term debt                                                             |                                             | $      
|                                        | Accounts payable                                                                                 |                                             |        
|                                        | Accrued liabilities                                                                              |                                             |        
|                                        | Due to related parties                                                                           |                                             |        
|                                        |                                                                                                  |                                             |        
|                                        |                                                                                                  | Total current liabilities                   |        
|Long-term debt, less current maturities |                                                                                                  |                                             |       
|Due to parent                           |                                                                                                  |                                             | 139,063
|Other noncurrent liabilities            |                                                                                                  |                                             | 3,237  
|                                        |                                                                                                  |                                             |        
|Total liabilities                       |                                                                                                  |                                             | 253,340
|Shareholders' equity (deficit):         |                                                                                                  |                                             |        
|                                        | Capital stock, $0.01 par value, 15,912,083,739 shares                                            |                                             |        
|                                        | Accumulated deficit                                                                              |                                             |        
|                                        |                                                                                                  |                                             |        
|                                        |                                                                                                  | Total shareholders' deficit                 |        
|                                        |                                                                                                  |                                             |        
|                                        |                                                                                                  | Total liabilities and shareholders' deficit |        
|                                        |                                                                                                  |                                             |        

The
accompanying notes are an integral part of these consolidated financial statements.

100

---





DOE RUN PERU S.R.L.        Consolidated Statements of Operations        (U.S. Dollars in thousands)

|                                                                               |                                                                 | Year Ended October 31,                  |        
|------------------------------------------------------------------------------ | --------------------------------------------------------------- | --------------------------------------- | -------
|
|Net sales                                                                      |                                                                 | $                                       | 436,213
|Costs and expenses:                                                            |                                                                 |                                         |        
|                                                                               | Costs of sales                                                  |                                         |        
|                                                                               | Depreciation                                                    |                                         |        
|                                                                               | Fees and commissions to related parties                         |                                         |        
|                                                                               | Selling, general and administrative expenses                    |                                         |        
|                                                                               | Exploration                                                     |                                         |        
|                                                                               | Losses from impairment/disposal of long-lived assets            |                                         |        
|                                                                               | Unrealized loss (gain) on derivatives                           |                                         |        
|                                                                               |                                                                 |                                         |        
|                                                                               |                                                                 | Total costs and expenses                |        
|                                                                               |                                                                 |                                         |        
|                                                                               |                                                                 | Income (loss) from operations           |        
|                                                                               |                                                                 |                                         |        
|Other income (expense):                                                        |                                                                 |                                         |        
|                                                                               | Interest expense                                                |                                         |        
|                                                                               | Interest income                                                 |                                         |        
|                                                                               | Exchange difference                                             |                                         |        
|                                                                               | Other, net                                                      |                                         |        
|                                                                               |                                                                 |                                         |        
|                                                                               |                                                                 |                                         | (3,174 
|                                                                               |                                                                 |                                         |        
|                                                                               |                                                                 | Income (loss) before income tax expense |        
|Income tax expense                                                             |                                                                 |                                         |       
|                                                                               |                                                                 |                                         |        
|                                                                               | Loss before cumulative effect of change in accounting principle |                                         |        
|Cumulative effect of change in accounting principle, net of income tax benefit |                                                                 |                                         | (92    
|                                                                               |                                                                 |                                         |        
|                                                                               |                                                                 | Net loss                                |        
|                                                                               |                                                                 |                                         |        

The
accompanying notes are an integral part of these consolidated financial statements.

101

---





DOE RUN PERU S.R.L.        Consolidated Statements of Changes in Shareholders' Equity (Deficit)        For the Years Ended October 31, 2003, 2002 and 2001        (U.S. Dollars in
thousands)

|                               |          | Capital
Stock |       | Retained Earnings
(Accumulated
Deficit) |   | Total   |        
|------------------------------ | -------- | ------------- | ----- | --------------------------------------- | - | ------- | -------
|Balance as of October 31, 2000 |          |               | 2,005 |                                         |   | 25,142  |        
|                               | Net loss |               |       |                                        |   |         | (7,693 
|                               |          |               |       |                                         |   |         |        
|Balance as of October 31, 2001 |          |               | 2,005 |                                         |   | 17,449  |        
|                               | Net loss |               |       |                                        |   |         | (22,146
|                               |          |               |       |                                         |   |         |        
|Balance as of October 31, 2002 |          | $             | 2,005 |                                         | $ | (4,697  | )      
|                               | Net loss |               |       |                                        |   |         | (20,500
|                               |          |               |       |                                         |   |         |        
|Balance as of October 31, 2003 |          | $             | 2,005 |                                         | $ | (25,197 | )      
|                               |          |               |       |                                         |   |         |        

The
accompanying notes are an integral part of these consolidated financial statements.

102

---





DOE RUN PERU S.R.L.        Consolidated Statements of Cash Flows        (U.S. Dollars in thousands)

|                                                 |                                                                                             | Year Ended October 31,                                   |       
|------------------------------------------------ | ------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ------
|
|Cash flows from operating activities:            |                                                                                             |                                                          |       
|                                                 | Net loss                                                                                    |                                                          | $     
|                                                 | Cumulative effect of change in accounting principle                                         |                                                          |       
|                                                 | Adjustments to reconcile net income to net cash provided by (used in) operating activities: |                                                          |       
|                                                 |                                                                                             | Deferred income taxes                                    |       
|                                                 |                                                                                             | Depreciation                                             |       
|                                                 |                                                                                             | Amortization of deferred financing fees                  |       
|                                                 |                                                                                             | Imputed interest                                         |       
|                                                 |                                                                                             | Unrealized (gain)/loss on derivatives                    |       
|                                                 |                                                                                             | Losses from impairment and disposal of long-lived assets |       
|                                                 | Increase (decrease) resulting from changes in:                                              |                                                          |       
|                                                 |                                                                                             | Trade accounts receivable                                |       
|                                                 |                                                                                             | Inventories                                              |       
|                                                 |                                                                                             | Prepaid expenses and other current assets                |       
|                                                 |                                                                                             | Trade accounts payable                                   |       
|                                                 |                                                                                             | Accrued liabilities                                      |       
|                                                 |                                                                                             | Other non-current assets and liabilities, net            |       
|                                                 |                                                                                             |                                                          |       
|                                                 | Net cash provided by (used in) operating activities                                         |                                                          |       
|                                                 |                                                                                             |                                                          |       
|Cash flows from investing activities:            |                                                                                             |                                                          |       
|                                                 | Purchases of plant, property and equipment                                                  |                                                          |       
|                                                 |                                                                                             |                                                          |       
|                                                 |                                                                                             | Net cash used in investing activities                    |       
|                                                 |                                                                                             |                                                          |       
|Cash flows from financing activities:            |                                                                                             |                                                          |       
|                                                 | Proceeds from (payments on) revolving loans and short-term borrowings, net                  |                                                          |       
|                                                 | Payments on long-term debt                                                                  |                                                          |       
|                                                 | Payments of financing fees                                                                  |                                                          |       
|                                                 | Change in due to related parties                                                            |                                                          |       
|                                                 |                                                                                             |                                                          |       
|                                                 |                                                                                             | Net cash provided by (used in) financing activities      |       
|                                                 |                                                                                             |                                                          |       
|                                                 |                                                                                             | Net increase (decrease) in cash                          |       
|Cash at beginning of year                        |                                                                                             |                                                          | 7,018 
|                                                 |                                                                                             |                                                          |       
|Cash at end of year                              |                                                                                             | $                                                        | 16,794
|                                                 |                                                                                             |                                                          |       
|Supplemental disclosure of cash flow information |                                                                                             |                                                          |       
|                                                 | Cash paid during the period for:                                                            |                                                          |       
|                                                 |                                                                                             | Interest                                                 |       
|                                                 |                                                                                             |                                                          |       
|                                                 |                                                                                             | Peruvian income tax                                      |       
|                                                 |                                                                                             |                                                          |       

The
accompanying notes are integral part of these consolidated financial statements.

103

---





DOE RUN PERU S.R.L.        Notes to Consolidated Financial Statements        (Dollars in thousands, except per share amounts)

1. Nature of business

Doe Run Peru S.R.L. (Doe Run Peru or the Company) is a Peruvian company incorporated on September 8, 1997 and, since June 1, 2001, 99.9% owned by
Doe Run Cayman Ltd. (Doe Run Cayman). Prior to June 1, 2001 Doe Run Peru was 99.9% owned by Doe Run Mining S.R.L. (Doe Run Mining), a subsidiary of Doe Run Cayman. See Note 2.

Doe
Run Peru is engaged in the mining, smelting and refining of polymetallic concentrates, producing mainly copper, lead, zinc and silver which are sold as refined metals primarily to
customers located outside of Peru.

2. Business acquisitions

At the General Shareholders' Meetings held on May 14, 2001 by Doe Run Peru and Doe Run Mining, the merger by absorption of these two companies was
approved, with Doe Run Peru the absorbing company and Doe Run Mining the absorbed company. This merger was effective as of June 1, 2001.

On
the day before the effective date of the merger Doe Run Mining's shareholders' equity transferred to Doe Run Peru, the absorbing company. As a result of the transfer of the
shareholders' equity of
Doe Run Mining to Doe Run Peru after the merger, and taking into account that Doe Run Mining was the majority shareholder of Doe Run Peru, several accounts were consolidated, such as the capital stock
of Doe Run Peru and the investment account of Doe Run Mining, resulting in a decrease in the capital stock of Doe Run Peru from $271,435 to $2,005. The capital stock of Doe Run Peru is comprised of
15,912,083,739 shares with a par value of $0.01 each, less an adjustment of $157,115 resulting from a write up of fixed assets, which is allowed for Peruvian GAAP but not under U.S. GAAP.

3. Basis of presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of
America (U.S. GAAP).

The
consolidated financial statements include all the accounts of the Company and its subsidiaries, after eliminating intercompany balances and transactions, including gains and losses
resulting from such transactions. The minority interest is not significant.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

Reclassifications

Certain balances have been reclassified from their previous presentation in order to conform to their current-year presentation.

104

---



4. Summary of significant accounting policies

Inventories

Finished metals and concentrates, metals and concentrates in process and raw materials are stated at the lower of cost or market. The last-in,
first-out (LIFO) method of determining cost is used for the majority of the Company's inventories. Supplies and repair parts are principally stated at average cost, net of reserves for
obsolescence.

Inventory
costs include concentrates purchased, labor, material and other production costs.

Property, plant and equipment

Property, plant and equipment are recorded at cost. In accordance with Statement of Financial Accounting Standards No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets," (Statement No. 144) long-lived assets are reviewed for
impairment when events or circumstances indicate that the carrying amount of the assets may not be recoverable. The impairment loss on such assets, as well as long-lived assets and certain
identifiable intangibles to be disposed of, is measured as the amount by which the carrying value of the assets exceeds the fair value of the assets.

Recoverability
of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value
of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer
depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

Major
additions and improvements to property, plant and equipment are capitalized, at cost, when they significantly increase the productive capacity or the life of the asset. Repair and
maintenance expenditures which are routine, unanticipated, or for which the timing cannot be estimated, and which
do not extend the useful life or increase the productive capacity of the asset, are charged to operations as incurred.

Costs
to treat environmental contamination are capitalized when they extend the life, increase the capacity, or improve the safety or efficiency of the property; when they mitigate or
prevent future environmental contamination or when they are incurred in preparing property for sale.

Depreciation
is calculated on a straight-line basis at the rates indicated in Note 8.

Exploration and Development Costs

Exploration costs and development costs incurred to maintain production at operating mines are charged to operations as incurred. Development expenditures for
mining properties that are considered to be commercially feasible, but are not yet producing, and major development expenditures at operating mines that are expected to benefit future production are
capitalized and amortized using the units of production method over the estimated proven ore reserves to be benefited.

105

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Reclamation and Mine Closure Costs

The Company's mining and smelting facilities are subject to governance by various agencies that have established minimum standards for reclamation.

As
of November 1, 2002 the Company adopted Statement of Financial Accounting Standards No. 143,Accounting for Asset Retirement
Obligations(Statement No. 143), which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition,
construction, development and (or) normal use of the asset.

Prior
to the adoption of Statement No. 143 the Company accrued for mine and other closure obligations at their estimated, undiscounted cost. Statement No. 143 requires that
the fair value of a
liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the
carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating
expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement.

The
cumulative effect related to the adoption of Statement No. 143 was a loss of $92, a net decrease to plant, property and equipment of $1,613, and a decrease of $1,521 to the
liability for asset retirement obligations.

Commitments and contingencies

The Company accrues for loss contingencies, including costs associated with environmental remediation obligations, when it is probable that a liability has been
incurred and can be reasonably estimated. Liability estimates for environmental remediation obligations are based on an evaluation of, among other factors, currently available facts, existing
technology, presently enacted laws and regulations and the Company's experience in remediation. Costs of future expenditures for environmental remediation obligations are not discounted to their
present value.

Revenue recognition

Sales are recorded as products are shipped to customers and title transfers or as tolling services are performed. Concentrate and certain smelter product sales
are recorded based upon estimated weights and metal contents and metal prices in effect at time of shipment. Revenues are adjusted between month of shipment and month of settlement based on changes in
market prices. Adjustments with respect to such sales are recorded based on final settlement weights, metal contents and metal prices using applicable customer agreements.

Derivative Instruments and Hedging Activities

Statement of Financial Accounting Standards No. 133,Accounting for Derivative Instruments and Hedging
Activities, was issued by the Financial Accounting Standards Board in June 1998, and amended

106

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by
Statement No. 138,Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement
No. 133, issued in June 2000 (collectively, Statement No. 133). Under Statement No. 133, the Company carries all derivative instruments in the
balance sheet at fair value. The accounting for changes in the fair value (that is, gains and losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a
hedging relationship, and if so, whether the derivative instrument is designated as a hedge of exposures to changes in fair values, or cash flows. If the hedged exposure is an exposure to changes in
the fair value of a fixed commitment, the gain (loss) is recognized in earnings in the period of change, with an equal and offsetting (loss) gain recognized on the change in value of the hedged item.
If the hedged exposure is an exposure to changes in forecasted cash flows, the effective portion of the gain (loss) is reported as a component of other comprehensive income (outside earnings) until
the forecasted hedged transaction affects earnings, when it is reclassified into earnings.

The
Company adopted Statement No. 133 as of November 1, 2000, in the first quarter in which it was required by the standard, as amended. The adoption of Statement
No. 133 resulted in a net transition loss of $1,125, net of income tax benefit of $480.

Deferred income taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and the respective tax bases of these assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled.

Deferred workers' profit sharing

In accordance with government regulations in Peru, employees are entitled to receive 8% of Doe Run Peru's taxable income, 50% of which is distributed to employees
based on number of days worked, and the remaining amount is distributed in proportion to their salaries. Such profit sharing, which is tax
deductible, is limited to 18 times the annual salary for each worker. Any excess is to be reserved and used for training of the workers.

Because
workers' profit sharing is calculated on taxable income, the Company recognizes the effect of temporary differences between financial reporting and tax bases of assets and
liabilities related to workers' profit sharing on a basis consistent with that used for income taxes.

5. Remeasurement into U.S. dollars

The methodology utilized for the re-measurement of nuevos soles into U.S. dollars, as established by Statement of Financial Accounting Standards
No. 52,Foreign Currency Translation, (Statement No. 52), is as follows:

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6. Foreign currency transaction and exchange risk exposure

Under current law, foreign currency transactions are made through the Peruvian financial banking system at free market exchange rates. The exchange rates in
effect were S/3.472, S/3.600 and S/3.439 per each $1 for assets at October 31, 2003, 2002 and 2001, respectively, and S/3.473, S/3.602 and S/3.443 per each $1 for liabilities at
October 31, 2003, 2002 and 2001, respectively.

Assets
and liabilities denominated in Peruvian nuevos soles are as follows (in thousands):

|             |                                           | October 31,  |       
|------------ | ----------------------------------------- | ------------ | ------
|
|Assets:      |                                           |              |       
|             | Cash                                      |              | S/    
|             | Prepaid expenses and other current assets |              |       
|             |                                           |              |       
|             |                                           |              | 15,996
|             |                                           |              |       
|Liabilities: |                                           |              |       
|             | Accounts payable                          |              |       
|             | Accrued liabilities                       |              |       
|             |                                           |              |       
|             |                                           |              | 42,743
|             |                                           |              |       
|             |                                           | Net position |       
|             |                                           |              |       

The
Company recorded net foreign currency transaction gains (losses) relating to transactions denominated in Peruvian nuevos soles of $(157) for the year ended October 31,
2003, $97 for the year ended October 31, 2002 and $(412) for the year ended October 31, 2001, which have been reflected in the consolidated statements of operations in other
income (expense).

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7. Inventories

Inventories consist of the following:

October 31,2003

2002Refined metals for sale

$
2,535

$
1,495Metals and concentrates in process


39,654


44,517Materials, supplies and spare parts


11,892


13,199$
54,081

$
59,211


Materials,
supplies and spare parts are stated net of reserves for obsolescence of $911 and $332 at October 31, 2003 and 2002, respectively.

The
FIFO cost of inventories valued under the LIFO cost method were approximately $48,828 and $45,065 at October 31, 2003 and 2002, respectively. If the FIFO cost method had been
used to determine cost, inventories would have been $7,350 higher and $21 lower at October 31, 2003 and 2002, respectively.

As
a result of reducing certain inventory quantities valued on the LIFO basis, inventory costs prevailing in previous years were charged to cost of sales in 2003, 2002 and 2001. The
Company calculates the effect of LIFO liquidations on results of operations based on the current cost method. The effects of these liquidations on the results of operations in the years ended
October 31, 2003, 2002 and 2001 were not significant.

8. Property, plant and equipment, net

Property, plant and equipment consists of the following:

October 31,Average Annual
Depreciation
Rate2003

2002Cost:Land



$
5,948

$
5,939Buildings and improvements

5% and 10%


36,456


25,435Machinery and equipment

6.67%


99,654


102,059Transportation units

33.33%


4,182


4,121Other equipment

10% and 20%


20,050


16,829Construction in progress




23,560


29,527189,850


183,910Less accumulated depreciation




56,167


45,400$
133,683

$
138,510


109

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The
implementation of Statement No. 143 resulted in a decrease to the cost of plant, property and equipment of $2,523, and a decrease in accumulated depreciation of $910 as of
November 1, 2002. Changes to the estimates of expected cash flows related to asset retirement obligations resulted in an additional decrease to plant, property and equipment of $600 as of
October 31, 2003. See additional disclosures to Statement No. 143 in Note 13.

Losses
from impairment or retirement of long-lived assets for the year ended October 31, 2002 includes an impairment loss of $7,849 related to the Cobriza backfill
plant project. This project represents an engineering plant that was designed to enable the Company to put tailings produced from the mining process back into the mine. In fiscal year 2002, due to the
lack of success in identification of new ore reserves at its Cobriza mine, the decrease in exploration activities as a result of the Company's financial condition, the outlook for continued low copper
prices, and higher costs than were originally anticipated to complete the project, the Company made the decision to cease construction on the project, determining that the asset will most likely not
ever be completed. The impairment loss represented the total cost of the asset of $8,450, less estimated salvage value of $601.

9. Accrued liabilities

Accrued liabilities consist of the following:

October 31,2003

2002Salaries, wages and employee benefits

$
10,001

$
8,418Accounts payable to contractors


3,977


4,167Income taxes payable


1,601


1,601Due to power company


4,062


1,953Other accrued liabilities


3,374


4,468$
23,015

$
20,607


10. Debt

Long-term debt consists of the following:

October 31,2003

2002Revolving credit facility

$
36,000

$
36,700Sale and leaseback obligations


1,481


5,593Capital leases


78


37637,559


42,669Less current maturities


37,559


4,410Long-term debt, less current maturities

$


$
38,259


The
revolving credit facility (the Doe Run Peru Revolving Credit Facility), which was amended and extended September 25, 2002, expires September 23, 2005. The Doe Run Peru
Revolving Credit Facility

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provides
for working capital loans up to $40,000, including a limit on letters of credit of $5,000, but the total commitments may not exceed the maximum line of $40,000. The Doe Run Peru Revolving
Credit Facility bears interest at LIBOR (1-month, 3-month or 6-month rate, depending on the term of the loan) plus 3.5% per annum. The Doe Run Peru Revolving Credit
Facility is secured by accounts receivable and inventories. The effective rate was 4.89% at October 31, 2003 and 4.00% at October 31, 2002. An unused line fee of .375% per annum on the
average unused portion of the line is payable quarterly, in arrears. Availability of loans under the facility is limited to a percentage of Doe Run Peru's eligible accounts receivable and eligible
inventories, less any outstanding loans and letters of credit. Revolving loans outstanding under the Doe Run Peru Revolving Credit Facility were $36,000 and $36,700 at October 31, 2003 and
2002, respectively. Doe Run Peru's actual availability and cash balances were $3,830 and $16,794 at October 31, 2003, respectively.

In
2002, The Doe Run Resources Corporation (Doe Run), Doe Run Cayman's parent, tendered a Special Term Deposit in payment of a loan made to Doe Run Peru by a foreign bank, and, in
return, Doe Run Peru delivered an intercompany note to Doe Run in an equivalent amount, plus accrued and unpaid interest, for an aggregate balance of $139,063. This intercompany note will not bear
interest during the term of the Doe Run Peru Revolving Credit Facility. Obligations under the intercompany note are subordinate to obligations under the Doe Run Peru Revolving Credit Facility.

The
Company's sale and leaseback transactions have been accounted for as financing arrangements. The weighted average rate applicable to these transactions and capital leases is 11.86%.

The
Doe Run Peru Revolving Credit Facility contains certain covenants governing minimum net worth requirements, limitations on indebtedness and investments, capital expenditures and
restrictions on the payments of dividends in the event of default. The Company was in compliance with the covenants as of October 31, 2003, except for the minimum net worth covenant. As a
result of this default, the related loan balance under the Doe Run Peru Revolving Credit Facility is reflected in current maturities of long-term debt at October 31, 2003. See
discussion in Note 19 regarding an amendment of the Doe Run Peru Revolving Credit Facility. The Doe Run Peru Revolving Credit Facility also limits Doe Run Peru's ability to make distributions
to Doe Run. See Note 19 for revised limits on distributions to Doe Run in the discussion of an amendment to this agreement.

11. Taxation

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 is a party to a Tax

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Stabilization
Agreement and a Contract of Guarantees and Measures to Promote Investments with the Peruvian Government as follows:



The Tax Stabilization Agreement expires as of December 31, 2006. Under this agreement, Doe Run Peru will utilize tax statutes prevailing as of
November 6, 1997. The principal provisions of the agreement are as follows:



On December 30, 1997, Doe Run Peru signed a Contract of Guarantees and Measures to Promote Investments, as modified in September 2003. This
agreement is effective beginning in the calendar year ended December 31, 2007, provided that Doe Run Peru complies with the committed investments related to the improvements of the facilities
[see Note 13(b)], and provides tax stability through December 31, 2022. The principal provisions are similar to those established in the Tax Stabilization
Agreement, except that Doe Run Peru will utilize the tax statutes prevailing as of December 23, 1997.

The
provision for Peruvian income tax is comprised of the following for the years ended October 31, 2003, 2002 and 2001:

Year Ended October 31,2003

2002

2001Current

$


$


$
496Deferred








7,671Total income tax expense (benefit)

$


$


$
8,167


112

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Peruvian
income tax expense (benefit) differed from the amount computed by applying the statutory income tax rate of 30% to income before income tax expense (benefit) as a result of the
following:

Year Ended October 31,2003

2002

2001Income tax expense at statutory rate

$
(6,122
)
$
(6,644
)
$
480Increase (reduction) in income tax expenseResulting from:Change in valuation allowance


5,473


4,375


4,256Effect of converting Peruvian nuevos soles into U.S. dollars





(118
)

(1,037
)Non-deductible interest on long term debt





675


2,531Other, net


649


1,712


1,937$


$


$
8,167


The
tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

|                          |                                         | October 31,                    |       
|------------------------- | --------------------------------------- | ------------------------------ | ------
|
|Deferred tax assets:      |                                         |                                |       
|                          | Inventories                             |                                | $     
|                          | Property, plant and equipment           |                                |       
|                          | Accrued liabilities                     |                                |       
|                          | Tax loss carryforwards                  |                                |       
|                          | Other noncurrent assets and liabilities |                                |       
|                          |                                         |                                |       
|                          |                                         |                                | 46,570
|                          | Less valuation allowance                |                                |       
|                          |                                         |                                |       
|                          |                                         | Total deferred tax assets      |       
|                          |                                         |                                |       
|Deferred tax liabilities: |                                         |                                |       
|                          | Property, plant and equipment           |                                |       
|                          |                                         |                                |       
|                          |                                         | Total deferred tax liabilities |       
|                          |                                         |                                |       
|                          |                                         | Net deferred tax assets        |       
|                          |                                         |                                |       

The
deferred tax assets and liabilities related to property, plant and equipment are principally due to differences in book and tax allocations of the excess of the fair value of the sum
of assets acquired, less liabilities assumed over the purchase price paid and accelerated depreciation methods used for tax purposes.

The
net operating loss carryforwards in Peru are available for use for four years beginning with the first year the Company obtains taxable income against which it can take a credit.

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Management
believes that sufficient uncertainty exists regarding the realization of certain deferred tax assets that a valuation allowance is required. The valuation allowance increased
$5,473, $4,375, and $4,256 for the years ended October 31, 2003, 2002 and 2001, respectively.

See
Note 19 for discussion of a tax assessment received by Doe Run Peru subsequent to October 31, 2003.

12. Employee benefits



Doe Run Peru is required to make monthly deposits into a bank account for severance indemnity benefits for Peruvian employees under Peruvian government
regulations. The balance in the account represents the full benefit due to such employees upon termination. The Company accrues for the additional amount that would be contributed to the account since
the last deposit date as if all such employees were to terminate as of the balance sheet date. The Company's expense related to severance indemnity benefits was $3,974, $3,456 and $2,946 for the years
ended October 31, 2003, 2002 and 2001, respectively.



In accordance with government regulations in Peru, employees are entitled to receive 8% of the Doe Run Peru's taxable income, 50% of which is distributed to
employees based on number of days worked, and the remaining distributed in proportion to their salaries. Such profit sharing, which is tax deductible, is limited to 18 times the annual salary for each
worker. Any excess is to be reserved and used for training of the workers. The Company had no expense relating to workers' profit sharing payments for the years ended October 31, 2003, 2002 and
2001, due to tax losses in those years.

13. Commitments and contingencies



According to the Contract of Guarantees and Measures to Promote Investments mentioned in note 11, (as modified in September, 2003) Doe Run Peru has
committed to performing certain economic expansion projects in order to provide tax stability from January 1, 2007 through December 31, 2022. The current contract requires Doe Run Peru
to spend $90,587 to expand and modernize its facilities, including environmental expenditures, by December 31, 2006. Through October 31, 2003, Doe Run Peru has invested $65,224. As
discussed below, in the second quarter of 2004, Doe Run Peru intends to submit a request to Ministry of Energy and Mines (MEM) to modify the requirements of its existing Environmental Adjustment and
Management Program (PAMA), at which time it will also request modifications to the requirements of the Contract of Guarantees and Measures to Promote Investments.

114

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Metaloroya S.A., the former owner of the La Oroya smelter, at the time a subsidiary of Centromin, received approval from the Peruvian government for an PAMA that
consisted of an environmental impact analysis, monitoring plan and data, mitigation measures and closure plan. Doe Run Peru assumed the obligations under the PAMA. The PAMA also sets forth the actions
and corresponding annual investments the concession holder agrees to undertake in order to achieve compliance with the applicable 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 any other type of mining or metallurgical operation like Cobriza). Once approved, the PAMA, as modified from time to time,
functions as the equivalent of an operating permit with which the operator must comply. After expiration of the PAMA, the operator must comply with all applicable standards and requirements. Future
changes in maximum permissible limits and material changes in environmental rules would not be applicable to Doe Run Peru for the remaining period of the PAMA, except for certain closure requirements.
Because these costs improve the property or prevent future environmental contamination, they are capitalized.

Doe
Run Peru has committed under its PAMA to implement the following projects at its La Oroya smelter through December 31, 2006:



Through
October 31, 2003, the Company had spent approximately $37,800 on projects under the La Oroya PAMA.

Estimated
annual spending on a calendar year basis for the projects approved in the La Oroya PAMA as amended, most recently on January 25, 2002 are as follows:

Year

Estimated Cost2004


12,8002005


53,5002006


67,700$
134,000


The
current estimate for the total to be expended on environmental projects under the PAMA and on additional related process changes for Doe Run Peru is approximately $168,000 for the
remaining term of the PAMA. The PAMA provides a specific plan for achieving the applicable maximum permissible limits pertaining to air emissions and wastewater effluent quality. The PAMA may be
modified and amended as to the actual design and timing of projects to be implemented, provided compliance with the applicable maximum permissible limits is achieved by December 31, 2006.
Although the PAMA currently requires Doe Run Peru to construct certain sulfuric acid plants,

115

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estimated
to cost approximately $107,500, in conjunction with a portion of the PAMA in order to reduce emissions, Doe Run Peru is also proceeding with efforts to identify alternative methods of
achieving compliance. These efforts include, but are not limited to, reducing or curtailing production from a portion of the plant thus eliminating the need for the equipment presently contemplated
and replacing it with another alternative. These efforts must take into consideration the impacts on profitability and liquidity, as well as other economic impacts. Doe Run Peru intends to submit a
PAMA request to MEM in 2004 to modify the requirements of the existing PAMA. There can be no assurance that the Peruvian government will approve the alternatives or that they will achieve compliance
in the timeframe required by the PAMA. If the La Oroya smelter does not operate within the current PAMA limits after December 31, 2006, Doe Run Peru could be forced to cease operations at the
La Oroya smelter.

Doe
Run Peru's operations historically and currently exceed some of the applicable MEM maximum permissible limits pertaining to air emissions, ambient air quality and wastewater effluent
quality. The PAMA projects have been designed to achieve compliance with such requirements prior to the expiration of the PAMA on December 31, 2006. No assurance can be given that
implementation of the PAMA projects is feasible or that their implementation will achieve compliance with the applicable legal requirements by the end of the PAMA period. Further, there can be no
assurance that the Peruvian government will not in the future require compliance with additional or different environmental obligations that could adversely affect Doe Run Peru's business, financial
condition or results of operations. Under the purchase agreement related to the acquisition of the La Oroya assets in October 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 other 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 obligations and investment requirements, including those in its PAMA, 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 or results of operations.

The
Cobriza mine has a separate PAMA in which Doe Run Peru has committed to complete projects to manage tailings, mine drainage, sewage and garbage. Doe Run Peru had spent approximately
$10,000 under the PAMA as of October 31, 2003. On July 3, 2002, the government of Peru enacted the Supreme Decree No. 022-2002-EM, extending the PAMA for
all companies not yet in compliance with their PAMA for a period of not less than 12 months, and up to 18 months if approved by MEM. Companies not in compliance at the end of the
extension period would have an additional period to close their operations. Doe Run Peru has received approval from MEM to extend the date of required compliance with the PAMA to April of 2004, and
has a request pending to extend the compliance period for the full 18 months allowed by the Supreme Decree. Doe Run Peru expects that it will complete its PAMA requirements by June 2004
including a mine water treatment system and by making a surface paste fill from tailings. If the extension is not granted, Doe Run Peru may be subject to legal redress in the form of fines, which
management does not believe will be material. Ore reserves are now estimated to be approximately four years at current production levels and space has been identified to store the associated tailings.

Doe
Run Peru is responsible for the remediation costs relating to a zinc ferrite disposal site. The current closure plan provides for encapsulating the ferrite residues in place at
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.

116

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On November 1, 2002 Doe Run Peru adopted Statement No. 143"Accounting for Asset Retirement
Obligations."With the adoption of this Statement, asset retirement obligations (AROs) are recognized as liabilities when incurred, with the initial measurement at fair value.
These liabilities will be accreted to full value over time through charges to income. In addition, an asset retirement cost was capitalized as part of the related asset's carrying value and will
subsequently be depreciated over the asset's useful life.

Doe
Run Peru has AROs at its Cobriza mine, related to the costs associated with closing the mine openings and covering acid rock. In October 2003, the Peruvian government enacted
a law relating to mine closure. The law indicates the necessity of preparing a mine closure plan for each operation and requires financial assurance to guarantee the completion of the plan. The
government has yet to establish regulations that put the law into effect, and as such, the Company cannot yet determine the effect that this law will have on its closure obligations. Doe Run Peru is
also responsible for the covering and revegetation of mixed lead and copper slag also stored in Huanchan, an area a short distance from the smelter where the slag is currently stored.

The
following table summarizes the balance sheet impact associated with the adoption of Statement No. 143:

|                                                    |  | October 31,
2002
As Reported |         | Statement No. 143 Adoption Impact |   | November 1, 2002 After Adoption |  
|--------------------------------------------------- |  | ---------------------------- | ------- | --------------------------------- | - | ------------------------------- | -
|Property, plant and equipment                       |  | $                            | 183,910 |                                   | $ | (2,523                          | )
|Accumulated depreciation                            |  |                              | (45,400 | )                                 |   | 910                             |  
|Plant, property and equipment, net                  |  |                              | 138,510 |                                   |   | (1,613                          | )
|Liability for AROs                                  |  |                              | 3,606   |                                   |   | (1,521                          | )
|Cumulative effect of change in accounting principle |  |                              |        |                                   |   | (92                             | )

The
pro forma effects of the application of Statement No. 143 on net income/(loss) are insignificant.

The
pro forma asset retirement obligation liability balances as if Statement No. 143 had been adopted on November 1, 2000 are as follows:

|Pro formaARO liabilityNovember 1, 2000 |  | $ | 1,566 | 
|--------------------------------------- |  | - | ----- | 
|Pro formaARO liabilityOctober 31, 2001 |  | $ | 1,740 | 

The
following illustrates the activity pertaining to the AROs for the year ended October 31, 2003.

|AROs as of October 31, 2002     |  | $ | 3,606  |  
|------------------------------- |  | - | ------ | -
|Transition adjustment           |  |   | (1,521 | )
|Accretion Expense               |  |   | 158    |  
|Changes in estimated cash flows |  |   | (600   | )
|                                |  |   |       
|AROs as of October 31, 2003     |  | $ | 1,643  |  
|                                |  |   |       

For
the year ended October 31, 2003, the effects of adopting Statement No. 143 on Peruvian operations was an increase to the loss before cumulative effect of change in
accounting principle of $158 resulting from accretion expense and a loss from cumulative effect of change in accounting principle of $92.

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Doe Run Cayman and its wholly-owned subsidiary, Doe Run Peru, have jointly and severally, fully, unconditionally guaranteed notes issued by Doe Run. The total
principal amounts owed under these notes as of October 31, 2003 and 2002 was $203,303 and $185,992, respectively. These notes are secured by a second priority interest in substantially all of
the assets of Doe Run's U.S. operations, except for substantially all accounts receivable and inventory.

The
guarantee of Doe Run Peru is contractually subordinated to the indebtedness of Doe Run Peru under the Revolving Credit Facility described in Note 10.



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

A
law firm in Lima, Peru has initiated a large number of lawsuits in the Lima labor courts against various mining companies in Peru. All lawsuits allege that workers have contracted lung
disease from working at the mining facilities. Currently, Doe Run Peru has 44 cases pending, with all claims totaling
approximately $714. Only one case has resulted in a judgment of approximately $8 against Doe Run Peru that was upheld on appeal.

The
Company is unable at this time to estimate the expected outcome and the final costs, except as noted, of these actions. Therefore, 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.



At October 31, 2003, the Company had outstanding customs bonds of $102 relating to raw materials and other purchases.



The Company has commitments to sell approximately 84%, 53%, 42%, 42% and 29% of its anticipated 2004 lead, zinc, copper, gold and silver metal production,
respectively under agreements, with terms of generally less than one year. Sales prices are generally based on the average quoted exchange prices for the month of shipment, plus a premium.

Doe
Run Peru derives its revenue from the sale of its refined metals and other products to numerous customers. Doe Run Peru's three largest customers accounted for: 15%, 9% and 8%,
respectively, of net sales in the year ended October 31, 2003, 14%, 8% and 7%, respectively, of net sales in the year ended October 31, 2002, and 9%, 8% and 8%, respectively, of net
sales in the year ended October 31, 2001. The customers have sales contracts, under which the Company will supply products at prices based on international market quotations.

14. Hedging and Derivative Financial Instruments

The Company uses derivative financial instruments primarily to enhance revenue by receiving premiums on option contracts. The Company sells futures contracts and
options and combinations thereof that effectively establish contract prices for sales and purchases that are acceptable to the Company, should the options be exercised. The options generate premium
income, which enhance revenues. Because these instruments do not meet the requirements for hedge accounting under FAS 133, the changes in fair market value related to these instruments
(including the time value

118

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portion),
which reflect market prices and volatility at the balance sheet date, are recorded in results of operations, and are expected to increase the volatility of reported results.

The
unrealized gain or loss reflected in the statement of operations relates to the change in fair market value of derivative financial instruments that are not designated as hedges. For
derivative instruments designated as hedges (futures contracts), the Company assesses effectiveness by comparing the changes in fair value or cash flows relating to the hedged transaction with all
changes in the fair values or cash flows of the related derivative contract. Because the futures contracts fluctuate by the same amount as the hedged transaction (the change in the LME price), the
hedges are considered effective.

The
fair market value of the Company's derivative financial instruments reflected in the Company's balance sheet as of October 31, 2003 and 2002 is the difference between quoted
prices at the balance sheet date and the contract settlement value. The fair market value represents the estimated net cash the Company would receive (pay) if the contracts were canceled on the
balance sheet date.

The
Company's open derivative positions as of October 31, 2003 were: (numbers not in thousands)



|Metal  |  | Quantity     |  | Weighted Average Price |  | Fair market value |  | Period       
|------ |  | ------------ |  | ---------------------- |  | ----------------- |  | -------------
|Copper |  | 3,519 tons   |  | $1,839.10/ton          |  | $33,150           |  | Nov 03Feb 04
|       |  | (213) tons   |  | $1,721.00/ton          |  | (122,788)         |  | Dec 03       
|Silver |  | 850,175 oz   |  | $5.21/oz               |  | 507,548           |  | Dec 03       
|       |  | (987,300) oz |  | $5.47/oz               |  | (841,410)         |  | Dec 03       
|Gold   |  | 6,472 oz     |  | $262.08/oz             |  | (572,985)         |  | Dec 03       
|       |  | (6,198) oz   |  | $292.53/oz             |  | 359,996           |  | Dec 03       

Sold/(Purchased) call option contracts (ton and dollar amounts not in thousands)

|Metal  |  | Quantity     |  | Price range             |  | Fair market
value |   | Period       
|------ |  | ------------ |  | ----------------------- |  | ----------------- | - | -------------
|Copper |  | 550 tons     |  | $1,720.00$1,760.00/ton |  | ($98,074          | ) | Feb 04Mar 04
|Silver |  | 323,615 oz   |  | $4.65$5.47/oz          |  | (42,658           | ) | Nov 03Mar 04
|       |  | (109,700) oz |  | $4.88$5.01/oz          |  | 2,926             |   | Nov 03       

At
October 31, 2003, the Company had recorded an asset and a liability of $13 and $774 related to the fair values of these instruments. To affect this balance, the Company
recorded a loss of $58, net of the effect of balances of deferred option premiums and options at fair value previously recorded on the balance sheet.

The
Company's open hedging positions as of October 31, 2002 were: (numbers not in thousands)

119

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Sold/(Purchased) futures contracts (ton and dollar amounts not in thousands)

|Metal  |  | Quantity     |  | Price range   |  | Fair market
value |   | Period
|------ |  | ------------ |  | ------------- |  | ----------------- | - | ------
|Copper |  | (213) tons   |  | $1,641.00/ton |  | ($43,988          | ) | Dec 02
|Silver |  | 850,175 oz   |  | $5.16/oz      |  | 897,063           |   | Nov 02
|       |  | (987,300) oz |  | $5.38/oz      |  | (1,261,800        | ) | Nov 02
|Gold   |  | (6,198) oz   |  | $288.00/oz    |  | 13,779            |   | Dec 02

Sold/(Purchased) call option contracts (ton and dollar amounts not in thousands)

|Metal  |  | Quantity     |  | Price range             |  | Fair market
value |   | Period       
|------ |  | ------------ |  | ----------------------- |  | ----------------- | - | -------------
|Copper |  | 3,613 tons   |  | $1,520.00$1,600.00/ton |  | ($75,264          | ) | Nov 02Feb 03
|Silver |  | 669,170 oz   |  | $4.28$4.60/oz          |  | (31,561           | ) | Nov 02Mar 03
|       |  | (405,890) oz |  | $4.28$4.60/oz          |  | 10,757            |   | Nov 02Dec 02
|Gold   |  | 8,118 oz     |  | $260.00/oz              |  | (250,386          | ) | Nov 02Dec 02
|       |  | (1,646) oz   |  | $260.00/oz              |  | 50,754            |   | Nov 02Dec 02

Sold/(Purchased) put option contracts (ton and dollar amounts not in thousands)

|Metal  |  | Quantity     |  | Price range          |  | Fair market
Value |   | Period       
|------ |  | ------------ |  | -------------------- |  | ----------------- | - | -------------
|Silver |  | 351,040 oz   |  | $3.65$3.87/oz       |  | ($16,502          | ) | Nov 02Mar 03
|       |  | (197,460) oz |  | $3.87/oz             |  | 7,029             |   | Nov 02Dec 02
|Gold   |  | 4,827 oz     |  | $264.00/oz           |  | (2,495            | ) | Nov 02Dec 02
|       |  | (6,034) oz   |  | $264.00  $283.00/oz |  | 8,994             |   | Nov 02Dec 02

At
October 31, 2002, the Company had recorded an asset and a liability of $78 and $771 related to the fair values of these instruments. To affect this balance, the Company
recorded a loss of $44, net of the effect of balances of deferred option premiums and options at fair value previously recorded on the balance sheet.

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15. Fair value of financial instruments

The fair values of the Company's long-term debt were estimated using discounted cash flow analysis, based on the estimates of incremental borrowing
rates for similar types of borrowing arrangements. At October 31, 2003 and 2002, the fair values of the Company's financial instruments were not materially different from their carrying
amounts.

16. Related party transactions

The Company has signed the following agreements with Doe Run:

Pursuant
to the terms and conditions included in an International Sales Agency Services Contract dated November 1, 2000, Doe Run agreed to perform marketing and sales services for
Doe Run Peru. The term of this agreement is for two years after which it is automatically renewed on an annual basis unless either party gives notice of non-renewal. The commission is
2.25% of the sales revenue. Doe Run Peru expensed $9,046, $8,574 and $8,818 for the years ended October 31, 2003, 2002 and 2001, respectively.

Pursuant
to the terms and conditions included in a Hedging Services Contract renewed November 1, 2002, Doe Run agreed to perform trading and hedging services. The agreement is
automatically renewed on an annual basis unless either party gives notice of non-renewal. The commission is $42 per month. Doe Run Peru expensed $504 for the years ended October 31,
2003, 2002 and 2001, respectively.

In
addition to the above, the following balances relating to inter-company transactions were outstanding as of October 31, 2003 and 2002:



Doe
Run Peru has guaranteed notes of Doe Run. See discussion in Note 13.

Doe
Run's debt agreements contain covenants that limit the ability of Doe Run Peru to, among other things, incur additional indebtedness, make certain restricted payments, consummate
certain asset sales, enter into certain transactions with affiliates, incur lines, impose restrictions on the ability of a subsidiary to pay dividends or make certain payments to Doe Run and its
subsidiaries, merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets.

121

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17. Geographic data

The following is an analysis of net sales by country of destination:

|               |                 | Year Ended October 31,
|-------------- | --------------- | ----------------------
|
|USA            |                 | $                     
|Japan          |                 |                       
|Brazil         |                 |                       
|Peru           |                 |                       
|Switzerland    |                 |                       
|United Kingdom |                 |                       
|Other          |                 |                       
|               |                 |                       
|               | Total net sales |                       
|               |                 |                       

18. Financial Condition

The treatment charges Doe Run Peru receives for processing raw materials have declined over the past five years, which has severely impacted Doe Run Peru's
liquidity. As noted in Note 10, the Company failed to meet certain financial covenant requirements contained in its revolving credit agreement
during fiscal 2003, which default continued into fiscal 2004. As discussed in Note 13, the Company has substantial environmental commitments that will affect the Company's liquidity. These
issues combined raise substantial doubt about the Company's ability to continue as a going concern.

Doe
Run Peru's results of operations and liquidity have been severely impacted by declining treatment charges that Doe Run Peru receives for processing raw materials resulting from a
shortage in the global supply of concentrates. The effects of low metals prices for the past several years have also caused some of Doe Run Peru's current suppliers of concentrates to suffer financial
distress, which has affected the availability of concentrate feed. During 2003, deliveries of lead and zinc concentrates to La Oroya from a major Peruvian supplier were below contracted amounts. While
Doe Run Peru was able to replace a portion of this shortfall with concentrates from other suppliers, total concentrate receipts were less than expected and the resulting changes in concentrate mix and
interruptions in delivery schedules adversely affected Doe Run Peru's metal production and results of operations. If one or more of Doe Run Peru's significant local suppliers were to cease delivery of
concentrates, there could be no assurance La Oroya would be able to secure sufficient replacement feedstock at economically acceptable terms. If such shortages resulted in a significant interruption
in feed supply, a material reduction in the production of metals from La Oroya or an interruption of production in the lead and zinc circuits could result, which could have a significant adverse
effect on the Company's results of operations, financial condition and liquidity.

As
discussed in Note 13, Doe Run Peru is proceeding with efforts to identify alternative methods of achieving compliance in conjunction with its PAMA. These efforts include, but
are not limited to, reducing or curtailing production from a portion of the plant thus eliminating the need for the equipment presently contemplated and replacing it with another alternative. These
efforts must take into consideration the impacts on profitability and liquidity, as well as other economic impacts. Doe Run Peru intends to submit a PAMA request to MEM 2004 to modify the requirements
of the existing PAMA. There can be no assurance that the alternatives will be approved by the Peruvian government or that they will achieve compliance in the timeframe required by the PAMA. If the La
Oroya smelter does not operate within the current PAMA limits after December 31, 2006, Doe Run Peru could be forced to cease operations at the La Oroya smelter.

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Doe
Run Peru has implemented cost savings, including a planned reduction of approximately 10% of its workforce, through termination or attrition, acceleration of cash receipts, as well
as other measures, to improve its liquidity. The cost of the related severance benefits in 2003 was $2,548, with a balance for accrued severance of $1,791 at October 31, 2003.

In
addition, the retirement of Doe Run Peru's loan from a foreign bank, discussed in Note 16, reduced Doe Run Peru's interest payments by approximately $14,000 per year. These
changes succeeded in improving Doe Run Peru's cash flow and availability in 2003. The cash balance and net unused availability under the Doe Run Peru Revolving Credit Facility were $16,794 and $3,830
at October 31, 2003, respectively.

Doe
Run Peru was in the process of negotiating an amendment to the agreement governing its revolving credit facility at October 31, 2003, and an amendment to its revolving credit
facility was finalized subsequent to October 31, 2003. See Note 19 for discussion. Management will continue to assess market and operating conditions to maximize its operating profit or
limit losses, while allowing Doe Run Peru to fulfill its environmental obligations. Metal prices began rising in the latter part of the fourth quarter of 2003. See discussion in Note 19
regarding recent changes in market conditions and primary smelting operations.

Based
on the factors discussed above, management expects that Doe Run Peru will continue as a going concern through October 31, 2004.

19. Subsequent Events

Metal prices have improved significantly since October 31, 2003. The Company's cash flow and financial position should improve, provided the higher metals
prices remain in effect.

These
increases in metal prices and other factors have improved the financial condition of Doe Run Peru's concentrate suppliers, which should improve the availability of economically
suitable concentrates.

On
December 26, 2003, the Peru tax authority, SUNAT notified Doe Run Peru of an income tax assessment for the 1998 tax year. The assessment primarily relates to Doe Run Peru's
income tax treatment of the December 1997 merger of Doe Run Peru and Metaloroya S.A., which was purchased by Doe Run Peru in October 1997. 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 and additional income taxes due.

Under
the assessment, the reduction in depreciation would result in additional taxes of approximately $6,600, plus penalties and interest of $9,600 to date for the 1998 tax year. For tax
years after 1998, the Company estimates that additional taxes of approximately $5,700 would be due related to the decrease in the amount of depreciation originally claimed plus penalties and interest
of approximately $20,000 to date in the event SUNAT would prevail. Interest would also be assessed on the prepayments of taxes that were not made as a result of the depreciation deductions taken by
Doe Run Peru in the years affected, estimated at approximately $5,800.

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 change discussed
above, or approximately $3,500.

Management
of the Company believes that Doe Run Peru has followed the applicable Peruvian statutes and intends to pursue all available administrative and judicial appeals. Doe Run Peru
is not

123

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required
to make any payments pending the administrative appeal process. If Doe Run Peru were to appeal in the judicial system, some type of financial assurance would be required.

On
February 16, 2004 Doe Run Peru entered into an amendment of the Doe Run Peru Revolving Credit Facility. The amendment lowered the levels of net worth Doe Run Peru must comply
with from the date of the amendment through September 2004, among other things. Based on current forecasted results, assuming metal prices higher than those experienced in fiscal 2003,
management expects to remain in compliance for the foreseeable future. The amendment does not cure or waive defaults in existence before the date of the amendment. The amendment also limits payment of
fees to Doe Run through September 30, 2004 to $2,800. In the event Doe Run Peru's net worth would fall to a level lower than the requirement at the quarterly reporting dates, the amendment
permanently reduces the amount available under the Doe Run Peru Revolving Credit Facility if Doe Run Peru does not meet its required net worth by the amount of the difference between the required and
the actual net worth. If Doe Run Peru is not successful with its administrative appeal of the tax assessment discussed above, the lender can, at its discretion, require that the amount of the
assessment reduce net worth as defined in the Doe Run Peru Revolving Credit Facility amendment. Such reduction along with other factors, including metal prices and results of operations, could affect
Doe Run Peru's ability to comply with the net worth requirement.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None.

Item 9A. Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company's management,
including the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on
that evaluation, the Company's management, including the CEO and CFO, concluded the Company's disclosure controls and procedures as of October 31, 2003 were effective in ensuring information
required to be disclosed in this Annual Report on Form 10-K was recorded, processed, summarized and reported on a timely basis. There have been no changes in the Company's internal
control over financial reporting that occurred during the period covered by this Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

Part III

Item 10. Directors and Executive Officers of the Registrant

The following table sets forth certain information regarding the directors and executive officers of Doe Run:

|Name                 |  | Age |  | Position                                                                 
|-------------------- |  | --- |  | -------------------------------------------------------------------------
|Ira Leon Rennert*    |  | 69  |  | Chairman and Director of Doe Run                                         
|Jeffrey L. Zelms     |  | 59  |  | Vice Chairman, President and Chief Executive Officer of Doe Run          
|Marvin K. Kaiser     |  | 62  |  | Executive Vice President and Chief Administrative Officer of Doe Run     
|David A. Chaput      |  | 45  |  | Vice President, Finance, Chief Financial Officer and Treasurer of Doe Run
|Richard L. Amistadi  |  | 59  |  | Vice President Sales and Marketing of Doe Run                            
|Kenneth R. Buckley   |  | 65  |  | Vice President of Doe Run                                                
|Jerry L. Pyatt       |  | 48  |  | Vice President Domestic Operations and Chief Operating Officer of Doe Run
|Dennis A. Sadlowski* |  | 64  |  | Director and Secretary of Doe Run                                        
|Thomas P. Krasner*   |  | 42  |  | Director                                                                 

---

*Mr. Rennert
was the sole director of Doe Run until the election, pursuant to the terms of the Investor Rights Agreement discussed below, of Messrs. Sadlowski and Krasner.
Mr. Sadlowski was elected to Doe Run's Board of Directors effective October 29, 2002 and Mr. Krasner was elected to Doe Run's Board of Directors effective January 13, 2003.

Pursuant
to the Investor Rights Agreement, dated as of October 29, 2002, entered into in connection with the Restructuring, Doe Run's Board of Directors was expanded to three
members, consisting of Mr. Rennert, Mr. Sadlowski and Mr. Krasner. Mr. Krasner was nominated for election by the Majority Warrantholders (see "Item 13Certain
Relationships and Related Transactions").

Ira
Leon Rennert has been Chairman, Chief Executive Officer and deemed beneficial shareholder of Renco, Doe Run's ultimate parent, and Renco's predecessors since the first acquisition by
a Renco predecessor in 1975, and has been Chairman and Director of Doe Run since April 1994. Renco holds controlling interests in a number of manufacturing and mining concerns, including AM
General LLC, US Magnesium LLC ("US Magnesium"), WCI Steel, Inc. ("WCI Steel") and Magnesium Corporation

125

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of
America ("Magcorp"), none of which are in competition with Doe Run. Mr. Rennert also holds a controlling interest in Lodestar Holdings, Inc. WCI Steel, Magcorp and Lodestar, and
certain of their respective subsidiaries, have each filed for bankruptcy court protection under the U.S. Bankruptcy Code.

Jeffrey
L. Zelms has served as Vice Chairman of Doe Run since December 1998 and as President and Chief Executive Officer of Doe Run and its predecessor since August 1984.
Mr. Zelms has over 30 years of experience in the mining industry. Mr. Zelms serves on the board of directors of Phoenix Textiles.

Marvin
K. Kaiser has served as Executive Vice President and Chief Administrative Officer since September 2001, as Executive Vice President and Chief Finance and Administrative
Officer from September 2001 through April 2004, and as Vice President and Chief Financial Officer of Doe Run and its predecessor from January 1994 through September 2001.
From June 1989 to December 1993, Mr. Kaiser was the Chief Financial Officer of AMAX Gold, Inc., a gold producing company. Mr. Kaiser is a Certified Public
Accountant.

David
A. Chaput was named Chief Financial Officer in May 2004, has served as Treasurer since February 1993 and as VP, Finance from September 2001. Prior to serving
as Treasurer, Mr. Chaput served as Manager of Credit and Financial Services from June 1987 through January 1993. Mr. Chaput has 24 years of experience in the
extractive and natural resources industries.

Richard
L. Amistadi has served as Vice President of Sales and Marketing of Doe Run and its predecessor since November 1986. Mr. Amistadi has over 30 years of
experience in sales, marketing and product development of lead metal, lead alloys, zinc metal, lead, zinc and copper concentrates and associated by-products.

Kenneth
R. Buckley served as Vice President of Doe Run since September 1996, General Manager of Doe Run Peru from October 1997 to August 31, 2003 and General Manager
of Cobriza from August 31, 1998 to August 31, 2003. From January 1996 until September 1996, Mr. Buckley was Vice President of Smelting for Doe Run.
Mr. Buckley served as General Manager of the resource recycling operations for Doe Run and its predecessor from September 1988 until January 1996. Mr. Buckley has over
35 years of experience in managing metal milling and smelting operations in five countries.

Mr. Buckley
retired effective January 1, 2004. Mr. Buckley has been replaced by A. Bruce Neil, who became General Manger of Doe Run Peru September 1, 2003.
Mr. Neil has been the general manager at the Glover Smelting Division since September 2001. Prior to joining Doe Run in 1998, Mr. Neil held positions with ASARCO where he was
involved in custom lead refining, and with Noranda Inc. and Timminco Limited smelters in Quebec, New Brunswick and Ontario, Canada.

Jerry
L. Pyatt has served as Vice President Domestic Operations and Chief Operating Officer since September 2001. Prior to that time Mr. Pyatt served as Vice President
Secondary Smelting of Doe Run, General Manager of the Company's resource recycling operations. Mr. Pyatt joined the Company in 1991 as a Metallurgical Engineer.

Dennis
A. Sadlowski, Esq. was appointed to Doe Run's Board of Directors on October 29, 2002. Mr. Sadlowski also serves as the Secretary of Doe Run. Mr. Sadlowski has
served as the Vice President-Law of Renco since 1996.

Thomas
P. Krasner was appointed to Doe Run's Board of Directors on January 13, 2003. Mr. Krasner, a Chartered Financial Analyst, has been Executive Vice President of Harch
Capital Management, Inc., an investment management firm located in Boca Raton, FL, since March 1999. From March 1996 through March 1999, Mr. Krasner was a Principal
and Portfolio Manager at Biscayne Capital Management, Fort Lauderdale, FL. Mr. Krasner serves as a member of the board of directors

126

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of
Sterling Chemical, Inc., and has served as Chairman of the Board of Trism, Inc. and as a member of the boards of directors of Birch Telecom, Inc. and FWT, Inc.

Item 11. Executive Compensation

The following table sets forth certain information concerning compensation of the named executive officers by Doe Run for services rendered to it in all
capacities:

Summary Compensation Table

|                                                                                         |  |                |  | Annual
Compensation (a) |                         |  |    |                  
|---------------------------------------------------------------------------------------- |  | -------------- |  | ----------------------- | ----------------------- |  | -- | -----------------
|
|
|
|Ira Leon Rennert(c)
Chairman of the Board                                                |  | 2003
2002
2001 |  |                         | 

                   |  |    | 

            
|Jeffrey L. Zelms
Vice Chairman, President and Chief Executive Officer                    |  | 2003
2002
2001 |  | $$$                     | 500,000
500,000
500,000 |  | $$ | 250,408
250,000

|Marvin K. Kaiser
Executive Vice President and Chief Financial and Administrative Officer |  | 2003
2002
2001 |  | $$$                     | 275,000
275,000
244,375 |  | $$ | 137,908
137,500

|Richard L. Amistadi
Vice President Sales and Marketing                                   |  | 2003
2002
2001 |  | $$$                     | 213,000
213,000
213,000 |  | $$ | 106,908
106,500

|Kenneth R. Buckley
PresidentDoe Run Peru                                                |  | 2003
2002
2001 |  | $$$                     | 200,000
200,000
200,000 |  | $  | 100,000

      
|Jerry L. Pyatt
Vice President and Chief Operating OfficerU.S. Operations                |  | 2003
2002
2001 |  | $$$                     | 200,000
200,000
164,749 |  | $$ | 100,408
100,000


---



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Net Worth Appreciation Agreements

The named executive officers (not including Mr. Rennert) and six other current and former employees of Doe Run are each parties to net worth appreciation
agreements with Doe Run, pursuant to which, upon termination of each person's employment with Doe Run, he is entitled to receive a fixed percentage of the increase in the net worth of the Company, as
defined, from a base date until the end of the fiscal quarter preceding the date of his termination. Such amount is payable without interest in 40 equal quarterly installments, commencing three months
after the termination of each person's employment, and at three month intervals thereafter. In addition, Mr. Buckley's agreement provides for a "Peru Credit" under which he is entitled to
receive a fixed percentage of the cumulative net income of Doe Run Peru S.R.L. with provisions similar to those described above. Four other employees are parties to net worth appreciation agreements
providing for a Peru Credit.

The
following table summarizes the net worth appreciation agreements now held by the named executive officers and the amounts earned thereunder.

Net Worth
Percentage

Base Date

Accumulated
as of
October 31,
2003 (a)Jeffrey L. Zelms

5.0
%
11/1/02

$
Marvin K. Kaiser

1.5

11/1/02


Richard L. Amistadi

1.5

11/1/02


Kenneth R. Buckley

0.5

11/1/02


Kenneth R. BuckleyPeru Credit

1.0

10/23/97


Jerry L. Pyatt

1.0

11/1/02





---



The
net worth appreciation agreements also provide that, in the event of payment of a dividend or a 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.

Retirement Plans

The following table shows the estimated amount of annual retirement income (calculated as a straight life annuity benefit) payable to employees under The Doe Run
Resources Corporation Retirement Plan for Salaried Employees (the Plan), supplemented by the Doe Run Resources Corporation Supplemental Employee Retirement Plan (SERP). The SERP is a
non-qualified plan under which any benefits not payable from Plan assets by reason of the limitations imposed by the Internal Revenue Code of 1986, as amended (the Code) are paid by the
Company. The benefits paid are not subject to any deduction for Social Security or other offset amount.

128

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Pension Plan Table

Approximate Annual Retirement BenefitsFinal Average
Compensation

15 Years of
Service

20 Years of
Service

25 Years of
Service

30 Years of
Service

35 Years of
Service$
125,000

$
28,125

$
37,500

$
46,875

$
56,250

$
65,625150,000


33,750


45,000


56,250


67,500


78,750175,000


39,375


52,500


65,625


78,750


91,875200,000


45,000


60,000


75,000


90,000


105,000225,000


50,625


67,500


84,375


101,250


118,125250,000


56,250


75,000


93,750


112,500


131,250300,000


67,500


90,000


112,500


135,000


157,500400,000


90,000


120,000


150,000


180,000


210,000450,000


101,250


135,000


168,750


202,500


236,250500,000


112,500


150,000


187,500


225,000


262,500600,000


135,000


180,000


225,000


270,000


315,000700,000


157,500


210,000


262,500


315,000


367,500800,000


180,000


240,000


300,000


360,000


420,000900,000


202,500


270,000


337,500


405,000


472,5001,000,000


225,000


300,000


375,000


450,000


525,000


Retirement
benefits are based on a Member's monthly "Compensation" for the highest 36 consecutive months out of the final 120 months. "Compensation" covered by the Plan includes
basic salary, overtime pay, cash bonuses, amounts contributed through a salary reduction arrangement to a qualified plan which meets the requirements of Section 401(k) of the Internal Revenue
Code or to a cafeteria plan which meets the requirements of Section 125 of the Internal Revenue Code. "Compensation" covered by the plan does not include commissions, income from the exercise
of stock options or income from shadow stock, other special pay or allowances, severance pay, payments in the nature of royalties, and the cost to the Company of any public or private employee benefit
plan.

As
of December 31, 2003, the following officers had completed the number of years of service indicated opposite their names: Jeffrey L. Zelms, 35 years; Marvin K. Kaiser,
10 years; Richard L. Amistadi, 35 years; Kenneth R. Buckley, 25 years. Covered compensation under the Plan for the year ended
October 31, 2003 did not differ by more than 10% from the compensation disclosed in the Summary Compensation Table.

Employment Agreements

The named executive officers are parties to employment agreements with Doe Run. The agreements require that, during the term of their employment, the officers
shall not directly or indirectly, engage in any aspect of the business of lead mining, milling, recycling or sale within the continental United States as an officer, director, partner, proprietor,
investor, associate, employee or consultant except with the Company. In addition, each of the above executive officers has agreed to maintain the confidentiality of information obtained during
employment with the Company.

The
agreements are automatically renewable for additional one-year terms, unless either party gives written notice at least three months of the respective renewal dates.
Pursuant to the terms of these agreements compensation is composed of: 1) a base annual salary, 2) certain year-end bonuses and 3) such additional amounts, if any, as
the Chairman may determine from time to time in his discretion subject to the terms of the credit agreements.

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On
November 1, 2002, Doe Run executed amendments to or restated the employment agreement of each of the named executive officers. Terms of the specific agreements as follows:

AnnualThrough Date

Base Salary

Retention
BonusJeffrey L. Zelms

October 31, 2005

$
500,000

$
250,000Marvin K. Kaiser

October 31, 2005

$
275,000

$
137,500Richard L. Amistadi

October 31, 2004

$
213,000

$
106,500Jerry L. Pyatt

October 31, 2004

$
200,000

$
100,000


Pursuant
to this amendment, each named executive officer received a retention bonus. These retention bonuses are also payable, in the same amounts as set forth above, on
November 1, 2003, November 1, 2004 and November 1, 2005, assuming the applicable executive is employed by the Company at such time.

On
November 1, 2002, Doe Run executed an amendment to the employment agreement of Kenneth R. Buckley. Pursuant to this amendment, Mr. Buckley will receive a retention bonus
of $100,000 payable on November 1, 2003, November 1, 2004 and November 1, 2005, assuming he is employed by the Company at such time. Mr. Buckley has announced his
retirement effective January 1, 2004.

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Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of the date hereof with respect to beneficial ownership of Doe Run's common stock by each beneficial owner
of 5% or more of the common stock, each director and each named executive officer of Doe Run during the last fiscal year, and by all directors and executive officers of Doe Run as a group. Except as
otherwise noted, the persons named in the table below have sole voting and investment power with respect to all shares or interests, as applicable, shown as beneficially owned by them.

|Name                        |  | Number of
Shares |  | Percent |  
|--------------------------- |  | ---------------- |  | ------- | -
|The Renco Group, Inc.(a)(b) |  | 1,000            |  | 100.0   | %
|DR Acquisition Corp.(a)     |  | 1,000            |  | 100.0   |  
|Ira Leon Rennert(a)(b)      |  | 1,000            |  | 100.0   |  

---



By
virtue of Renco's indirect ownership of all of the outstanding common stock of Doe Run, and Mr. Rennert's ownership of the stock of Renco, Mr. Rennert is in position to
influence actions that require the consent of a majority of the holders of equity interests in Doe Run and its subsidiaries, subject to the approval of the Independent Director, which is required for
certain transactions. See discussion below in Item 13. "Certain Relationships and Related Transactions"for actions that require approval by the
Independent Director.

Item 13. Certain Relationships and Related Transactions

Under a management consultant agreement, dated as of April 7, 1994, as amended (Management Consultant Agreement), between Renco and Doe Run, Doe Run owes
an annual fee of $2.4 million to Renco. The Management Consultant Agreement provides that Doe Run shall not make any payment thereunder which would violate any of its agreements with respect to
any of its outstanding indebtedness. The Management Consultant Agreement extends to October 31, 2006 and thereafter shall continue for additional terms of three years each unless sooner
terminated by either party by giving six months prior written notice. In the year ended October 31, 2003, Doe Run recorded expense of $2.4 million pursuant to the management consultant
agreement, but did not make any payments to Renco and at October 31, 2003, $6.4 million remained unpaid to Renco. The Company believes that the cost of obtaining the type and quality of
services rendered by Renco under the Management Consultant Agreement was, and continues to be, no less favorable than that at which the Company could obtain such services from unaffiliated entities.

At
times, to obtain the advantages of volume, Renco purchased certain insurance policies for a number of its subsidiaries, including the Company. The actual cost of such policies,
without markup, is reimbursed by the covered subsidiaries. For the years ended October 31, 2003, 2002 and 2001, the Company made payments to Renco of approximately $23 thousand,
$299 thousand and $1.8 million, respectively, under the Renco insurance program.

Doe
Run is subject to a tax sharing agreement with Renco effective October 29, 2002, as amended January 30, 2004. Pursuant to the agreement, Doe Run is required to make
quarterly payments based

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on
a pro forma federal and state income tax liability, assuming that Doe Run is not and never was a subsidiary of Renco, plus amounts reasonably determined by Renco to cover tax liabilities of current
or prior years not reflected in Doe Run's pro forma tax calculations. Until the obligations under the Senior Credit Facility, the 11.75% Notes and the Warrants have expired, the pro forma income tax
liabilities will assume that Doe Run became a C corporation under the Internal Revenue Code of 1986 (the Code) on the day after Restructuring, and will include no income attributable to any
cancellation of indebtedness prior to the restructuring or any effect of such cancellation on the basis of the assets of Doe Run.

Renco
has elected for Doe Run to be treated as a qualified subchapter S subsidiary (QSSS). Most states in which Doe Run operates will follow similar tax treatment. QSSS status requires
the ultimate shareholders to include their pro rata share of Doe Run's income or loss in their individual tax returns. The election does not affect foreign income taxes related to Doe Run's foreign
subsidiaries. As a result, Doe Run's taxable income will be included in Renco's shareholders' income tax returns. Generally, no provision for federal income taxes will be included in the Company's
statements of income for periods beginning after October 31, 1998. The Company will continue to provide for foreign, state and local income taxes for those taxing jurisdictions that do not
recognize qualified S corporation subsidiary status. However, under the "built-in gains" provisions of the tax law, federal and state taxes may become payable and will be charged to the
Company's statement of income. Such taxes are measured by the excess of the fair market value of assets over their tax bases on the effective date of the S corporation election if the appreciated
assets are disposed of within the ten-year post-conversion period. It is not management's present intent to trigger any taxes under the built-in gains provisions of
the tax laws. Doe Run may still make payments to Renco pursuant to the tax sharing agreement discussed above.

On
March 21, 2003 Renco and the Term Note lenders entered into a Term Note Assignment Agreement whereby, Renco purchased all of the rights of the agent and lenders under the Term
Note. The Term Note was amended April 30, 2004 to amend, among other things, financial covenants and waive covenant defaults.

The
Company may sell zinc and other alloys to WCI Steel, Inc., an indirect subsidiary of Renco. The Company believes that such sales are on an arm's length basis at a price no
less favorable than that at which the Company could sell to unaffiliated entities.

The
Company is a member of a controlled group with other Renco-owned companies. Accordingly the Company is jointly and severally liable with all other members of the controlled group
under Title IV of the Employee Retirement Income Security Act (ERISA) for obligations of other members of the controlled group that could include certain pension funding and excise taxes in the event
that any
member of the controlled group does not satisfy certain of its pension obligations arising pursuant to ERISA.

In
such an event, statutory liens would arise in favor of the Pension Benefit Guaranty Corporation (the PBGC) upon the assets of the other members of the controlled group not in
bankruptcy, and the PBGC may seek to obtain court approval to terminate the plan (a PBGC Termination) and may require the other members of the controlled group to satisfy such pension plan
obligations. In the event that a PBGC Termination occurs, and the PBGC requires that the Company satisfy such pension plan obligations, such requirements could have a materially adverse effect on the
Company's financial condition and liquidity.

Pursuant
to an Investor Rights Agreement, dated as of October 29, 2002, at any time during which the warrants issued pursuant to Doe Run's restructuring are outstanding, Doe Run's
Board of Directors will consist of three individuals, two of whom are to be nominated by the stockholder of Doe Run, and one of whom, the Independent Director, is to be nominated by the Majority
Warrantholders. Pursuant to the Investor Rights Agreement, Doe Run may not take, nor permit any of its subsidiaries to take,

132

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certain
actions without the approval of the Independent Director. These actions include filing a voluntary bankruptcy petition, merging or consolidating with another entity, issuing capital stock or
securities convertible into capital stock, making certain changes to its charter documents or incurring certain levels of indebtedness. The Majority Warrantholders have chosen Thomas P. Krasner as the
Independent Director. See "Directors and Executive Officers of the Registrant".

Under
certain circumstances (including a default by Doe Run on its payment obligations under the warrants or in the event that Doe Run is the subject of certain insolvency proceedings),
the holders of a majority of the warrants will be entitled to cause the stockholder of Doe Run to elect a Special Director to Doe Run's board of Directors. The Special Director will be entitled to
cast a majority of the votes at all meetings of directors. Doe Run will be required to take any of the following actions if approved by the Special Director: (i) sell all of its capital stock
or of any of its subsidiaries, (ii) merge or consolidate itself or any of its subsidiaries with any other entity, and (iii) sell off any or all of its assets or any of its subsidiaries
and apply the proceeds of such sale to cure any payment default with respect to the Exchange Notes.

On
October 29, 2002, Renco purchased $20 million of Series A Redeemable Preferred Stock, or Series A Preferred, of Doe Run. The Series A Preferred
accrues dividends at a rate of 12.5% per annum which are payable only in kind as long as the Term Note or Warrants are outstanding. The Series A Preferred ranks senior to all other classes of
capital stock of Doe Run for purposes of liquidation preference and dividends and is redeemable, at the option of Renco, at any time after May 1, 2009.

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Part IV

Item 15. Exhibits and Reports on Form 8-K



1. Financial Statements (included in Part II, Item 8):a) The Doe Run Resources CorporationIndependent Auditors' ReportConsolidated Balance SheetsOctober 31, 2003 and 2002Consolidated Statements of OperationsYears ended October 31, 2003, 2002 and 2001Consolidated Statements of Comprehensive Income and Shareholder's EquityYears ended October 31, 2003, 2002 and 2001Consolidated Statements of Cash FlowsYears ended October 31, 2003, 2002 and 2001Notes to Consolidated Financial Statementsb) Doe Run Peru S.R.LIndependent Auditors' ReportBalance SheetsOctober 31, 2003 and 2002Combined Statements of OperationsYears ended October 31, 2003, 2002 and 2001Combined Statements of Changes in Shareholders' EquityYears ended October 31, 2003, 2002 and 2001Combined Statements of Cash FlowsYears ended October 31, 2003, 2002 and 2001Notes to Combined Financial Statements2. Exhibits Required to be Filed by Item 601 of Regulation S-K.




None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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)                                          
| |  | ------------------ | ----------------------------------------------------------------------------------------
| |  | By:                | /s/JEFFREY L. ZELMSJeffrey L. Zelms Vice Chairman, President and Chief Executive
Officer
| |  | June 2, 2004(Date)

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

|                                                                                                                            |  |                                 |  |                 
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- |  | ----------------
|Ira Leon Rennert
Chairman of the Board and Director                                                                         |  | /s/IRA LEON RENNERTSignature    |  | June 2, 2004Date
|Jeffrey L. Zelms
Vice Chairman, President and Chief Executive Officer (principal executive officer)                         |  | /s/JEFFREY L. ZELMSSignature    |  | June 2, 2004Date
|David A. Chaput
Chief Financial Officer, Vice President, Finance and Treasurer (principal financial and accounting officer) |  | /s/DAVID A. CHAPUTSignature     |  | June 2, 2004Date
|Dennis A. Sadlowski
Director and Secretary of Doe Run                                                                       |  | /s/DENNIS A. SADLOWSKISignature |  | June 2, 2004Date
|Thomas P. Krasner
Director                                                                                                  |  | /s/THOMAS P. KRASNERSignature   |  | June 2, 2004Date

135

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SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS, WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

No
annual report to security holders covering the registrant's last fiscal year and no proxy statement, form of proxy or other proxy soliciting material with respect to any annual or
other meeting of security holders has been or will be sent to security holders.

136

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EXHIBIT INDEX

|Exhibit
No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Certificate of Amendment of the Certificate of Incorporation of Doe Run. (10)                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3.2         |  | Amended and Restated By-laws of Doe Run. (10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3.3         |  | Certificate of Incorporation of FPI. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.4         |  | Bylaws of FPI. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.5         |  | Certificate of Incorporation of Doe Run Cayman. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3.6         |  | Memorandum and Articles of Association of Doe Run Cayman. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3.8         |  | Constitución de Sociedad Comercial de Responsibilidad Limitada de Doe Run Peru (with English translation). (1)                                                                                                                                                                                                                                                                                                                                                                                                          
|3.10        |  | Certificate of Formation of DRLH. (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3.11        |  | Limited Liability Company Agreement of DRLH. (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3.12        |  | Certificate of Formation of The Buick Resource Recycling Facility LLC. (10)                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.13        |  | Limited Liability Company Agreement of The Buick Resource Recycling Facility. (10)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.1.1       |  | Indenture, dated as of March 12, 1998, by and among Doe Run, as issuer, FPI, Doe Run Cayman, Doe Run Mining and Doe Run Peru, as guarantors, and State Street Bank and Trust Company, as trustee, relating to the
111/4% Senior Notes due 2005, Series A, Floating Interest Rate Senior Notes due 2003, Series A, 111/4% Senior Notes due 2005, Series B and Floating Interest Rate Senior Notes due 2003, Series B and
the Guarantees thereof (containing, as exhibits, specimens of the Notes and the Guarantees). (1)
|4.1.2       |  | First Supplemental Indenture, dated as of September 1, 1998, by and among Doe Run, as issuer, FPI, Doe Run Cayman, Doe Run Mining, Doe Run Peru, Doe Run Air and Doe Run Development, as guarantors, and State Street
Bank and Trust Company, as trustee, supplementing the Indenture, dated as of March 12, 1998. (2)                                                                                                                                                                                                  
|4.1.3       |  | Second Supplemental Indenture, dated as of September 16, 1998, by and among Doe Run, as issuer, FPI, Doe Run Cayman, Doe Run Mining, Doe Run Peru, Doe Run Air, Doe Run Development and Cobriza, as guarantors, and
State Street Bank and Trust Company, as trustee, supplementing the Indenture, dated as of March 12, 1998. (3)                                                                                                                                                                                       
|4.1.4       |  | Third Supplemental Indenture, dated as of January 13, 1999, by and among Doe Run, as issuer, FPI, Doe Run Cayman, Doe Run Mining, Doe Run Peru, Doe Run Air, Doe Run Development, Cobriza and DR Land Holdings, LLC
("DRLH"), as guarantors, and State Street Bank and Trust Company, as trustee, supplementing the Indenture, dated as of March 12, 1998. (3)                                                                                                                                                          
|4.1.5       |  | Fourth Supplemental Indenture, dated as of October 29, 2002, by and among Doe Run, as issuer, Doe Run Cayman, FPI, DR Land Holdings, Doe Run Peru and Doe Run Development, as guarantors, and State Street Bank and
Trust Company, as trustee, supplementing the Indenture, dated as of March 12, 1998. (10)                                                                                                                                                                                                            
|4.2.1       |  | Indenture, dated as of September 1, 1998, by and among Doe Run, as issuer, FPI, Doe Run Cayman, Doe Run Mining, Doe Run Peru, Doe Run Air and Doe Run Development, as guarantors, and State Street Bank and Trust
Company, as trustee, relating to the 111/4% Senior Secured Notes due 2005, Series A and 111/4% Senior Secured Notes due 2005, Series B and the Guarantees thereof (containing, as exhibits, specimens
of the Notes and the Guarantees). (2)                                                           
|4.2.2       |  | First Supplemental Indenture, dated as of September 16, 1998, by and among Doe Run, as issuer, FPI, Doe Run Cayman, Doe Run Mining, Doe Run Peru, Doe Run Air, Doe Run Development and Cobriza, as guarantors, and State
Street Bank and Trust Company, as trustee, supplementing the Indenture, dated as of September 1, 1998. (3)                                                                                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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|4.2.3  |  | Second Supplemental Indenture, dated as of January 13, 1999, by and among Doe Run, as issuer, FPI, Doe Run Cayman, Doe Run Mining, Doe Run Peru, Doe Run Air, Doe Run Development, Cobriza and DRLH, as guarantors, and
State Street Bank and Trust Company, as trustee, supplementing the Indenture, dated as of September 1, 1998. (3)                                                                     
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.2.4  |  | Pledge Agreement, dated as of January 15, 1999, by Doe Run to State Street Bank and Trust Company. (3)                                                                                                                                                                                                                                                                                                       
|4.2.5  |  | Third Supplemental Indenture, dated as of October 29, 2002, by and among Doe Run, as issuer, Doe Run Cayman, FPI, DR Land Holdings, Doe Run Peru and Doe Run Development, as guarantors, and State Street Bank and Trust
Company, as trustee, supplementing the Indenture, dated as of September 1, 1998. (10)                                                                                               
|4.4    |  | Registration Rights Agreement, dated as of September 1, 1998, by and among Doe Run, FPI, Doe Run Cayman, Doe Run Mining, Doe Run Peru, Doe Run Air, Doe Run Development and Jefferies & Company, Inc., relating to
the 111/4% Senior Secured Notes due 2005. (2)                                                                                                                                             
|4.5.1  |  | Indenture, dated as of October 29, 2002, by and among Doe Run, as issuer, The Buick Resource Recycling Facility, DR Land Holdings, FPI, Doe Run Peru, Doe Run Cayman and Doe Run Development, as guarantors, and State
Street Bank and Trust Company, as trustee, relating to the 113/4% Notes due 2008 and the Guarantees thereof (containing, as exhibits, specimens of the Notes and the Guarantees). (10)
|4.5.2  |  | Security Agreement, dated as of October 29, 2002, by and among Doe Run, Doe Run Cayman, DR Land Holdings, FPI, The Buick Resource Recycling Facility and State Street Bank and Trust Company, as trustee and collateral
agent. (10)                                                                                                                                                                          
|4.5.3  |  | Warrant Agreement, dated as of October 29, 2002, by and between Doe Run and State Street Bank and Trust Company, as warrant agent (containing, as an exhibit, a specimen of the Warrant Certificate). (10)                                                                                                                                                                                                   
|4.5.4  |  | Investor Rights Agreement, dated as of October 29, 2002, by and among Doe Run, DR Acquisition Corp., The Renco Group, Inc. and State Street Bank and Trust Company, as Warrant Agent. (10)                                                                                                                                                                                                                   
|4.5.5  |  | Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and Rents, dated as of October 29, 2002, by and among Doe Run and Lisa M. Haines, as trustee, for the benefit of State Street Bank and Trust
Company. (10)                                                                                                                                                                        
|4.5.6  |  | Participations Pledge Agreement, dated as of October 29, 2002, by and among Doe Run Cayman, State Street Bank and Trust Company, Regiment Capital Advisors, L.L.C. and Doe Run Peru. (10)                                                                                                                                                                                                                    
|4.5.7  |  | Intercreditor Agreement, dated as of March 21, 2003 by and among Congress Financial Corporation, The Renco Group, Inc. and U.S. Bank National Association. (10)                                                                                                                                                                                                                                              
|4.5.8  |  | Environmental Compliance and Indemnity Agreement, dated as of October 29, 2002, by and among Doe Run, The Buick Resource Recycling Facility and State Street Bank and Trust Company. (10)                                                                                                                                                                                                                    
|4.6    |  | Stock Purchase Agreement, dated as of October 29, 2002, by and between Doe Run and The Renco Group, Inc. (10)                                                                                                                                                                                                                                                                                                
|10.1.1 |  | Employment Agreement, dated as of April 7, 1994, as amended, between The Doe Run Resources Corporation and Jeffrey L. Zelms. (10)                                                                                                                                                                                                                                                                            
|10.1.2 |  | Employment Agreement, dated as of April 7, 1994, as amended, between The Doe Run Resources Corporation and Marvin K. Kaiser. (10)                                                                                                                                                                                                                                                                            
|10.1.3 |  | Employment Agreement, dated as of April 7, 1994, between The Doe Run Resources Corporation and Richard L. Amstadi. (1)                                                                                                                                                                                                                                                                                       
|10.1.5 |  | Employment Agreement, dated as of April 7, 1994, as amended, between The Doe Run Resources Corporation and Kenneth R. Buckley. (1)                                                                                                                                                                                                                                                                           
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                              

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|10.2.1  |  | Net Worth Appreciation Agreement, dated as of April 7, 1994, as amended, between The Doe Run Resources Corporation and Jeffrey L. Zelms. (1)                                                                                                                                                                                                  
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2.2  |  | Net Worth Appreciation Agreement, dated as of April 7, 1994, as amended, between The Doe Run Resources Corporation and Marvin K. Kaiser. (1)                                                                                                                                                                                                  
|10.2.3  |  | Net Worth Appreciation Agreement, dated as of April 7, 1994, as amended, between The Doe Run Resources Corporation and Richard L. Amistadi. (1)                                                                                                                                                                                               
|10.2.5  |  | Net Worth Appreciation Agreement, dated as of January 15, 1999, as amended, between The Doe Run Resources Corporation and Kenneth R. Buckley. (6)                                                                                                                                                                                             
|10.2.6  |  | Form of second amendment to net worth appreciation agreements dated January 15, 1999 (Amendments to Exhibits 10.1.1-10.1.4). (6)                                                                                                                                                                                                              
|10.2.7  |  | Form of amendment to net worth appreciation agreements dated November 1, 2002 (amendment to Exhibits 10.2.1, 10.2.2 and 10.2.3) (10)                                                                                                                                                                                                          
|10.2.8  |  | Form of amendment to net worth appreciation agreements dated November 1, 2002 (amendment to Exhibit 10.2.5) (10)                                                                                                                                                                                                                              
|10.2.9  |  | Form of amendment to employment agreements dated November 1, 2002 (amendment to Exhibits 10.1.1, 10.1.2 and 10.1.3)(10)                                                                                                                                                                                                                       
|10.3    |  | The Doe Run Resources Corporation Supplemental Employee Retirement Plan. (1)                                                                                                                                                                                                                                                                  
|10.4    |  | The Doe Run Company Executive Tax Services Plan. (1)                                                                                                                                                                                                                                                                                          
|10.5.12 |  | Amended and Restated Loan and Security Agreement, dated as of October 29, 2002, by and among Doe Run, The Buick Resource Recycling Facility and FPI, as guarantors, the financial institutions named therein, as lenders,
 Congress Financial Corporation, as agent and The CIT Group/Business Credit, Inc., as co-agent. (10)                
|10.5.13 |  | Amendment No. 1 to Amended and Restated Loan and Security Agreement, dated as of March 11, 2003, by and among Doe Run, The Buick Resource Recycling Facility and FPI, as guarantors, the financial institutions named
therein, as lenders, Congress Financial Corporation, as agent and The CIT Group/Business Credit, Inc., as co-agent. (10)
|10.5.14 |  | Amendment No. 2 to Amended and Restated Loan and Security Agreement, dated as of April 9, 2004, by and among Doe Run, The Buick Resource Recycling Facility and FPI, as guarantors, the financial institutions named
therein, as lenders, Congress Financial Corporation, as agent and The CIT Group/Business Credit, Inc., as co-agent. (10) 
|10.6    |  | Contrato de Transferencia de Acciones, Aumento del Capital Social y Suscripción de Acciones de La Empresa Metalúrgica La Oroya S.A. (Contract of Stock Transfer, Capital Increase and Stock Subscription) (with
English translation). (1)                                                                                                     
|10.7    |  | Programa de Adecuación y Manejo Ambiental (Environmental Remedy and Management Program) (with English translation). (1)                                                                                                                                                                                                                       
|10.8.1  |  | Convenio de Estabilidad Jurídica Entre el Estado y La Empresa Metalúrgica La Oroya S.A. (Legal Stability Agreement between the State and Empresa Metalúrgica La Oroya S.A.) (with English translation).
(1)                                                                                                                                   
|10.8.2  |  | Convenio de Estabilidad Jurídica con Doe Run Mining S.R. Ltda. (Legal Stability Agreement with Doe Run Mining Commission for Foreign Investments and Technologies) (with English translation). (1)                                                                                                                                            
|10.8.3  |  | Convenio de Estabilidad Jurídica con Doe Run Mining S.R. Ltda. (Legal Stability Agreement with Doe Run Mining Ministry of Energy and Mines) (with English translation). (1)                                                                                                                                                                   
|10.8.4  |  | Convenio de Estabilidad Jurídica con Doe Run Perú S.R. Ltda. (Legal Stability Agreement with Doe Run Peru Minister of Energy and Mines) (with English translation). (1)                                                                                                                                                                       
|10.8.5  |  | Convenio de Estabilidad Jurídica con Doe Run Perú S.R. Ltda. (Legal Stability Agreement with Doe Run Peru Vice Minister of Mines) (with English translation). (1)                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                               

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|10.8.6   |  | Convenio de Estabilidad Jurídica con Doe Run Cayman Ltd. (Legal Stability Agreement with Doe Run Cayman Commission for Foreign Investments and Technologies) (with English translation). (1)                                                                          
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.8.7   |  | Remite Contrato de Estabilidad Administrativa Ambiental (Environmental Stability Agreement) (with English translation). (1)                                                                                                                                           
|10.10    |  | Contrato de Afectación en Garantía de Pagos y/o Cobranzas y de Cuentas Cobranza (Collection Account Agreement), dated June 11, 1998, between Banco de Crédito del Perú and Doe Run Peru
(with English translation). (1)                                               
|10.11    |  | Contrato de Prenda de Minerales (Ore Collateral Agreement), dated June 11, 1998, between Banco de Crédito del Perú and Doe Run Peru (with English translation). (1)                                                                                                   
|10.12    |  | Security Agreement, dated as of September 1, 1998, by Doe Run in favor of State Street Bank and Trust Company, as trustee and collateral agent. (2)                                                                                                                   
|10.13    |  | Intercreditor Agreement, dated as of September 1, 1998, between State Street Bank and Trust Company, as note trustee, and Congress Financial Corporation, as lender. (2)                                                                                              
|10.14    |  | Management Consulting Agreement, dated as of April 17, 1994, as amended, between The Renco Group, Inc. and The Doe Run Resources Corporation. (3)                                                                                                                     
|10.15    |  | Financial leasing dated January 20, 1999 entered into by and between Credito Leasing S.A. and Banco de Credito del Peru as party of the first part and Doe Run Peru S.R.L. as party of the second part (English) (5) Ex.
10.1                                         
|10.16    |  | Unconditional Guarantee dated June 11,1999 by and among the Doe Run Resources Corporation, Boeing Capital Corporation and First Security Bank, N.A. (5) Ex 10.2.1                                                                                                     
|10.17    |  | Promissory Note dated July 6, 1999 by and among Boeing Capital Corporation and First Security Bank, N.A. (5) Ex 10.2.2                                                                                                                                                
|10.18    |  | Loan and Security Agreement dated June 11, 1999 by and among Boeing Capital Corporation and First Security Bank, N.A. (5) Ex 10.2.3                                                                                                                                   
|10.19.1  |  | Credit Agreement, dated as of October 29, 2002, by and among Doe Run, the lenders party thereto and Regiment Capital Advisors, L.L.C., as agent for the lenders. (10)                                                                                                 
|10.19.2  |  | Term Note, dated as of October 29, 2002, between Doe Run and Regiment Capital Advisors, L.L.C. (10)                                                                                                                                                                   
|10.19.3  |  | Term Note, dated as of October 29, 2002, between Doe Run and Lathi, LLC. (10)                                                                                                                                                                                         
|10.19.4  |  | Guarantee and Security Agreement, dated as of October 29, 2002, by and among DR Acquisition Corp., Doe Run, Doe Run Cayman, Doe Run Peru, Doe Run Development, DR Land Holdings, FPI, The Buick Resource Recycling
Facility and Regiment Capital Advisors, L.L.C. (10)
|10.19.5  |  | Intercreditor Agreement, dated as of March 21, 2003, between Congress Financial Corporation and The Renco Group, Inc. (10)                                                                                                                                            
|10.19.6  |  | Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and Rents, dated as of October 29, 2002, by and among Doe Run and Lisa M. Haines, as trustee, for the benefit of Regiment Capital Advisors,
L.L.C. (10)                                    
|10.19.8  |  | Environmental Compliance and Indemnity Agreement, dated as of October 29, 2002, by and among Doe Run, The Buick Resource Recycling Facility and Regiment Capital Advisors, L.L.C. (10)                                                                                
|10.19.9  |  | Assignment and Acceptance dated as of March 21, 2003 by and among Doe Run, Regiment Capital II, L.P. and Lathi, LLC, as assignors, The Renco Group, Inc., as assignee and new agent and Regiment Capital Advisors,
L.L.C. as prior agent (10)                         
|10.19.10 |  | Amended and Restated Credit Agreement dated as of April 30, 2004 by and between Doe Run and The Renco Group, Inc., as agent and lender (10)                                                                                                                           
|10.20    |  | Asset Transfer Agreement, dated as of October 29, 2002, by and between Doe Run and The Buick Resource Recycling Facility. (10)                                                                                                                                        
|         |  |                                                                                                                                                                                                                                                                       

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|10.22   |  | Amended and Restated Tax Sharing Agreement, effective as of October 30, 2002, by and between Doe Run and The Renco Group, Inc. (10)                            
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.23.1 |  | Subordinated Promissory Note dated September 12, 2002 between Doe Run and Doe Run Peru. (10)                                                                   
|10.23.2 |  | Correspondence relating to cancellation of previously existing deposit and loan facilities with Banco de Credito Overseas Limited. (10)                        
|10.24.1 |  | Working Capital Facility dated September 17, 2002 between Doe Run Peru and Banco de Credito del Peru (with English translation). (10)                          
|10.24.2 |  | Accounts Receivable Assignment of Rights Agreement dated September 17, 2002 between Doe Run Peru and Banco de Credito del Peru (with English translation). (10)
|10.24.3 |  | Global and Floating Pledge Agreement dated September 17, 2002 between Doe Run Peru and Banco de Credito del Peru (with English translation). (10)              
|10.24.4 |  | Amendment to Working Capital Facility dated September 17, 2002 between Doe Run Peru and Banco de Credito del Peru, dated Feburary 16, 2004 (10)                
|21      |  | List of Subsidiaries of Registrant. (10)                                                                                                                       
|31      |  | Certifications pursuant to Section 302 of the Sarbannes-Oxley Act of 2002 (10)                                                                                 
|32      |  | Certifications pursuant to Section 906 of the Sarbannes-Oxley Act of 2002 (10)                                                                                 

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