`================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                                   FORM 20-F/A
                                 Amendment No.1

           |_| REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

                |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2006

                                       OR

          |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                                       OR

            |_| SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                Date of event requiring this shell company report

                        For the transition period from to

                         Commission file number 1-14370

                      COMPANIA DE MINAS BUENAVENTURA S.A.A.
             (Exact name of Registrant as specified in its charter)

                        BUENAVENTURA MINING COMPANY INC.
                 (Translation of Registrant's name into English)

                                REPUBLIC OF PERU
                 (Jurisdiction of incorporation or organization)

                               CARLOS VILLARAN 790
                          SANTA CATALINA, LIMA 13, PERU
                    (Address of principal executive offices)

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

         Title of each class           Name of each exchange on which registered
-------------------------------------  -----------------------------------------
Common shares, nominal (par) value of        New York Stock Exchange Inc.*
 four Peruvian Nuevos Soles per share             Lima Stock Exchange

  American Depositary Shares (ADSs)
 representing one Common share each           New York Stock Exchange Inc.

----------
*    Not for trading but only in connection with the registration of ADSs
     pursuant to the requirements of the Securities Exchange Commission

                                   ---------

     Securities registered or to be registered pursuant to Section 12(g) of
                                  the Act: None

 Securities for which there is a reporting obligation pursuant to Section 15(d)
                                of the Act: None

      Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report.

      Common shares nominal (par) value of S/.4.00 per share .....  137,444,962*
      Investment shares nominal (par) value of S/.4.00 per share..       372,320

      Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.

                                 Yes |_| No |X|

      If this report is an annual or transition report, indicate by check mark
if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.



                                 Yes |_| No |X|

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

                                 Yes |X| No |_|

      Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act.

   Large accelerated filer |X| Accelerated filer |_| Non-accelerated filer |_|

      Indicate by check mark which financial statement item the registrant has
elected to follow.

                             Item 17 |_| Item 18 |X|

      If this is an annual report, indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).

                                 Yes |_| No |X|

================================================================================



EXPLANATORY NOTE

            We are filing this Amendment No. 1 to our Annual Report on Form 20-F
filed on June 27, 2007 to include a map showing our exploration activities in
Peru as of December 31, 2006, an organizational chart showing our corporate
structure as of May 31, 2007 and a map showing our principal mining operations
as of May 31, 2007 that were inadvertently omitted from the original filing.
Other than the foregoing items, no part of the Annual Report on Form 20-F filed
on June 27, 2007 is being amended. Accordingly, this Amendment No. 1 does not
reflect events occurring after the filing of our Annual Report on Form 20-F on
June 27, 2007 and should not be understood to mean that any other statements
contained therein are true or complete as of any date subsequent to June 27,
2007. Investors should not rely upon this amendment as a reaffirmation or
reiteration of forward-looking statements that were made in the original filing
and are reprinted in this amendment.



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                              Page
                                                                                              ----
<S>                                                                                             <C>
INTRODUCTION ...............................................................................    4
  ITEM 1.     Identity of Directors, Senior Management and Advisers.........................    6
  ITEM 2.     Offer Statistics and Expected Timetable.......................................    6
  ITEM 3.     Key Information...............................................................    6
  ITEM 4.     Information on the Company....................................................   22
  ITEM 5.     Operating and Financial Review and Prospects..................................   89
  ITEM 6.     Directors, Senior Management and Employees....................................  119
  ITEM 7.     Major Shareholders and Related Party Transactions.............................  126
  ITEM 8.     Financial Information.........................................................  128
  ITEM 9.     The Offer and Listing.........................................................  131
  ITEM 10.    Additional Information........................................................  134
  ITEM 11.    Quantitative and Qualitative Disclosures About Market Risk....................  144
  ITEM 12.    Description of Securities Other Than Equity Securities........................  146
PART II
  ITEM 13.    Defaults, Dividend Arrearages and Delinquencies...............................  146
  ITEM 14.    Material Modifications to the Rights of Security Holders and Use of Proceeds..  146
  ITEM 15.    Controls and Procedures.......................................................  147
  ITEM 16A.   Audit Committee Financial Expert..............................................  149
  ITEM 16B.   Code of Ethics................................................................  149
  ITEM 16C.   Principal Accountant Fees and Services........................................  149
  ITEM 16D.   Exemptions from the Listing Standards for Audit Committees....................  150
  ITEM 16E.   Purchases of Equity Securities by the Issuer and Affiliated Purchasers........  150
PART III
  ITEM 17.    Financial Statements..........................................................  150
  ITEM 18.    Financial Statements..........................................................  150
  ITEM 19.    Exhibits......................................................................  151
</TABLE>



INTRODUCTION

Presentation of Financial Information

      As used in this Annual Report on Form 20-F, or Annual Report, unless the
context otherwise requires, references to "we," "us," "our," "Company," "BVN" or
"Buenaventura" mean Compania de Minas Buenaventura S.A.A. and its consolidated
subsidiaries. Unless otherwise specified or the context otherwise requires,
references to "$", "US$", "Dollars" and "U.S. Dollars" are to United States
Dollars, and references to "S/.", "Nuevo Sol" or "Nuevos Soles" are to Peruvian
Nuevos Soles, the legal currency of the Republic of Peru, or Peru.

      Until December 31, 2005, we and our subsidiaries maintained our financial
books and records in Nuevos Soles, the functional and reporting currency until
such date. Effective January 1, 2006, we changed our functional and reporting
currency from Nuevos Soles to U.S. Dollars. See Note 3(f) to our audited
consolidated financial statements as of December 31, 2005 and 2006 and for the
years ended December 31, 2004, 2005 and 2006, or the Financial Statements, for
an explanation of the main reasons supporting this change. We present our
consolidated financial statements in conformity with accounting principles
generally accepted in Peru, which we refer to as Peruvian GAAP. See Note 39 the
Financial Statements for a description of the significant differences between
the accounting principles we follow under Peruvian GAAP and accounting
principles generally accepted in the United States of America, which we refer to
as U.S. GAAP, and Note 40 to the Financial Statements for a reconciliation to
U.S. GAAP of net income and shareholders' equity for the periods covered.
Pursuant to the rules of the United States Securities and Exchange Commission,
or the Commission, this Annual Report includes certain separate financial
statements and other financial information of Minera Yanacocha S.R.L., or
Yanacocha. Yanacocha maintains its financial books and records in U.S. Dollars
and presents its financial statements in accordance with U.S. GAAP. See Note 20
to the audited financial statements of Yanacocha as of December 31, 2005 and
2006 and for the years ended December 31, 2004, 2005 and 2006, or the Yanacocha
Financial Statements, for a description of the significant differences between
the accounting principles followed by Yanacocha under U.S. GAAP and Peruvian
GAAP, and for a reconciliation to Peruvian GAAP of net income and partners'
equity for the periods covered.

      We record our investments in Yanacocha and Cerro Verde in accordance with
the equity method. Our partnership interest in Yanacocha has been calculated at
43.65 percent for the years ended December 31, 2005 and 2006, as described in
"Item 5. Operating and Financial Review and Prospects--The Company--General" and
Note 3(e) to the Financial Statements. As of December 31, 2006, our equity
interest in Cerro Verde was 18.50 percent.

Exchange Rates

      Effective January 1, 2006, our functional and reporting currency changed
from the Nuevo Sol to the Dollar. This change resulted from an evaluation of the
currency denominations of our cash flows in recent years and, in particular,
reflects the increasing significance of dividends from affiliates denominated in
Dollars to our financial position, results of operation and cash flows. Profit
and loss accounts for years ended December 31, 2005 and 2004 have been
translated into Dollars using the average exchange rates for such years, US$1.00
to S/3.305 and S/3.410 for 2005 and 2004, respectively.

      The translation of amounts expressed in nominal or constant Nuevos Soles
with purchasing power as of a specified date by the then-prevailing exchange
rate may result in presentation of Dollar amounts that differ from the Dollar
amounts that would have been obtained by translating nominal or constant Nuevos
Soles with purchasing power as of another specified date by the prevailing
exchange rate on that specified date. See "Item 3. Key Information--Exchange
Rates" for information regarding the average rates of exchange between the Nuevo
Sol and the Dollar for the periods specified therein.


                                        4



      Certain amounts and percentages have been rounded for presentation
purposes and may not sum exactly.

Forward-Looking Statements

      Certain statements contained in this Annual Report contain
"forward-looking" information (as defined in the U.S. Private Securities
Litigation Reform Act of 1995) that involve risks and uncertainties, including
those concerning our and Yanacocha's costs and expenses, results of exploration,
the continued improving efficiency of operations, prevailing market prices of
gold, silver and other metals mined, the success of joint ventures, estimates of
future exploration, production, subsidiaries' plans for capital expenditures,
estimates of reserves and Peruvian political, economic and legal developments.
Additional forward-looking statements related to Cerro Verde contained in this
Annual Report include those concerning costs and expenses, the continued
improving efficiency of operations, prevailing market prices of copper and
molybdenum, production and Peruvian political, economic and legal developments.
These forward-looking statements reflect our view with respect to our,
Yanacocha's and Cerro Verde's future financial performance. Actual results could
differ materially from those projected in the forward-looking statements as a
result of a variety of factors discussed elsewhere in this Annual Report,
including but not limited to those discussed under "Item 3. Key
Information--Risk Factors".


                                        5



PART I

ITEM 1. Identity of Directors, Senior Management and Advisers

      Not applicable.

ITEM 2. Offer Statistics and Expected Timetable

      Not applicable.

ITEM 3. Key Information

Selected Financial Data

Selected Financial Information and Operating Data

      The following information should be read in conjunction with, and is
qualified in its entirety by reference to, the Financial Statements including
the Notes thereto appearing elsewhere in this Annual Report. The selected
financial information as of December 31, 2005 and 2006, and for the three years
ended December 31, 2004, 2005 and 2006, is derived from the Financial Statements
appearing elsewhere in this Annual Report. The selected financial information as
of and for the years ended December 31, 2002 and 2003 has been derived from
consolidated financial statements and related notes thereto which are not
included in this Annual Report. The report of Medina, Zaldivar, Paredes &
Asociados (a member firm of Ernst & Young International) on our 2005 and 2006
Financial Statements appears elsewhere in this Annual Report. The Financial
Statements are prepared and presented in accordance with Peruvian GAAP, which
differ in certain respects from U.S. GAAP. Note 39 to the Financial Statements
provides a description of the principal differences between Peruvian GAAP and
U.S. GAAP as such differences relate to us, and Note 40 to the Financial
Statements provides a reconciliation to U.S. GAAP of our net income for the
years ended 2004, 2005 and 2006, and shareholders' equity as of December 31,
2005 and 2006. The operating data presented below is derived from our records
and has not been subject to audit. The financial information and operating data
presented below should be read in conjunction with "Item 5. Operating and
Financial Review and Prospects--The Company" and the Financial Statements and
the related Notes thereto and other financial information included in this
Annual Report.


                                        6



<TABLE>
<CAPTION>
                                                                             As of and for the year ended December 31,
                                                              -------------------------------------------------------------------
                                                                  2002          2003          2004          2005          2006
                                                              -----------   -----------   -----------   -----------   -----------
                                                                                     (In thousands of US$)(2)
<S>                                                               <C>           <C>           <C>           <C>           <C>
Income statement data:
Peruvian GAAP
Net sales of goods and services ..........................        163,553       211,477       266,405       283,387       548,072
Realized income from sale of future production ...........           --            --          20,187        28,064        50,325
Royalties income .........................................         23,395        33,609        37,797        46,094        48,475
                                                              -----------   -----------   -----------   -----------   -----------
  Total revenues .........................................        186,948       245,086       324,389       357,545       646,872
                                                              -----------   -----------   -----------   -----------   -----------
Costs of operation
Cost of good sold exclusive of depreciation and
    amortization .........................................        (78,216)      (88,186)      (99,911)     (103,881)     (147,664)
Exploration and development costs in operational mining
    sites ................................................        (22,063)      (24,836)      (37,371)      (41,166)      (49,534)
Depreciation and amortization ............................        (16,961)      (18,345)      (21,723)      (33,640)      (36,931)
Royalties ................................................         (4,171)       (7,231)       (9,254)      (12,209)      (24,420)
Environmental liability expense ..........................           --            --            --            --          (6,764)
                                                              -----------   -----------   -----------   -----------   -----------
    Total costs of operation .............................       (121,411)     (138,598)     (168,259)     (190,896)     (265,313)
                                                              -----------   -----------   -----------   -----------   -----------
Gross margin .............................................         65,537       106,488       156,130       166,649       381,559
                                                              -----------   -----------   -----------   -----------   -----------
Operating expenses
General and administrative ...............................        (22,793)      (35,684)      (22,833)      (34,350)      (36,639)
Exploration costs in
    non-operational mining sites .........................        (11,451)      (17,042)      (25,877)      (27,812)      (36,190)
Selling ..................................................         (6,907)       (7,413)       (5,231)       (4,800)       (5,928)
                                                              -----------   -----------   -----------   -----------   -----------
Total operating expenses .................................        (41,151)      (60,139)      (53,941)      (66,962)      (78,757)
                                                              -----------   -----------   -----------   -----------   -----------
Operating income (loss) ..................................         24,386        46,349       102,189        99,687       302,802
                                                              -----------   -----------   -----------   -----------   -----------
Other income (expenses), net
Share in affiliated companies, net .......................        100,558       160,356       177,423       263,994       313,168
Finance income ...........................................          2,618         2,239         3,558         3,523         7,949
Gain (loss) from change in the fair value of derivative
    instruments ..........................................         12,716      (192,128)      (17,360)      (26,588)      (13,268)
Finance expense ..........................................         (2,971)       (2,498)       (4,273)       (4,060)       (5,948)
Loss from changes in the market value of gold certificates           --            --            --            --          (4,861)
Exchange difference gain (loss) ..........................         (1,774)         (136)       (3,706)          448          (308)
Gain (loss) from exposure to inflation ...................           (941)          228        (2,888)         --            --
Loss from sale of subsidiary's shares ....................         (2,008)         --            --            --            --
Other, net ...............................................            839        (3,683)       (4,811)       (3,227)       (5,026)
                                                              -----------   -----------   -----------   -----------   -----------
Total other income (expenses), net .......................        109,037       (35,622)      147,943       234,090       291,706
                                                              -----------   -----------   -----------   -----------   -----------
Income before workers' profit sharing, income tax and
    minority interest ....................................        133,423        10,727       250,132       333,777       594,508
Workers' profit sharing ..................................           (458)       18,087        (5,383)       (2,593)      (14,271)
Income tax ...............................................         (7,631)       57,028       (29,911)      (22,816)      (64,033)
                                                              -----------   -----------   -----------   -----------   -----------
Net income ...............................................        125,334        85,842       214,838       308,368       516,204
Net income attributable to minority interest .............         (7,233)      (14,675)       (8,261)      (19,971)      (88,147)
                                                              -----------   -----------   -----------   -----------   -----------
Net income attributable to Buenaventura ..................        118,101        71,167       206,577       288,397       428,057
Cumulative effect of change in accounting principles due
    to mine closing ......................................           --         (20,792)         --            --            --
                                                              -----------   -----------   -----------   -----------   -----------
Net income ...............................................        118,101        50,375       206,577       288,397       428,057
                                                              -----------   -----------   -----------   -----------   -----------

Basic and diluted earnings per share(3) (4) ..............           0.93          0.40          1.62          2.27          3.36
Basic and diluted earnings per ADS(3) ....................           0.93          0.40          1.62          2.27          3.36
Dividends per share ......................................           0.17          0.36          0.32          0.35          0.47

Average number of shares outstanding .....................    127,236,219   127,236,219   127,236,219   127,229,844   127,221,164

U.S. GAAP
Operating income (loss) ..................................         24,111        64,731        96,961        97,225       302,277
</TABLE>


                                        7



<TABLE>
<CAPTION>
                                                                            As of and for the year ended December 31,
                                                             -------------------------------------------------------------------
                                                                 2002          2003          2004          2005          2006
                                                             -----------   -----------   -----------   -----------   -----------
                                                                                    (In thousands of US$)(2)
<S>                                                           <C>           <C>           <C>          <C>           <C>
Net income - restated(5) .................................        15,268        55,473       206,685       288,488       424,697
Basic and diluted earnings per share - restated(3) .......          0.12          0.44          1.62          2.27          3.34
Basic and diluted earnings per ADS- restated(3)(5) .......          0.12          0.44          1.62          2.27          3.34
Balance sheet data:
Peruvian GAAP
Total assets .............................................       678,425       881,415       973,184     1,251,122     1,735,771
Total debt ...............................................        53,779        40,624        18,803         8,517        10,606
Shareholders' equity .....................................       592,406       453,788       587,023       862,959     1,300,506
U.S. GAAP
Total assets - restated(5) ...............................       677,737       880,835       972,712     1,250,741     1,732,030
Shareholders' equity - restated(6) .......................       450,308       446,563       574,649       839,162     1,205,328
Operating data (unaudited):(5)
Production:
  Gold (oz.) .............................................       277,490       319,427       357,562       388,042       405,383
  Silver (oz.) ...........................................    13,346,374    13,813,658    15,095,562    16,429,816    22,179,552
Proven and probable reserves
  Gold (oz.) .............................................       592,102       870,345       931,924     1,036,543     1,032,063
  Silver (oz.) ...........................................    72,119,422    92,817,825    95,862,405   116,452,462   117,808,602
</TABLE>

---------
(1)   Except per share, per ADS, outstanding shares and operating data.

(2)   Until December 31, 2005, our financial books and records were maintained
      in Nuevos Soles, the functional and reporting currency as of such date.
      Effective January 1, 2006, was changed the functional and reporting
      currency from Nuevos Soles to U.S. Dollars. See Note 3(f) to the Financial
      Statements. For comparative purposes, all prior years are presented
      assuming that U.S. Dollars were used as the reporting currency. See Note
      3(f) to the Financial Statements for a description of the translation
      procedures.

(3)   Income per share has been calculated for each year as net income divided
      by average number of shares outstanding during the year. As of December
      31, 2002, 2003 and 2004, the total number of Common Shares outstanding was
      137,444,962, including 10,585,130 treasury shares, and the total number of
      Investment Shares Outstanding was 372,320, including 15,933 treasury
      shares. On October 28, 2003, we approved a modification of the ratio of
      the Common Shares to ADSs from two Common Shares per ADS to one Common
      Share per ADS. The ratio change became effective on November 12, 2003 and
      income per ADS in prior years has been restated to reflect this
      modification. During 2005, we acquired 15,055 Investment Shares that are
      held as treasury shares.

(4)   Basically diluted.

(5)   Net income, total assets and shareholders' equity for the years ended
      December 31, 2002, 2003 and 2004 have been adjusted retroactively to
      comply with APB 18 - The Equity Method of Accounting for Investments in
      Common Stock, due to the change in the accounting treatment of Cerro
      Verde's investment during 2005. See Note 13(c) to the Financial
      Statements. We have not modified years 2002, 2003 and 2004 to give effect
      to the accounting changes described in Note 4 to the Financial Statements.

(6)   The amounts in this table reflect our total operating data and the total
      operating data of each of our consolidated subsidiaries for each year,
      2002 through 2006. As of December 31, 2006, our ownership percentages for
      the relevant companies were as follows: Condesa, 100%; Conenhua, 100%;
      Colquijirca, 61.42%; Chaupiloma, 60.0% and Cedimin, 100%.

      As of December 31, 2004, Minera Paula, which as of October 22, 2004 was
      100% owned by us, was merged with and into Cedimin and is no longer a
      separate legal entity.


                                        8



Yanacocha Selected Financial Information and Operating Data

      The following table presents selected financial information and operating
data for Yanacocha at the dates and for each of the periods indicated. This
information should be read in conjunction with, and is qualified in its entirety
by reference to, the Yanacocha Financial Statements, which have been audited by
Dongo-Soria Gaveglio y Asociados (a member firm of PricewaterhouseCoopers). The
report of Dongo-Soria Gaveglio y Asociados on the Yanacocha Financial Statements
appears elsewhere in this Annual Report. The Yanacocha Financial Statements are
prepared and presented in accordance with U.S. GAAP, which differ in certain
respects from Peruvian GAAP. Note 20 to the Yanacocha Financial Statements
provides a description of the principal differences between U.S. GAAP and
Peruvian GAAP, as such differences relate to Yanacocha, as well as a
reconciliation to Peruvian GAAP of Yanacocha's net income for the years ended
2004, 2005 and 2006 and partners' equity as of December 31, 2005 and 2006. The
operating data presented below, which is based on 100 percent of Yanacocha's
production and reserves, is derived from Yanacocha's records and has not been
subject to audit. The financial information presented below should be read in
conjunction with "Item 5. Operating and Financial Review and
Prospects--Yanacocha" and the Yanacocha Financial Statements and the related
Notes thereto and other financial information included in this Annual Report.


                                        9



<TABLE>
<CAPTION>
                                                                      As of and for the year ended December 31,
                                                              ---------------------------------------------------------
                                                                 2002        2003        2004        2005        2006
                                                              ---------   ---------   ---------   ---------   ---------
                                                                               (In thousands of US$)(1)
<S>                                                           <C>         <C>         <C>         <C>         <C>
Income statement data:
U.S. GAAP
  Revenues ................................................     713,398   1,036,370   1,249,882   1,490,402   1,543,212
Costs and expenses:
  Costs applicable to sales ...............................    (312,980)   (377,214)   (450,825)   (507,806)   (515,883)
  Depreciation and depletion ..............................    (114,769)   (146,822)   (179,441)   (193,587)   (171,730)
  Exploration costs .......................................     (11,121)    (13,574)    (35,236)    (32,884)    (32,254)
  General and administrative costs ........................      (4,682)     (5,126)     (4,986)     (5,453)     (5,589)
  Other expenses ..........................................         160     (18,126)     (6,135)     (6,669)    (60,790)
Total operating expenses ..................................    (443,392)   (560,862)   (676,623)   (733,061)    786,246
Operating income ..........................................     270,006     443,541     573,259     757,341     756,966
Interest expense and other ................................      (7,473)     (1,055)     (1,392)      3,540       6,825
Pre-tax income ............................................     262,533     474,453     571,867     760,881     763,791
Income tax provision ......................................     (64,611)   (121,688)   (181,563)   (235,407)   (238,343)
Net income before cumulative effect of change in accounting
  principles ..............................................     197,922     352,765     390,304     525,474     525,448
Cumulative effect of change in accounting principle, net ..           0     (32,353)          0           0           0
                                                              ---------   ---------   ---------   ---------   ---------
Net income and comprehensive income .......................     197,922     320,412     390,304     525,474     525,448
                                                              ---------   ---------   ---------   ---------   ---------
Peruvian GAAP
Revenues(2) ...............................................     729,285   1,059,951   1,266,550   1,527,609   1,636,009
Operating income ..........................................     281,274     475,894     605,019     675,293     886,373
Net income ................................................     220,847     313,143     427,975     535,476     567,659
Balance sheet data:
U.S. GAAP
Total assets ..............................................   1,055,280   1,146,041   1,207,748   1,549,583   1,824,853
Total debt ................................................     114,954      67,356      37,316       3,160     200,000
Partners' equity ..........................................     680,458     700,870     811,174   1,156,648   1,196,409
Peruvian GAAP
Total assets ..............................................     868,992     974,630   1,091,571   1,473,255   1,823,480
Total debt ................................................     112,581      65,777      36,553       2,850     200,000
Partners' equity ..........................................     574,085     587,228     735,203   1,090,679   1,200,562
Operating data (unaudited):
Gold produced (oz.) .......................................   2,285,584   2,851,143   3,017,303   3,333,088   2,612,199
Gold proven and probable reserves (thousands of oz.) ......      32,605      31,709      32,257      32,620      29,327
</TABLE>

----------
(1)   Except operating data.

(2)   Under US GAAP, Yanacocha recognizes revenue when the price is determinable
      and upon delivery and transfer of title of gold to the customer. In
      addition, revenues from silver sales are credited to cost applicable to
      sales as a by-product credit. Under Peruvian GAAP, revenue, including gold
      and silver sales, is recognized, net of transportation and refining costs,
      when dore is delivered to the shipper.

Exchange Rates

      The following table sets forth the high and low month-end rates and the
average and end-of-period offered rates for the sale of Nuevos Soles in U.S.
Dollars for the period indicated, as published by the Superintendencia de Bancos
y Seguros (Superintendent of Bank and Insurance, or the SBS). The Federal
Reserve Bank of New York does not report a noon buying rate for Nuevos Soles.


                                       10



                                 Exchange Rates
                            (Nuevos Soles per US$)(1)

Year            High(2)   Low(2)   Average(3)   Period end(4)
-------------   -------   ------   ----------   -------------
2002.........    3.644     3.433      3.517         3.514
2003.........    3.495     3.461      3.478         3.463
2004.........    3.499     3.277      3.413         3.277
2005.........    3.427     3.253      3.303         3.427
2006.........    3.355     3.194      3.264         3.194

2006            High(5)   Low(5)   Average(6)   Period end(7)
-------------   -------   ------   ----------   -------------
  December       3.216     3.194      3.205         3.194

2007
-------------
  January....    3.201     3.187      3.192         3.198
  February...    3.196     3.185      3.190         3.189
  March......    3.190     3.182      3.185         3.182
  April......    3.182     3.171      3.178         3.171
  May........    3.175     3.156      3.167         3.174

----------
(1)   Expressed in nominal (not inflation adjusted) Nuevos Soles.

(2)   Highest and lowest of the twelve month-end exchange rates for each year
      based on the offered rate.

(3)   Average of month-end exchange rates based on the offered rate.

(4)   End of period exchange rates based on the offered rate.

(5)   Highest and lowest of the exchange notes based on the offered rate on the
      last day of each month.

(6)   Average of the exchange rates based on the offered rate on the last date
      of each day in the relevant month.

(7)   The exchange rate based on the offered rate on the last day of each
      relevant month. Source: SBS

      On June 22, 2007, the offered rate for Dollars as published by the SBS was
S/.3.171 = US$1.00.

Capitalization and Indebtedness

      Not applicable.

Reasons for the Offer and Use of Proceeds

      Not applicable.


                                       11



Risk Factors

Factors Relating to the Company

Dependence on Mining Exploration Agreements

      An integral part of our operations is the participation in mining
exploration projects with experienced mining companies. Such projects benefit us
by providing a source of outside funds for exploration of mining rights, giving
us access to the holdings of outside parties without the risks and costs of
outright acquisition. They also enable us to expand the scope of knowledge and
experience of our senior management, geologists and engineers through increased
contact with their counterparts from other organizations. We can be highly
dependent upon our partners, co-venturers or other shareholders in a joint
mining exploration project carrying out their obligations under the applicable
joint mining exploration agreement or mining operating agreement. Such partners,
co-venturers and other shareholders in a joint mining exploration venture may
contribute capital to cover the expenses of the joint venture project or provide
critical technological expertise and/or management and organizational expertise.
See "Item 4. Information on the Company--Yanacocha--Overview" for a description
of how we and Newmont Mining Corporation, a Delaware corporation, or Newmont
Mining, have joined together to participate in Yanacocha and how Yanacocha is
dependent upon Newmont Peru Limited, Peruvian Branch, or Newmont Peru, to
provide management and other expertise to the Yanacocha project. If, however, a
partner, a co-venturer or in certain cases another shareholder does not carry
out its obligations under the applicable joint venture agreement, joint mining
operating agreement, by-laws or shareholders agreement, the value of our
investment in the joint mining exploration project could be adversely affected
and we could incur significant expense in enforcing our rights or pursuing
remedies. There can be no assurance that our current or future partners will
fulfill their obligations under such agreements. See "Item 4. Information on the
Company--Yanacocha" and "Item 4. Information on the Company--The
Company--Business Overview--Exploration".

Investment in International Operations

      Foreign operations are subject to certain risks inherent in conducting
business abroad, including, among others, exposure to foreign currency
fluctuations, devaluations or supply restrictions, exchange control regulations,
government policies, price and wage controls, taxation, intervention, social
instability and other political, economic or diplomatic developments beyond our
control. There can be no assurance that our foreign exploration activities will
not be adversely affected in the future.

Prices of Gold, Silver and Copper

      Because our revenues are derived primarily from the sale of ore
concentrates containing gold and silver, Yanacocha's revenues are derived
primarily from the sale of gold and silver and Cerro Verde's revenues are
derived primarily from copper sales, the prices we, Yanacocha and Cerro Verde
obtain for gold, silver, copper and ore concentrates containing such metals, and
our, Yanacocha's and Cerro Verde's earnings, are directly related to world
market prices for such metals. Such prices have historically fluctuated widely
and are affected by numerous factors beyond our control, including the overall
demand for and worldwide supply of gold, silver, copper and other metals; the
availability and price of competing commodities, international economic trends,
currency exchange fluctuations, expectations of inflation, actions of commodity
markets participants, consumption and demand patterns and political events in
major producing countries. Although we engage in hedging activities, such as
forward sales and option contracts, to minimize our exposure to fluctuations in
the prices of gold, silver and other metals, there can be no assurance that
hedging activities will protect us from price fluctuations in such metals. In
2006, management decided to close out gold derivative contracts maintained as of
December 31, 2005 and replace them with normal sales contracts. See "Item 11.
Quantitative and Qualitative Disclosure About Market Risk" and Note 34 to the
Financial Statements. For information on gold and silver prices for each of the
years in the five-year period ended December 31, 2006, see "Item 4. Information
on the Company--The Company--Business Overview--Sales of Metal Concentrates". On
December 29, 2006 and June 22, 2007, the morning fixing price for gold on the
London Bullion Market was US$635.70 per ounce and US$652.00 per ounce,
respectively. On December 29, 2006 and June 22, 2007, the afternoon fixing spot
price of silver on the London market, or London Spot, was US$632.00 per ounce
and US$652.82 per ounce, respectively. On December 29, 2006 and June 22, 2007,
the London Metal Exchange Settlement price for copper was US$2.853 per pound and
US$3.406 per pound, respectively.


                                       12



Impact of Government Regulation

      Our and Yanacocha's activities in Peru depend on mining concessions for
exploration, which we refer to as mining concessions, being obtained from the
Peruvian Ministry of Energy and Mines, or MEM, in our case, and through the
assignment of concessions granted to a related entity by the Peruvian
government, in the case of Yanacocha. In addition, our and Yanacocha's
activities in Peru depend on provisional permits, obtained from the MEM, for
exploration rights of the area of the claim, which we refer to as provisional
permits, and together with mining concessions, referred to as mining rights,
and/or processing concessions, obtained from the MEM, for treatment of mining
ores, or processing concessions, as well as compliance by us and Yanacocha with
certain agreements entered into with the Peruvian government. Under Peru's
current legal and regulatory regime, our mining rights have an indefinite term
and Yanacocha's assigned mining rights have a term of 20 years, contingent upon
payment of the annual concession fee for each mining right, with an option to
renew for an additional term of 20 years. The mining rights are maintained by
meeting a minimum annual level of production or investment and by the annual
payment of a concession fee. A fine is payable for the years in which minimum
production or investment requirements are not met. In addition if, in any year,
the concession fee is not paid, payment may be made the following year within
the term provided for making such payment. Any payment made will be applied to
the prior year if such prior year was not paid. Failure to pay such concession
fees or fines for two consecutive years could result in the loss of one or more
of the mining rights. However, mining and processing concessions will not lapse
if the administrative authority failed to issue a resolution declaring the
termination of the concession within the first five years following the date on
which such payment failure occurred. Our and Yanacocha's processing concessions
enjoy the same duration and tenure as the mining rights, subject to payment of a
fee based on nominal capacity for the processing plant. Failure to pay such
processing fees or fines for two consecutive years could result in the loss of
the processing concessions. We are, and Yanacocha has informed us that Yanacocha
is, current in the payment of all amounts due in respect to its mining and
processing concessions.

      On June 24, 2004, the Peruvian Congress approved Law 28258 - Mining
Royalties Law. This law established a mining royalty that owners of mining
concessions must pay to the Peruvian government for the exploitation of metallic
and non-metallic resources. The mining royalties are calculated on a sliding
scale with rates ranging from 1 to 3 percent over the value of mineral
concentrates based on international market prices. As provided by Law No. 28969,
effective since January 26, 2007, government tax agencies are responsible for
the collection of mining royalties. See "Item 4. Information on the Company--The
Company--Regulatory Framework--Mining Royalties". We made our first payment of
the mining royalty pursuant to Law 28258 in 2004. Yanacocha and Cerro Verde were
exempt from this payment pursuant to its Mining Law Stabilization Agreements
under the General Mining Law with the Peruvian government. There can be no
assurance that the Peruvian government will not impose additional mining
royalties on us, Yanacocha or Cerro Verde in the future or that such mining
royalties will not have an adverse effect on our, Yanacocha's or Cerro Verde's
results of operations or financial condition.


                                       13



      In addition, during 2006 Peruvian mining companies, represented by the
Sociedad Nacional de Mineria, Petroleo y Energia, agreed to a mining payment
equivalent to 3.75 percent of net income after taxes. The payment was negotiated
with the Peruvian government and is intended to support government efforts to
alleviate poverty. On December 21, 2006, the Peruvian Government issued Supreme
Decree No. 071-2006-EM, which regulates the conditions under which the
negotiated payment will be paid by Peruvian mining companies. The payment
amounts to 3.75 percent of Peruvian net income after income tax, including 2.75
percent to be paid to a local mining fund and 1 percent to be paid to a regional
mining fund. This payment is payable from 2006 through 2010, contingent on the
price of gold.

      In the case of Sociedad Minera Cerro Verde S.A.A., or Cerro Verde, a
negotiated payment agreement with the Peruvian Government was pending signature
as of December 31, 2006. Under the terms of this agreement, a portion of the
total payment (2.75%) would be covered with other payments previously committed.
For the remaining portion (1%), Cerro Verde has not made any provision because
its management considers that the related criteria to recognize a liability had
not been met as of December 31, 2006. Cerro Verde's management considers that
such criteria will be met upon signing the agreement with the Peruvian
Government.

Environmental and other Regulatory Matters

      Our, Yanacocha's and Cerro Verde's exploration, mining and milling
activities, as well our and Yanacocha's smelting and refining activities, are
subject to a number of Peruvian laws and regulations, including environmental
laws and regulations. Additional matters subject to regulation include, but are
not limited to, concession fees, transportation, production, water use and
discharges, power use and generation, use and storage of explosives, surface
rights, housing and other facilities for workers, reclamation, taxation, labor
standards, mine safety and occupational health.

      We anticipate additional laws and regulations will be enacted over time
with respect to environmental matters. The development of more stringent
environmental protection programs in Peru could impose constraints and
additional costs on our, Yanacocha's and Cerro Verde's operations and require
us, Yanacocha and Cerro Verde to make significant capital expenditures in the
future. Although we believe we are substantially in compliance, and Yanacocha
and Cerro Verde have advised us that Yanacocha and Cerro Verde are substantially
in compliance, with all applicable environmental regulations, there can be no
assurance that future legislative or regulatory developments will not have an
adverse effect on our, Yanacocha's or Cerro Verde's business or results of
operations. See "Item 4. Information on the Company--The Company--Regulatory
Framework--Environmental Matters" and "--Permits" and "Item 4. Information on
the Company--Yanacocha--Regulation, Permitting and Environmental Matters".

Hedging

      Since 2003, we have been modifying the terms of certain derivative
instruments in order to qualify them as normal sales contracts. In October 2004,
our Board of Directors issued a mandate not to enter into new hedging
transactions. At December 31, 2005, we were engaged in gold price hedging
activities, such as forward sales and put/call options, from derivative
contracts executed prior to 1999. In March 2006, we closed out all our
outstanding gold derivative contracts as of December 31, 2005 and replaced them
with normal sales contracts. On January 15, 2007, we transferred 208,000 gold
ounces that had been committed for 2007 and 108,000 gold ounces that had been
committed for 2008 to 2012, without any cash disbursement. On March 9, 2007, we
negotiated with several counterparties to eliminate the fixed or maximum price
component on determined commitments for a total of 483,000 gold ounces scheduled
for delivery from 2008 to 2012, which required us to make aggregate payments of
US$144.99 million. Additionally, on May 15 and May 25, 2007, we negotiated with
several counterparties to eliminate the fixed or maximum price component on all
of our 2007, 2008 and 2009 gold commitments for a total of 488,000 gold ounces,
which required us to make aggregate payments of US$170.70 million. After these
transactions we will continue delivering physical gold as scheduled but will
receive the prevailing market price at the time. See "Item 11. Quantitative and
Qualitative Disclosures About Market Risk" and Note 38 to the Financial
Statements.


                                       14



      Yanacocha and Cerro Verde have not engaged in, and are currently not
engaged in, gold or copper price hedging activities, such as forward sales or
option contracts, to minimize its exposure to fluctuations in the price of gold
or copper. No assurance can be given, however, that Yanacocha or Cerro Verde
will not enter into hedging transactions in the future or that such
transactions, if entered into, will have the desired effect.

Speculative Nature of Precious Metals Exploration

      Precious metals exploration, particularly gold exploration, is highly
speculative in nature, involves many risks and frequently is unsuccessful. There
can be no assurance that our or Yanacocha's precious metals exploration efforts
will be successful. Once mineralization is discovered, it may take a number of
years from the initial phases of drilling before production is possible, during
which time the economic feasibility of production may change. Substantial
expenditures are required to establish proven and probable ore reserves through
drilling, to determine metallurgical processes to extract the metals from the
ore and, in the case of new properties, to construct mining and processing
facilities. As a result of these uncertainties, no assurance can be given that
our or Yanacocha's exploration programs will result in the expansion or
replacement of current production with new proven and probable ore reserves.

      Advanced exploration projects have no operating history upon which to base
estimates of proven and probable ore reserves and estimates of future cash
operating costs. Such estimates are, to a large extent, based upon the
interpretation of geologic data obtained from drill holes and other sampling
techniques, and feasibility studies which derive estimates of cash operating
costs based upon anticipated tonnage and grades of ore to be mined and
processed, the configuration of the ore body, expected recovery rates of the
mineral from the ore, comparable facility and equipment operating costs,
anticipated climatic conditions and other factors. As a result, it is possible
that actual cash operating costs and economic returns based upon proven and
probable ore reserves may differ significantly from those originally estimated.
Moreover, significant decreases in actual over expected prices may mean
reserves, once found, will be uneconomical to produce. It is not unusual in new
mining operations to experience unexpected problems during the start up phase.
Yanacocha and Cerro Verde, used US$500 per ounce of gold and US$1.05 per pound
of copper to calculate their gold and copper reserves, respectively, as of
December 31, 2006; however, we use a fixed price of US$446 per ounce of gold and
a three-year average historic price of US$8.50 per ounce of silver (US$6.50 per
ounce for El Brocal) to calculate our proven and probable ore reserves due to
the fact that most of our gold sales contracts consider fixed prices.

Increased Costs Could Affect Profitability

      Costs at any particular mining location frequently are subject to
variation due to a number of factors, such as changing ore grade, changing
metallurgy and revisions to mine plans in response to the physical shape and
location of the ore body. In addition, costs are affected by the price of
commodities, such as fuel, electricity and labor. Commodity costs are at times
subject to volatile price movements, including increases that could make
production at certain operations less profitable. Reported costs may be affected
by changes in accounting standards. A material increase in costs at any
significant location could have a significant effect on our profitability.


                                       15



      Yanacocha expects production to decrease by approximately 40 percent in
2007 as compared to 2006, and costs applicable to sales are expected to increase
by approximately 72 percent. As a result, net income is expected to decrease by
approximately 82 percent in 2007 as compared to 2006 net income.

Capital Intensive Nature of Precious Metals Exploration

      Precious metals exploration requires substantial capital expenditures for
the exploration, extraction, production and processing stages and for machinery,
equipment and experienced personnel. There can be no assurance that we or
Yanacocha will generate sufficient cash flow and/or that we will have access to
sufficient external sources of funds in the form of outside investment or loans
to continue exploration activities at the same or higher levels than in the
past.

Reserves Estimates

      The proven and probable ore reserve figures presented in this Annual
Report are our, Yanacocha's and Cerro Verde's estimates, and there can be no
assurance that the level of recovery of gold, silver, copper and certain other
metals will be realized. Reserve estimates may require revision based on actual
production experience. Market price fluctuations of gold, silver and other
metals, as well as increased production costs or reduced recovery rates, may
render proven and probable ore reserves containing relatively lower grades of
mineralization uneconomic to exploit and may ultimately result in a restatement
of proven and probable ore reserves. Moreover, short-term operating factors
relating to the reserves, such as the processing of different types of ore or
ore grades, could adversely affect our or Yanacocha's profitability in any
particular accounting period. See "Item 4. Information on the Company--Property,
Plants and Equipment--The Company's Property--Reserves" and "Item 4. Information
on the Company--Property, Plants and Equipment--Yanacocha's
Properties--Reserves".

Replacement of Reserves

      As we produce gold, silver, zinc and other metals, we deplete our ore
reserves for such metals. To maintain production levels, we must replace
depleted reserves by exploiting known ore bodies and locating new deposits.
Success in exploration for gold, silver and the other metals we produce is very
uncertain and there is a risk that our depletion of reserves will not be off-set
by new discoveries.

Industry Risks

      The business of mining, smelting and refining gold, silver, copper and
other metals is generally subject to a number of risks and hazards, including
industrial accidents, labor disputes, unusual or unexpected geological
conditions, changes in the regulatory environment, environmental hazards and
weather and other natural phenomena such as earthquakes. Such occurrences could
result in damage to, or destruction of, mining properties or production
facilities, personal injury or death, environmental damage, delays in mining,
monetary losses and possible legal liability. We, Yanacocha and Cerro Verde each
maintain insurance against risks that are typical in the mining industry in Peru
and in amounts that we and Yanacocha believe to be adequate but which may not
provide adequate coverage in certain circumstances. Insurance against certain
risks (including certain liabilities for environmental pollution or other
hazards as a result of exploration and production) is not generally available to
us or Yanacocha or to other companies within the industry.

Labor Matters

               Prior to April 30, 2007, we had not experienced any strikes
during the past five years. On April 30, 2007, we experienced a 5-day labor
stoppage at the Uchucchacua mine, which coincided with a strike called by the
national mining and metallurgical union. There can be no assurance that we will
not experience strikes or other labor-related work stoppages that could have a
material adverse effect on our operations and/or operating results in the
future. In February 2004, Yanacocha entered into its first collective bargaining
agreement with Workers' Union of Minera Yanacocha S.R.L., or the Union, which
was created and registered before the Peruvian Labor Ministry on December 9,
2003. This collective bargaining agreement expired in February 2007 and
Yanacocha is currently negotiating a new agreement. Yanacocha has informed us
that it considers its relations with its employees to be good. However, a small
percentage of Union members engaged in a three-day strike in April 2006, despite
the fact that the collective bargaining agreement had not yet expired. The
strike did not have any material impact on Yanacocha's operations; nevertheless
there can be no assurance that Yanacocha will not experience other strikes or
labor-related work stoppages that could have a material adverse effect on its
operations or its operating results. See "Item 6. Directors, Senior Management
and Employees--Employees" and "Item 4. Information on the
Company--Yanacocha--Employees".


                                       16



Political and Social Perception

      Our and Yanacocha's exploration and production activities are potentially
subject to political and social risks. Over the past several years, we and
Yanacocha have been the target of local political protests, including community
protests at our La Zanja project, a roadblock in protest of drilling activities
at Yanacocha's Cerro Quilish mine and a roadblock carried out by members of the
Combayo community. In September 2004, due to the incidents at Cerro Quilish,
Yanacocha suspended all drilling activities at this mine. In December 2004,
Yanacocha removed the Cerro Quilish gold deposit from its proven and probable
reserves. See "Item 4. Information on the Company--The Company--History and
Development--Joint Venture Exploration Projects--La Zanja" and "Item 4.
Information on the Company--Yanacocha--Legal Proceedings". There can be no
assurance that these incidents will not continue, or that similar incidents will
not occur, or that the continuation or intensification of community protests
would not adversely affect our or Yanacocha's exploration and production
activities or our or Yanacocha's results of operations or financial condition.

Investment Company Act

      We own a 43.65 percent partnership interest in Yanacocha and an 18.50
percent equity interest in Cerro Verde. These interests may constitute
"investment securities" for purposes of the U.S. Investment Company Act of 1940,
as amended, or the Investment Company Act.

      Under the Investment Company Act, an investment company is defined in
relevant part to include (i) any company that is or holds itself out as being
engaged primarily, or proposes to engage primarily, in the business of
investing, reinvesting or trading in securities and (ii) any company that owns
or proposes to acquire investment securities having a value exceeding 40 percent
of such company's total assets (exclusive of certain items) on an unconsolidated
basis. Issuers that are investment companies within the meaning of the
Investment Company Act, and which do not qualify for an exemption from the
provisions of such act, are required to register with the Commission and are
subject to substantial regulations with respect to capital structure,
operations, transactions with affiliates and other matters. If we were deemed to
be an investment company and did not qualify for an exemption from the
provisions of the Investment Company Act, we would be required to register with
the Commission and would be subject to such regulations, which would be unduly
burdensome and costly for us and possibly adversely impact us.

      We received an order from the Commission on April 19, 1996 declaring us to
be primarily engaged in a business other than that of an investment company and,
therefore, not an investment company within the meaning of the Investment
Company Act. We intend to conduct our operations and maintain our investments in
a manner, and will take appropriate actions as necessary, to ensure we will not
be deemed to be an investment company in the future. The Commission, however,
upon its motion or upon application, may find that the circumstances that gave
rise to the issuance of the order no longer exist, and as a result may revoke
such order. There can be no assurance that such order will not be revoked.


                                       17



Factors Relating to Peru

Exposure to Peruvian Political Risk

      All of our, Yanacocha's and Cerro Verde's operations are conducted in
Peru. Accordingly, our, Yanacocha's and Cerro Verde's business, financial
condition or results of operations could be affected by changes in economic or
other policies of the Peruvian government or other political, regulatory or
economic developments in Peru.

      During the past several decades, Peru has had a history of political
instability that has included military coups and a succession of regimes with
differing policies and programs. Past governments have frequently played an
interventionist role in the nation's economy and social structure. Among other
things, past governments have imposed controls on prices, exchange rates and
local and foreign investment as well as on limitations on imports, have
restricted the ability of companies to dismiss employees, have expropriated
private sector assets (including mining companies) and have prohibited the
remittance of profits to foreign investors.

      During the 1980s, government policies restricted our ability, among other
things, to repatriate funds and import products from abroad. In addition,
currency exchange rates were strictly controlled, and all export sales were
required to be deposited in Peru's Banco Central de Reserva, or Central Bank,
where they were exchanged from U.S. Dollars to Peruvian currency at
less-than-favorable rates of exchange. These policies generally affected our
results of operations. Controls on repatriation of funds limited the ability of
our shareholders to receive dividends outside of Peru, but did not limit the
ability of our shareholders to receive distributions of earnings in Peru. See
"Item 10. Additional Information--Exchange Controls".

      In July 1990, Alberto Fujimori was elected president of Peru, and his
administration implemented a broad-based reform of Peru's political system,
economy and social conditions, aimed at stabilizing the economy, restructuring
the national government by reducing bureaucracy, privatizing state-owned
companies, promoting private investment, developing and strengthening free
markets, institutionalizing democratic representation and enacting programs for
the strengthening of basic services related to education, health, housing and
infrastructure. However, after Fujimori's reelection to his third five-year term
of office on May 29, 2000, Fujimori resigned his post amid increasing social
pressure. The Peruvian Congress appointed Valentin Paniagua as interim
President. New elections were subsequently held on April 8, 2001 and a run-off
election was held on June 3, 2001, in which Alejandro Toledo was elected
President. President Toledo's government has largely retained the economic
policies of the previous government, focusing on promoting private investment,
privatizing state-owned companies in various sectors including energy, mining
and public services.

      At the elections held on April 9, 2006, no presidential candidate received
the required 50 percent or more of the votes. As a result, a second round
election between the top two presidential candidates, Ollanta Humala Tasso from
the Partido Union por el Peru, or the UPP, and Alan Garcia Perez of the Partido
Alianza Popular Revolucionaria, or APRA, was held on June 4, 2006. Alan Garcia
Perez was elected, but he has no majority in Congress. The new government has
continued the economic policies of its predecessor.


                                       18



Risks of Inflation, Reduced Economic Growth and Currency Devaluation

      Over the past several decades, Peru has experienced periods of high
inflation, slow or negative economic growth and substantial currency
devaluation. The inflation rate in Peru, as measured by the Indice de Precios al
Consumidor, or IPC, and published by INEI, has fallen from a high of 7,649.7
percent in 1990 to 1.5 percent in 2002, 2.5 percent in 2003, 3.5 percent in
2004, 1.5 percent in 2005 and 1.1 percent in 2006. The Peruvian currency has
been devalued numerous times during the last 20 years. The devaluation rate has
decreased from a high of 4,019.3 percent in 1990 to 2.0 percent in 2002, 1.5
percent in 2003, 5.2 percent in 2004, 4.5 percent in 2005 and 6.9 percent in
2006. Our revenues and operating expenses are primarily denominated in U.S.
Dollars. If inflation in Peru were to increase without a corresponding
devaluation of the Nuevo Sol relative to the U.S. Dollar, our financial position
and results of operations, and the market price of our Common Shares and
American Depositary Shares, or ADSs, could be affected. Although the Peruvian
government's stabilization plan has significantly reduced inflation, and the
Peruvian economy has experienced strong growth in recent years, there can be no
assurance that inflation will not increase from its current level or that such
growth will continue in the future at similar rates or at all.

      Among the economic circumstances that could lead to a devaluation would be
the decline of Peruvian foreign reserves to inadequate levels. Peru's foreign
reserves at December 31, 2006 were US$17.6 billion as compared to US$14.1
billion at December 31, 2005. Although actual foreign reserves must be
maintained at levels that will allow the succeeding government the ability to
manage the Peruvian economy and to assure monetary stability in the near future,
there can be no assurance that Peru will be able to maintain adequate foreign
reserves to meet its foreign currency denominated obligations, or that Peru will
not devalue its currency should its foreign reserves decline. See "Item 3. Key
Information--Exchange Rates".

      Peru's current account deficit is being funded partially by foreign direct
investment. There can be no assurance that foreign direct investment will
continue at current levels, particularly if adverse political or economic
developments in Peru arise, a development that may also contribute to
devaluation pressure.

Deterioration in Economic and Market Conditions in Latin America and Other
Emerging Market Countries

      The market for securities issued by Peruvian companies is influenced by
economic and market conditions in Peru and, to varying degrees, market
conditions in other Latin American and emerging market countries. Although
economic conditions are different in each country, the reaction of investors to
developments in one country is likely to cause the capital markets in other
countries to fluctuate. For example, political and economic events, such as the
crises in Venezuela, Ecuador, Bolivia, Brazil and Argentina, have influenced
investors' perceptions of risk with regards to Peru. The negative investor
reaction to developments in our neighboring countries may adversely affect the
market for securities issued by countries in the region, cause foreign investors
to decrease the flow of capital into Latin America, and introduce uncertainty
about plans for further integration of regional economies.

Exchange and Investment Controls

      Peruvian law currently imposes no restrictions on the ability of companies
operating in Peru to transfer foreign currency from Peru to other countries, to
convert Peruvian currency into foreign currency or foreign currency into
Peruvian currency or to remit dividends abroad or on the ability of foreign
investors to liquidate their investment and repatriate their capital. Prior to
1991, Peru had restrictive exchange controls and exchange rates. During the
latter part of the 1980s, exchange restrictions prevented payment of dividends
to our shareholders in the United States in U.S. Dollars. Accordingly, should
such or similar controls be instituted, dividends paid to holders of Common
Shares and, consequently, holders of American Depositary Receipts, or ADRs,
could be affected. There can be no assurance that the Peruvian government will
continue to permit such transfers, remittances or conversion without
restriction. See "Item 10. Additional Information--Exchange Controls".


                                       19



Corporate Disclosure and Accounting Standards

      We prepare our financial statements using Peruvian GAAP, which differs in
certain material respects from U.S. GAAP. Thus, the presentation of Peruvian
financial statements and reported earnings may not be comparable to those
companies whose financial statements are prepared in accordance with U.S. GAAP.
See Note 39 to the Financial Statements for a description of the significant
differences between Peruvian GAAP and U.S. GAAP, as such differences relate to
us, and Note 40 for a reconciliation to U.S. GAAP of our net income and
shareholders' equity for the period included therein. In addition, as a foreign
private issuer in the United States, we have less intensive reporting
requirements and information regarding us may not be as readily disseminated
into the market.

Enforceability of Civil Liabilities

      We are organized under the laws of Peru. A significant majority of our
directors and officers reside outside the United States (principally in Peru).
All or a substantial portion of our assets or the assets of such persons are
located outside the United States. As a result, it may not be possible for
investors to effect service of process within the United States upon us or upon
such persons or to enforce against them in federal or state courts in the United
States judgments predicated upon the civil liability provisions of the federal
securities laws of the United States. We have been advised by our Peruvian
counsel, that there is uncertainty as to the enforceability, in original actions
in Peruvian courts, of liabilities predicated solely under the United States
federal securities laws and as to the enforceability in Peruvian courts of
judgments of United States courts obtained in actions predicated upon the civil
liability provisions of the United States federal securities laws.

Factors Relating to the Common Shares and ADSs

Voting Rights; Effective Control by Principal Shareholders

      The aggregate percentage of the economic interest of our outstanding share
capital held by Alberto Benavides de la Quintana, our Chairman and former Chief
Executive Officer, and certain members of his immediate and extended family and
their spouses, or the Benavides Family, as of April 30, 2007, was 27.3 percent.
Because of the significant ownership interest the Benavides Family holds in
common shares and because the Investment Shares held by others do not have
voting rights, the Benavides Family has the power to elect a significant number
of the outstanding directors and has a significant influence over the outcome of
substantially all matters to be decided by a vote of shareholders. In addition,
under the terms of the Amended and Restated Deposit Agreement dated May 3, 2002,
as further amended and restated as of November 12, 2003, among us, The Bank of
New York, as depositary, or the Depositary, and the owners and beneficial owners
of ADSs, or the Amended and Restated Deposit Agreement, relating to our ADSs, if
holders of ADSs do not provide the Depositary with timely instructions for the
voting of Common Shares represented by such ADRs, the Depositary will be deemed
to be instructed to give a person designated by us, which will likely be Alberto
Benavides de la Quintana, a discretionary proxy to vote such shares, unless we
inform the Depositary that we do not wish such proxy to be given.


                                       20



Fewer and Less Well Defined Shareholders' Rights

      Our shareholders have fewer and less well-defined rights under applicable
Peruvian law than they might have as shareholders of a corporation incorporated
in a jurisdiction of the United States or certain other countries.

Shares Eligible for Future Sale

      Sales of a substantial number of our shares by Alberto Benavides de la
Quintana and certain other members of the Benavides Family could materially and
adversely affect prevailing market prices for the Common Shares and ADSs. There
is no contractual restriction on the disposition of shares of our share capital
by our shareholders, including the Benavides Family. Furthermore, under the Ley
General de Sociedades Peruana, or Peruvian Companies Law, any restriction on the
free sale of shares in a sociedad anonima abierta (open stock company) such as
we are, is null and void.

Possible Inability of ADS Holders to Exercise Preemptive Rights

      Holders of the ADSs are, under Peruvian law, entitled to exercise
preemptive rights and accretion rights on the Common Shares underlying the ADSs
in the event of any future capital increase by us unless (x) the increase is
approved, expressly stating that the shareholders have no preemptive rights to
subscribe and pay for the Shares to be issued in such increase, by holders of
Common Shares, holding at least 40 percent of the Common Shares, at a properly
called meeting with a proper quorum and (y) the increase is not designed to
improve directly or indirectly the shareholding of any shareholder. However,
United States holders of ADSs may not be able to exercise through the Depositary
for the ADSs the preemptive rights and accretion rights for Common Shares
underlying their ADSs unless a registration statement under the Securities Act
of 1933, as amended, or the Securities Act, is effective with respect to such
rights or an exemption from the registration requirement thereunder is
available. Any such rights offering would have a dilutive effect upon
shareholders who are unable or unwilling to exercise their rights. We intend to
evaluate, at the time of any rights offering, the costs and potential
liabilities associated with any registration statement as well as the benefits
to it of enabling the holders of ADSs to exercise such rights and will then make
a decision as to whether to file such a registration statement. Therefore, no
assurance can be given that any such registration statement would be filed. To
the extent that holders of ADSs are unable to exercise such rights because a
registration statement has not been filed and no exemption from such
registration statement under the Securities Act is available, the Depositary
will, to the extent practicable, sell such holders' preemptive rights or
accretion rights and distribute the net proceeds thereof, if any, to the holders
of ADSs and such holders' equity interest in us would be diluted
proportionately. The Depositary has discretion to make rights available to
holders of ADSs or to dispose of such rights and to make any net proceeds
available to such holders. If, by the terms of any rights offering or for any
other reason, the Depositary is not able to make such rights or such net
proceeds available to any holder of ADSs, the Depositary may allow the rights to
lapse.


                                       21



ITEM 4. Information on the Company

                                   THE COMPANY

History and Development

Overview

      We are Peru's largest publicly-traded precious metals company, and are
engaged in the exploration, mining and processing of gold, silver and, to a
lesser extent, other metals, in Peru. We currently operate the Julcani,
Recuperada, Orcopampa, Uchucchacua, Antapite and Ishihuinca mines and have
controlling interests in two other mining companies which operate the
Colquijirca, and Shila-Paula mines. Effective March 2001, we temporarily
suspended operations and discontinued exploration efforts at the Recuperada
mine. In April 2004, we elected to resume exploration efforts at the Esperanza
vein of the Recuperada mine due to an increase in ore reserves as well as the
rising price of metals and in February 2006 we initiated mining operations.

      On August 22, 2006, we purchased approximately 22 percent of the
outstanding shares of Inversiones Mineras del Sur, or Inminsur, from minority
shareholders. As a result of this transaction, we currently hold a 100%
controlling interest in Inminsur. In December 2006, Inminsur merged with and
into us.

      In addition, as of January 1, 2005, the operating data from the Paula mine
has been consolidated with the operating data from the Shila mine and after such
date is referred to herein as the Shila-Paula mine. We also own an electric
power transmission company and an engineering services consulting company and
have minority interests in several other mining companies, including a
significant ownership interest in Yanacocha, a Peruvian partnership that
operates South America's largest gold mine, and Cerro Verde, a Peruvian company
that operates a copper mine located in the south of Peru. In 2006, the Julcani,
Recuperada, Uchucchacua, Orcopampa, Antapite, Colquijirca, Ishihuinca and
Shila-Paula mines produced 405,383 ounces of gold, 22,179,552 ounces of silver
and 80,686 short tons of metallic zinc. Yanacocha produced 2,612,199 ounces of
gold and 3,656,452 ounces of silver and Cerro Verde produced 110,863 short tons
of copper. Our equity share of production in 2006 was 1,546,000 ounces of gold,
17,027,000 ounces of silver, 33,000 short tons of metallic zinc and 20,509 short
tons of copper, including 1,140,000 ounces of gold and 1,596,000 ounces of
silver for Yanacocha and 20,509 short tons of copper for Cerro Verde. For the
year ended December 31, 2006, our net sales were US$548.1 million and our net
income was US$428.1 million.

      Compania de Minas Buenaventura S.A.A., a sociedad anonima abierta (open
stock company) under the laws of Peru, was originally established in 1953 as a
sociedad anonima (company) under the laws of Peru, and currently operates under
the laws of Peru. Our registered office is located at Carlos Villaran 790, Santa
Catalina, Lima 13, Peru, telephone no. 5-11-419-2538. Our Internet Website
address is http://www.buenaventura.com. The information on our website is not a
part of, and is not incorporated into, this document.

History

      During our first 25 years, our efforts focused on the exploration of
silver mines. During this period, we built up our principal mines in Peru,
commencing with the acquisition of the Julcani mine in 1953. We commenced
exploration of the Orcopampa mine in 1962 and operations in 1965. We began
exploring the Uchucchacua mine site in 1960 and, after operating a pilot project
in the area in the early 1970s with successful results, built an ore processing
plant at the mine site, which began operations in 1975.


                                       22



      Because of political uncertainties in Peru in the mid-1970s, we explored
mining possibilities in other countries in South America, including Colombia,
Ecuador, Venezuela, Bolivia and Argentina. Exploration began on a small scale at
the Toachi mine near Quito, Ecuador, but this project was discontinued in 1981
due to border disputes between Peru and Ecuador. At that time, we also decided
to discontinue our exploration outside Peru and to intensify efforts in Peru.

      Following a sharp increase in silver prices, which peaked in 1980, we
initiated a program to explore for gold and, to a lesser extent, other metals in
Peru to reduce our dependence on silver, since we believed the high price of
silver could not be sustained. Faced with declining silver prices throughout the
1980s, we expanded silver output to reduce cash flow while at the same time
continuing our exploration efforts for other metals. Exploration of gold
anomalies in the Yanacocha district began in 1983 and an expansion of the
Orcopampa mine, which had operated since 1967 as a silver-producing mine, to
enable us to explore newly-discovered gold veins began in 1984 and was concluded
in 1999. In 2002, after an intense exploration program of the Orcopampa mine,
gold production was commenced in the Chipmo area. New gold mining operations
commenced at the Ishihuinca mine in the early 1980s and at the Antapite mine in
2001.

      Since the late 1980s, we have continued our efforts to decrease our
exposure to silver price fluctuations and have pursued a plan to increase
overall precious metals production and production efficiency. We have continued
to expand our mineral reserves through the implementation of property
acquisition and intensive exploration programs designed to increase reserves and
production of gold. As part of this strategy, we acquired an equity interest in
Yanacocha and conducted exploration leading to the discovery of gold
mineralization and subsequent production of gold at the Orcopampa, Shila,
Ishihuinca and Antapite mines. These initiatives have transformed us from
primarily a silver producer into primarily a gold producer, based on allocated
revenue. In 2006, gold, silver and other metals accounted for 63 percent, 16
percent and 21 percent, respectively, of our equity share of production value in
our consolidated subsidiaries, Yanacocha and Cerro Verde.

      On January 14, 1992, we, through our 100 percent owned subsidiary,
Compania Minera Condesa S.A., or Condesa, together with Newmont Second Capital
Corporation, or Newmont Second, a wholly owned subsidiary of Newmont Mining, and
Societe d'Etudes, de Recherches et d'Exploitations Minieres, or Serem, a wholly
owned subsidiary of the Bureau de Recherches Geologiques et Minieres, or BRGM,
the geological and mining bureau of the French government, formed Yanacocha to
continue exploration of the deposits at a mining site in the Cajamarca area. At
that time, Yanacocha was 38 percent owned by Newmont Second, 24.7 percent owned
by Serem, 32.3 percent owned by Condesa and 5 percent owned by The International
Finance Corporation, or IFC, the branch of the World Bank that promotes private
investments. As of May 31, 2007, we had increased our participation in Yanacocha
to 43.65 percent, and Newmont Second had increased its participation in
Yanacocha to 51.35 percent, with IFC continuing to own 5 percent.

      In October 2000, we and Newmont Mining agreed to consolidate our
properties in Cajamarca, northern Peru, in Yanacocha. Under the consolidation
plan and according to agreements signed in December 2000, we sold several assets
to Yanacocha, including the Minas Conga project, the China Linda lime plant,
mining rights, aerial land and other machinery and equipment and inventories.
See "--Property, Plants and Equipment--Yanacocha's Properties--Operating
Properties". We received approximately US$9 million in connection with this
sale. We also entered into an administration agreement with Yanacocha, setting
forth that we would manage the China Linda lime plant until December 18, 2010,
for a monthly fee of US$10,000 plus reimbursement of all incurred costs.
However, in December 2001, Yanacocha terminated the agreement and we ceased to
manage the China Linda plant. As a result of the termination, we received a
payment of US$1,800,000 from Yanacocha.


                                       23



      On June 1, 2005, Cerro Verde conducted a capital increase whereby we
subscribed 42,925,975 shares for US$154.9 million, increasing our interest in
Cerro Verde from 9.17 percent to 18.21 percent. Freeport-McMoran Copper & Gold
Inc. maintains a majority interest in Cerro Verde. See "--Intermediate Holding
Companies; Subsidiaries and Equity Participations--Sociedad Minera Cerro Verde
S.A.A." As of March 2007, Cerro Verde was 53.56 percent owned by Cyprus Climax
Metals Company, a subsidiary of Freeport-McMoran Copper & Gold Inc., 21 percent
owned by SMM Cerro Verde Netherlands B.V. and 18.50 percent owned by us.

Redesignation of our Shares and ADSs

      At our shareholder meeting held on April 30, 2002, following special
meetings of our Series A shareholders and Series B shareholders on the same
date, or the Special Meetings, amendments to our estatutos, or By-laws, were
approved pursuant to the Special Meetings to effect the redesignation of each
outstanding Series B Share as one Series A Share and the immediate redesignation
thereafter of each Series A Share as one Common Share, or the Redesignation. The
Redesignation was effective May 3, 2002. At that date, we had Common Shares with
a nominal par value of S/.4.00 per share and Investment Shares also with a
nominal par value of S/.4.00 per share. The Common Shares represent 100 percent
of our outstanding share capital. The Investment Shares have no voting rights
and are not, under Peruvian law and accounting rules, characterized as share
capital.

      Our ADSs have traded on the New York Stock Exchange Inc., or the New York
Stock Exchange, since May 15, 1996. Prior to the Redesignation, each of our ADSs
represented two Series B Shares. In connection with the Redesignation, we
submitted a technical original listing application to the New York Stock
Exchange dated April 25, 2002, or the Application, for the redesignation of our
ADSs representing non-voting Class B Shares to ADSs representing voting Common
Shares and the reservation of additional ADSs issuable upon redesignation of
Class B Shares as Class A Shares and immediate redesignation thereafter of Class
A Shares as Common Shares. The New York Stock Exchange approved the Application
prior to the date of Redesignation and on May 3, 2002, each of our ADSs
represented two Common Shares. Since that date, we have had Common Shares with a
nominal par value of S/.4.00 per share. On November 3, 2003, we submitted a
supplemental listing application to the New York Stock Exchange to modify the
ratio of our ADSs, and on November 12, 2003, our ratio of Common Shares per ADSs
was modified from two Common Shares per ADS to one Common Share per ADS.

Business Strategy

      Our strategy is to strengthen our position as one of Peru's leading gold
and silver mining companies by expanding our reserves and production. We are
currently engaged in an active exploration and mine development program and
participate in several mining exploration projects with Newmont, Minera ABX
Exploraciones S.A., or Barrick, Gold Fields Peru S.A., or Gold Fields, Southern
Copper Corporation, or SCC, Phelps Dodge Corporation, or Phelps Dodge, and Teck
Cominco Peru S.A., or Teck Cominco. Further, we seek to increase the efficiency
and capacity of our mining operations. We are aware of our social and
environmental responsibilities and aim to excel in the prevention, mitigation
and rehabilitation of mining-related disturbances.


                                       24



Maintaining an Active Exploration Program

      We view an active exploration program as our primary means to obtain new
reserves. As of May 2007, through an intensive exploration program, we hold,
either directly or in conjunction with exploration partners, 503,068 hectares of
mining rights, excluding an additional 338,864 hectares in mining properties
which consolidate production units, making us a major holder of mining rights in
Peru.

      During 2006 we spent approximately US$35.2 million on "greenfield" and
"brownfield" exploration-related investments in Peru. Our "greenfield"
investments focused on the following exploration projects: El Faique, Los
Pircos, La Zanja, Colquirrumi, Tantahuatay, Cordillera Oriental, Pampa Andino,
Huancavelica, Tinyaclla, El Milagro, Minasnioc, Hueso Sur, Trapiche, Altiplano,
Arenizo and Argentina. In 2007, we intend to concentrate on the El Faique, La
Zanja, Tantahuatay, Colquirrumi, Llillinta, Huancavelica, El Milagro, Breapampa,
Trapiche, Altiplano and Argentina exploration projects with a budget of
approximately US$22.8 million. The 2006 exploration program was financed by
internal funds as well as a US$3.7 million contribution by Newmont Peru S.R.L.,
SCC, Gold Fields and Phelps Dodge. Our "brownfield" investments focused on the
following exploration projects: Poracota, Soras, Pozo Rico, Mallay, Anamaray,
Layo and Shila-Paula. In 2007 we intend to invest US$7.5 million in the Mallay,
Anamaray, Soras, Layo, Umachulco-Manto N and Shila-Paula brownfield exploration
projects.

Participation in Mining Exploration Agreements

      In addition to managing and operating precious metals mines, we
participate in mining exploration agreements with mining partners to reduce
risks, gain exposure to new technologies and diversify revenues to include other
metals. See "--Business Overview--Exploration". We believe that maintaining our
focus on mining operations complements our partnership strategy because the
engineering and geological expertise gained from such operations enhances our
ability to participate in and contribute to those projects.

Capital Expenditures

      Our capital expenditures in the past three years have related principally
to the acquisition of new mining properties, increasing our participation in the
Cerro Verde mine, construction of new facilities and renewal of plant and
equipment. Capital expenditures relating to exploration are not included herein
and are discussed separately in "--Business Overview--Exploration". Set forth
below is information concerning capital expenditures incurred by us in respect
of each of our principal operating mines and by category of expenditure:

                            Year Ended December 31,
                     -----------------------------------
                        2004         2005         2006
                     ---------    ---------    ---------
                                (in thousands)

Julcani...........   US$    22    US$   133    US$   802
Uchucchacua (a)...       2,418        6,610       13,560
Orcopampa(b)......       6,391        3,122       13,649
Recuperada........          94          122          939
Ishihuinca........         641          229          154
Shila(c)..........          39          427*       1,385
Paula                      579           --           --
Colquijirca(d)....       4,328        3,222       15,362
Antapite..........       5,496          899        5,440
Conenhua..........       7,624          137          537
                     ---------    ---------    ---------
  Total...........   US$27,632    US$14,904(e) US$51,828
                     ---------    ---------    ---------


                                       25



                                    Year Ended December 31,
                             -----------------------------------
                                2004         2005         2006
                             ---------    ---------    ---------
                                        (in thousands)

Machinery and equipment...   US$ 8,756    US $1,796        2,634
Infrastructure............       3,710        4,836       20,998
Mining....................       3,073        2,609        5,856
Milling(b)................      10,208        4,713       17,594
Transportation............         339          200          999
Communications............         427          136          205
Environmental.............         903           22           20
Other.....................         215          532        3,522
                             ---------    ---------    ---------
Total.....................   US$27,632    US$14,904(e) US$51,828
                             ---------    ---------    ---------

----------
(a)   For 2006, includes US$7.7 million for the construction of the sulfide and
      oxide cyanidation plant and US$1.4 million for the excavation of the
      Carmen and Socorro mines.

(b)   For 2006, includes US$4.4 million for the expansion of the treatment plant
      and US$9.8 million for the excavation of the Nazareno and Prometida mines.

(c)   As of January 1, 2005, Paula's operating data has been consolidated with
      Shila's operating data.

(d)   For 2006, includes US$5.3 million for the construction of a copper
      treatment plant and US$4.6 million for the construction of two dams for
      the copper and lead-zinc plant tailings.

(e)   Excludes US$4.5 million of goodwill incurred in connection with the
      acquisition of shares of El Brocal and Poracota.

      We financed our capital expenditures in 2004, 2005 and 2006 with
internally-generated funds.

      We have budgeted approximately US$67.9 million and US$80.7 million for
capital expenditures in 2007 and 2008, respectively. Exploration expenses in
non-operating units are expected to be US$28.0 million and US$20.0 million in
2007 and 2008, respectively. To fund our planned capital expenditures program,
we plan to use internally-generated funds. See "Item 5. Operating and Financial
Review and Prospects--The Company--Liquidity and Capital Resources".

      Our ongoing projects include (i) the deepening of the Carmen and Socorro
mines at Uchucchacua, which includes the construction of ramp 760 at the Carmen
mine, the construction of ramp 626 at the Socorro mine and the deepening of the
master shaft at the Carmen mine, (ii) the deepening of the Nazareno and
Prometida mines and the Prometida auxiliary shaft at Orcopampa and (iii) the
expansion of a tailing dam to increase capacity at the Orcopampa and Antapite
mines. During 2008, we expect that our principal capital expenditures will
relate to the construction of the Poracota plant.

      We continuously evaluate opportunities to expand our business within Peru,
as well as in other countries as opportunities arise, and expect to continue to
do so in the future. We may in the future decide to acquire part or all of the
equity of, or undertake other transactions with, other companies involved in the
same business as us or in related other businesses. However, there can be no
assurance that we will decide to pursue any such new activity or transaction.


                                       26



Business Overview

Production

      We principally produce refined gold and different types of metal
concentrates that we distribute and sell internationally, including silver-lead
concentrate, silver-gold concentrate, zinc concentrate and lead-gold-copper
concentrate. The following table sets forth the production of the Antapite,
Julcani, Uchucchacua, Orcopampa, Recuperada (which resumed operations in
February 2006), Ishihuinca, Paula (as of January 1, 2005, Paula's operating data
has been consolidated with Shila's operating data), Colquijirca and Shila mines
by type of product for the last three years, calculated in each case on the
basis of 100 percent of the applicable mine's production.

                          Year Ended December 31,
                   ------------------------------------
                      2004         2005         2006
                   ----------   ----------   ----------
Gold (oz.)(1)...      357,562      388,042      405,383
Silver (oz.)....   15,095,562   16,429,816   22,179,552
Zinc (ST)(2)....       70,925       69,550       80,686
Lead (ST).......       35,965       35,619       44,436
Copper (ST).....          169          280          141

----------
(1)   Throughout this Annual Report, "oz" refers to troy ounces of a fineness of
      999.9 parts per 1,000, equal to 31.0134 grams.

(2)   Throughout this Annual Report, "ST" refers to short tons, each weighing
      2,000 avoirdupois pounds.

Exploration

      We view exploration as our primary means of generating growth value for
shareholders and typically maintain a portfolio of active exploration projects
at various stages of exploration for mineral resources in Peru. We currently
hold, either directly or in conjunction with exploration partners, 503,068
hectares of mining rights as part of our exploration program; this figure
excludes an additional 338,864 hectares in mining properties which are involved
in consolidating production units. We invested approximately US$35.2 million in
exploration for Mineralized Material not in Reserve, or NRM, during 2006,
including 49,992 meters of exploratory diamond drilling and 5,393 meters of
exploratory underground workings in the La Zanja, Tantahuatay, Los Pircos,
Mallay, Pampa Andino, Hueso Sur, Tinyaclla, El Milagro, Trapiche, Poracota and
Soras projects. In addition, our exploration partners invested US$3.5 million in
the Tantahuatay, La Zanja, Hualgayoc and Cordillera Negra prospects.

      In 2007, we expect to invest a minimum of approximately US$42.9 million in
greenfield and brownfield exploration activities. All exploration programs at
our principal mines are individual and expressed as part of mine cost structure.
Exploration expenditures include all of the costs associated with manpower and
activities such as geologists, contractors, engineering, drilling equipment,
metallurgical testing and economic feasibility studies. Management of the
exploration division prepares programs and budgets for individual projects each
year and we allocate, subject to board approval, the proper amount to finance
each particular exploration activity considered worthwhile. In light of the
nature of mining exploration and in order to maintain flexibility to take
advantage of opportunities, we allocate budgeted amounts by property or project
only in the case of high geological expectation as decided by management. We
also allocate non-budgeted amounts over the course of the year to new projects
based on our needs and our geologists' periodic evaluations of the progress of
each opportunity and its potential for further exploration activities.

      An integral part of our exploration program is the participation in mining
exploration agreements with affiliates of experienced mining companies,
including Newmont Peru S.R.L., Barrick, SCC, Teck Cominco, Phelps Dodge and Gold
Fields. The benefits of these joint exploration projects include greater
investment in the exploration of our mining rights from the funds contributed by
the partners, access to the assets of the partners without the costs and risks
of outright acquisition, increased exposure to new exploration technologies and
expansion of knowledge and sharing of experiences of management, geologists and
engineers. In these mining exploration agreements, we may be the designated
operator, an equity participant, the manager or a combination of these and other
functions.


                                       27



      We do not generally conduct significant research and development
activities other than investments in exploration as described herein.
Nevertheless, we have provided funding for university-based research and
training of geological staff, with the objective of improving the appraisal of
our properties, presently carried out at the Mineral Deposit Research Unit,
University of British Columbia, with research on mineral zoning at Uchucchacua,
and at the Research School of Earth Sciences, Western Australian University,
with research on the Nazareno vein at Orcopampa, and at the Universidad
Politecnica de Madrid, with research on regional distribution of copper deposits
in northern Peru. In addition, we have three geologists studying to receive
their M.Sc. degree in the Red DESIR program promoted by the Universidad
Politecnica de Madrid in Lima, which is funded by the European Union and
supported by the Universidad Nacional Mayor de San Marcos and the Universidad
Nacional de Ingenieria.

     The following table lists our current greenfield exploration projects, our
effective participation in each project, our partners with respect to each
project, the total hectares as of May 10, 2007, observed mineralization of each
project and the total exploration expenditures (in millions of US$) during 2004,
2005 and 2006.


                                       28



<TABLE>
<CAPTION>
                                                                                           Total         Total         Total
                                                                                        Exploration   Exploration   Exploration
                             Company's                                                  Expenditures  Expenditures  Expenditures
        Exploration          Effective     Principal   Property                            During        During        During
       Projects(1)(2)      Participation    Partners   Hectares                             2004          2005          2006
-------------------------  -------------  -----------  --------         Observed        ------------  ------------  ------------
                                      at December 31, 2006           Mineralization     Total BVN'S   Total BVN'S   Total BVN'S
                           ------------------------------------  ---------------------  ----- -----   ----- -----   ----- -----
<S>                           <C>         <C>          <C>       <C>                    <C>   <C>     <C>   <C>     <C>   <C>
Joint Venture Projects:
  Hualgayoc..............      50.00%     Gold Fields   13,248   Silver, zinc & lead     0.38  0.38    0.86  0.21    0.88  0.17
  La Zanja(3)............      53.06%     Newmont       32,070   Gold & copper           5.84  3.10    2.64  1.40    3.65  1.94
  Minasnioc(6)...........      60.00%     Barrick       23,600   Gold & silver           0.95  0.21    0.86  0.86    0.43  0.43
  Hueso Sur                    60.00%     Barrick       11,500   Gold & silver           0.00  0.00    0.00  0.00    0.36  0.36
  Patagonia(7)...........       0.00%     None               0   Gold & silver           0.45  0.45    0.00  0.00    0.00  0.00
  Puquio.................      40.00%     Gold Fields        0   Gold & silver           1.03  0.12    0.70  0.20    0.11  0.11
  Santa Marina...........      51.00%     Rio Narcea         0   Gold & copper           0.02  0.02    0.25  0.25    0.10  0.10
  Aguas Verdes ..........      20.00%     Penoles        2,000   Copper                  0.71  0.15    0.02  0.01    0.00  0.00
  Tantahuatay...........       40.00%     SCC, Espro    17,722   Gold & copper           1.08  0.61    1.55  0.62    3.96  2.21
Company's Projects:
  Altiplano Peru.........     100.00%     None           7,200   Gold & silver           0.38  0.38    0.19  0.19    0.07  0.07
  Cofradia...............     100.00%     None           2,100   Gold & silver           0.00  0.00    0.52  0.52    0.00  0.00
  Cordillera Oriental....     100.00%     None           4,900   Gold & silver           0.00  0.00    0.13  0.13    0.18  0.18
  El Faique..............     100.00%     None          87,341   Copper, zinc & gold     0.00  0.00    1.62  1.62    0.75  0.75
  El Milagro                  100.00%     None          13,400   Zinc, silver, lead      0.00  0.00    0.00  0.00    2.06  2.06
  Huancavelica...........     100.00%     None          47,823   Lead, silver & zinc     0.47  0.47    0.56  0.56    0.64  0.64
  Los Pircos(5)..........     100.00%     None          36,776   Gold & silver           0.38  0.38    0.99  0.99    3.48  3.48
  Pampa Andino...........     100.00%     None          18,900   Gold & silver           1.08  1.08    1.35  1.35    0.99  0.99
  Tinyaclla                   100.00%     None           2,576   Copper, zinc, gold      0.00  0.00    0.00  0.00    4.47  4.47
  Trapiche...............     100.00%     None          14,200   Copper & molybdenum     0.04  0.04    0.91  0.91    1.92  1.92
  Oyotun.................     100.00%     None          11,400   Zinc, copper & silver   0.04  0.04    0.24  0.24    0.03  0.03
  Arenizo................     100.00%     None           2,916   Gold                    1.30  1.30    1.03  1.03    0.00  0.00
  Cedimin(8).............     100.00%     None          51,649   Gold, silver & copper   0.31  0.31    0.00  0.00    0.00  0.00
  Others(9)..............     100.00%     None          24,553   Polymetallic            1.62  1.62    1.68  1.68    0.65  0.65
                                                       -------                          ----- -----   ----- -----   ----- -----
                                                       425,874                          16.08 10.66   16.10 12.77   24.73 20.56
                                                       =======                          ===== =====   ===== =====   ===== =====
</TABLE>

----------
(1)   The table does not include projects abandoned by us, consolidated mining
      units or those placed on hold prior to 2003.

                                       29



(2)   In addition to these projects, we continue to conduct exploration at all
      of our operating mines and our subsidiaries.

(3)   On December 31, 2003, Newmont Peru's interest in the project was diluted
      to 46.94 percent.

(4)   On March 11, 2004, BHP-B decided to withdraw from the project.

(5)   On March 25, 2004, Meridian Peru SAC decided to withdraw from the project.

(6)   We are in the process of closing the project.

(7)   In August 2004, we withdrew from the project.

(8)   Includes Crucero, Leonor and others (excludes Shila-Paula).

(9)   Includes generative exploration in new areas.

      The following table lists our current brownfield exploration projects, our
effective participation in each project, the total hectares as of May 10, 2007,
observed mineralization of each project and the total exploration expenditures
(in millions of US$) during 2004, 2005 and 2006.

<TABLE>
<CAPTION>
                                                                                           Total         Total         Total
                                                                                        Exploration   Exploration   Exploration
                             Company's                                                  Expenditures  Expenditures  Expenditures
        Exploration          Effective     Principal   Property                            During        During        During
       Projects(1)(2)      Participation    Partners   Hectares                             2004          2005          2006
-------------------------  -------------  -----------  --------         Observed        ------------  ------------  ------------
                                   at December 31, 2006              Mineralization     Total BVN'S   Total BVN'S   Total BVN'S
                           ------------------------------------  ---------------------  ----- -----   ----- -----   ----- -----
<S>                           <C>         <C>          <C>       <C>                    <C>   <C>     <C>   <C>     <C>   <C>
Brownfield Projects:
  Pozo Rico..............     100.00%     None          3,377    Silver, lead & zinc    0.00  0.00     2.48  2.48    2.86  2.86
  Anamaray...............     100.00%     None          6,952    Zinc, lead & silver    0.00  0.00     0.24  0.24    0.34  0.34
  Mallay.................     100.00%     None          2,250    Silver, lead & zinc    0.00  0.00     0.63  0.63    1.92  1.92
  Julcani................     100.00%     None            580    Silver                 0.00  0.00     0.00  0.00    0.20  0.20
  Hatun Orco.............     100.00%     None         20,700    Gold & silver          1.18  1.18     0.08  0.08    2.40  2.40
  Poracota...............     100.00%     None          6,674    Gold                   2.45  2.45     7.70  7.70    7.87  7.87
  Soras..................     100.00%     None         22,322    Gold, silver & copper  0.14  0.14     0.42  0.42    0.77  0.77
  Layo...................     100.00%     None            737    Gold, silver & copper  0.00  0.00     2.23  2.23    5.17  5.17
  Umachulco-Manto N......     100.00%     None            474    Gold & silver          0.00  0.00     0.00  0.00    0.23  0.23
  Shila-Paula............     100.00%     None         13,708    Gold & silver          0.00  0.00     0.77  0.77    1.72  1.72
                                                       ------                           ----  ----    ----- -----   ----- -----
                                                       77,774                           3.77  3.77    14.55 14.55   23.48 23.48
                                                       ------                           ----  ----    ----- -----   ----- -----
</TABLE>


                                       30



      The following is a brief summary of current greenfield and brownfield
exploration activities conducted by us directly and through joint exploration
agreements that are believed to represent the best prospects for the discovery
of new reserves. There can be no assurance, however, that any of our current
exploration projects will result in viable mineral production or that any of the
mineralization identified to date will ultimately result in an increase in our
ore reserves. Non-reserve mineralization has been included in our 2006 Annual
Report from the Los Pircos, La Zanja, Tantahuatay, Hatun Orcco, Pampa Andino, El
Milagro, Trapiche and Poracota exploration projects. Set forth below is a map of
all our exploration activities in Peru as of December 31, 2006:



                                       31



Greenfield Exploration Projects

      Hualgayoc. Hualgayoc is a silver, zinc and lead exploration project, with
copper (moly-gold) potential, owned by Consolidada de Hualgayoc S.A., which is
owned 50% by Compania Minera Colquirrumi S.A. and 50% by Goldfields La Cima
S.A., a wholly-owned subsidiary of Gold Fields. Consisting of 13,248 hectares,
the project is located in the Hualgayoc district, Cajamarca region, and
commenced operations in March 2007 with exploration for copper, gold, zinc and
lead ore. Since 1991, Colquirrumi stopped mining and mineral exploration
programs. On April 20, 2004, a capital increase, through the creation of Series
A Common Shares and Series B Common Shares, was authorized at an extraordinary
shareholders meeting. The Series A Common Shares and Series B Common Shares
receive 90 percent and 10 percent, respectively, of the profits or losses of
Colquirrumi. As of May 28, 2004, we are the sole shareholder of the Series A
Common Shares and hold a 99.99 percent interest in Colquirrumi. On February 24,
2005, we signed an agreement with Gold Fields to explore the Hualgayoc district,
including certain areas within the Colquirrumi project. During 2005, Gold Fields
invested US$0.65 million to drill 2,474 meters in eight holes. Low grade
copper-gold mineralization of porphyry style was found in the Cerro Jesus, Lola
and Quijote areas. In 2006, Gold Fields invested US$0.71 million to drill 1,941
meters in the Jose and Lola areas. In 2007, we will invest US$1.5 million in
2,040 meters of underground workings to generate silver, lead and zinc reserves.
In addition, Gold Fields will conduct superficial exploration efforts centered
on porphyry gold-copper targets, including 6,000 meters of diamond drilling in
two targets, with a budget of US$1.5 million.

      La Zanja. Minera La Zanja S.R.L., or La Zanja, controls 32,070 hectares of
mineralized ground in the La Zanja project, which is located 35 kilometers
north-west of Cajamarca city. Originally, the La Zanja project was part of the
Northern Peru joint mining exploration project, which was 35 percent owned by us
and 65 percent owned by Newmont Peru. We executed a carve-out agreement with
Newmont Peru on August 1, 2000, providing for the eventual dilution of Newmont
Peru's interest in the project. The project, which is operated by us, consists
of the San Pedro Sur and Pampa Verde superficial gold and silver oxide deposits,
amenable to low-strip open pits and heap-leach operation. NRM is 18.8 million
metric tons with an average grade of 1.1 grams per ton of gold. We have started
to test for deep sulfide ore potential in other prospects within the property.
During 2003, we acquired an additional 910 hectares of surface rights, conducted
an airborne electromagnetic survey of 30,000 hectares, and conducted a drilling
campaign at the Pampa Verde oxide-gold deposit, the Alcaparrosa prospect and the
San Pedro Norte deposit. During 2004, we invested US$5.8 million in the La Zanja
project to conduct metallurgical and feasibility studies, to drill 4,504 meters
at the Pampa Verde deposit, 2,933 meters at the Turmalina prospect, 1,113 meters
at the Campana prospect, 1,194 meters at the San Pedro Sur deposit, 458 meters
at the Pampa Verde Sur prospect and 190 meters at the C(0) Buitre prospect, and
to conduct 3,268 meters of sterilization drilling in the Pampa Bramadero area.
As of December 31, 2005, we own a 53.06 percent interest in La Zanja and Newmont
Peru's interest was diluted to 46.94 percent. Newmont Peru elected to maintain a
46.94 percent interest in La Zanja for 2003, 2004 and 2005. On November 16,
2004, during a protest at the La Zanja project, a warehouse was set on fire,
which resulted in the loss of 25 km of drill cores that were stored in the
warehouse. As a result, in 2005 we downgraded reserves to NRM. In addition, we
invested a total of US$2.6 million to address social issues and to conduct
18,050 meters of geophysical surveys and to drill 1,674 meters at the Cerro La
Zanja deep sulfide prospect. We drill-tested a transition zone between a
porphyry copper to an epithermal gold system. In 2005, surface rock sampling at
the Turmalina prospect identified a new oxide-related gold occurrence with an
average content of 0.42 grams per ton of gold. In 2006, we invested US$3.6
million on a 2,942 meter drilling campaign at the deep copper-gold sulfide
deposit at the Cerro La Zanja prospect, a 2,064 meter drilling campaign at the
gold oxide deposit at the Cerro La Zanja prospect and a 7,679 meter drilling
campaign at the superficial oxide gold Turmalina prospect, an extension of San
Pedro Sur. We have increased the geological resources in oxides at the Turmalina
prospect, where 11.8 million metric tons with an average grade of 0.72 grams per
ton of gold have been indicated by systematic diamond drilling. We are currently
completing bottle roll tests and will provide a new cone for these oxide gold
deposits. In 2007, we plan to invest US$1.5 million to maintain the property and
complete an environmental impact study.


                                       32



      Los Pircos. The Los Pircos project was originally a joint mining
exploration project with Meridian Gold Company, or MDG. Consisting of 11,808
hectares, the project is located east of Chiclayo in the Western Cordillera of
Cajamarca, approximately 690 kilometers northwest of the city of Lima. During
2003, MDG conducted 5,073 meters of diamond drilling of the Diana, Maribel,
Juana Sofia, Milagros, Andrea and Rosa Victoria veins and Lucero area, and an
18.5-kilometer electromagnetic survey of the Los Pircos vein system to define
vein continuity at depth. On March 25, 2004, MDG withdrew from the project and,
since that time, we have operated the project with the primary objective of
exploring precious metal veins of epithermal character. To date, we have
located, mapped and sampled five principal veins, which have shown strong
anomalous gold and silver values. The principal vein, the Diana vein, has a
380-meter long central section with average widths of 2.10 meters and
outcropping average grades of 8 grams per ton of gold and 300 grams per ton of
silver. First pass drilling with a total 3,566 meters in 2002 over the Diana
vein system showed mineralization of 203,680 metric tons at 18.3 grams per ton
of gold and 17.4 ounces per ton of silver in veins with an average thickness of
two meters. During 2004, we focused on renewing our surface rights permits and
negotiated a three-year agreement with the Santa Rosa de Sexi and Corral Viejo
neighborhoods, which was signed in April 2005, to ensure the continuation of our
exploration activities at the Diana and Maribel veins. In 2006, we drove two
crosscuts into the Diana vein system at levels of 2,000 meters and 2,050 meters,
totaling 2,450 meters of underground workings at a cost of US$3.5 million. We
generated 211,374 metric tons of high-grade gold and silver NRM with an average
grade of 15.7 grams per ton of gold and 319 grams per ton of silver. No further
exploration efforts for Los Pircos project have been scheduled in 2007. We plan
to seek a suitable partner to continue exploration of the property.

      Hueso Sur Project. The Hueso Sur project is a joint venture with Barrick
and is operated by us. The Hueso Sur project encompasses 11,500 hectares located
in the Huancavelica region, adjacent to the Minasnioc project and 25 km east of
the Antapite mine. It consists of epithermal high sulfidation breccias and
structures in volcaniclastic rocks of the Castrovirreyna formation. During 2006,
we invested US$0.36 million in this project to conduct a diamond drilling
campaign, which returned negative results. We will not conduct further
exploration activities in this project in 2007.

      Minasnioc. The Minasnioc project is a joint mining exploration project
with Barrick and Compania Minera Ares S.A.C., a company owned by the Hochschild
Group, or MHC. In August 2004, Barrick withdrew as operator of the Minasnioc
project and since that date, we have been the operator of the project. In
addition, MHC withdrew from the project in 2004. We currently have a 60 percent
interest in the project. The Minasnioc project encompasses 23,600 hectares of
high sulfidation epithermal terrain located in southern Peru, in the
Huancavelica region, 310 kilometers southeast of Lima. The first-pass 2003
drilling campaign by Barrick confirmed the presence of low-grade uneconomic gold
mineralization hosted in volcanic rocks, mainly following a stratabound pattern.
In the last quarter of 2004, we invested US$0.20 million in exploration and the
construction of new camp facilities. In 2005, we invested US$861,768 in 1,802
meters of diamond drilling and additional studies to confirm the presence of
gold enriched veinlets. The results of the 2005 campaign indicated poor evidence
of gold mineralization at depth. In 2006, our exploration efforts were focused
on exploring additional areas not previously explored in detail by Barrick and
to define our interest in the Minasnioc project. After testing the overall
mineral potential of these areas with detailed structural mapping and selective
geochemical sampling, none of the three target areas proved positive. Diamond
drilling and trenching at the Minasnioc prospect demonstrated enriched surface
veinlets and produced only narrow, poor intercepts. No further exploration
efforts are planned for this project in 2007.


                                       33



      Puquio. The Puquio generative project was a joint mining exploration
project with Gold Fields that originally encompassed 18,073 hectares of
hydrothermally altered and mineralized volcanic terrain in the Ayacucho region,
500 kilometers southeast of Lima. The project was operated by Gold Fields, which
had a 60 percent effective participation. In 2003, US$0.37 million was invested
to review selected anomalies detected by rock-geochemistry and satellite
imagery. In 2004, Gold Fields invested US$0.43 million in the Incapacha prospect
to conduct 2,500 meters of diamond drilling, 3,000 meters of reverse circulation
drilling and an electromagnetic survey, which had negative results. In addition,
Gold Fields invested US$0.16 million to evaluate the Titanca, Tampa Tampa,
Condoray and Nayca prospects in 2004. In 2005, we and Gold Fields invested
US$0.69 million in 2,500 meters of a diamond drilling campaign at the Nayca
prospect and thereafter decided to abandon the project due to poor geochemical
results. The joint exploration agreement was terminated in February 2006.

      Tantahuatay. The Tantahuatay project, a gold-copper project, is wholly
owned by Compania Minera Coimolache S.A., or Coimolache, an entity which is 40.1
percent owned by us, 44.2 percent owned by SCC, and 15.7 percent owned by ESPRO
S.A.C., a Peruvian-based holding company. Since January 2003, the project has
been managed and operated by an independent mining engineer, Ing. Amado Yataco,
appointed by us. The area of the project consists of 17,722 hectares of
mineralized ground. The Tantahuatay project is located 30 kilometers northwest
of Yanacocha in the Hualgayoc district, 950 kilometers north of the city of
Lima. Two of the five outcropping gold anomalies have NRM. Tantahuatay 2 was
infill-drilled during 2002 and Cienaga Norte in 2006; together they host NRM of
659,000 ounces of gold and 6.8 million ounces of silver. The studies have been
focused in the oxide zone only. Cyanidation column tests have been completed
with encouraging results, which indicate rapid extractions in the order of 80 to
90 percent, by low-concentration cyanide leaching. The Tantahuatay 2 prospect is
being evaluated for Feasibility and Environmental Impact Study during 2007.
Infill-drilling has been completed in the Cienaga deposit, and after the
metallurgical studies are completed a feasibility study will be finalized to
address viability of a 15,000-ton per day open-pit/heap leach operation. We are
focusing our efforts on resolving community issues and obtaining permits to
continue our exploration and enhance support of our infill drilling and
feasibility studies for both oxide and sulfide targets. During 2005, Coimolache
invested US$1.55 million in the Tantahuatay project. In 2006 we obtained permits
for a diamond drilling campaign in the Cienaga Norte area, 3 km southwest from
the Tantahuatay 2 area. Beginning in the third quarter of 2006, we drilled 3,179
meters in 27 holes, which required an investment of US$2.2 million. Best hole
C-57 intercepted 120 meters with 2.06 grams per ton of gold. Bottle roll tests
and geostatistical modeling are currently in progress.

      El Faique. The El Faique project, previously known as El Papayo, is
wholly-owned and operated by us. The project encompasses 87,341 hectares and is
located in the Sechura desert of northern Peru in the Piura region. This project
includes 3,200 hectares sold to us by Cedimin on April 4, 2006. During 2005, we
invested US$1.6 million to acquire the property from Manhattan Minerals and
other third parties and to claim new areas. The El Faique project consists of a
deep massive sulfide deposit evidenced by diamond drilling 400 to 700 meters
below the surface in the B5 gravimetric anomaly. This deposit contains a
higher-grade mineralization of 7.91 million tons with 2.3 percent copper and
significant traces of zinc and gold. In 2006 we invested US$747,790 in
gravimetric reinterpretation and hydrogeologic studies to determine ground water
resources and in a community public relations campaign to address social and
environmental issues related to the project. We obtained permits to conduct a
drilling program in 2007 over geophysical anomaly A22, 52 km southeast of B5,
which was detected after gravimetric reinterpretation. In 2007 we intend to
invest US$0.9 million to drill the A22 anomaly. We intend to conduct additional
drilling over the B5 anomaly after obtaining surface access.

      Oyotun. The Oyotun project is wholly-owned and was operated by us until
2005. Consisting of 11,400 hectares, the project is located on a prospective
area of massive sulfide deposits in northern Peru in the coastal zone of Piura
and the Lambayeque and La Libertad regions. In 2005, we invested US$236,237 in
regional surveys at the Sican prospect, where we conducted a drilling campaign
of 270 meters. Due to the lack of mineralization at this prospect, we do not
intend to conduct additional field work. Claims will elapse in 2007 after two
consecutive years without payment of tenure.


                                       34



      Cordillera Oriental. The Cordillera Oriental project is wholly-owned and
operated by us. Consisting of 4,900 hectares, the project is located on three
prospective areas in the eastern cordillera of Central Peru in the Pasco and
Junin regions. These areas were identified after a regional stream sediment
campaign was conducted by INGEMMET in early 2004. In 2005, we invested
US$121,555 in the Cordillera Oriental project and identified and claimed mining
properties over three mineralized areas. In 2006, we continued field work over
the claimed prospects to define mineralization, however our explorations
indicated uneconomic polimetallic deposits in all three areas. No additional
field work is planned for 2007. We are evaluating properties owned by third
parties for exploration in this region.

      Huancavelica Project. The Huancavelica project is wholly-owned and
operated by us. Consisting of 47,823 hectares, the project covers several
prospects of the Huancavelica region. We initiated exploration efforts in 1994
with the purpose of identifying base-metal skarns and/or disseminated precious
metal deposits along the Cenozoic volcanic belt and underlying Mesozoic
basement. During 2003, the Pampa Andino prospect was separated from the
Huancavelica project. In 2004, we invested US$473,000 to evaluate several
prospective areas, including the Cofradia, Yuracjasa, Dorita Sur and Llipina
prospects. At the end of 2004, the Cofradia prospect was separated from the
Huancavelica project, and at the end of 2005 and the beginning of 2006, the El
Milagro and Tinyaclla prospects were separated from the Huancavelica project. We
plan to continue to evaluate several prospective areas in 2007 to identify
potentially economic mineralization. We plan to abandon several positions in
this claim block and to consolidate the remainder of this project into our
general exploration budget in 2007.

      Tinyaclla Project. The Tinyaclla project is wholly-owned and operated by
us and consists of 2,576 hectares located northwest of Huancavelica city. We
acquired the property from Inca Pacific S.A., or Inca Pacific, for US$3.6
million in late 2005. The property was previously explored intensively for skarn
mineralization by Inca Pacific and Rio Tinto Minera Peru Limitada S.A.C., or
RTZ, which conducted a 6,341-meter diamond drilling campaign. We initiated
exploration efforts in 1998 around the Rumimaqui area in the northern portion of
the property to identify base-metal skarns. During 2006 we conducted a
geophysical survey with 218 km of magnetic lines and 38 km of induced
polarization electrical lines pursuant to which we conducted a 2,705-meter
diamond drilling program over the Lucia and Talia breccia bodies. Exploration
results were negative and we plan to abandon these reclaimed properties. We
invested US$4.47 million for this project in 2006, including the acquisition
price for the property.

      El Milagro. The El Milagro project is wholly-owned and operated by us.
Consisting of 13,400 hectares located in the Ayacucho and Huancavelica regions,
the project includes four prospective areas named El Milagro, Yuraccasa,
Vizcachayoc and Titiminas. The project consists of polymetallic, zinc-lead and
silver-rich breccias and replacement bodies in the Jurassic limestones of the
Pucara formation. We have mining lease & option agreements with Complejo Minero
Industrial S.R.L. and Sociedad Minera de Responsabilidad Limitada Tambo del
Condor, owners of certain critical properties. In 2006 we invested US$1.5
million to conduct a 4,782-meter drilling campaign at the El Milagro area and a
1,313-meter drilling campaign at the Yuraccasa area, as well as to construct a
8.65-km road and an 8-meter bridge to reach the Yuraccasa area. In the El
Milagro area we have estimated a NRM of 567,900 metric tons with an average
grade of 7.5 percent of zinc, 130 grams per ton of silver and 2 percent lead. In
2007, we plan to invest US$7.2 million in an 11,200-meter diamond drilling
campaign and 3,300 meters of underground exploration workings to prove
continuity of mineralization and generate ore reserves.


                                       35



      Pampa Andino. In May 2005, we acquired mining rights for the Pampa Andino
project for US$1.9 million. The Pampa Andino project consists of 18,900
consolidated hectares located 175 kilometers southeast of Lima, on the border
between the Ica and Huancavelica regions. The Pampa Andino project is a low
sulfidation epithermal vein system and is the outcome of a regional exploration
program designed to focus on gold exploration in Huancavelica. In 2003, we
invested US$0.3 million in 2,726 meters of diamond drilling over the Rosita and
Claudia veins. In 2004, we invested US$1.1 million in 300 meters of diamond
drilling and 1,563 meters of underground workings, initially identifying NRM of
15,700 metric tons at 15.0 grams per ton of gold and 21 ounces per ton of silver
at the Rosita vein. In 2005, we invested US$1.3 million in 3,036 meters of
diamond drilling and 1,458 meters of underground workings at the Rosita vein.
During 2006, we invested US$0.99 million and continued diamond drilling and
extended underground workings by approximately 500 meters, with disappointing
results. We intend to remediate the site and actively seek an exploration
partner for other veins in this project.

      Altiplano Peru. The Franja Sur project, renamed the Altiplano Peru project
in 2004, is wholly owned and operated by us. Consisting of 7,200 hectares, the
project is located in the Apurimac, Arequipa, Cusco and Puno regions of volcanic
rocks and carbonate terrains of south-eastern Peru. After regional
reconnaissance and a selection of mineralized areas, we conducted initial
mapping, sampling and drilling at several project sites, including the Pichacani
prospect, which demonstrated a strong mercury and tellurium anomaly in a high
sulfidation epithermal system. During 2003, we invested US$0.6 million to
explore the Pichacani prospect, which had disappointing results. In 2004, we
conducted first pass drilling with a total of 591 meters drilled in the
Chilacocha epithermal prospect located in the Apurimac region, investing US$0.4
million. Due to disappointing results, we have decided to cease activity in the
Chilacocha prospect after engaging in environmental remediation efforts. In
2005, we invested US$0.2 million in a regional exploration program on gold
stream sediment anomalies previously detected in the Puno region in the
Armapampa prospect with disappointing results. In 2006 and 2007, we continued
our exploration activities in the Apurimac, Cusco and Puno regions with a
renewed effort to evaluate third-party properties that are structurally and
geochemically anomalous.

      Trapiche. The Trapiche project is wholly-owned by us and encompasses
14,200 hectares of porphyry and skarn style mineralization in the Apurimac
region. The Apurimac region is part of a mineralized belt known as the
Andahuaylas-Yauri batholith, where several copper deposits have been identified.
In 2005, we conducted a magnetic geophysical reinterpretation, metallurgical
tests and a diamond drilling campaign on the two main prospects, Millucucho and
Cerro Trapiche. In 2006, we invested US$1.9 million to conduct 4,338 meters of
diamond drilling in both Millucucho and Cerro Trapiche porphyry to contour and
expand previously-identified disseminated copper and molybdenum mineralization.
Current NRM was calculated in 265 million tons with an average grade of 0.52
percent of copper and 0.02 percent of molybdenum. We plan to invest US$3.7
million in 2007 to conduct an additional 10,000 meters of diamond drilling,
metallurgical tests and an economic scoping study.

      Arenizo. The Arenizo project is wholly-owned by us and encompasses 2,916
hectares of hydrothermally altered and mineralized volcanic terrain in the
Arequipa region. In 2003, we invested US$60,000 in superficial exploration
efforts with systematic trenches, which identified the Anita, Maria and Nelly
quartz veins. In 2004, we invested US$1.3 million, focusing on 886.7 meters of
underground workings and 3,544 meters of diamond drilling in these veins, which
confirmed NRM of 7,305 metric tons at 9.54 grams per ton of gold with an average
thickness of 1.2 meters. In 2006, we did not conduct additional exploration in
Arenizo. Claims are still active and we plan to sell them to a third party.

Brownfield Exploration Projects

               Uchucchacua. The Uchucchacua brownfield exploration project is
located in 12,579 hectares of our mining and exploration properties and was
established in late 2004 and began operations in 2005. We have currently focused
our exploration on three prospects, Pozo Rico, Anamaray and Mallay. The Pozo
Rico prospect is a silver-rich breccia pipe deposit with manganese, lead and
zinc skarn. Ore reserves as of December 31, 2006 are 342,425 dry short tons, or
DST, with an average grade of 15.6 ounces per ton of silver, 0.46 percent lead
and 0.85 percent zinc. In 2006, we invested US$2.86 million in 2,652 meters of
underground development workings and 4,998 meters of diamond drilling. In 2007,
we expect to begin production from the Pozo Rico prospect. The
Anamaray-Jancapata prospect is another silver, lead and zinc-bearing set of
breccias and veins in limestone. During 2006 we invested US$0.34 million in
2,073 meters of diamond drilling and intercepted several ore-grade structures.
In 2007, we intend to continue underground workings and to invest US$1.58
million in the Anamaray-Jancapata prospect. The Mallay prospect consists of
2,250 hectares leased for 20 years and optioned for four years, which will
expire in February 2008, from Minera Los Rios S.R.L. Exploration activities
during 2006 included about 36,000 meters of geophysical surveys, 1,863 meters of
diamond drilling and 1,839 meters of underground workings for an aggregate
investment of US$1.92 million. Mineralization out of reserves is estimated at
317,090 DST at an average grade of 7.6 percent zinc, 4.9 percent lead and 5.6
ounces per ton silver in massive sulfide and skarn deposits. In 2007, we expect
to invest US$1.13 million in advancing the Mallay prospect with underground
tunneling and diamond drilling.


                                       36



      Orcopampa. Brownfield exploration at the Layo deposit was encouraging
during 2005. Diamond drill tests carried out in the northern sector intercepted
three mineralized structures: the first with a 0.8 meter thickness and 12.5
ounces per DST of gold, 0.7 ounces per DST of silver and traces of copper; the
second with a 0.5 meter thickness with 0.03 ounces per DST of gold, 18.3 ounces
per DST of silver and 4.5 percent copper; and the third with a 0.8 meter
thickness with 0.6 ounces per DST of gold, 21.7 ounces per DST of silver and 3.4
percent copper. New reserves found during initial workings in 2005 were 20,875
DST with 0.3 ounces per DST of gold, 2.5 ounces per DST of silver and 0.3
percent copper. Metallurgical tests of diamond drill cores suggest that the Layo
mineralization is apt for gravity and flotation treatment. Bulk samples were
sent for metallurgical assaying obtaining concentrates with a high grade of
silver, gold and copper with recoveries ranging between 80 percent and 90
percent. Metallurgical research will continue to establish optimum operational
parameters for the flotation circuit at Orcopampa's concentration plant which is
currently available for use and rated to treat up to 1,200 DST per day, although
the crushing and the milling processes require adaptation. In 2005, we invested
US$2.2 million in the Layo prospect. During 2006 we invested an additional
US$5.17 million in 2,542 meters of underground exploration workings and 1,545
meters of diamond drilling. In 2007, we intend to invest US$1.8 million on
exploration activities, primarily focused on Layo Norte.

      Julcani-Recuperada. In view of the encouraging results obtained at Julcani
from the exploration work conducted on the Acchilla dome veins, we have begun to
explore other structures in the Condoray and Taype domes, as well as in the area
between these two domes and Acchilla. Exploration activities in the Recuperada
region focused on the Esperanza area to search for new reserves to justify
resuming mining operations. As of December 31, 2005, we calculated 143,190 DST
of mineralization out of reserves with 10.4 ounces per DST of silver, 2.8
percent lead and 5.0 percent zinc. Additionally, we estimated 94,905 DST with
6.2 ounces per DST of silver, 6.8 percent lead and 4.9 percent zinc in other
areas, totaling 238,095 DST with 8.7 ounces per DST silver, 4.4 percent lead and
4.9 percent zinc. Mineralization located in areas currently inaccessible in the
lower sections of the Teresita mine was estimated in the order of 605,185 DST,
with 2.8 ounces per DST of silver, 5.9 percent lead and 8.2 percent zinc. From
these, 190,835 DST is proven-probable ore reserves and 414,350 DST is NRM
indicated by drill holes. In the Hallazgo area, we are exploring a group of
veins with silver, lead and zinc mineralization. We intend to focus our
exploration efforts in 2006 to locate new reserves. Remnants of old mine
workings in the areas of Carhuancho, together with information on the mining
activity of this particular area in colonial times, appear to make Recuperada's
brownfield exploration a target worth studying and exploring. During 2006 we
invested US$0.20 million in 523 meters of diamond drilling in the Hallazgo area
and other exploration activities. In 2007, we intend to invest US$0.61 million
to complete the initial exploration phase of this project.


                                       37



      Shila-Paula. The Shila-Paula brownfield exploration is focused on several
areas surrounding actual operating units such as Ampato, Paula Brownfield,
Puncuhuayco-Ticlla, Tocracancha and other prospects. In 2005, we invested
US$0.77 million to conduct trenching and diamond drilling in the Ampato and
Tocracancha prospects. The Ampato prospect is located northwest of the
Shila-Paula mine. The Angela vein in the Ampato prospect shows gold and silver
values up to 130 grams per ton and 128 grams per ton respectively. In the
Puncuhuayco-Ticlla prospect, the Teresa vein shows gold and silver values up to
18.8 grams per ton and 706 grams per ton, respectively, as well as base metal
contents. In Paula Brownfield, we are conducting a 1,050 meter diamond drilling
campaign. In Tocracancha, we conducted 1,607 meters of diamond drilling with
poor results, and accordingly, this prospect was discarded because of irregular
continuity of metal content in the veins. In 2006, we invested US$1.72 million
in complementary surface workings in the Ampato prospect and diamond drilling
near the Paula mine. In 2007 we estimate that we will invest US$1.1 million,
focusing on the Ampato, Puncuhuayco-Ticlla and Paula Brownfield prospects.

      Poracota. The Poracota mining exploration project, in which we acquired a
100 percent interest, is currently operated by the Orcopampa team. The Poracota
project encompasses 6,674 hectares owned by Minas Poracota S.A. (a former
subsidiary of Minera del Suroeste S.A.C.) and is located 20 kilometers west of
the Orcopampa mine in southern Peru. On December 31, 2005, we exercised an
option to purchase a 50 percent participation in Minas Poracota from Minera del
Suroeste S.A.C. for US$4.6 million. We also invested US$0.4, US$1.0 and US$1.6
million in 2003, 2004 and 2005, respectively, to exercise a second option to
purchase an additional 25 percent interest from Teck Cominco. In October 2006,
we purchased the remaining 25 percent interest from Teck Cominco for US$2.25
million. The epithermal high sulfidation system is comprised of two main areas,
Huamanihuayta and Perseverancia. During 2003 and 2004, the drilling campaign in
the Huamanihuayta area confirmed vertical ore shoots in two sub-horizontal
structures, Manto Dorado and Manto Aguila, with an average thickness of 5 to 6
meters each. The Manto Dorado structures included NRM of 693,785 metric tons at
10.6 grams per ton of gold with an average thickness of 6.0 meters and the Manto
Aguila structure included NRM of 801,687 metric tons at 10.0 grams per ton of
gold with an average thickness of 5.2 meters. In 2004, we invested US$2.45
million in 967 meters of underground workings and a 5,250-meter diamond drilling
campaign. In addition, we invested US$2.95 million for the construction of a
30.5-kilometer gravel road to connect the Poracota project to the Orcopampa
mine. In 2005, we advanced our exploration efforts with 1,688 meters of
underground workings and 6,369 meters of diamond drilling, in addition to
conducting metallurgical tests. We are preparing scoping studies based on an
updated ore reserve calculation. Currently, the Poracota project is centered on
mine development at depth, bulk flotation tests at the Orcopampa mine and
permiting to begin mine production. We have also engaged Aker Kvaerner Metals,
Inc. to design an autoclave scheme to treat the refractory ores at Manto Aguila.

      Soras. The Soras project is wholly-owned by us and located adjacent to the
Poracota project. The Soras project encompasses 22,323 hectares of
hydrothermally altered and mineralized volcanic terrain in the Arequipa region.
In 2004 and 2005, we identified two main mineralized structures, the Soraya and
Soraya 1 veins, with surface ore grades of up to 26 grams per ton of gold.
First-pass drilling identified two narrow veins with grades of 16 and 36 grams
per ton of gold with an average of 5.9 ounces of silver and 3.8 percent copper.
In 2006, we initiated underground workings and additional drilling to contour
mineralization and generate new ore reserves. The Soraya vein system has been
intercepted in the 4,720 crosscut with narrow, high grade, northeast-trending
pyritic enargite veins. Drifting and raising along the Soraya veins will follow
in 2007 to demonstrate continuity. Both the Soras and Poracota exploration
projects have been transferred to the Orcopampa operation, which will manage
future mine development and exploration.


                                       38



      Cedimin. Cedimin S.A.C., or Cedimin, is wholly owned by us and controls
51,649 hectares of owned and leased mining concessions, including the Crucero
project. As of January 2, 2003, Minera Shila S.A.C. merged with and into Cedimin
and is no longer a separate legal entity. As a result of this merger, mining
activities at Cedimin increased significantly compared to exploration
activities. In addition, on October 22, 2004, Cedimin acquired a 100 percent
equity interest in Inversiones Mineras Aureas S.A.C., or Mineras Aureas, which
had a 49 percent interest in Minera Paula 49 S.A.C., or Minera Paula. As a
result of this acquisition, Minera Paula became wholly owned by us. As of
December 31, 2004, Mineras Aureas and Minera Paula merged with and into Cedimin
and are no longer separate legal entities. Their exploration is managed as part
of the Orcopampa brownfield activities.

      Hatun Orcco. Prior to 2005, the Hatun Orcco project was wholly owned and
operated by us. Consisting of 20,700 hectares of mining properties, the project
is located 20 kilometers north of the Antapite mine in the headwaters of the Ica
valley. The Hatun Orcco project is the outcome of a regional exploration program
designed to focus on gold exploration in Huancavelica. Epithermal veins, located
in the Hatun Orcco Norte, Hatun Orcco Sur and Karla prospects, have sporadic
high-grade gold and silver geochemical anomalies. During 2003, our exploration
efforts included a US$1.1 million investment in an underground exploration
program of 1,276 meters to test for grade continuity along the Mercedes and
Capicua veins in the Hatun Orcco Sur prospect. The results confirmed NRM of
16,330 metric tons at 16.9 grams per ton of gold and 6.6 ounces per ton of
silver with an average width of 1.1 meters. In 2004, we continued our
exploration efforts, investing US$1.2 million in 1,703 meters of tunneling and
1,710 meters of diamond drilling in the Hatun Orcco Sur prospect. In March 2005,
we decided to lease the land and mineral rights of the Hatun Orcco project to
Inminsur, which will operate this as a brownfield project going forward due to
the proximity to the Antapite mine and mill area. We do not intend to continue
any work on this project.

Competition

      We believe that competition in the metals market is based primarily upon
cost. We compete with other mining companies and private individuals for the
acquisition of mining concessions and leases in Peru and for the recruitment and
retention of qualified employees.

Sales of Metal Concentrates

      All of our metal production is sold to smelters, traders and banks, either
in concentrate or metal form, such as gold-silver concentrate, silver-lead
concentrate, zinc concentrate, lead-gold-copper concentrate and gold and silver
bullion. Our concentrates sales are made under one to three-year, U.S.
Dollar-denominated contracts, pursuant to which the selling price is based on
world metal prices as follows: generally, in the case of gold and silver-based
concentrates, the London Spot settlement prices for gold, less certain
allowances, and the London Spot or the United States Commodities Exchange
settlement price for silver, less certain allowances; and, in the case of
base-metal concentrates, such as zinc, lead and copper, the London Metals
Exchange settlement prices for the specific metal, less certain allowances.
Sales prices vary according to formulas that take into account agreed
contractual average prices for a quotational period, generally being the month
of, the month prior to, or the month following the scheduled month of shipment
or delivery according to the terms of the contracts.


                                       39



      The historical average annual prices for gold and silver per ounce and our
average annual gold and silver prices per ounce for each of the last five years
are set forth below:

<TABLE>
<CAPTION>
                                               Gold                              Silver
                                 --------------------------------   --------------------------------
                                 Average Annual     Our Average     Average Annual     Our Average
                                  Market Price    Annual Price(1)    Market Price    Annual Price(1)
                                 --------------   ---------------   --------------   ---------------
<S>                                <C>                <C>             <C>                <C>
                                   US$/oz.(2)         US$/oz.         US$/oz.(3)         US$/oz.
2002..........................        309.97          309.39             4.60             4.65
2003..........................        363.51          364.88             4.88             4.91
2004..........................        409.21          373.78             6.65             6.51
2005..........................        444.88          359.75             7.31             7.38
2006..........................        604.34          354.98            11.57            11.92
2007 (through May 31, 2007)...        659.41          560.93            13.36            13.39
</TABLE>

----------
(1)   Our average annual price includes only the consolidated average annual
      price from the Julcani, Uchucchacua, Orcopampa, Antapite, Recuperada,
      Colquijirca, Ishihuinca and Shila mines.

(2)   Average annual gold prices are based on the London PM fix as provided by
      Metals Week.

(3)   Average annual silver prices are based on London Spot prices.

      Most of the sales contracts we enter into with our customers state a
specific amount of metal or concentrate the customer will purchase. We have
sales commitments from various parties for virtually all of our estimated 2007
production; however, concentrates not sold under any of our contracts may be
sold on a spot sale basis to merchants and consumers.

Sales and Markets

      The following table sets forth our total revenues from the sale of gold,
silver, lead, zinc and copper in the past three fiscal years:

                                As of and for the year ended December 31(1)
                                -------------------------------------------
Product                                 2004      2005      2006
-----------------------------         -------   -------   -------
                                                (In thousands of US$)
Gold                                  132,064   125,422   147,420
Silver                                 92,716   107,136   228,987
Lead                                   28,292    29,508    48,268
Zinc                                   54,379    67,677   202,735
Copper                                    346       527       692

----------
(1)   Does not include refinery charges and penalties incurred in 2006, 2005 and
      2004 of US$105,458, US$53,372 and US$47,678, respectively.

      We sold our concentrates to 15 customers in 2006. Approximately 54
percent, 54 percent and 46 percent of our concentrate sales in 2004, 2005 and
2006, respectively, were sold outside Peru. Set forth below is a table that
shows the percentage of sales of concentrate from our mines, and of sales of
gold bullion that were sold to our various customers from 2004 to 2006.


                                       40



                             Percentage of Concentrates
                               and Gold Bullion Sales
                             --------------------------
                                2004     2005     2006
                               -----    -----    -----
Export Sales:
  Noranda                       0.88       --       --
  Pechiney                      1.77       --       --
  Hochschild                    0.54     0.50       --
  Johnson Matthey              44.74     7.91     1.99
  Glencore                      1.72     6.55    11.58
  Trafigura                     1.64       --       --
  Marc Rich                     0.42     1.39       --
  Umicore                       1.64     1.83     3.09
  Transamine                    1.02     1.30     2.33
  J.P. Morgan                     --     7.46     3.97
  Standard Bank                   --     9.11       --
  Macquarie                       --     8.40     4.47
  Mitsui                          --     9.51    11.38
  J Aron                                          5.23
  BHL                                             1.82
  Total Export Sales           54.37    53.96    45.86
                               -----    -----    -----
Domestic Sales:
  Doe Run                      14.75    17.82    14.15
  Cormin                       11.81    14.74    17.13
  BHL                           9.69     7.68    14.29
  Cajamarquilla                 2.19     2.60     5.10
  Procesadora Sudamericana      0.74     0.83     0.98
  Ayssa                         6.45     2.37     2.49
  Total Domestic Sales         45.63    46.04    54.14
Total Sales                      100      100      100

      The following table sets forth the terms of our sales contracts for the
delivery of silver-lead and zinc concentrates from 2006 to 2009:

<TABLE>
<CAPTION>
                                                                           Delivery period
                                                              Wet metric   ---------------
        Buyer                  Concentrate           Dated       tons       From      To
---------------------   -------------------------   -------   ----------   ------   ------
<S>                     <C>                         <C>         <C>        <C>      <C>
    Doe Run S.R.L.        Julcani's Silver-Lead      Feb-06      2,400     Jan-06   Dec-07
    Doe Run S.R.L.        Julcani's Silver-Lead     Pending      5,000     Feb-08   Dec-09
    Doe Run S.R.L.      Uchucchacua's Silver-Lead    Feb-06     33,000     Jan-06   Dec-07
    Doe Run S.R.L.      Uchucchacua's Silver-Lead   Pending     36,000     Jan-08   Dec-09
   BHL Peru S.A.C.      Uchucchacua's Silver-Lead    Jan-06     10,000     Jan-06   Dec-06
       AYS S.A.         Uchucchacua's Silver-Lead    Jun-06      1,400     Jun-06   Dec-06
       AYS S.A.         Uchucchacua's Silver-Lead   Pending     42,000     Jan-07   Dec-09
Consorcio Minero S.A.      Uchucchacua's Zinc        Jan-05     13,000     Jan-05   Dec-06
   BHL Peru S.A.C.         Uchucchacua's Zinc        Jan-06      3,000     Jan-06   Dec-06
   BHL Peru S.A.C.         Uchucchacua's Zinc        Oct-06     39,000     Nov-06   Dec-08
   BHL Peru S.A.C.      Recuperada's Silver -Lead    Apr-06      5,700     May-06   Apr-07
   BHL Peru S.A.C.      Recuperada's Silver -Lead   Pending      9,600     May-07   Dec-09
   BHL Peru S.A.C.          Recuperada's Zinc        Apr-06      8,000     May-06   Apr-07
   BHL Peru S.A.C.          Recuperada's Zinc       Pending     11,800     May-07   Dec-08
</TABLE>


                                       41



Note: The price of the concentrate supplied under the contract is based on
specified market quotations minus deductions.

      We also sell refined gold, which is derived from our operations at
Orcopampa, Shila-Paula, Antapite and Ishihuinca and processed at a local smelter
in Lima, to Johnson Matthey Public Limited Company, or Johnson Matthey, which
further refines the gold. Under the terms of the Johnson Matthey sales contract,
we supply Johnson Matthey, at Johnson Matthey's option, with gold assaying in
excess of 75 percent gold and approximately 20 percent silver, monthly from
January 1, 2006 to December 31, 2006. The price of the gold supplied under the
contract is determined based on, for the gold content, the quotation for gold at
the London Gold Market PM fixing in U.S. Dollars, and for the silver content,
the quotation for silver at the London Silver Market spot fixing in U.S.
Dollars, minus, in each case, certain minimum charges, as well as charges for
customs clearance and treatment of the gold (which varies depending on its gold
and silver content). The contract also provides that we may elect to have our
material toll refined at Johnson Matthey's Royston U.K. works and returned to
our account for sale to third parties. Under the terms of the contract, we are
responsible for delivering the gold to Johnson Matthey's designated flight at
the Lima airport.

Hedging/Normal Sales Contracts

      In October 2004, our Board of Directors issued a mandate not to enter into
new hedging transactions. At December 31, 2005, we were engaged in gold price
hedging activities, such as forward sales and put/call options, from derivative
contracts executed prior to 1999. Since 2003, we have been modifying the terms
of certain derivative instruments in order to qualify them as normal sales
contracts. In March 2006, we closed out all our outstanding gold derivative
contracts as of December 31, 2005 and replaced them with normal sales contracts.
On January 15, 2007, we transferred 208,000 gold ounces that had been committed
for 2007 and 108,000 gold ounces that had been committed for 2008 to 2012,
without any cash disbursement. On March 9, 2007, we negotiated with several
counterparties to eliminate the fixed or maximum price component on determined
commitments for a total of 483,000 gold ounces scheduled for delivery from 2008
to 2012, which required us to make aggregate payments of US$144.99 million.
Additionally, on May 15 and May 25, 2007, we negotiated with several
counterparties to eliminate the fixed or maximum price component on all of our
2007, 2008 and 2009 gold commitments for a total of 488,000 gold ounces, which
required us to make aggregate payments of US$170.70 million. After these
transactions we will continue delivering physical gold as scheduled but will
receive the prevailing market price at the time. See "Item 11. Quantitative and
Qualitative Disclosures About Market Risk" and Note 38 to the Financial
Statements.

      Yanacocha and Cerro Verde have not engaged in, and are currently not
engaged in, gold and copper price hedging activities, such as forward sales or
option contracts, to minimize their respective exposures to fluctuations in the
price of gold and copper.


                                       42



Regulatory Framework

Mining and Processing Concessions

      In Peru, as in many other countries, the government retains ownership of
all subsurface land and mineral resources. The surface land, however, is owned
by the individual landowners. Our right to explore, extract, process and/or
produce silver, gold and other metals is granted by the Peruvian government in
the form of mining and processing concessions. The rights and obligations of
holders of mining concessions, provisional permits and processing concessions
are currently set forth in the General Mining Law (Single Unified Text, 1992,
Supreme Decree 014-92-EM), which is administered by the MEM.

      Prior to 1991, in order to obtain a mining concession, a prospective
claimant filed a mining claim with the MEM and obtained from it a provisional
permit to explore the area of the claim. Thereafter, the MEM would issue a
technical and legal report on the claimed area and the mining concession would
be granted. In 1991, however, a new system was established for granting new
mining concessions, based on Universal Transversal Mercator Coordinates, or UTM
Coordinates, to map the mining concessions and provisional permits on Peru's
land area. Under the new system, no provisional permits are granted, and
therefore filers of mining claims filed after 1991 must obtain a mining
concession before they may explore the areas claimed. A holder of a provisional
permit, granted with respect to claims over an area claimed before 1991 who
follows proper procedures to comply with the new 1991 system, however, is
permitted to continue to explore the area claimed.

      Following implementation of the new system in 1991, there was a period of
transition during which pre-1991 provisional permits and mining concessions
could be brought into compliance with the new grid coordinate system by
following certain specified procedures. Some conflicts developed regarding
recognizing new mining concessions, identifying the exact location of old mining
claims and placing old mining claims into the established UTM Coordinates, which
slowed down the period of transition. To address such conflicts, the Mining
Properties Mapping Law was enacted in May 1996. The Mining Properties Mapping
Law established a new mapping system to identify the land area of mining claims
and to set forth a procedure to resolve such conflicts and to recognize the
rights held by holders of mining concessions and provisional permits claimed
from colonial times until 1991. Under this law, to establish mining concessions
claimed from colonial times to 1991, the MEM publishes provisional UTM
Coordinates with respect to such mining concessions in El Peruano, or El
Peruano, the official gazette of Peru, and requests that any objections to such
provisional UTM Coordinates be made to the MEM within 90 days of such
publication. A similar procedure has been established for provisional permits
claimed from colonial times to 1991; however, an owner of such provisional
permit must establish the area subject to such provisional permit in UTM
Coordinates and, once such land area is established, MEM publishes such
provisional UTM Coordinates in El Peruano, requesting that any objections to
such provisional permit be made to the MEM within 120 days of such publication
and before the granting of the mining concession. Mining concessions applied for
after 1991 under the UTM Coordinates system have been placed into the new
mapping system and do not have to follow the procedure described above.


                                       43



      Mining concessions have an indefinite term, subject to payment of (a) an
annual concession fee of US$3 per hectare claimed and (b) an annual fine if a
minimum annual production of US$100 per hectare is not achieved before the
expiration of the sixth year, counted from the year in which the title of the
concession is granted, of US$6 per hectare will be payable starting in the
seventh year following the year in which the title of the concession was granted
until the year in which such minimum annual production is achieved; and if the
failure to comply with the minimum annual production continues after the
eleventh year following the year in which the title of the concession was
granted, the penalty will increase to US$20 per hectare starting in the twelfth
year counted since the year in which the title of the concession was granted.
The fine may be avoided, however, by demonstrating investments in the mining
rights during the previous year of amounts more than ten times greater than the
fine to be paid. In order to calculate the production of and investment in each
mining right, the titleholder may create an operating unit, or Unidad Economica
Administrativa, provided the mining rights are all within a radius of five
kilometers. If, in any year, the concession fee is not paid, payment may be made
the following year within the term provided for making such payment. Any payment
made will be applied to the prior year if such prior year was not paid. Failure
to pay such concession fees or fines for two consecutive years could result in
the loss of one or more of the mining rights. However, mining and processing
concessions will not lapse if the administrative authority failed to issue a
resolution declaring the termination of the concession within the first five
years following the date on which such payment failure occurred. Processing
concessions have an indefinite term, subject to payment of a fee based on
nominal capacity for the processing plant. No other payments or royalties are
required by the Peruvian government for us to maintain mining and exploration
property rights in full force and effect. As of 2002, the annual concession fee
and the annual fine will be calculated pursuant to the provisions of the General
Mining Law and of Supreme Decree No. 010-2002-EM, effective since March 10,
2002. We paid approximately US$2.5 million, US$2.7 million and US$3.2 million in
fees for mining rights and approximately US$6,327, US$6,475 and US$7,190 in fees
for processing concessions for the years ended December 31, 2004, 2005 and 2006,
respectively, and are current in the payment of all amounts due in respect of
our mining rights and processing concessions.

      As of May 31, 2007, we own and administer, directly and indirectly,
through subsidiaries or in conjunction with joint venture partners,
approximately 899,361 hectares devoted to mineral exploration and mining
operations. Mining rights related to the current operations are provisional
permits or mining concessions. Almost all of the mining rights related to the
current operations already are provisional permits or mining concessions. The
mining rights and processing concessions are in full force and effect under
applicable Peruvian laws. We believe that we are in compliance with all material
terms and requirements applicable to the mining rights and processing
concessions and that we are not subject to any condition, occurrence or event
that would cause the revocation, cancellation, lapse, expiration or termination
thereof, except that we may, from time to time, allow to lapse, revoke, cancel
or terminate mining rights and processing concessions that are not material to
the conduct of our business. The principal mining rights and processing
concessions are (i) with respect to our mines, new applications filed for
provisional permits and mining concessions at Julcani, Uchucchacua, Orcopampa,
Colquijirca, Ishihuinca, Antapite and Shila-Paula; and (ii) with respect to our
current exploration projects, new applications filed for mining concessions, the
provisional permits and the mining concessions at the Tantahuatay project, El
Milagro project, the Trapiche project and El Faique project. The principal
processing concessions are the processing concessions of the concentrators at
Julcani, Uchucchacua, Orcopampa, Colquijirca, Ishihuinca, Antapite and
Shila-Paula.

      Both mining concessions and provisional permits claimed before 1991
conferred on their holders the right to explore mine underground ore reserves,
and it is often the case that the titleholders of these mining rights are not
the owners of the land surface. Since October 1996, pursuant to Peruvian
regulations, all operators of new mining areas in Peru are required to have an
agreement with the owners of the land surface above the mining rights or to
establish an easement upon such surface for mining purposes pursuant to General
Mining Law, Article 7 of Law No. 26505, as amended by Law No. 26570 and the
regulations to such Article 7 contained in Supreme Decree 017-96-AG, as amended
by Supreme Decree No. 015-2003-AG. We have been actively pursuing the
acquisition of the land surface or obtaining easements relating to land
positions containing prospective geological exploration target sites, deposits
that can be exploited in the future or areas that would be considered for plant
or facility sites.


                                       44



      On December 19, 1998, Special Law No. 27015, the Law Regulating Mining
Concessions in Urban Areas and Urban Expansion Areas, was released. Law No.
27015 was amended by Law No. 27560, effective as of November 25, 2001 (Law No.
27015 as amended by Law No. 27560, the Urban Mining Concessions Law).
Regulations pursuant to the Urban Mining Concessions Law were set forth in
Supreme Decree No. 007-99-EM published on March 22, 1999, which was abrogated
and replaced by Supreme Decree No. 008-2002-EM, effective since February 22,
2002, or the Regulations. Under the Urban Mining Concessions Law, metallic or
non-metallic mining concessions will be granted in areas that have been or are
designated as urban areas by municipal ordinances issued by the Provincial
Municipality pursuant to the procedures set forth in the Regulations for the
Territorial Conditioning, Urban Development and Environment approved by Supreme
Decree No. 007-85-VC, unless the grant of such title or concession is expressly
authorized by a special law. This Supreme Decree was abrogated by Article 2 of
Supreme Decree No. 027-2003-Vivienda, published on October 6, 2003. Article 1 of
the same Supreme Decree approved the new Regulations for the Territorial
Conditioning, Urban Development and Environment currently in effect.

      The granting of titles to metallic and non-metallic mining concessions in
an area designated as an urban expansion area by means of municipal ordinances
in force as of the date of filing of an application for a mining concession
requires authorization through a Ministerial Resolution. The issuance of a
Ministerial Resolution requires the receipt of a resolution of the Cabinet of
the applicable Provincial Municipality, which will be issued within a period of
sixty days. If the opinion is negative or if no opinion is issued, the
application for the mining concession will be rejected. Any change from a
metallic concession to a non-metallic concession and vice versa will be subject
to these same requirements.

      Applications for concessions in urban expansion areas will be presented on
the basis of increments of 10 to 100 hectares under the UTM Coordinates system.

      A mining concession in an urban expansion area, whether metallic or
non-metallic, will be granted for a term of 10 years, renewable for like terms
under the procedures set forth above for the grant of the initial concession. In
both urban areas or urban expansion areas the only legally valid easements for
mining purposes are those which are entered into directly with the owner of the
surface area.

      In order to begin exploration activities, holders of mining concessions in
urban areas or urban expansion areas must comply with the provisions of the
Environmental Regulations for Mining Exploration Activities set forth in Supreme
Decree No. 038-98-EM, as amended by Supreme Decree No. 014-2007-EM. To begin
exploration activities, holders of mining concessions in urban areas or urban
expansion areas must comply with the Regulations of Title Fifteenth of the
General Mining Law, Regulations for Environmental Protection of the Mining and
Metallurgical Activities set forth in Supreme Decree No. 016-93-EM, as amended
and supplemented by Supreme Decrees Nos. 059-93-EM, 029-99-EM and 022-2002-EM,
as well as with the provisions contained in the Safety and Hygienic Regulations
for Mining Activities set forth in Supreme Decree No. 046-2001-EM published on
July 26, 2001, as amended by Supreme Decree No. 018-2003-EM effective May 31,
2003 and Supreme Decree No. 046-2005-EM, effective as of October 30, 2005.
Failure to comply with the provisions of the Regulations may be punished with a
fine or by the temporary suspension of mining activities. If the failure
continues, the mining concession may be revoked.

      Law No. 28964, which became effective on January 25, 2007, abrogated Law
No. 27474, the purpose of which was to ensure that mining, power and hydrocarbon
obligations are audited by auditing companies duly registered with the MEM. Law
No. 28964 created the Organismo Supervisor de la Inversion en Energia y Mineria
(OSINERGMIN) as the government agency in charge of regulating and auditing the
electricity, hydrocarbon and mining activities of companies. Law No. 28964
provides that overview and audit of activities related to the environment,
mining safety and health regulations may be performed by companies duly
certified and approved by OSINERGMIN.


                                       45



Environmental Matters

      On September 8, 1990, a new regime of environmental laws, codified in
Legislative Decree 613, was enacted in Peru. On June 2, 1992, new environmental
laws, codified in Title 15 of the General Mining Law, relating to the mining
industry were enacted. These laws and the related regulations significantly
increased the level of environmental regulation previously in effect in Peru and
established standards as well as guidelines with respect to particulate
emissions in air, water quality, exploration, tailings and water discharges,
among other requirements. As of 1998, environmental quality standards
enforceable for all economic activities have to be in line with the provisions
set forth by Supreme Decree No. 044-98-PCM. In 2005, the General Environmental
Law (Law No. 28611) was passed, revoking Legislative Decree 613 and
incorporating a number of environmental management guidelines relating mainly to
emissions standards.

      The MEM monitors environmental compliance and sets specific environmental
standards. In particular, the MEM has established standards for emissions or
discharges of liquid and gas effluents. The MEM also approves the environmental
impact assessments and programs for environmental control.

      The MEM has issued regulations that establish maximum permissible levels
of emissions of liquid effluents approved by Ministerial Resolution No.
011/96-EM/VMM. Generally, holders of mining rights and processing plants that
were in operation prior to May 2, 1993 have a maximum of 10 years to comply with
the maximum permissible levels; in the meantime, they must prepare their
Programas de Adecuacion y Manejo Ambiental (Environmental Adaptation and
Management Programs, or PAMAs) to comply with more stringent maximum permissible
levels. Under Peruvian environmental regulations that were passed in 1993, a
company that initiated operations prior to May 2, 1993, as is the case for us
and most of our affiliated companies, was required to file with the Peruvian
government an Evaluacion Ambiental Preliminar (Preliminary Environmental
Evaluation, or EVAP) for each of its mining units to disclose any pollution
problems in its operations and, thereafter, to submit a follow-up PAMA aimed at
implementing measures in order to solve problems identified in the EVAP.
Companies must correct the pollution problems relating to their mining
activities within five years, while smelters must comply within ten years. These
companies must allocate no less than one percent of their annual sales to
redress the problems identified in their EVAPs and contemplated in their PAMAs.
Mining and processing activities that began after May 2, 1993 or had at that
time a specific environmental program will be required to file and obtain
approval for an Environmental Impact Study, or EIS, before being authorized to
operate. Mining and plant processing activities that began after May 2, 1993 are
required to comply with the more stringent maximum permissible levels for liquid
effluents from the initiation of their operations. Exploration activities,
classified as either initial, intermediate and advanced, are also subject to
heightened compliance requirements. Unlike initial exploration projects, which
do not require MEM approval, intermediate exploration projects must submit a
Sworn Declaration, or SDs. Furthermore, advanced exploration projects are
required to submit an Environmental Assessment, or EA, which incorporates
technical, environmental and social matters. Commitments assumed by the mining
company in the SDs and EAs are obligatory for such mining companies and
enforceable by the MEM.

      Many of our mining rights and processing plants were in operation prior to
May 2, 1993, and we are in substantial compliance with the maximum permissible
levels. EVAPs for Julcani, Uchucchacua, Orcopampa, Recuperada, Ishihuinca and
Shila were all accepted between August and September 1995. The EISs for
Huallanca and Paula were approved in 1998 and February 2001, respectively.
Between November 2002 and April 2003, the MEM approved and verified the PAMAs
for all these entities, issuing and approving resolution for each respective
mining unit.


                                       46



      EISs for capacity expansion at the Uchucchacua mine and the Esperanza
project (near the Recuperada mine) were approved in May 2006 and September 2006,
respectively.

      The EAs for the La Zanja, Los Pircos, Tantahuatay, Samana and Pozo Rico
exploration projects were approved in July 2001, August 2001, December 2000,
December 2001 and May 2003, respectively. EAs for Hatun Orcco, Ccarhuarazo,
Salpo and Poracota were all accepted in 2003. The SDs for the Anamaray,
Cofradia, Sican, Shilacocha and Trapiche projects and the EAs for the Esperanza,
Hatun Orco, Layo Mallay, Minasnioc and Soras projects were approved in 2005. The
SDs for El Milagro, Jancapata, Fortuna, Tablapampa, El Rifle projects and the
EAs for Pampandino, Hallazgo, Angelica Rublo, El Milagro and Anamaray projects
were approved in 2006 and early 2007.

      In October 2001, Consorcio Energetico de Huancavelica S.A., or Conenhua,
completed the construction of two transmission lines, one between Trujillo and
Cajamarca and the other between Cajamarca Norte and La Pajuela, and of a
substation in Cajamarca Norte, in order to provide electricity to Yanacocha and
the city of Cajamarca. The final concessions for the two transmission lines were
granted by Supreme Resolution No. 165-2001-EM in October 2001.

      In 2001, we submitted an EIS for a transmission line from Ares to
Huancarama, which will connect Orcopampa with the national electricity grid.
Orcopampa was connected to the Peruvian national electricity grid on September
12, 2002 and Minera Shila S.A.C. was connected on April 9, 2003. On August 24,
2006, MEM approved the EIS for the Huancarama-Chipmo-Poracota transmission line
and its substations. This connection to the national grid should result in lower
energy costs.

      Except as described above, there are no material legal or administrative
proceedings pending against us with respect to any environmental matters.

      Law No. 28090, Ley que Regula el Cierre de Minas (Law that Regulates the
Closing of Mines), was published on October 14, 2003, establishing the
obligations and procedures that mining companies must follow to prepare, submit
and execute plans for the closing of mines, or Closure Plans, and the granting
of environmental guarantees to secure compliance with Closure Plans. Pursuant to
Law No. 28090, as amended by Law No. 28507, published on May 8, 2005 and the
Mine Closure Regulations approved by Supreme Decree 033-2005-EM, published on
August 15, 2005, as amended by Supreme Decree No. 045-2006-EM, we are required
to (i) submit a Closure Plan for "New Projects" to the MEM within one year
following approval of the EIS or PAMA, or in the case of "Existing Projects",
one year after August 15, 2005; (ii) submit a modification to the Closure Plan
to the MEM within nine months after August 15, 2005; (iii) inform the MEM
semi-annually of any progress on the conditions established in the Closure Plan;
(iv) perform the Closure Plan consistent with the schedule approved by the MEM
during the life of the concession; and (v) grant an environmental guarantee that
covers the estimated amount of the Closure Plan. The guarantee may be in cash,
trusts, and any other guarantee contemplated in the Banking Law. Supreme Decree
No. 045-2006-EM, dated August 14, 2006, amended Articles 8 and 51 of the Mine
Closure Regulations relating to companies obliged to submit a duly approved
Closure Plan. Article 51 refers to the method of calculating the guarantee. On
November 24, 2003, Ministerial Resolution No. 627-2003-MEM/DM was published to
create the Registro de Entidades Autorizadas a Elaborar Planes de Cierre de Mina
y de Plantas de Beneficio (Registry for Authorized Entities to Elaborate the
Closing of Mines and the Beneficial Plants). Only the entities recorded in such
registry are allowed to prepare the Closure Plan. The Mine Closure Regulations,
Supreme Decree No. 033-2005-EM, deals with the effects on health, safety,
property and the environment at the end of the productive life of mining-related
facilities.


                                       47



      Law No. 28271, Ley que Regula los Pasivos Ambientales de la Actividad
Minera (Law that Regulates the Mining Liabilities of the Mining Activities),
became effective on July 7, 2004 to regulate the identification of liabilities
in mining activity and financial responsibility for remediation, in each case to
mitigate any negative impact mining may have with respect to the health of the
population, environment and property. Pursuant to Law No. 28271, as amended by
Law No. 28526, published on May 25, 2005 and the Mining Environmental
Liabilities Regulations approved by Supreme Decree 059-2005-EM, published on
December 8, 2005, the technical office of the MEM will identify environmental
liabilities, mining companies responsible for abandoned mining facilities,
mining works and residue deposits that may be linked to such environmental
liabilities and holders of inactive mining concessions with mining liabilities.
Holders of inactive mining concessions with environmental mining liabilities
will be required to submit a Closure Plan within one year of their
identification and notification as holders of inactive mining concessions with
environmental mining liabilities. The Peruvian government will only assume the
environmental mining liabilities of unidentified holders. In addition, holders
will enter into environmental remediation agreements with the MEM, acting
through the Environmental General Department, to perform any studies and work
necessary to control and mitigate the risk and effects of any contamination,
which will be financed by the Fondo Nacional del Ambiente - FONAM. A Closure
Plan must be executed within three years of its approval by the Environmental
General Department, although the Environmental General Department has the
authority to establish an additional two-year term for those cases with extreme
environmental mining liabilities.

      We anticipate additional laws and regulations will be enacted over time
with respect to environmental matters. The development of more stringent
environmental protection programs in Peru could impose constraints and
additional costs on our operations, and we would be required to make significant
additional capital expenditures in the future. Although we believe that we are
substantially in compliance with all applicable environmental regulations of
which we are now aware, there is no assurance that future legislation or
regulatory developments will not have an adverse effect on our business or
results of operations.

Permits

      We believe that our mines and facilities have all necessary material
permits. All future exploration projects will require a variety of permits.
Although we believe the permits for these projects can be obtained in a timely
fashion, permitting procedures are complex, time-consuming and subject to
potential regulatory delay. We cannot predict whether we will be able to renew
our existing permits or whether material changes in existing permitting
conditions will be imposed. Non-renewal of existing permits or the imposition of
additional conditions could have a material adverse effect on our financial
condition or results of operations.

Insurance

      We maintain a comprehensive insurance program designed to address the
specific risks associated with our operations, in addition to covering the
normal insured risks encountered by major mining companies. Our insurance
program is provided through the local Peruvian insurance market and includes
employers' liability, comprehensive third party general liability, comprehensive
automobile liability, all risk property on a replacement basis, including
transit risks, business interruption insurance and mining equipment.


                                       48



Mining Royalties

      Article 20 of Law No. 26821, Ley Organica para el Aprovechamiento
Sostenible de los Recursos Naturales, establishes that private companies must
pay compensation to the Peruvian government for the economic use of natural
resources. Law No. 28258, published on June 24, 2004 and amended by Law No.
29323, created a mining royalty (regalia minera) that holders of mining
concessions must pay on a monthly basis to the Peruvian government for the
exploitation of metallic and non-metallic resources. The royalty, which is the
compensation referred to in Article 20 of Law No. 26821, Ley Organica para el
Aprovechamiento Sostenible de los Recursos Naturales, is not considered a tax.
However, it will be included in the scope of the Mining Law Stabilization
Agreements and mining companies that are taxpayers and are party to such
Stabilization Agreements will not have to pay this compensation or royalty
during the life of their Stabilization Agreements. Although we are not party to
a Stabilization Agreement, Yanacocha has entered into Mining Law Stabilization
Agreements under the General Mining Law with the Peruvian government. See "Item
5. Operating and Financial Review and Prospects--Yanacocha--Operating Results".
Law No. 28969, effective since January 26, 2007, provides that government tax
agencies are responsible for the collection of mining royalties and establishes
rules relating to the calculation of royalties, valuation methods and penalties.

      The royalty is calculated on revenue from sales of product (based on the
international market price) less certain refining and transportation expenses.
The mining royalty to be paid for ore concentrates with a value (i) up to US$60
million per year, is 1 percent of such value, (ii) between US$60 million and
US$120 million per year, is 2 percent of such value and (ii) in excess of US$120
million per year, is 3 percent of such value. The MEM will publish the
international market price of minerals and in the event that a mineral does not
have an international market price, the mining royalty will be 1 percent of the
mining component.

Negotiated Payment

      During 2006 Peruvian mining companies, represented by the Sociedad
Nacional de Mineria, Petroleo y Energia, agreed to a mining payment equivalent
to 3.75 percent of net income after taxes. The payment was negotiated with the
Peruvian government and is intended to support government efforts to alleviate
poverty. On December 21, 2006, the Peruvian Government issued Supreme Decree No.
071-2006-EM, which regulates the conditions under which the negotiated payment
will be paid. The payment amounts to 3.75 percent of Peruvian net income after
income tax, including 2.75 percent to be paid to a local mining fund and 1
percent to be paid to a regional mining fund. This payment is payable from 2006
through 2010, contingent on the price of gold. We paid a total of US$1.8 million
during the year ended December 31, 2006.

      In the case of Cerro Verde, a negotiated payment agreement with the
Peruvian Government was pending signature as of December 31, 2006. Under the
terms of this agreement, a portion of the total payment (2.75%) would be covered
with other payments previously committed. For the remaining portion (1%), Cerro
Verde has not made any provision because its management considers that the
related criteria to recognize a liability had not been met as of December 31,
2006. Cerro Verde's management considers that such criteria will be met upon
signing the agreement with the Peruvian Government.

Organizational Structure

      As of May 31, 2007, we conducted our mining operations directly and
through various majority-owned subsidiaries, controlled companies and other
affiliated companies as described in the following organizational chart.


                                       49




                                       50





Intermediate Holding Companies, Subsidiaries and Equity Participations

Compania Minera Condesa S.A.

      Condesa, wholly owned by us, is a mining and facilities holding company
with direct and indirect ownership participation in two mining-related entities,
Cedimin and Yanacocha, and in exploration projects conducted by Minas Conga and
Conenhua. See "--Business Overview--Exploration". As a partner in Yanacocha,
Condesa shares responsibility for the investments made in the Yanacocha mine and
through its investment in Cedimin receives return dividend revenues. See
"--S.M.R.L. Chaupiloma Dos de Cajamarca" below. Condesa also holds a 7.68
percent interest in us.

Compania de Exploraciones, Desarrollo e Inversiones Mineras S.A.C.

      Cedimin, wholly owned by us, is a mining and facilities holding company.
At December 31, 2005, Cedimin held a 40 percent participation in Minas Conga and
a 40 percent interest in Chaupiloma. See "--The Company--History and
Development" and "--S.M.R.L. Chaupiloma Dos de Cajamarca" below. See "--The
Company--History and Development" for a description of the legal proceedings in
the Peruvian courts concerning the ownership of certain shares of Cedimin
originally held by BRGM. Through its direct ownership in Chaupiloma, Cedimin
receives a portion of the royalty revenues paid by Yanacocha to Chaupiloma equal
to such ownership interest.

      As of January 2, 2003, Minera Shila S.A.C. merged with and into Cedimin.
As a result of the merger, our interest in Cedimin increased from 0.0009 percent
before the merger to 44.83 percent after the merger, and Condesa's interest in
Cedimin decreased from 99.9991 percent before the merger to 55.17 percent after
the merger. In addition, on October 22, 2004, Cedimin acquired a 100 percent
equity interest in Inversiones Mineras Aureas S.A.C., or Mineras Aureas, which
had a 49 percent interest in Minera Paula 49 S.A.C., or Minera Paula. As a
result of this acquisition, Minera Paula became wholly owned by us. As of
December 31, 2004, Mineras Aureas and Minera Paula merged with and into Cedimin
and are no longer separate legal entities.

S.M.R.L. Chaupiloma Dos de Cajamarca

      Chaupiloma is a Peruvian limited liability company that holds all of the
mining rights for the areas mined by Yanacocha and Minas Conga. Chaupiloma
receives a royalty that is calculated as a percentage of the total revenues of
Yanacocha. We, Cedimin and Newmont Peru own a 20 percent interest, a 40 percent
interest and a 40 percent interest, respectively, in Chaupiloma. We own,
directly and indirectly, through our interest in Cedimin, a 60 percent interest
in Chaupiloma.

Consorcio Energetico Huancavelica S.A.

      Conenhua is an electrical transmission company that provides a significant
portion of our electrical needs through its transmission facilities. We own 100
percent of Conenhua and manage its operations. Conenhua obtained the concession
for power transmission in the Huancavelica area in 1983, enabling us to buy
energy from Electro Peru and to transmit electric power to our mining facilities
through our own facilities. The provinces of Huancavelica, Angaraes, Acobamba
and Castrovirreyna are now connected to the system. Conenhua also provides
electric power to other mining companies in the area. In 2006, Conenhua sold
21.3 million kilowatt hours, or kWh, in Huancavelica. Revenues generated by
Conenhua benefit us in the form of operational costs savings at the rate of
US$0.11 per kWh regarding thermoelectric generation costs. Conenhua has become
the operator of Paragsha II-Uchucchacua, the power line which provides
electricity to the Uchucchacua mine and two other mines and, in 2006, Conenhua
provided 126.7 million kWh to those mines. Conenhua also operates the
Callalli-Ares power line, which in 2006 provided 46.8 million kWh to the
Orcopampa and Shila-Paula mines. In addition, Conenhua provides the Antapite
mine (which was operated by Inminsur until 2006) with electricity, including
electrical power service and maintenance and, in 2006, Conenhua provided 15.0
million kWh to this mine. In 2006, Conenhua provided 359.5 million kWh to
Yanacocha. Conenhua's revenues in 2006 amounted to US$12.4 million.


                                       51



      In order to ensure the availability of electricity for future mining
projects, Conenhua purchased Hidroelectrica Maranon and Empresa Generacion
Huanza, each of which owns a hydroelectric project to be developed in the short
term by Energia Transandina SRL, a company created to be a holding company of
both projects, and created Egehuaura to develop minor hydroelectric projects.

Buenaventura Ingenieros S.A.

      Buenaventura Ingenieros S.A., or BISA, one of our wholly owned
subsidiaries, has provided mining sector geological, engineering, design and
construction consulting services for over 30 years. During this time, BISA has
consulted in Peru, Chile, Argentina, Mexico and Ecuador on a range of projects,
operations and expansions. In 1995, BISA created an environmental services
group. BISA owns a 99.95% percent interest in Contacto Corredores de Seguros
S.A., an insurance brokerage company that provides insurance brokerage and
related services to us and our affiliates. In 2004, 2005 and 2006, BISA
participated in 194, 181 and 183 projects, respectively, for domestic and
international mining industry customers in Latin America, including the
preparation of Environmental Impact Studies and Environmental Adaptation and
Management Programs. In 2006, BISA's revenues amounted to US$13.81 million.

Sociedad Minera Coshuro S.A.

      Coshuro, which began operations in December 1995, was created jointly by
us and Newmont Peru to conduct gold mining exploration in the Yanacocha volcanic
belt. Coshuro was 35 percent owned by us until December 20, 2000, on which date
Newmont Peru transferred 10.9 percent of its interest in the Coshuro to us. On
August 13, 2002, Sociedad Minera Coshuro S.A. authorized the separation and
transfer to us of all of the mining concessions granted to Coshuro pursuant to
the Separation Agreement dated September 25, 2000. The mining concessions were
transferred to Minera La Zanja S.R.L., or Minera La Zanja, incorporated in July
2004, in which we held a 35 percent interest. After July 2004, Minera La Zanja
conducted a capital increase whereby our interest in Minera La Zanja increased
to 53.06 percent. As a result, we currently hold a 45.9 percent interest in
Coshuro.

Inversiones Colquijirca S.A. / Sociedad Minera El Brocal S.A.A.

      In January 1999, we purchased all of the outstanding shares ADRA
International Holding Corp., or ADRA, for US$14.29 million, subject to
contractual purchase price adjustment. As a result of this acquisition, we
acquired ADRA's 29.73 percent equity interest in Inversiones Colquijirca S.A. We
currently hold a 61.42 percent equity interest in Inversiones Colquijirca S.A.,
including a direct 31.20 percent equity interest a 30.22 percent indirect equity
interest through our wholly-owned subsidiary, ADRA. In addition, we hold a 34.29
percent ownership interest in Sociedad Minera El Brocal S.A.A., or El Brocal.

      In January 2006, we entered into arbitration to resolve a dispute related
to the purchase price adjustment for our acquisition of ADRA International
Holding Corp. in 1999. On February 26, 2007, we received the arbitration award
and agreed to pay an additional US$23.9 million in connection with the purchase
price adjustment for the shares. On June 8, 2007, we paid approximately US$19.9
million of this award. The remaining balance due is approximately $3.9 million.
See Note 38(c) to the Financial Statements


                                       52



Ferrovias Central Andino S.A.

      We hold 10 percent of Ferrovias Central Andino S.A., or Ferrovias, a
railroad company, pursuant to a concession granted to a consortium of several
companies in April 2000. Among the other companies holding interests in the
share capital of Ferrovias are Railroad Development Corporation, Cemento Andino
S.A., Commonwealth Development Corporation and others. Ferrovias will provide
transportation for concentrates from El Brocal's mining operations at a lower
cost.

Sociedad Minera Cerro Verde S.A.A.

      We hold a 18.50 percent interest in Cerro Verde, which owns the Cerro
Verde copper deposit located approximately 1,100 kilometers southeast of Lima.
The Peruvian government previously owned and operated the mine. In November
1993, the Cerro Verde operation was privatized. Cyprus Climax Metals Company
(now a subsidiary of Freeport-McMoran Copper & Gold Inc.) bought 91.65 percent
and, pursuant to Peruvian privatization laws, the employees of Cerro Verde
purchased approximately 8.35 percent of the shares of Cerro Verde. Cyprus Climax
Metals Company paid US$33.9 million for its equity interest in Cerro Verde and
made a US$485 million capital commitment to finance the construction of the
facilities. In 2002, Cerro Verde obtained ISO 14001 certification.
Freeport-McMoran Copper & Gold Inc. is currently the operator and senior partner
of Cerro Verde. In 2006, the mine produced 96,516 metric tons of copper
cathodes, compared to 93,551 metric tons produced in 2005. It is estimated that
Cerro Verde contains over 7 million metric tons of recoverable copper and 20,825
hectares of mining concessions in its mining district.

      On June 1, 2005, Cerro Verde completed a capital increase. As a result of
the capital increase, SMM Cerro Verde Netherlands B.V. acquired a 21 percent
equity interest in Cerro Verde. In addition, we increased our equity interest in
Cerro Verde from 9.17 percent to 18.21 percent. The remaining minority
shareholders own 7.23 percent of Cerro Verde through shares publicly traded on
the Lima Stock Exchange. As a result of the transaction, Cerro Verde received
US$441.7 million in cash, net of US$1.0 million in expenses, and Phelps Dodge's
interest in Cerro Verde was reduced to 53.56 percent from 82.48 percent.
Freeport-McMoran Copper & Gold Inc. maintains a majority interest in Cerro
Verde. Since June 1, 2005, we have purchased additional common shares in Cerro
Verde on the Lima Stock Exchange, increasing our interest to 18.50 percent as of
March 2007.

      In February 2005, the board of directors of Cerro Verde approved an
approximately US$850 million expansion and financing of the Cerro Verde mine. On
September 30, 2005, Cerro Verde obtained in connection with such financing,
debt-financing facilities in an overall amount of US$450 million, subject to
certain conditions precedent. The cash invested by us and Sumitomo Metal Mining
Co. and Ltd. and Sumitomo Corporation in connection with the capital increase
financed approximately US$420 million of the expansion for the year ended
December 31, 2006.

      Effective on January 17, 2007 Cerro Verde terminated its commitments with
each lender under its credit facilities. Approximately US$110 million in
borrowings under Cerro Verde's credit facilities remain outstanding. As of May
31, 2007, Cerro Verde had total debt outstanding of approximately US$202
million.

      Presented in the table below is certain financial and operating data
regarding Cerro Verde for the years ended December 31, 2004, 2005 and 2006:


                                       53



<TABLE>
<CAPTION>
                                                          As of and for the year ended
                                                                 December 31,
                                                       ---------------------------------
                                                          2004        2005        2006
                                                       ---------   ---------   ---------
<S>                                                    <C>         <C>         <C>
Income statement data(1)
  Total revenues (US$ in thousands)                      260,782     358,928     667,671
  Net income (US$ in thousands)                           87,663     234,663     444,621
Proven and Probable Reserves(2)
  Leachable ore reserves (metric tons in thousands)      351,214     331,327     334,296
  Millable ore reserves (metric tons in thousands)     1,295,528   1,262,857   1,407,136
  Average copper grade of leachable ore reserves (%)        0.45        0.44        0.46
  Average copper grade of millable ore reserves (%)         0.49        0.49        0.47
Production(3)
  Cathodes (in metric tons)                               88,502      93,551      96,516
  Price (US$ per metric ton)                               2,868       3,684       6,731
</TABLE>

----------
(1)   Derived from Cerro Verde's financial statements filed with CONASEV. See
      Note 13 to the Financial Statements.

(2)   Reserve calculations are derived from the financial statements filed by
      Cerro Verde with CONASEV. The calculation or estimation of proven and
      probable ore reserves for Cerro Verde may differ in some respects to the
      calculations of proven and probable reserves for us and Yanacocha located
      elsewhere in this Annual Report. According to Cerro Verde, ore estimates
      for Cerro Verde are based upon engineering evaluations of assay values
      derived from samplings of drill holes and other openings. Cerro Verde's
      ore estimates includes assessments or the resource, mining and metallurgy,
      as well as consideration of economic, marketing, legal, environmental,
      social and governmental factors, including projected long-term prices for
      copper and molybdenum and Cerro Verde's estimate of future cost trends.

(3)   Derived from Cerro Verde's financial statements filed with CONASEV.


                                       54



                                    YANACOCHA

Overview

      Founded in Peru in 1992, Yanacocha is the largest gold producer in Latin
America. Yanacocha produced 2,612,199 ounces of gold in 2006, its thirteenth
full year of operations. Yanacocha's operations are located in the Andes
Mountains in Northern Peru in the area of Cajamarca, located approximately 900
kilometers north of Lima and north of the City of Cajamarca at an altitude of
4,000 meters above sea level. As of December 31, 2006, Yanacocha's proven and
probable reserves (excluding Conga's proven and probable reserves) were
estimated to be 17.5 million ounces of gold, representing a 15.8 percent
decrease over Yanacocha's proven and probable reserves as of December 31, 2005,
which were estimated to be 20.8 million ounces of gold. The decrease in reserves
of gold was mainly due to a mining depletion of 3.7 million ounces, partially
offset by an increase of 0.4 million ounces of gold reserves due to an increase
in the price of gold and updated grade in recovery models. As of December 31,
2006, Conga's proven and probable reserves were estimated to be 11.8 million
ounces of gold and 3.2 billion pounds of copper, representing no variation from
estimated 2005 gold and copper reserves. As of December 31, 2006, Yanacocha's
total proven and probable reserves (including Conga) were estimated to be 29.3
million ounces of gold, representing a 10.1 percent decrease over Yanacocha's
total proven and probable reserves as of December 31, 2005, which were estimated
to be 32.6 million ounces of gold. Yanacocha's total proven and probable
reserves of copper were 3.2 billion pounds as of December 31, 2006 and 2005.

      Proven and probable reserves are based on extensive drilling, sampling,
mine modeling and metallurgical testing from which economic feasibility has been
determined. Under the Management Contract (as defined below), Newmont Peru, in
conjunction with Yanacocha, calculates Yanacocha's reserves by methods generally
applied within the mining industry and in accordance with existing regulations.
Reserves represent estimated quantities of proven and probable ore that, under
present and anticipated conditions, may be economically mined and processed.
Newmont Peru has not quoted silver reserves at Yanacocha for the last year due
to recovery issues.

      Yanacocha's exploration activities encompass 282,079 hectares covered by
411 mining concessions. Chaupiloma holds the mining rights with respect to these
hectares and has assigned the mining rights related to 109,964 hectares to
Yanacocha, which are covered by 163 mining concessions. Chaupiloma has assigned
these mining concessions to Yanacocha pursuant to several assignments of mining
rights.

      In 1994, its first full year of production, Yanacocha produced 304,552
ounces of gold. Yanacocha produced 2,285,584 ounces of gold in 2002, 2,851,143
ounces in 2003, 3,017,303 ounces in 2004, 3,333,088 ounces in 2005 and 2,612,199
ounces in 2006. Yanacocha expects production to decrease by 40 percent from the
2006 production level to 1,555,938 ounces in 2007. Yanacocha believes that it
was one of the world's lowest cost gold producers in 2006, with a cost per ounce
of gold sold of US$201. Yanacocha's cost per ounce of gold sold was US$153 in
2005, US$148 in 2004, US$132 in 2003 and US$137 in 2002.

      Yanacocha expects production of silver to decrease 49 percent from the
2006 production level to 1,763,105 million ounces in 2007. Yanacocha reduces the
cost of gold sold with sales of silver, which is considered a by-product. Silver
production was 24,467 ounces in 1993, Yanacocha's first full year of production,
1,921,670 ounces in 2002, 3,035,275 ounces in 2003, 3,479,436 ounces in 2004,
4,342,292 ounces in 2005 and 3,441,401 ounces in 2006.


                                       55



      Yanacocha is owned 51.35 percent by Newmont Mining, through its wholly
owned subsidiary Newmont Second, 43.65 percent by us through our 100 percent
owned subsidiary Condesa, and 5 percent by IFC. Yanacocha is managed by Newmont
Peru. See "--Management of Yanacocha--General Manager/Management Agreement".
Since 1992, aggregate capital contributions of US$2.3 million have been made by
Condesa, Newmont Second and IFC to Yanacocha. Although Yanacocha did not pay
dividends during its development years, 1992 through 1994, cash dividends were
distributed from 1995 to 2000. In 2001, Yanacocha paid an aggregated amount of
US$10 million in dividends in respect of 2000 earnings and elected to reinvest
US$80 million from 2001 profits based on a new reinvestment program for the
years 2001 to 2004. In December 2001, the MEM approved the 1998 reinvestment
program (increased in 1999) for US$206.5 million. As a result, an additional
US$13.5 million was capitalized. In 2002, Yanacocha paid an aggregated amount of
US$50.7 million in dividends in respect of 2001 earnings and elected to reinvest
US$80 million from 2002 profits. In 2003, Yanacocha paid an aggregated amount of
US$300 million in dividends in respect of 2002 earnings and elected to reinvest
US$29.6 million from 2003 profits. In 2004, Yanacocha paid an aggregated amount
of US$280 million in dividends in respect of 2003 earnings and completed all
investments under its reinvestment program from 2000-2004. See the Statements of
Changes in Partners Equity in the Yanacocha Financial Statements on page F-56
and "Item 5. Operating and Financial Review and Prospects--Yanacocha--Operating
Results". In 2005, Yanacocha paid an aggregated amount of US$180 million in
dividends in respect of 2004 earnings. Undistributed earnings associated with
the reinvestment program are presented as restricted earnings as of December 31,
2004, 2005 and 2006.

      On October 31, 1999, pursuant to a public deed, Yanacocha changed its
legal structure from a corporation to a partnership, changing its name from
"Minera Yanacocha S.A." to "Minera Yanacocha S.R.L." As a result, Yanacocha (i)
cannot have more than 20 partners; (ii) its capital stock is represented in
participations; (iii) is not required to maintain a legal reserve (see Note 16
to Yanacocha Financial Statements); and (iv) will not receive a different income
tax treatment under Peruvian law than it did as a corporation.

Capital Expenditures

      Yanacocha's capital expenditures from its formation in 1992 through 2006
have related principally to the construction of the Carachugo, Maqui Maqui, San
Jose, Cerro Yanacocha and La Quinua mining operations, the construction of the
two plants at Carachugo and Yanacocha that include a leach solution processing
facility and a smelter at each plant, the construction of four carbon column
plants at Cerro Yanacocha and La Quinua, the acquisition of both new and used
mining equipment, the construction of two dams, the construction of one
agglomeration plant at La Quinua, the construction of a gold mill facility at
Yanacocha and several expansions of the leach pads located at the Carachugo,
Maqui Maqui, Cerro Yanacocha and La Quinua mining operations. Yanacocha's
capital expenditures from its formation through December 31, 2006 totaled
approximately US$2,134.5 million, including capital expenditures of US$237.2
million in 2004, US$230.1 million in 2005 and US$264.3 million in 2006. Capital
expenditures in 2006 included an investment of US$157.8 million for mine and
leach pad expansions of Carachugo (stage 10) and La Quinua (stage 6), US$9.3
million for environmental site and regional water management projects, US$11.9
million for mining equipment, US$44.8 million for the Yanacocha gold mill
facility, US$11.1 million for the Conga project and US$32.7 million for work
related to other ongoing expansions. Capital expenditures in 2005 included an
investment of US$73 million for mine and leach pad construction, US$12 million
for environmental site and regional water management projects, US$30 million for
mining equipment, US$17 million for the Minas Conga project and US$98 million
related to other ongoing expansions. Capital expenditures in 2004 included an
investment of US$93.5 million for mine and leach pad construction, US$20.4
million for environmental site and regional water management projects, US$36.8
million for mining equipment and US$86.5 million for work related to other
ongoing expansion projects. See "--The Company--History and Development".


                                       56



      Yanacocha anticipates that its capital expenditures for 2007 will be
approximately US$355.2 million, which Yanacocha plans to use primarily in the
completion of the leach pad expansion at Carachugo (Stages 10 and 11), La Quinua
(Stage 6) and Yanacocha (Stage 5), the continuation of the site-wide management
plan to control sediment and chemicals, installation of a reverse osmosis plant
for excess water treatment at Pampa Larga, continuation of the Yanacocha gold
mill project and the Minas Conga project, development of the Chaquicocha
deposit, construction of an alternate road to the coast of Peru, and the
acquisition of real property, heavy mining equipment and miscellaneous mining
equipment. The Yanacocha gold mill facility, or YGM, will provide a process
alternative to exploit high grade oxide ore and sulfide ores which are not
amenable to heap leaching through a grinding circuit classification, followed by
pre-leach thickening, a 24-hour leaching process, and countercurrent
decantation. Since the YGM will be located within the current Minera Yanacocha
operating area, it will maximize utilization of existing infrastructure at La
Quinua. Minas Conga currently consists of two gold-copper porphyry deposits
located northeast of Minera Yanacocha's operating area in the provinces of
Celendin, Cajamarca and Hualgayoc. This project, incorporated to reserves in
2004, reported 11.8 million ounces of gold reserves and 3.2 billion pounds of
copper reserves in 2006 and 2005.

      Yanacocha expects that it will meet its working capital, capital
expenditure and exploration requirements for the next several years from
internally-generated funds, cash on hand and financing from banks and financial
institutions. There can be no assurance that sufficient funding will be
available to Yanacocha from internal or external sources to finance future
working capital, capital expenditures and exploration and construction
requirements, or that external funding will be available for such purposes on
terms or at prices favorable to Yanacocha. A very significant decline in the
price of gold would be reasonably likely to affect the availability of such
sources of liquidity. See "Item 5. Operating and Financial Review and
Prospects--Yanacocha--Exploration Costs; Capital Expenditures".

Description of Yanacocha's Operations

      As of December 31, 2006, Yanacocha's business operations consisted of five
separate open-pit mines located at Carachugo, Maqui Maqui, San Jose, Cerro
Yanacocha and La Quinua, of which only two, Cerro Yanacocha and La Quinua, are
currently in operation. The Carachugo, Maqui Maqui, San Jose, Cerro Yanacocha
and La Quinua mining areas began operations in August 1993, October 1994,
January 1996, the last quarter of 1997 and October 2001, respectively. The Maqui
Maqui open-pit mine temporarily ceased mining operations in 2000. Maqui Maqui,
however, has reported new reserves. The San Jose open-pit mine ceased operations
in 2002, but temporarily reopened and closed again during 2006. San Jose has
increased reserves as a result of an increase in the base price for proven and
probable reserve estimates, from US$400 in 2005 to US$500 in 2006. The Carachugo
open-pit mine has temporarily ceased mining operations, although one ore
processing facility remains in operation.

      Leach pads are located at Carachugo (410 million ton-capacity), Maqui
Maqui (70 million ton-capacity), Cerro Yanacocha (470 million ton-capacity) and
La Quinua (540 million ton-capacity). Each of these leach pads includes at least
two leach solution storage ponds and storm water ponds located down gradient
from each leach pad. The Cerro Yanacocha site has two additional solution ponds
attached to Stages 6 and 7 for the segregation of solution generated from the
treatment of transition ores. A raw water pond is used both for storm
containment and to store excess solution during the wet season. La Quinua has an
additional solution pond attached to Stage 4.

      Yanacocha has three processing facilities, which are located at Pampa
Larga, Yanacocha Norte and La Quinua. The processing facilities can be used to
process gold-bearing solutions from any of the leach pads through a network of
solution pumping facilities located adjacent to the solution storage ponds. The
Pampa Larga facility includes Merrill-Crowe and carbon column gold recovery
plants, and two four-stage water plants to allow treatment of excess process
solutions accumulated during the rainy season. The Pampa Larga facility also
includes the original gold refinery installation, which is maintained for
emergency standby purposes only. The Yanacocha Norte facility includes
Merrill-Crowe and carbon column gold recovery plants, three four-stage water
treatment plants, and a reverse osmosis water plant to allow treatment of excess
process solutions accumulated during the rainy season. This facility also
contains primary refining and mercury retorting operations and an acid water
treatment plant to allow neutralization of acid waters emanating from its mining
operation and waste dumps prior to release into the environment. In addition, a
slaking plant to provide lime for ensuring an alkaline pH on the pads and for
water treatment purposes is located in close proximity to the facility. The La
Quinua facility includes a carbon column gold recovery plant, an acid water
treatment plant to allow neutralization of acid waters emanating from its mining
operations and waste dumps prior to release into the environment, and a slaking
plant to provide lime for ensuring an alkaline pH on the pads and for water
treatment purposes.


                                       57



      Mining consists of a sequence of drilling, blasting, loading and hauling.
Ore containing gold is transported from each mine to the nearest active leach
pad while waste is taken to specially designed storage facilities. Unlike
Yanacocha's other mines, the ore in the La Quinua mine contains clays and fine
grain material which can inhibit the heap leaching process if not handled
properly. Initially, the La Quinua mine utilized an ore crushing and
agglomeration process to improve the permeability of the ore prior to stacking
ore on the leach pad. In May 2004, this process was replaced with a more
inexpensive method whereby the ore is re-excavated using hydraulic shovels to a
depth of four meters to improve permeability. Improved ore control to ensure
proper blending of fine and coarse grained ore is an integral part of this
process.

      Ore is leached by introducing dilute solutions of cyanide through an
irrigation system placed on top of the ore. This solution percolates through the
ore, dissolving gold and silver as AuCN and AgCN complexes respectively, and
results in a "pregnant" solution which drains to solution storage ponds to be
transferred to the nearest recovery facility. Carbon column gold recovery plants
typically treat lower grade solutions to produce a highly upgraded metal-bearing
solution which in turn is routed to the Merrill-Crowe plants. Solution from the
carbon column gold recovery plants or high grade solutions from the leach pads
are sent to the Merrill-Crowe plants for gold extraction by a zinc precipitation
process. The resulting gold concentrate is then retorted to remove mercury, and
then smelted, producing dore bars currently assaying approximately 52 percent
gold and 45 percent silver. The dore bars are transported from the processing
plant by an outside security firm and refined outside of Peru. See
"--Transportation and Refining". The solution from which the gold is removed
(barren solution) is recycled to the leach pads for further heap-leaching after
having been reconstituted with cyanide. The leaching process is generally a
closed system. However, during periods of high rainfall, excess water must be
treated at the facilities located at Yanacocha Norte and Pampa Larga, which have
been designed to meet or exceed standards for drinking water and for agriculture
and livestock as set out by the Peruvian Ministry of Health, the U.S.
Environmental Protection Agency, the State of Nevada Regulations and World Bank
guidelines. See "--Regulation, Permitting and Environmental Matters".

      Electric power for Yanacocha's operations is currently provided by local
power companies via two separate networks. Yanacocha also maintains diesel
generation capacity for emergency requirements which have an aggregate power
generation capacity of 16 megawatts, or MW. In addition, Yanacocha has been
connected to the Peruvian national electricity grid since the end of 1997.
Yanacocha currently receives its supply of electric power through a 220
kilovolt, or kV, power line originating in Trujillo, which is owned by
Buenaventura and has the capacity to provide up to 150 MW to Yanacocha (although
current contracted demand is limited to 42 MW). In addition, a 60 kV power line
routed through Cajamarca permits Yanacocha to receive up to 15 MW. This power
line is used only in emergencies. See "Item 5. Operating and Financial Review
and Prospects".


                                       58



      Water for Yanacocha's operations is collected from rainfall and wells. All
excess water used by Yanacocha undergoes treatment at the treatment facilities
described above.

      Set forth below are certain unaudited operating data, for the years shown
for each of Yanacocha's mining operations that were then in operation:

<TABLE>
<CAPTION>
                                          2002           2003          2004          2005         2006
                                       -----------   -----------   -----------   -----------   -----------
<S>                                    <C>           <C>           <C>           <C>           <C>
Mining Operations:
Ore mined (dry short tons):
  Cerro Yanacocha ..................    97,660,028    78,201,929    73,551,712    64,582,674    59,944,475
  Carachugo ........................     5,301,915       101,150            --            --       950,355
  Maqui Maqui ......................            --            --            --            --            --
  La Quinua ........................    45,779,942    68,555,909    63,714,676    80,889,028       414,559
  San Jose .........................       114,089            --            --            --    54,485,222
Total ore mined (dry short tons) ...   148,855,974   146,858,989   137,266,389   145,471,702   115,794,610
Average gold grade of ore mined
(oz./dry short ton)
  Cerro Yanacocha ..................         0.021         0.024         0.022         0.034         0.030
  Carachugo ........................         0.019         0.014            --            --         0.039
  Maqui Maqui ......................            --            --            --            --            --
  San Jose .........................         0.024            --            --            --         0.028
  La Quinua ........................         0.028         0.031         0.029         0.023         0.021
                                       -----------   -----------   -----------   -----------   -----------
Total average gold grade of ore
  Mined (oz./dry short ton) ........         0.023         0.027         0.025         0.028          0.026

Gold Production (oz.):
  Cerro Yanacocha ..................       903,581       813,132       740,087     1,198,160     1,035,794
  Carachugo ........................       585,249       826,920       701,491       421,967       308,600
  Maqui Maqui ......................        30,998        64,335        45,612        38,631        21,747
  San Jose .........................            --            --            --            --            --
  La Quinua ........................       765,756     1,146,756     1,530,112     1,674,329     1,246,058
Total gold (oz.) ...................     2,285,584     2,851,143     3,017,302     3,333,088     2,612,199
</TABLE>

Exploration

      Yanacocha's exploration activities encompass 282,079 hectares covered by
411 mining concessions. Chaupiloma holds the mining rights with respect to these
hectares and has assigned the mining rights related to 109,964 hectares to
Yanacocha, which are covered by 163 mining concessions. Chaupiloma has assigned
these mining concessions to Yanacocha pursuant to several assignments of mining
rights.

      Yanacocha has three processing concessions from the MEM for its processing
plant. The processing concessions have indefinite terms, subject to the payment
of a fee based on nominal capacity for the processing plant. In 2006, Yanacocha
requested extensions for two of these processing concessions.

      Exploration expenditures amounted to approximately US$35.2 million,
US$32.9 million and US$32.3 million in 2004, 2005 and 2006, respectively. These
expenditures have resulted in the identification of several deposits, which have
been advanced to reserves, including Carachugo, Maqui Maqui, San Jose, Cerro
Yanacocha, La Quinua (which includes Cerro Negro), Chaquicocha, El Tapado,
Corimayo, Antonio, Quecher and Minas Conga (Perol, Chailhuagon and Amaro).
Exploration expenditures have also been used to identify deep sulfide
mineralization beneath the oxide deposits at El Tapado, Corimayo, Antonio,
Yanacocha and Chaquicocha. In 2006, exploration efforts will focus on
metallurgical and infill drilling at Chaquicocha. A first pass drilling test and
follow up has been scheduled at several target sites, namely, San Cirilo,
Mishacocha, Gentiles SE, and the western and eastern portions of the Yanacocha
District (Exaltado and Colorado graben targets).


                                       59



      Yanacocha's exploration expenditures include all of the costs associated
with exploration activities such as drilling, geological and metallurgical
testing. Yanacocha prepares a budget for each year and allocates an amount for
exploration activities. In light of the nature of mining exploration and in
order to maintain flexibility to take advantage of opportunities that may arise,
Yanacocha does not allocate a specified budgeted amount by property or project.
Rather, Yanacocha allocates a budgeted amount over the course of the year to
each project based on Yanacocha's needs and its geologists' periodic evaluations
of the progress of each project and its potential for mine construction.

      Yanacocha intends to continue to develop the Cerro Yanacocha, La Quinua
and Chaquicocha gold deposit projects and the Minas Conga gold-copper deposit
project over the next several years, while continuing to explore the remainder
of the Yanacocha district along with the adjacent Minas Conga and Solitario
mineral holdings. For 2007, Yanacocha's estimated expenditures will be US$ 17.8
million for exploration, which will be expensed, and an additional US$3 million
for delineation activities for ore bodies that are currently classified as
reserves, which will be capitalized. This budgeted amount will be expended
mainly on the Chaquicocha, Cerro Yanacocha, La Quinua, and Minas Conga deposits
along with an extensive exploration program in Yanacocha's properties.

      In 2001 and 2002, activities resulted in the identification of a
continuous, high-grade zone at Corimayo, which can be traced for at least 600
meters in a north-south direction and contains a significant volume of oxide
material with grades of 5 to 20 grams per metric ton common through this zone.
At the end of 2003, Corimayo, Antonio and Quecher contained 3.00 million, 0.11
million and 0.04 million ounces of reserves, respectively. In 2004, exploration
efforts focused on the exploration of near-surface oxide deposits at Cerro
Quilish, including Cerro Negro, and Chaquicocha, and the expansion of the
Antonio deposit and the Giuliana prospect, located north of the Yanacocha Norte
pit. Exploration of gold-dominant sulfide mineralization continues beneath known
oxide deposits at Yanacocha Sur, Chaquicocha, Tapado, Corimayo, Antonio and
Maqui Maqui. In 2004, infill drilling at Minas Conga added 8.7 million ounces of
gold and 2.23 billion pounds of copper from the Perol and Chailhuagon deposits.
In 2005, additional infill drilling at Chaihuagon and Perol added 3.1 million
ounces, and 0.99 billion pounds of copper reserves. Several early stage target
sites were tested by drilling, including Gentiles at the Minas Conga deposit and
San Cirilo at the Solitario Regional Sector. In 2006, 400,000 ounces were added
from Chaquicocha. In addition, early stage drilling continues at San Cirilo,
Deborah corridor, Minas Conga and Yanacocha.

Transportation and Refining

      The dore bars produced by Yanacocha are transported to refineries outside
of Peru and, accordingly, Yanacocha has entered into pre-established
transportation contracts. Yanacocha has engaged Hermes Transportes Blindados
S.A., or Hermes, to service its local transportation requirements. Under the
terms of Yanacocha's agreement with Hermes, the risk of loss with respect to the
dore bars is assumed in its entirety by Hermes during the transportation of the
dore bars from the mines to Jorge Chavez Airport in Lima. Thereafter, the
responsibility for the dore bars shifts to the refiner, which has entered into a
contract with an outside security firm to provide offshore transportation. The
dore bars are melted, weighed and sampled in refineries abroad, which store the
dore bars in strong-room vaults and assume responsibility there for the dore
bars. Yanacocha pays a predetermined fee for the refining service. The final
output from refineries, known as London Good Delivery gold and silver, is
credited to Yanacocha's London bullion accounts until transferred to purchasers.


                                       60



Sales of Gold

      Yanacocha's gold sales are made through a monthly open-bidding process in
which Yanacocha auctions its production, corresponding to the next four to five
weeks. This bidding process is set up by Yanacocha with approximately 10
financial institutions and trading firms prior to each month. Yanacocha collects
bids and confirms sales. The gold is typically sold on the date of departure
from Jorge Chavez Airport in Lima. If a portion of gold remains unsold, it is
sold on the spot market within a few days. Silver is sold on the spot market
approximately once a month to financial institutions or trading firms. The cash
from such sales is received into a collection account in London against orders
to the London bullion bank for deliveries of the gold and silver to the
purchasers.

      Delivery is made once a week and payments are collected the day of
confirmation. The payment price for the gold consists of either (i) the market
price at the confirmation of the sale, or (ii) the average London PM Fixing
price over the tendered period plus a small premium established pursuant to the
bidding process. Since 1994, Yanacocha has consistently sold to five or six
financial institutions and trading firms at each auction. Such buyers are market
makers and active participants in precious metal markets.

Employees

      As of December 31, 2006, Yanacocha had 2,946 employees. Compensation
received by Yanacocha's employees includes base salary and other non-cash
benefits such as a health program and term life insurance. In addition, pursuant
to the profit sharing plan mandated by Peruvian labor legislation, employees at
Yanacocha are entitled to receive eight percent of the annual pre-tax profits of
their employers, or the Employee Profit Sharing Amount, four percent of such
profits to be distributed based on the number of days each employee worked
during the preceding year and the remaining four percent of such profits to be
distributed among the employees based on their relative salary levels. Effective
January 1, 1997, the annual payment to each employee under the profit sharing
plan cannot exceed 18 times such employee's monthly salary, and any difference
between the Employee Profit Sharing Amount and the aggregate amount paid to
employees must be contributed by Yanacocha to the Fondo Nacional de Capacitacion
Laboral y Promocion del Empleo (FONDO EMPLEO), a public fund established to
promote employment and employee training. Since 2005, if the amount contributed
by Yanacocha exceeds 2,200 Unidad Impositiva Tributaria (Tributary Tax Units),
the excess should be dedicated exclusively to the financing of road
infrastructure works and managed by the regional government.

      In 1998, the Peruvian Government issued additional regulations regarding
the calculation of the workers participation, which limited to 18 monthly
salaries the total amount to which each employee is entitled. However, there is
a difference in the criteria for the calculation between the law and its
regulations. Yanacocha followed the criteria established by the law in
determining the amount to be paid to its employees since 1998. As of December
31, 2006, Yanacocha recorded a charge of US$14.9 million, included in Other
expenses, net, to cover any payment derived from the different criteria
established to make these payments by both the law and the regulation.

      Pursuant to the Peruvian labor laws enacted in 1991, Yanacocha deposits
funds for severance payments in a bank account selected by each employee and for
the benefit of such employee, in both May and November of each year.

      Yanacocha's employees receive the benefit of one of two types of pension
arrangements. All workers can choose to enroll in the system of the Oficina de
Normalizacion Previsional (the Public Pension System, or ONP), in a
privately-managed system of individual contribution pension funds or in the
Administradoras de Fondo de Pensiones, or AFPs. Yanacocha is required to
withhold 13 percent from the salary of each employee enrolled in the ONP system
and pay such amount to the ONP system, and withhold between 12.40 percent and
12.96 percent from the salary of each employee enrolled in the AFP system and
pay such amount to the respective AFP. Yanacocha has no liability for the
performance of these pension plans.


                                       61



      In addition, Yanacocha pays approximately 9 percent of its total payroll
to ES-SALUD (the social security agency) for general health services for all
employees. Law No. 26790 also requires Yanacocha to provide private insurance
representing an average payment equal to 1.48 percent of the payroll of covered
employees for employment-related incapacity and death for blue collar employees
and other employees exposed to mining-related hazards.

      Yanacocha has entered into arrangements with independent contractors who
are responsible for the security services and staffing for several operational
and administrative areas. As of December 31, 2006, independent contractors
employed 8,673 persons who worked at Yanacocha's operations. In 2004, Yanacocha
entered into its first collective bargaining agreement with Workers' Union of
Minera Yanacocha S.R.L., or the Union, which was created on December 9, 2003.
Because the Union's 605 members as of December 31, 2006 represented a minority
of Yanacocha's employees, the collective bargaining agreement applied only to
the Union's members and expired on February 28, 2007. In April 2006, although
the collective bargaining agreement had not yet expired, a small percentage of
Union members engaged in a three-day strike. The strike did not have any
material impact on Yanacocha's operations; nevertheless there can be no
assurance that Yanacocha will not experience other strikes or labor-related work
stoppages that could have a material adverse effect on its operations or its
operating results.

      Since commencement of operations, Yanacocha's rate of turnover has been
less than ten percent per year. Yanacocha has informed us that it considers its
relations with its employees to be good. Yanacocha annually evaluates employee
relations using an anonymous employee opinion survey to measure employee
opinions of its benefits and policies. Approximately 80% of payroll employees
participate in this survey each year.

Social Development

      Since its formation,Yanacocha has been attentive to its relationship with
the community in the fields of social relations and development.

      During 2006, the External Affairs Management, an internal department
within Yanacocha, through its Community Relations and Rural Development
Departments, established social development programs that address 122 rural
communities and the city of Cajamarca. To implement these programs, Yanacocha
developed active relationships with domestic and foreign institutions and
organizations, including the Ministry of Health, the Ministry of Education, the
Ministry of Agriculture, the Ministry of Foreign Trade and Tourism, Cajamarca
local governments, International Finance Corporation, CITE Koriwasi, Cooperative
Housing Foundation or CHF, Asociacion para el Desarrollo Rural de Cajamarca or
ASPADERUC, Asociacion para el Desarrollo Forestal or ADEFOR, Camara Regional de
Turismo or CARETUR, FONDO EMPLEO, Antares, Asociacion para el Desarrollo Local
or ASODEL, Foncreagro, Cenfotur and Aprec, among others. In 2006, Yanacocha
invested up to US$24 million in its social development programs, including the
Conga project.

      In 2006, Yanacocha invested US$5.5 million in educational infrastructure
at the Davey school and US$1.7 million for road improvements. Yanacocha also
invested US$6.9 million in development projects for rural areas, including
community capacity building, agriculture, health, education and other projects.
In addition, Yanacocha invested $9.3 million in mitigation programs in areas
such as Tual, La Quinua, La Shacsha, La Ramada, Lagamarca and Granja Porcon.


                                       62



      Since 1993, Yanacocha has invested nearly US$79 million in social
development programs including education, health, social infrastructure (schools
and medical posts), productive infrastructure projects, rural electrification,
roads, transformation plants, business promotion programs, local tourist
programs, livestock and agricultural assistance programs.

Security

      Yanacocha has 50 security employees on its payroll and one expatriate. In
addition there is a contracted security force of over 375 persons assigned to
rotating shifts. Distribution of payroll security personnel includes six persons
with respect to the processing plant, one person with respect to its
headquarters in Lima and one person with respect to the road to the coast. The
distribution of the contracted security force is throughout the site, at access
points, offices and residential areas in Cajamarca and at check point 0 on the
road to the coast. In addition to the standing posts, there is a rapid response
force of 18 persons per shift. No terrorist incidents have been recorded against
Yanacocha's personnel or property at its mining operations or at its
headquarters in Lima.

Mining and Processing Concessions

      Yanacocha's exploration activities encompass 282,079 hectares covered by
411 mining concessions. Chaupiloma holds the mining rights with respect to these
hectares and has assigned the mining rights related to 109,964 hectares to
Yanacocha, which are covered by 163 mining concessions. Chaupiloma has assigned
these mining concessions to Yanacocha pursuant to several assignments of mining
rights, each with an initial term of 20 years (with the exception of one
contract that has an initial term of 30 years) and expiring in 2012, 2014, 2015,
2018, 2021, 2024, 2025, 2026 and 2035, that are renewable at Yanacocha's request
for an additional 20-year term. Chaupiloma has not yet assigned 100 hectares
covered by one mining concession to Yanacocha. Approximately 22 percent of the
mining concessions that have been assigned by Chaupiloma to Yanacocha were
claimed prior to 1991. Chaupiloma is owned 40 percent by Newmont Peru and 60
percent by Minera Condesa and Cedimin.

      Currently, 17 of the mining concessions assigned to Yanacocha are being
utilized for mining operations. They are Chaupiloma Uno, Chaupiloma Dos,
Chaupiloma Tres, Chaupiloma Cuatro, Chaupiloma Cinco, Chaupiloma Seis,
Chaupiloma Once, Chaupiloma Doce, Chaupiloma Trece, Chaupiloma Veintiuno,
Chaupiloma Veintiuno A2, Chaupiloma Cuarentaidos, Chaupiloma Cincuentaicuatro,
El Sol No. 4, La Providencia, Mirtha III and Claudina Ocho.

      The Carachugo and San Jose mining facilities are located on the mining
concessions of Chaupiloma Tres, Chaupiloma Cuatro and Chaupiloma Cinco; the
Maqui Maqui mining facility is located on the mining concessions of Chaupiloma
Seis and Chaupiloma Doce; the Cerro Yanacocha mining operation is located on the
Chaupiloma Uno, Chaupiloma Dos and Chaupiloma Tres mining concessions; the La
Quinua mining facility is located on the Chaupiloma Dos, Chaupiloma Once,
Chaupiloma Veintiuno, Chaupiloma Cuarentidos, Chaupiloma Cincuenticuatro, Mirtha
III, La Providencia, Chaupiloma Trece, Chaupiloma Veintiuno A2 and El Sol No. 4
mining concessions; and the Calera China Linda mining operation is located on
the Claudina Ocho mining concession. Yanacocha currently conducts mining
activities at Cerro Yanacocha, La Quinua and Calera China Linda.

      Yanacocha pays a royalty fee to Chaupiloma of 3 percent of the net sale
value of all ore extracted from these mining concessions after deducting
refinery and transport costs for the right to mine five of the mining
concessions. For 2006, Yanacocha paid royalties of US$48.5 million to
Chaupiloma. The mining concession not yet assigned to Yanacocha will be assigned
to Yanacocha by Chaupiloma on comparable terms.


                                       63



      According to Peruvian mining law, the assignee in an assignment of mining
concessions assumes all the duties and rights of the holder of the concession.
Management of Yanacocha believes that the mining concessions assigned to
Yanacocha are in full force and effect under applicable Peruvian laws and that
Yanacocha is in compliance with all material terms and requirements applicable
to the mining concessions and is not experiencing any condition, occurrence or
event known to it that would cause the revocation, cancellation, lapse,
expiration or termination thereof, except that Yanacocha and Chaupiloma may,
from time to time, remake, cancel, terminate or allow to lapse mining
concessions assigned to Yanacocha that are not material to the conduct of
Yanacocha's business.

      Yanacocha has been actively pursuing the acquisition of the land surface
rights or obtaining easements relating to land positions containing prospective
geological exploration target sites, deposits that can be developed in the
future or areas that would be considered for plant or facility sites. To date,
Yanacocha has acquired all the surface rights with respect to 13,927 hectares of
the surface land covering its Carachugo, Chaquicocha, Maqui Maqui, Haussing,
Laboratorio, Linea de Alta Tension, Presas, Museo, Sorpresa Mishacocha, San
Jose, Cerro Yanacocha and La Quinua (which includes the Cerro Negro deposit)
mining operations, and a majority of the Cerro Quilish deposit and Calera China
Linda.

      In addition, as of December 31, 2006, Yanacocha had acquired 22,953
hectares, including 5,053 hectares of surface rights with respect to the Minas
Conga deposit, 3,572 hectares for the San Cirilo and Las Lagunas prospects at
Solitario, and 419 hectares for future land swaps. See "--The Company--History
and Development".

<TABLE>
<CAPTION>
                                           Hectares as of                Hectares Acquired   Total Hectares as of
              PROJECT                    December 31, 2005   Exchanges         in 2006         December 31, 2006
--------------------------------------   -----------------   ---------   -----------------   --------------------
<S>                                          <C>               <C>            <C>                 <C>
Carachugo - San Jose - Chaquicocha ...        3,347.61             --           114.74             3,462.35
Cerro Quilish - Cerro Negro ..........        2,806.64             --            19.24             2,825.88
Calera China Linda ...................          256.60             --            90.69               347.29
Haussing .............................           10.89             --               --                10.89
La Quinua ............................        2,741.46             --            76.12             2,817.58
Laboratorio ..........................            0.10             --               --                 0.10
Las Lagunas ..........................        1,674.78             --               --             1,674.78
Linea de Alta Tension ................            0.01             --               --                 0.01
Maqui Maqui ..........................        1,957.23             --               --             1,957.23
Minas Conga ..........................        4,617.98             --           435.45             5,053.43
Presas ...............................          196.72             --               --               196.72
San Cirilo ...........................        1,299.98             --           596.79             1,896.77
Terrenos para canjes .................          336.88         (18.36)          100.98               419.50
Cerro Yanacocha ......................        2,084.14             --            51.17             2,135.31
Museo ................................              --             --             8.56                 8.56
Sorpresa Mishacocha ..................              --             --           146.38               146.38
                                             ---------         ------         --------            ---------
TOTAL ................................       21,331.02         (18.36)        1,640.12            22,952.78
                                             =========         ======         ========            =========
</TABLE>

NOTE:

From the 336.88 hectares reported through December 31, 2005, 18.36 hectares have
been delivered by permuting, leaving a total of 318.52 hectares. In 2006, a
total of 104.33 hectares were acquired, of which 3.35 hectares have been
delivered by permuting, leaving 100.98 hectares. As of December 31, 2006, we had
a total of 419.50 hectares for exchange.


                                       64



Regulation, Permit and Environmental Matters

      Yanacocha is subject to a full range of governmental regulation and
supervision generally applicable to companies engaged in business in Peru,
including mining laws, labor laws, social security laws, public health, consumer
protection laws, environmental laws, securities laws and antitrust laws. See
"--The Company--Regulatory Framework--Mining and Processing Concessions" and
"--The Company--Regulatory Framework--Environmental Matters" for a general
description of Peruvian regulations of mining companies and environmental
obligations. See "--Mining and Processing Concessions" above for a discussion of
Peruvian regulations relating to the mining and processing concessions utilized
by Yanacocha in its mining operations.

      Yanacocha is required to submit certain documentation with respect to its
plans and operations for the review and approval of various Peruvian government
entities, including the MEM, the Ministry of Agriculture and the Ministry of
Health. Yanacocha is required to file and obtain approval of an EIS for each of
its mining operations before being authorized to operate such mine. EISs for the
Carachugo, Maqui Maqui, San Jose, Cerro Yanacocha, La Quinua (including Cerro
Negro) mining operations and China Linda lime plant have been approved. Pursuant
to current Peruvian regulations, Yanacocha also submits supplemental EISs each
time a project's production rate or disturbed area used is expanded by more than
50 percent. In 2006, Yanacocha filed an EIS to expand its operations at the
Yanacocha and La Quinua areas. After an EIS is approved and construction
activities are initiated, a governmental-accredited environmental auditing firm
is required to audit the operation three times per year. Each of the Carachugo,
Maqui Maqui, San Jose, Cerro Yanacocha, La Quinua (including Cerro Negro) mining
operations and China Linda lime plant has been and continues to be audited as
required with no significant pollution problems identified.

      Yanacocha's corporate policy is to operate in compliance with all material
applicable laws and regulations and adopt and adhere to standards that are
protective of both human health and the environment at the facilities it builds
and operates. Additionally, Yanacocha has agreed to several environmental
covenants in loans with the IFC that require Yanacocha to comply with relevant
World Bank environmental guidelines and World Bank occupational health and
safety guidelines, and such covenants are monitored annually by IFC. See
"--Trust Certificates and IFC Loan Documents". In addition, in 2005 Yanacocha
became a signatory of the International Cyanide Code, which provides specific
and strict standards on how to manage cyanide.

      In August 2001, the Financial Accounting Standards Board, or FASB, issued
SFAS No. 143, "Accounting for Asset Retirement Obligations," effective January
1, 2003, which established a uniform methodology for accounting for estimated
reclamation and abandonment costs. Accordingly, on January 1, 2003, Yanacocha
recorded the estimated present value of reclamation liabilities, or asset
retirement obligation or ARO, and increased the carrying amount of the related
asset to be retired in the future. Yanacocha allocates the carrying amount of
the related asset to expense over the life of the related assets, adjusting for
changes resulting from the passage of time and revisions to either the timing or
amount of the original present value estimate. At January 1, 2003, Yanacocha
recorded approximately US$50 million for the carrying amount of the related
asset, net, an increase of approximately US$72.1 million to ARO, an increase of
US$7.9 million to deferred tax liabilities, and an increase of US$2.3 million to
deferred profit sharing liabilities.

      Prior to the adoption of SFAS No. 143, estimated future reclamation costs
were based principally on legal and regulatory requirements. Such costs for
active mines were accrued and charged over the expected operating lives of the
mines using the unit of production method based on proven and probable reserves.
Future remediation costs for inactive mines were accrued based on management's
best estimate at the end of each period of the undiscounted costs expected to be
incurred at a site. Such cost estimates included, where applicable, ongoing
care, maintenance and monitoring costs. Changes in estimates were reflected in
earnings in the period an estimate was revised.


                                       65



      Yanacocha has informed us that its management believes that its operations
are conducted in accordance with all applicable laws and regulations. All future
exploration and construction projects require or will require a variety of
permits. Although procedures for permit applications and approvals are
customarily faster in Peru than in the United States, permitting procedures are
still complex, time-consuming and subject to potential regulatory delay.

      Yanacocha has informed us that its management does not believe that
existing permitting requirements or other environmental protection laws and
regulations applicable to Yanacocha will have an adverse effect on its business,
financial condition or results of operations. However, Yanacocha's management
recognizes the possibility that additional, more stringent environmental laws
and regulations may be enacted in Peru, which could result in significant
additional expense, capital expenditures, restrictions or delays associated with
the construction and operation of Yanacocha's properties. Neither we nor
Yanacocha can predict whether Yanacocha will be able to renew its existing
permits or whether significant changes in existing permit conditions will be
imposed. Non-renewal of existing permits or the imposition of additional
conditions with respect to Yanacocha could have a significant adverse effect on
its financial condition or results of operations.

      Yanacocha has informed us that its management believes that it is in
compliance with all applicable regulations and international standards
concerning safety.

Insurance

      Yanacocha maintains a comprehensive insurance program designed to address
the specific risks associated with its operations, in addition to covering the
normal insured risks encountered by major mining companies.

      Yanacocha's insurance program consists of a "Primary Program" and an
"Umbrella/Excess Program." Coverage under the Primary Program is provided
through the local Peruvian insurance market and includes employers' liability,
comprehensive third party general liability, comprehensive automobile liability,
all risk property on a replacement basis, including transit risks, business
interruption insurance and mining equipment. Coverage under the Umbrella/Excess
Program is provided through Newmont Mining's master worldwide insurance program
and addresses claims that the Primary Program cannot, or will not, cover. During
2005 and 2004, Yanacocha received US$1.1 million and US$1.0 million,
respectively, from its insurance program in connection with a mercury spill and
expects to receive further insurance payments to cover most of the remediation
expenses it incurred as a result of the accident.

Financing Activities

      On July 27, 2006, Yanacocha issued US$100 million in bonds in the Peruvian
capital markets under a US$200 million bond program approved by the Peruvian
securities regulatory authority. The bonds are held by various Peruvian
entities, including pension funds, mutual funds, government funds and insurance
companies. The issuance was comprised of US$42 million in floating rate notes
bearing interest at LIBOR plus 1.4375% and US$58 million in fixed rate notes
bearing interest at 7.0%. The bonds have a four-year grace period and amortize
quarterly over six years. The bonds are unsecured and are non-recourse to both
Newmont and us. Funds generated from the issuance will be used by Yanacocha
primarily for capital expenditures.


                                       66



      On May 19, 2006, Yanacocha entered into a US$100 million bank facility
with a syndicate of Peruvian commercial banks, comprised of Banco de Credito del
Peru, BBVA Banco Continental and Banco Wiese Sudameris (now Scotiabank Peru).
Quarterly repayments began in May 2007 with final maturity on May 2014.
Borrowings under the facility bear interest at a rate of LIBOR plus 1.875%. The
loan is non-recourse to both Newmont and us.

Trust Certificates and IFC Loan Documents

      In 1997, Yanacocha issued debt through the sale of US$100 million Series A
Trust Certificates to various institutional investors. The proceeds from the
Yanacocha Receivables Securitization were primarily used to finance the Cerro
Yanacocha project. In June 2004, the Trust Certificates were paid in full.

      In order to finance the La Quinua project, Yanacocha obtained a credit
facility from IFC. Pursuant to an agreement dated December 22, 1999, IFC agreed
to extend to Yanacocha a loan in the amount of up to US$20 million (Tranche A)
to be repaid no later than December 15, 2009, and a second loan in the amount of
up to US$80 million (Tranche B) to be repaid no later than December 15, 2006. On
December 15, 2005, this credit facility was paid in full.

By-Laws of Yanacocha

      Yanacocha is governed by the Peruvian Companies Law and the estatutos (the
combined articles of incorporation and by-laws) of Yanacocha, or the Yanacocha
By-Laws.

Control Over Major Corporate Events

      Pursuant to the Peruvian Companies Law and the Yanacocha By-Laws
(including applicable quorum requirements), without the affirmative vote of the
partners of Yanacocha representing at least 51 percent of the voting shares,
none of the following may occur: (i) an increase or decrease in Yanacocha's
capital, (ii) the issuance of any debentures, (iii) any sale of an asset whose
book value is at least 50 percent of the paid in capital relating to such asset,
(iv) any amendment to the Yanacocha By-Laws in order to change its business
form, (v) the merger, consolidation, dissolution or liquidation of Yanacocha or
(vi) any other amendment of the Yanacocha By-Laws.

      Pursuant to the Shareholders Agreement among Newmont Second, Condesa,
Compagnie Miniere Internationale Or S.A. and IFC, dated as of August 16, 1993,
as amended by a General Amendment Letter, dated August 17, 1994, any member of
the Executive Committee of Yanacocha who wishes to propose that Yanacocha's
Executive Committee authorize Yanacocha to take a Significant Action (as defined
below) must (i) give written notice to each partner of such proposal prior to
consideration thereof at a meeting of the Executive Committee and (ii) refrain
from voting to approve such Significant Action until (x) the Executive Committee
has received the consent of 80 percent of the partners of Yanacocha (a partner
is deemed to have consented if no objection is received from such partner within
30 days after being notified) or (y) the Executive Committee has received the
consent of at least 51 percent of the partners of Yanacocha and 45 days have
elapsed since the member of the Executive Committee who proposed the Significant
Action has responded in writing to objections received from objecting partners.
"Significant Action" means (i) a disposal or sale of more than 20 percent by
value of Yanacocha's fixed assets, (ii) any planned shutdown or cessation of
Yanacocha's mining activities that is planned to last for more than one year,
(iii) any capital expenditure by Yanacocha exceeding US$20 million, (iv) any
disposal or sale by Yanacocha of the mining rights covered by certain
concessions or (v) the approval of the construction of a project in the area
owned by Yanacocha (other than the Carachugo mine and processing facilities).


                                       67



Preemptive Rights

      The Peruvian Companies Law and the Yanacocha By-Laws provide preemptive
rights to all partners of Yanacocha. In the event of a capital increase, any
partner has a preemptive right to pay its pro rata share of such increase in
order to maintain such partner's existing participation in Yanacocha.

      In the event of a proposed transfer, exchange or sale, either voluntary or
involuntary, of participation, collectively referred to as the Offered
Participation, of one or more partners, any partner has a right to acquire the
Offered Participation in proportion to its holdings of partners' capital. In the
event that not all of the partners wish to exercise this right or some indicate
their decision to acquire a smaller share than that to which they are entitled,
the other partners will be entitled to an increase, and consequently, the
remaining participation will be distributed among them in proportion to such
partners' capital participation and within the maximum limit of the
participation they have stated their intention to acquire. Finally, any Offered
Participation remaining unsubscribed by the partners must first be offered to
Yanacocha before they may be offered to third parties.

Legal Proceedings

      Choropampa. In June 2000, a transport contractor of Yanacocha spilled
approximately 151 kilograms of elemental mercury near the town of Choropampa,
Peru, which is located 53 miles southwest of the Yanacocha mine. Elemental
mercury is a by-product of gold mining and was sold to a Lima firm for use in
medical instruments and industrial applications. A comprehensive health and
environmental remediation program was undertaken by Yanacocha in response to the
incident. In August 2000, Yanacocha paid under protest a fine of 1,740,000
Nuevos Soles (approximately US$0.5 million) to the Peruvian government.
Yanacocha has entered into settlement agreements with a number of individuals
impacted by the incident. In addition, as compensation for the disruption and
inconvenience caused by the incident, Yanacocha entered into agreements with and
provided a variety of public works in the three communities impacted by this
incident. Yanacocha cannot predict the amount of additional expenditures related
to this matter.

      Yanacocha, various wholly-owned subsidiaries of Newmont and other
defendants have been named in lawsuits filed by over 1,100 Peruvian citizens and
the Provincial Municipality of Cajamarca in the Denver District Court for the
State of Colorado. These actions seek compensatory and punitive damages based on
claims associated with the elemental mercury spill incident. In February 2005,
Yanacocha and the various Newmont defendants answered the complaint in the
Denver District Court. The parties in these cases have agreed to submit these
matters to binding arbitration.

      Additional lawsuits related to the Choropampa incident were filed against
Yanacocha in the local courts of Cajamarca, Peru in May 2002 by over 900
Peruvian citizens. A significant number of the plaintiffs in these lawsuits have
previously entered into settlement agreements with Yanacocha prior to filing
such claims. In September 2006, the Peruvian Supreme Court issued contradictory
opinions on the validity of these settlements agreements. Subsequent lower court
decisions have upheld the validity of these settlements agreements, discharging
a number of lawsuits. In 2005, Yanacocha entered into settlement agreements with
approximately 350 additional plaintiffs.

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

      Conga. Yanacocha is involved in a dispute with the Provincial Municipality
of Celendin regarding the authority of that government body to regulate the
development of the Conga ore deposit. In the fourth quarter of 2004, the
Municipality of Celendin enacted an ordinance declaring the area around Conga to
be a mining-free reserve and naturally protected area. Yanacocha has challenged
this ordinance on the grounds that, under Peruvian law, local governments lack
authority to create such areas and deny the rights granted to Yanacocha's mining
concessions. Based on legal precedents established by Peru's Constitutional
Tribunal, it is reasonable to believe that Yanacocha's mining rights will be
upheld.


                                       68



      Yanacocha has carefully evaluated the social issues and dynamics of the
communities in and around the area of Conga. Yanacocha has engaged in extensive
community and external affairs efforts at this early stage of the Conga project.
It is Yanacocha's current assessment is that a significant percentage of the
population in the communities immediately surrounding the Conga area support the
project. Yanacocha will continue to engage actively with these communities
during the process of permiting the project and will expand its outreach efforts
to communities in the surrounding region. It will continually monitor and
evaluate conditions in the area and any resulting impact on Yanacocha's ability
to successfully permit and develop the Conga deposit.

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

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

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

Management of Yanacocha

Executive Committee

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


                                       69



General Manager/Management Agreement

      The Yanacocha By-Laws provide that the Yanacocha Partners' Meeting has the
power to appoint and remove the Manager of Yanacocha; the Executive Committee
has the power to appoint and remove other officers of Yanacocha, determine their
duties and compensation and grant and revoke powers of attorney. Newmont Peru
was named as Yanacocha's Manager according to a publicly filed deed, and it
continues to hold that position. Newmont Peru's duties as Manager are defined in
the Management Contract dated February 28, 1992, as amended, between Yanacocha
and Newmont Peru. Pursuant to the Management Contract, Newmont Peru is
responsible for managing, conducting and controlling the day-to-day operations
of Yanacocha and keeping Yanacocha's Executive Committee informed of all
operations through the delivery of various written reports. The Management
Contract was amended as of December 19, 2000. The amendment extends the term of
the Management Contract for a period of 20 years starting at the date of
amendment and provides that it may be extended for additional terms of 20 years
upon request by Newmont Peru. Newmont Peru, however, may cancel the Management
Contract by giving six months' prior notice to Yanacocha. The Management
Contract will be deemed terminated if, due to reasons attributable to the bad
management of Yanacocha, except for reasons beyond its control, Newmont Peru is
unable to substantially complete the agreed work programs. In exchange for its
services as Manager, Newmont Peru receives remuneration of US$2 per ounce of
gold production and its equivalent for copper production paid on a quarterly
basis, which amount is expected to cover the overhead and administrative
expenses for the management of the operations. Also, Newmont Peru may charge
Yanacocha for the salaries of employees of Newmont Peru or its affiliates who
are directly involved in the operation of Yanacocha. In 2006, Yanacocha accrued
fees of US$5.2 million owed to Newmont Peru and its affiliates under the
Management Contract.

Control Over Major Corporate Events

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

Preemptive Rights and Rights of First Refusal

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


                                       70



Property, Plants and Equipment

Our Property

Introduction

      We operate six mines: Julcani, Recuperada, Uchucchacua, Orcopampa,
Antapite and Ishihuinca. We also have controlling interests in two mining
companies which operate the Shila-Paula and Colquijirca mines. We also own an
electric power transmission company, an engineering services consulting company
and have minority interests in several other mining companies including a
significant ownership interest in Yanacocha and Cerro Verde. See "--The
Company--Organizational Structure" and "--Intermediate Holding Companies,
Subsidiaries and Equity Participations". Set forth below is a map of our
principal mining operations as of May 31, 2007.



                                       71



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

      Our mining operations are located throughout Peru. Our Julcani mine is
located in the province of Angaraes in the department of Huancavelica,
approximately 500 kilometers southeast of the city of Lima. Our Uchucchacua mine
is located in the province of Oyon in the department of Lima, approximately 265
kilometers northeast of the city of Lima. Our Orcopampa mine is located in the
province of Castilla in the department of Arequipa, approximately 1,350
kilometers southeast of the city of Lima. Our Recuperada mine is located in the
province of Huancavelica, in the department of Huancavelica, approximately 500
kilometers southeast of the city of Lima. Our Ishihuinca mine is located in the
province of Caraveli in the department of Arequipa, approximately 780 kilometers
southeast of the city of Lima. Our Antapite mine is located in the province of
Huaytara in the department of Huancavelica, approximately 434 kilometers
southeast of the city of Lima. The Shila mine, which is operated by one of our
wholly owned subsidiaries, is located in the province of Castilla in the
department of Arequipa, approximately 1,350 kilometers southeast of the city of
Lima and 100 kilometers south of our Orcopampa mine. The Paula mine, which is
operated by one of our wholly owned subsidiaries, is located in the province of
Castilla, approximately 1,400 kilometers southeast of the city of Lima and 140
kilometers south of the Orcopampa mine, and as of January 1, 2005, Paula's
operating data has been consolidated with Shila's operating data. The
Colquijirca mine, which is operated by one of our majority-owned subsidiaries,
is located approximately 285 kilometers east of Lima and 10 kilometers south of
the city of Cerro de Pasco. The Yanacocha mine, in which we have a 43.65 percent
interest, is located in the province and department of Cajamarca, approximately
900 kilometers north of Lima. The Cerro Verde mine, in which we have a 18.50%
percent interest as of May 31, 2007, is located in the department of Arequipa.

Operating Properties

Orcopampa

      The Orcopampa mine is wholly owned and operated by us. We lease the rights
to the mining concessions of Orcopampa from a group of private investors. This
lease, which was renewed in September 2003 and expires in 2043, stipulates a
payment from us equal to 10 percent of production value, subject to certain
conditions. Operations started in the Orcopampa mine in 1965. In 2006, we made
lease payments of US$12.3 million. We operated Orcopampa as a silver mine until
the late 1990s, when we also began to mine gold-bearing veins. In December 1996,
Orcopampa S.A., then owner and operator of the Orcopampa mine, merged into us.
As a result of the merger, Orcopampa S.A. assigned, and we assumed, the right to
the mining concessions of Orcopampa. At December 31, 2006, the net total fixed
assets of Orcopampa were approximately US$40.8 million.


                                       72



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

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

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

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

      In June 2006, we engaged a metallurgical consultant to evaluate the
possibility of installing a pressure leach circuit for the pre-treatment of gold
ore from Poracota prior to cyanidation next to the Orcopampa plant. After a
careful evaluation and review of all of the data available, we decided to
continue with the project and engaged Aker Kvaerner Metals, Inc., an engineering
firm located in Tucson, Arizona, to perform a Front End Engineering study, or
FEE. Depending upon the results of the FEE, which is due to be completed in
November 2007, we will determine whether to install a pressure leach circuit,
which would allow us pre-treat approximately 500 metric tons of gold ore per day
from Poracota.

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

      In 2006 we continued exploration activities in the Nazareno vein, and 43
drill holes explored in the western and eastern section of the vein confirm that
economically viable mineralization extends over that area. Another 13 drill
holes explored in the eastern part of the Prometida vein indicate good ore
shoots in both the Prometida and Nazareno veins. In addition, the exploration of
the Prometida and Nazareno veins has led to the discovery of new mineral
reserves and, in 2005, mineral reserves increased 16.6 percent in gold content
reaching 1,137,215 DST of mineral with a minimum grade of 0.68 ounces of gold
per short ton and 0.27 percent ounces of silver per short ton with a metallic
content of 773,306 ounces of gold. To facilitate ventilation and access to the
eastern region of Prometida, where ongoing reserve measurement and estimation
efforts are being carried out, we finished construction of the "Mario" ramp. In
addition, we have commenced construction of three additional ramps to facilitate
access to ore reserves and resources at the 3,590 and 3,990 levels


                                       73



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

                                           Year Ending December 31,(1)
                                 -----------------------------------------------
                                   2002      2003      2004      2005      2006
                                 -------   -------   -------   -------   -------
Mining Operations:
  Ore mined (ST)                 350,951   393,210   431,241   461,091   467,953
  Average gold grade (oz./t)       0.527     0.504     0.518     0.530     0.564
  Average silver grade (oz./t)      0.13      0.20      0.34      0.30      0.24
  Average copper grade                --        --        --        --
Production:
  Gold (oz.)                     160,017   180,725   211,388   233,182   254,631
  Silver (oz.)                    28,378    63,135    97,359    86,080    81,005
  Copper (ST)                         --        --        --        --
  Recovery rate (gold) (%)          86.5      86.5      93.7      95.4      96.0
  Recovery rate (silver) (%)        62.2      77.3      64.9      63.1      64.1

----------
(1)   Incorporates losses for mining dilution and recovery.

      The increase in 2002 and 2003 gold production was mainly due to our
exploration activities in the Nazareno vein and the exploration of the
Prometida, Prosperidad and Lucy Piso veins. In 2004, the increase in gold
production is primarily due to a considerable increase in the recovery of gold.
The slight increase in gold production in 2006 compared to the previous year was
due to an increase in total run of mine ore treated at the plant, a slightly
higher grade of gold in the feed and an increase in the recovery of gold.

Uchucchacua

      The Uchucchacua mine is wholly owned and operated by us. Operations
started in 1975, and Uchucchacua is currently our largest producer of silver. At
December 31, 2006, total estimated reserves were 74,301,451 ounces of silver,
90,744 DST of lead and 130,104 DST of zinc. The net total fixed assets of
Uchucchacua were approximately US$34.2 million.

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

      Mining at Uchucchacua is conducted underground utilizing cut-and-fill
stopping, shrinkage stopping, and sublevel stopping methods. Ore is processed at
a mill located at Uchucchacua. The mill, which has a rated capacity of 2,500 DST
per day since October 2006 and which had a 94.08 percent utilization rate in
2006, utilizes differential flotation to obtain a lead-silver concentrate and a
zinc concentrate.

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


                                       74



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

      At the end of 2003, we commenced evaluating the possibility of recovering
the silver values still contained in the final tails produced in the
concentrator plants. Metallurgical investigations indicated that an additional
five to eight percent of the silver value could be recovered by a cyanide leach
of a silver bearing pyrite concentrate previously obtained by flotation of the
final tails. Further metallurgical evaluations performed during 2004 indicated
that cyanide leaching is very effective when applied to a bulk zinc-silver
concentrate obtained by flotation of the lead-silver final tails flotation
circuit. After cyanidation, a zinc concentrate may still be produced from the
cyanidation residue. Due to encouraging results in the last quarter of 2004, we
commenced engineering studies and the construction of a 300 metric tons per day
cyanidation circuit, which is designed to treat both pyrite and bulk zinc-silver
concentrates.

      The new cyanidation plant commenced operations on a trial basis in June
2006 and became fully operational by September 2006. From June to December 2006,
the cyanidation plant produced 181,482 ounces of silver. Due to an increasing
amount of ore coming from the Socorro mine, the feed to the cyanidation plant
came from a silver bearing pyrite concentrate obtained by flotation of the final
tails.

      During the third quarter of 2005, samples of an oxide ore located in the
upper levels of the mine were tested for cyanidation and indicated that the
silver contained in this ore can be successfully leached by cyanidation. Based
on these results, we have decided to install a crushing and grinding circuit for
the comminution of the oxide ore and new leaching tanks and filters. The oxide
circuit commenced operations in October 2006. Total silver production in the
oxide circuit was 36,590 ounces for the year ended December 31, 2006.

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

<TABLE>
<CAPTION>
                                                    Year Ending December 31,(1)
                                    ----------------------------------------------------------
                                       2002        2003        2004        2005         2006
                                    ---------   ---------   ---------   ----------   ---------
<S>                                 <C>         <C>         <C>         <C>          <C>
Mining Operations:
  Ore mined (ST) ................     744,690     747,190     795,036      813,220     810,280
  Average silver grade (oz./t) ..       16.94       17.20       16.79        16.93       16.04
  Average zinc grade (%) ........        1.53        1.40        1.48         1.39        1.24
  Average lead grade (%) ........        1.19        1.09        1.13         1.12        1.06
Production:
  Silver (oz.) ..................   9,387,091   9,575,605   9,832,393   10,213,794   9,692,300
  Zinc (ST) .....................       7,759       6,216       7,477        6,553       5,225
  Lead (ST) .....................       7,718       7,218       8,042        8,067       7,718
  Recovery rate (silver) (%) ....        74.4        74.4       73.67        74.20       74.50
</TABLE>

----------
(1)   Incorporates losses for mining dilution and recovery.

      The decrease in silver production in 2006 compared to the previous year
was mainly due to a decrease of 0.89 ounces of silver per ton in the ore fed to
the mill.


                                       75



      The decrease in silver production in 2006 compared to the previous year
was mainly due to a decrease of 0.89 ounces of silver per ton in the ore fed to
the mill.

Julcani

      The Julcani mine is wholly owned and operated by us. We acquired Julcani
in 1953 as our first operating mine. In November 1999, due to the depletion of
gold and silver reserves, we were forced to suspend production in Julcani and
carry out exploration activities only. In 2000, we started to carry out the
actions required by the Environmental Shutdown Plan, or Plan de Cierre
Ambiental, and undertook only limited efforts primarily in the Herminia zone in
2001. As a result, ore mined in the Herminia zone was primarily milled to
produce copper and lead concentrates until 2003. In 2003, we initiated an
exploration program in the Acchilla area. In 2004, we continued the exploration
and initiated exploitation of ore with positive results. At December 31, 2006,
total estimated ore reserves were 221,775 DST with 21.8 ounces of silver and 1.8
percent of lead per short ton. At December 31, 2006, the net total fixed assets
of Julcani were approximately US$0.9 million

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

      Run of mine ore is processed in a concentrator plant located 50 meters
from the mine entrance. The ore is crushed and ground, and bulk flotation is
used thereafter to obtain a silver-gold-lead concentrate. The plant has a rated
capacity of 300 DST per day and had a 72.1% percent utilization rate in 2006.

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

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

<TABLE>
<CAPTION>
                                                Year Ending December 31,(1)
                                   -----------------------------------------------------
                                     2002      2003       2004        2005        2006
                                   -------   -------   ---------   ---------   ---------
<S>                                <C>       <C>       <C>         <C>         <C>
Mining Operations:
  Ore mined (ST)                    61,500    37,650      58,900      73,700      80,450
  Average gold grade (oz./t)         0.021     0.016       0.002       0.002       0.001
  Average silver grade (oz./t) .     15.28     15.33       18.50       18.80       18.80
  Average lead grade                  0.49      0.83        1.68        2.02        2.10
  Average copper grade (%)            0.51      0.40        0.17        0.13        0.14
Production:
  Gold (oz.)                           820       415          59          40       26.14
  Silver (oz.)                     833,481   526,516   1,019,743   1,302,596   1,417,666
  Lead (ST)                             77       225         854       1,308       1,529
  Copper (ST)                          271       104          83          82         100
  Recovery rate (gold) (%)            63.5      68.9        50.7        35.8        25.2
  Recovery rate (silver) (%)          88.7      91.2        93.7        94.0        93.8
</TABLE>

----------
(1)   Incorporates losses for mining dilution and recovery.


                                       76



      The significant increase in silver production in 2006 was mainly due to a
9.2 percent increase in run of mine ore treated in the plant.

Recuperada

      The Recuperada mine is wholly owned and operated by us. Effective March
2001, we temporarily suspended operations and discontinued exploration efforts
at the Recuperada mine. In April 2004, we elected to resume exploration efforts
at the Esperanza vein of the Recuperada mine due to an increase in ore reserves
as well as the rising price of metals. In February 2006 we initiated mining
operations. At December 31, 2006, the net total fixed assets of Recuperada were
approximately US$1.2 million.

      Recuperada is located in the province of Huancavelica, in the department
of Huancavelica, approximately 540 kilometers southeast of Lima at an altitude
of between 4,300 and 4,800 meters above sea level. Access is by a 242 kilometer
unpaved public road, which connects to the Pan American highway.

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

                                         Year Ending December 31,
                                   -----------------------------------
                                   2002   2003   2004   2005     2006
                                   ----   ----   ----   ----   -------
Mining Operations:
  Ore mined (ST)................    --     --     --     --     72,200
  Average silver grade (oz./t)..    --     --     --     --       7.32
  Average lead grade............    --     --     --     --       2.72
  Average zinc grade (%)........    --     --     --     --       4.75
Production:
  Silver (oz.)..................    --     --     --     --    478,129
  Lead (ST).....................    --     --     --     --      3,039
  Zinc (ST).....................    --     --     --     --       87.5

Colquijirca

      The Colquijirca mine is wholly owned by El Brocal. El Brocal was formed in
1956 and is engaged in the extraction, concentration and sale of concentrates of
polymetallic minerals, mainly zinc, lead and silver. As of December 31, 2002, we
held a 59.02 percent interest in Inversiones Colquijirca and a 32.83 percent
interest in El Brocal's mining properties. Other unrelated mining investors hold
the balance of the share capital of Inversiones Colquijirca. In January 2003, El
Brocal conducted a US$1 million capital increase to finance the exploration of
the Marcapunta deposit, reduction of the arsenic content and enhancement of the
gold content of the deposit's copper resources. We participated in this capital
share increase by exercising its and Teck Cominco's interest in El Brocal,
through each of their interests in Inversiones Colquijirca, to invest
approximately S/.1,500,000. Currently, our interest in Inversiones Colquijirca
is 61.42 percent.

      In addition, as a result of the stock dividends, which in the aggregate
were equivalent to S/.2.9 million, distributed by us in November 2002 in the
form of El Brocal shares, Sociedad Minera El Brocal S.A.A. became a sociedad
anonima abierta (open stock company) in 2003. Total reserves as of December 31,
2006 were 14,098,417 DST with a silver content of 2.14 ounces per DST, 5.91% of
zinc and 1.87% of lead. At December 31, 2006, the net total fixed assets of El
Brocal were approximately US$37.9 million.


                                       77



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

      Mining is conducted through the open-pit method. El Brocal's zinc
concentrate typically contains 50 percent zinc, while its lead concentrate
typically contains 60 percent lead. The concentrates are sold locally and also
exported to Europe and Asia (primarily Korea and China) for refining. The
capacity of the concentration has been increased to 4,000 tons per day, having
processed a total of 1,631,668 ST of ore, thereby meeting the established
program. The mill had a 100 percent utilization rate in 2006. The Colquijirca
mine primarily relies on a power line, connected to the Peruvian national
electricity grid in November 2002, for its electrical power.

      In 2001, El Brocal initiated an intensive exploration program, financed by
a capital increase in 2002 at the Marcapunta deposit, to confirm mineralization
and find possible extensions. In 2002, exploration revealed gold-bearing arsenic
copper resources in the Marcapunta deposit. El Brocal's production greatly
increased in 2003 to 1,409,104 short tons of ore, a growth of 6.5 percent from
2002. In 2004, El Brocal achieved a record ore throughput of 1,492,554 DST,
representing a 5.9 percent increase from 2003. In 2005, El Brocal achieved
another record ore throughput of 1,513,964 DST, representing a 1.4 percent
increase from 2004.

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

<TABLE>
<CAPTION>
                                                           Year Ending December 31,(1)
                                           ----------------------------------------------------------
                                              2002        2003        2004        2005        2006
                                           ---------   ---------   ---------   ---------   ----------
<S>                                        <C>         <C>         <C>         <C>         <C>
Mining Operations:
  Ore mined (ST) .......................   1,322,942   1,409,104   1,492,569   1,513,964    1,631,668
  Average silver grade (oz./t)
                                                2.59        2.93        3.23        3.96         8.17
  Average zinc grade (%)
                                                5.94        5.55        5.82        5.95         5.90
  Average lead grade (%) ...............        2.24        2.32        2.89        2.89         3.31
Production:
  Silver (oz.) .........................   2,420,034   2,895,735   3,399,130   4,394,940   10,269,511
  Zinc (ST) ............................      60,968      61,733      63,448      62,997       72,422
  Lead (ST) ............................      19,484      21,766      27,069      26,244       33,408
  Recovery rate (silver) in zinc (%) ...       28.07       26.67       26.07        25.3        23.61
  Recovery rate (zinc) (%) .............       77.63       78.89        73.0        69.9        75.18
  Recovery rate (silver) in lead (%) ...       42.71       43.49       44.46        48.0        53.39
  Recovery rate (lead) (%) .............       65.85       66.50       62.82        60.0        61.88
</TABLE>

----------
(1)   Incorporates losses for mining dilution and recovery.

      The significant increase in silver production in 2006 was mainly due to a
7.77 percent increase in run of mine ore treated in the mill and an increase of
106.3 percent of the silver grade in the feed.


                                       78



Ishihuinca

      In 1985, we purchased 51.0 percent of Inminsur, the owner and operator of
the Ishihuinca mine. As a result of subsequent purchases of shares of Inminsur,
we currently own 100 percent of Inminsur. Inminsur has leased the rights to the
mining concessions of Ishihuinca from a third party. The lease agreement, which
expires in 2015, stipulates payment by Inminsur to the lessor of a royalty of 7
percent of the price of the concentrates sold. In 2006, Ishihuinca paid US$0.83
million in royalties. At December 31, 2006, the net total fixed assets of
Ishihuinca were approximately US$1.3 million.

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

      Mining is conducted underground utilizing the conventional cut-and-fill
stopping method. Ore is processed at a mill located at Ishihuinca. The mill,
which has a rated capacity of 181 DST per day and which had a 83.4 percent
utilization rate in 2006, utilizes bulk flotation and gravity concentration
processes. The bulk flotation process produces a copper/gold concentrate, which
is sold to a local mineral broker, and a gold bearing pyrite concentrate which
is leached with cyanide in agitator tanks. The gravity concentrates, from the
gravity concentration processes, are treated by cyanidation in vats. The
dissolved gold obtained from the cyanidation of the gold bearing pyrite
concentrate and gravity concentrate is precipitated on zinc dust (Merrill-Crowe
process) and the resulting precipitate is refined in Lima and then sold to
Johnson Matthey. The mill at the Ishihuinca mine was last modernized and
expanded to operate at its current capacity in 1993.

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

      Exploration conducted in 2002 and 2003 indicated economically viable
mineralization at Ishihuinca, suggesting that, although ore deposits at the mine
seemed depleted, it may still contain reserves that warrant aggressive
exploration. In 2003, we initiated an exploration program in the Cordova area,
located 2 kilometers north of our Ishihuinca operations with positive results.
In 2004, we identified the Prolongacion Cordova vein in the Cordova area with
underground workings of 2,110 meters and an estimated 5,765 metric tons at 14.56
grams per ton of gold with an average thickness of 0.85 meters. In 2005, we
continued exploration of the Prolongacion Cordova vein in the Cordova area with
underground workings of 2,158 meters and an estimated 20,015 metric tons at
13.49 grams per ton of gold with an average thickness of 0.90 meters. During
2006, we continued exploration efforts in the Cordova area, primarily on the
Prolongacion Cordova vein and an estimated 16,465 metric tons at 17.60 grams per
ton of gold. In 2007, we intend to realize 3,500 meters with diamond drill holes
in the Cordova area and other close mineralized structures.

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


                                       79



                                         Year Ending December 31,(1)
                                 ------------------------------------------
                                  2002     2003     2004     2005     2006
                                 ------   ------   ------   ------   ------
Mining Operations:
  Ore mined (ST)..............   38,416   57,463   60,213   65,435   66,705
  Average gold grade (oz./t)..    0.480    0.508    0.474    0.436    0.377
  Average copper grade (%)....     0.31     0.41    0.345     0.40     0.33
Production:
  Gold (oz.)..................   15,694   25,287   24,505   23,911   21,020
  Copper (ST).................       89      194      169      198      141
  Zinc (ST)...................       --       --       --       --
  Lead (ST)...................       --       --       --       --
  Recovery rate (gold)  (%)...    85.11    86.62    85.80     83.7     83.3

----------
(1)   Incorporates losses for mining dilution and recovery.

      The slight decrease in the production of gold in 2006 compared to the
previous year was mainly due to a 13.5 percent decrease in the gold grade in the
feed and a lower recovery rate.

Antapite

      The Antapite mine is wholly owned by us. We leased the mine until July
2015 to Inminsur, our wholly owned subsidiary. Prior to our acquisition of a
100% controlling interest in Inminsur in August 2006, Inminsur paid us a 10
percent royalty based on revenue of the Antapite mine. The royalty payment for
the year ended December 31, 2006 was US$4.39 million. At December 31, 2006, the
net total fixed assets of Antapite were approximately US$18.3 million.

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

      In 2006, exploration efforts were centered on the Zorro Rojo and Reyna
areas and consisted mainly of underground workings and diamond drill holes.
Total calculated ore reserves as of December 31, 2006 were 466,135 DST with
0.343 ounces of gold.

      Mining is conducted underground utilizing the conventional cut-and-fill
stopping method. Ore is processed at a cyanidation plant located at Antapite.
The plant, which was completed in June 2001 with capacity for 272 DST per day,
has increased its capacity to 408 DST per day since May 2003. The plant had a
98.3 percent utilization rate in 2006.

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

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


                                       80



<TABLE>
<CAPTION>
                                              Year Ending December 31,(1)
                                    -----------------------------------------------
                                      2002      2003      2004      2005      2006
                                    -------   -------   -------   -------   -------
<S>                                 <C>       <C>       <C>       <C>       <C>
Mining Operations:
  Ore mined (ST).................   121,161   155,494   179,785   179,873   179,820
  Average gold grade (oz./t).....      0.60      0.59      0.57      0.60      0.60
  Average silver grade (oz./t)...      1.33      0.94      0.74      0.81      0.65
Production:
  Gold (oz.).....................    72,380    84,361    97,137   103,931   103,370
  Silver (oz.)                       98,121    91,492    86,162   102,222    83,258
  Recovery rate (gold) (%).......      92.9      91.8      94.4      95.9      96.6
  Recovery rate (silver) (%).....      60.0      62.5      64.5      70.4      71.2
</TABLE>

----------
(1)   Incorporates losses for mining dilution and recovery.

Shila

      Minera Shila S.A.C., or Minera Shila, owned 100 percent of the Shila
mining operation and held, directly and indirectly, through Condesa, a 100
percent equity interest in Minera Shila. As of January 2, 2003, Minera Shila
merged with and into Cedimin and is no longer a separate legal entity. Cedimin
operates the Shila mine, which began production in 1989. As of December 31,
2004, Minera Paula merged with and into Cedimin, and as of January 1, 2005, the
Paula mine's operating results have been consolidated with the Shila mine's
operating data. At December 31, 2006, the net total fixed assets of the Shila
and Paula mining operations were approximately US$5.03 million.

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

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

      Mining is conducted underground utilizing the conventional cut-and-fill
stopping method. Ore is processed at a mill located at the Shila mine with a
rated capacity of 227 DST per day. The mill had an 84.6 percent utilization rate
in 2006. The mill utilizes bulk flotation and gravity concentration processes.
Gravity concentrates and flotation concentrates are later treated together by
cyanidation leaching. The extracted gold and silver values are precipitated
using the Merrill-Crowe process and the product from this circuit is sent to the
smelter located next to the mill. The dore silver/gold bars are then purchased
by Cia de Minas Buenaventura who sends the bars to a refinery in Lima. The
refined products are later sold overseas.

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

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


                                       81



<TABLE>
<CAPTION>
                                              Year Ending December 31,(1)
                                    -----------------------------------------------
                                      2002      2003      2004    2005(2)     2006
                                    -------   -------   -------   -------   -------
<S>                                 <C>       <C>       <C>       <C>       <C>
Mining Operations:
  Ore mined (ST).................    52,015    50,085    41,151    64,050    67,888
  Average gold grade (oz./t).....      0.45      0.38      0.38      0.45     0.418
  Average silver grade (oz./t)...      11.7      13.8      17.5       5.9       3.0
Production:
  Gold (oz.).....................    21,947    17,772    14,086    26,978    26,336
  Silver (oz.)...................   479,415   592,261   587,181   330,184   157,683
  Recovery rate (gold) (%).......     93.35     94.10      90.0        93      92.8
  Recovery rate (silver) (%).....     78.78     85.70      81.3        83      78.6
</TABLE>

----------
(1)   Incorporates losses for mining dilution and recovery.

(2)   Data for 2005 reflects the consolidation of Paula's operating data has
      been with and into Shila's operating data.

      The increase in 2005 and 2006 in gold production was mainly due to the
consolidation of the Paula mine's operating results into the Shila mine's
operating results. The decrease in silver production is mainly due to a sharp
decrease of almost 50 percent of the silver grade in the feed.

Paula

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

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

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

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

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


                                       82



                                    Year Ending December 31,(1)
                                    ---------------------------
                                      2002     2003    2004(2)
                                     ------   ------   -------
Mining Operations:
  Ore mined (ST).................     9,512   14,880    16,831
  Average gold grade (oz./t).....      0.62     0.73     0.645
  Average silver grade (oz./t)...      5.33     4.83      4.83
Production:
  Gold (oz.).....................     6,632   10.867    10,387
  Silver (oz.)...................    54,658   68,914    73,594
  Recovery rate (gold) (%).......     93.40    95.80     94.80
  Recovery rate (silver) (%).....     86.90    91.40     89.00

----------
(1)   Incorporates losses for mining dilution and recovery.

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

Reserves

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

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

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

      The following table lists the proven and probable ore reserves at December
31, 2006 for each mining operation in which we have at least a 50 percent
interest as well as the average grade of such ore, calculated on the basis of
100 percent of each mine's reserves and US$446 per ounce of gold and US$8.50 per
ounce of silver.


                                       83



     Proven and Probable Ore Reserves at December 31, 2006(1)(2)

<TABLE>
<CAPTION>
                      Julcani  Uchucchacua Orcopampa Recuperada Colquijirca Ishihuinca Antapite Shila-Paula(3) Total/Average
                      -------  ----------- --------- ---------- ----------- ---------- -------- -------------- -------------
<S>                  <C>        <C>          <C>      <C>        <C>          <C>       <C>         <C>         <C>
Ore Reserves (ST) ..   221,775   5,124,693 1,195,030    298,095  14,099,000   18,150    466,135      82,073      21,504,951
Grade:
Gold (oz./t) .......        --          --     0.683         --          --    0.513      0.343       0.386           0.047
Silver (oz./t) .....     21.80       14.50      0.30       7.60        2.14       --         --        2.40            5.21
Copper (%) .........        --          --        --         --          --       --         --          --              --
Zinc (%) ...........      0.30        2.54        --       5.00        5.91       --         --          --            4.55
Lead (%) ...........      1.80        1.77        --       4.40        1.87       --         --          --            1.73

Gold (oz.) .........        --          --   816,205         --          --    9,311    159,884      31,680       1,017,080
Silver (oz.) ....... 4,834,695  74,301,451   358,509  2,265,522  30,171,860       --         --     196,975     112,129,012
Copper (ST) ........        --          --        --         --          --       --         --          --              --
Zinc (ST) ..........       665     130,104        --     14,905     833,251       --         --          --         978,925
Lead (ST) ..........     3,992      90,744        --     13,116     263,651       --         --          --         371,503
</TABLE>

----------
(1)   Reserves as stated are diluted and mineable.

(2)   Incorporates losses for mining dilution and recovery.

(3)   Reflects the consolidation as of January 1, 2005 of the operating data of
      Paula with that of Shila.

      Seven underground mines and one open pit mine, Colquijirca, comprise our
mining operations. Since establishing a significant amount of reserves in
underground mines requires costly and extensive exploration programs, we have,
in order to control costs, traditionally pursued an exploration and development
program in our mines designed to establish an amount of reserves sufficient to
permit the steady production of minerals over an extended period of time. The
following table sets forth the aggregate amount of production of ore, gold and
silver and the average grade of gold and silver for each of our eight mines for
the ten-year period ended December 31, 2006, calculated in each case on the
basis of 100 percent of the relevant mine's production.

<TABLE>
<CAPTION>
                          Julcani  Uchucchacua Orcopampa Recuperada Colquijirca Ishihuinca Antapite Shila-Paula(3)    Total
                          -------  ----------- --------- ---------- ----------- ---------- -------- -------------- ----------
<S>                      <C>         <C>         <C>       <C>       <C>            <C>     <C>         <C>         <C>
Ore mined
  (ST) .................    80,450     810,280   467,954    72,200    1,631,668     66,705  179,820      67,888     3,376,965
Gold produced (oz.) ....        26          --   254,631        --           --     21,020  103,370      26,336       405,383
Average Gold Grade
  (oz./ST) .............     0.001          --     0.564        --           --      0.380    0.600       0.418         0.126
Silver produced (oz.) .. 1,417,666   9,692,300    81,005   478,129   10,269,511         --   83,258     157,683     22179,552
Average silver
  Grade
  (oz./ST) .............     18.80        16.0      0.24      7.32         8.17         --     0.65        3.00          8.52
</TABLE>


                                       84



Yanacocha's Properties

Operating Properties

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

Carachugo

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

Maqui Maqui

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

San Jose

      San Jose is a 100-hectare gold deposit, located 1.5 kilometers southwest
of the Carachugo pit, that shares the leach pad located at Carachugo. Mining
operations at San Jose began in January 1996 using the open-pit mining method.
Mining operations at San Jose temporarily ceased during the fourth quarter of
2002 and reopened in 2005 to complete San Jose East. San Jose West is scheduled
to commence operations in 2010.

Cerro Yanacocha

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

La Quinua

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

      The La Quinua mining operation included Cerro Negro, a 15-hectare gold
deposit (ultimate pit) which is located six kilometers southwest of the La
Quinua pit. Cerro Negro utilized the La Quinua leach pad. Operations began in
April 2004 using the open-pit mining method and all solution processing occurred
at the Cerro Yanacocha plant following treatment at the La Quinua leach pad and
carbon column facility. Mining operations at Cerro Negro ceased in March 2005.


                                       85



China Linda

      In October 1999, we commenced lime production at the China Linda plant,
which is located 12 kilometers to the northeast of the Yanacocha installations,
in Cajamarca. Access to the plant from Yanacocha is by a ten kilometer private,
unpaved road. We had 100 percent ownership of China Linda until December 19,
2000, at which date the plant became Yanacocha's property pursuant to the
unitization of our and Newmont Mining's properties in Northern Peru. In January
2002, Yanacocha took over the operation of the China Linda plant. See "Item 4.
Information on the Company--The Company--History and Development". Lime is used
in the gold and silver mining process to regulate the alkalinity of the cyanide
solutions in the leaching process and for pH control in water treatment
applications. Currently, the plant has a production capacity of 63,000 tons of
lime per year. Additionally, construction gravel is obtained as a sub-product.

Reserves

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

      The following table lists Yanacocha's proven and probable reserves and the
average grade of ore as of December 31, 2002 through December 31, 2006. The
table also includes proven and probable reserves for the districts of Yanacocha
and Conga, along with average grade of ore. Calculations with respect to the
estimates of proven and probable reserves are based on a gold price of US$500
per ounce as of December 31, 2006, US$400 per ounce as of December 31, 2005,
US$350 per ounce as of December 31, 2004 and US$325 per ounce as of December 31,
2003 and 2002. Conga's copper reserves for 2006 and 2005 were calculated at a
price of US$1.00 per pound as of December 31, 2006 and 2005; and for 2004 were
calculated at a price of US$0.90 per pound as of December 31, 2004. The
districts of Yanacocha's and Conga's proven and probable reserves represent the
total quantity of ore to be extracted from the deposits, allowing for mining
efficiencies and ore dilution. Ounces of gold and pounds of copper in the
districts of Yanacocha's and Conga's proven and probable reserves are calculated
prior to any losses during metallurgical treatment.


                                       86



<TABLE>
<CAPTION>
                                     Proven and Probable               Proven and Probable                Proven and Probable
                                        Reserves at                        Reserves at                        Reserves at
                                     December 31, 2006                  December 31, 2005                  December 31, 2004
                              -------------------------------- ---------------------------------- ----------------------------------
                                Tonnage    Average    Ounces                 Average                            Average
                              (thousands    Gold     Contained   Tonnage      Gold       Ounces      Tonnage     Gold       Ounces
                                  of       Grade    (thousands (thousands    Grade     Contained   (thousands    Grade     Contained
                               dry short  (oz./dry      of       of dry     (oz./dry  (thousands     of dry    (oz./dry   (thousands
                                 tons)   short ton)   ounces)  short tons) short ton)  of ounces)  short tons) short ton) of ounces)
                              ---------- ---------- ---------- ----------- ---------- ----------- ------------ ---------- ----------
<S>                            <C>           <C>      <C>       <C>           <C>        <C>        <C>           <C>       <C>
Maqui Maqui .................      7,013     0.028       198        7,889     0.026         203         5,694     0.025        141
Quecher .....................         --        --        --           --        --          --            --        --         --
Antonio .....................         --        --        --           --        --          --            --        --         --
Cerro Quilish ...............         --        --        --           --        --          --            --        --         --
Cerro Negro .................         --        --        --           --        --          --           253     0.031          8
Carachugo ...................     83,091     0.039     3,231       69,016     0.040       2,763        66,405     0.042      2,777
San Jose ....................      8,225     0.019       160        7,334     0.021         153        10,818     0.020        213
Giuliana ....................      1,415     0.025        36           --        --          --            --        --         --
Cerro Yanacocha .............    179,872     0.028     5,103      208,178     0.033       6,807       257,363     0.032      8,328
La Quinua ...................     83,926     0.020     1,670      214,643     0.027       5,812       275,157     0.027      7,388
Tapado ......................     66,842     0.040     2,661           --        --          --            --        --         --
Corimayo ....................     57,201     0.053     3,019       62,755     0.049       3,074        58,425     0.051      3,006
In process ..................     45,524     0.031     1,413       71,108     0.028       1,968        60,860     0.028      1,685
                               ---------     -----    ------    ---------     -----      ------     ---------     -----     ------
Subtotal Yanacocha/avg ......    533,110     0.033    17,491      640,923     0.032      20,780       734,974     0.032     23,547
Subtotal Minas Conga/avg.* ..    560,447     0.021    11,836      617,787     0.019      11,836       371,110     0.023      8,711
Total/average ...............  1,093,557     0.027    29,327    1,258,710     0.026      32,616     1,106,084     0.029     32,257
                               ---------     -----    ------    ---------     -----      ------     ---------     -----     ------
</TABLE>

<TABLE>
<CAPTION>
                                     Proven and Probable               Proven and Probable
                                        Reserves at                        Reserves at
                                     December 31, 2003                  December 31, 2002
                              -------------------------------- ----------------------------------
                                Tonnage    Average     Ounces                Average
                              (thousands    Gold     Contained    Tonnage     Gold       Ounces
                                  of       Grade    (thousands  (thousands    Grade    Contained
                               dry short  (oz./dry      of        of dry    (oz./dry  (thousands
                                 tons)   short ton)   ounces)  short tons) short ton)  of ounces)
                              ---------- ---------- ---------- ----------- ---------- -----------
<S>                            <C>          <C>       <C>        <C>          <C>       <C>
Maqui Maqui ................          --       --         --         6,054    0.022        131
Quecher ....................       1,128    0.037         43            --       --         --
Antonio ....................       2,186    0.050        109            --       --         --
Cerro Quilish ..............     143,431    0.027      3,855       135,481    0.027      3,690
Cerro Negro ................      20,329    0.032        643        19,034    0.033        626
Carachugo ..................      63,976    0.043      2,762        71,795    0.040      2,898
San Jose ...................       9,475    0.021        198       366,868    0.029     10,807
Cerro Yanacocha ............     311,979    0.031      9,783       419,597    0.027     11,491
La Quinua ..................     372,739    0.025      9,395        21,661    0.056      1,220
Corimayo ...................      54,442    0.054      2,955            --       --         --
In process .................      67,363    0.029      1,966        58,682    0.030      1,742
                               ---------    -----     ------     ---------    -----     ------
Subtotal Yanacocha/avg .....   1,047,049    0.030     31,710     1,099,172    0.030     32,605
Subtotal Minas Conga/avg* ..          --       --         --            --       --         --
Total/average ..............   1,047,049    0.030     31,710     1,099,172    0.030     32,605
                               ---------    -----     ------     ---------    -----     ------
</TABLE>

----------
*    Minas Conga's proven and probable reserves as of December 31, 2006 include
     3,226 million pounds of 0.261 percent grade copper.


                                       87



     As of December 31, 2006, the Yanacocha District's proven and probable
reserves (excluding Conga's proven and probable reserves) were estimated to be
17.49 million ounces of gold, a 15.8 percent decrease from the Yanacocha
District's proven and probable reserves as of December 31, 2005, which were
estimated to be 20.78 million ounces of gold. The decrease in reserves of gold
was mainly due to the depletion of 3.74 million ounces of gold due to mining and
reserves revisions of 0.04 million ounces of gold reserves, partially offset by
an increase of 0.41 million ounces of gold reserves due to an increase in the
price of gold and updated grade and recovery models. As of December 31, 2006 and
2005, Conga's proven and probable reserves were estimated to be 11.84 million
ounces of gold and 3.23 billion pounds of copper, a 35.9 percent increase from
2004 gold reserves. The increases in reserves of gold and copper were due to
additional drilling in 2005, increases in the prices of gold and copper and a
lower processing cost estimates at both Perol and Chailhuagon. As of December
31, 2006, Yanacocha's total proven and probable reserves (including Conga) were
estimated to be 29.33 million ounces of gold, representing a 10.1 percent
decrease over Yanacocha's total proven and probable reserves as of December 31,
2005, which were estimated to be 32.62 million ounces of gold. Yanacocha's total
proven and probable reserves of copper were 3.23 billion pounds as of December
31, 2006 and 2005. Newmont Mining did not quote silver reserves at Yanacocha for
the year ended December 31, 2006 due to recovery issues.

     Based on the current recovery rate and estimated gold production levels in
2006, Yanacocha's proven and probable reserves as of December 31, 2006 will be
depleted by 2014 unless Yanacocha continues to add to its reserves. Yanacocha's
management believes that its prospective land positions and mining concessions
provide it with potential for future exploration and additions to its reserves.


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ITEM 5. Operating and Financial Review and Prospects

                                   THE COMPANY

Introduction

      The following discussion should be read in conjunction with the Financial
Statements as of December 31, 2005 and 2006 and for the years ended December 31,
2004, 2005 and 2006 and the related notes thereto included elsewhere in this
Annual Report. The Financial Statements are prepared and presented in accordance
with Peruvian GAAP, which differ in certain respects from U.S. GAAP. Note 39 to
the Financial Statements provides a description of the principal differences
between Peruvian GAAP and U.S. GAAP, as such differences relate to us, and Note
39 to the Financial Statements provides a reconciliation to U.S. GAAP of our net
income for the years ended December 31, 2004, 2005 and 2006 and shareholders'
equity as of December 31, 2005 and 2006. We present our financial statements in
U.S. Dollars.

Operating Results

General

      Overview. We were established in 1953 and are one of Peru's leading
producers of gold, silver and other metals. Our consolidated financial
statements comprise all of our accounts and those of our subsidiaries, which
include: (i) the Julcani, Uchucchacua, Orcopampa, Antapite and Ishihuinca mining
units; (ii) the Colquijirca and Shila-Paula mines, which are owned through
consolidated subsidiaries; (iii) Chaupiloma, which receives a royalty payment
from Yanacocha; (iv) Condesa, which is mainly a holding company for investments
in us, Yanacocha and other affiliated mining companies; (v) Conenhua, which is
mainly engaged in the transmission of electric power to Yanacocha and other
mining companies; (vi) Cerro Verde, which is an equity investee engaged in the
exploitation and commercialization of copper; and (vii) other minor
subsidiaries.

      Yanacocha. A substantial part of our net income before income tax was
derived from our equity interest in Yanacocha. We have a 43.65 percent equity
participation in Yanacocha through Condesa. Our interest in Yanacocha's
partnership's equity is accounted for under the equity method and is included
under the caption "Investments in shares" on our consolidated balance sheets.
According to International Accounting Standard 28, we make the appropriate
adjustments to the Yanacocha Financial Statements prepared under Peruvian GAAP
for like transactions and events in order to determine our equity share in
Yanacocha. Yanacocha expects production to decrease by approximately 40 percent
in 2007 as compared to 2006, and costs applicable to sales are expected to
increase by approximately 72 percent. As a result, net income is expected to
decrease by approximately 82 percent in 2007 as compared to 2006 net income. See
"Risk Factors--Factors Relating to the Company--Increased Costs Could Affect
Profitability."

      Cerro Verde. We hold a direct interest in Cerro Verde. During 2005, we
acquired an additional interest in Cerro Verde which allows us to exercise
significant influence over this company. See Note 13(c) to the Financial
Statements. As a result, we account for our investment in Cerro Verde using the
equity method since this investment no longer meets the criteria to be recorded
at its fair value. According to International Accounting Standard 28, we make
the appropriate adjustments to the Cerro Verde financial statements prepared
under Peruvian GAAP for like transactions and events in order to determine our
equity share in Cerro Verde. As of December 31, 2006 we had an 18.50 percent
equity participation in Cerro Verde.


                                       89



      Results of operations. The primary factors affecting our results of
operations are (i) the amount of gold, silver, zinc and copper produced and sold
by us; (ii) prevailing world market prices for gold, silver, zinc and copper;
(iii) commercial terms with respect to the sale of ore concentrates; and (iv)
our operating expenses.

      Gold and silver price hedging. Our revenues and earnings are strongly
influenced by world market prices for gold, silver, zinc and copper that
fluctuate widely and over which we have no control. Depending upon the metal
markets and other conditions, we may from time to time hedge our gold and silver
sales in order to decrease our exposure to fluctuations in the prices of these
metals. Since 1998, our hedging strategy has been focused on long-term
position-taking on the price of precious metals. In October 2004, our Board of
Directors issued a mandate not to enter into new hedging transactions.

      We regularly examine our strategy with regard to hedging. Our Chief
Executive Officer, Chief Financial Officer and Commercial Deputy Manager
coordinate our day-to-day hedging activities according to a policy established
with the Board of Directors. See "Item 11. Quantitative and Qualitative
Disclosures About Market Risk", "Item 3. Key Information-Risk Factors-Factors
Relating to the Company-Hedging" and Note 33 to the Financial Statements.

      Operating costs and expenses. Operating costs and expenses consist of (i)
operating costs, which are direct production costs, the major component of
operating expenses; (ii) exploration and development costs in operational mining
sites; (iii) depreciation and amortization expenses; (iv) exploration costs in
non-operational mining areas; (v) general and administrative expenses, which
principally consist of personnel expenses; (vi) royalties, which consist of
payments to third parties and the Peruvian government to operate leased mining
rights; and (vii) selling expenses, which principally consist of freight
expenses.

      Reserves. We utilize geological mapping, projection of ore-bearing
structures, diamond drilling, core logging and chemical assaying, in addition to
drifting along previously indicated mineralization, to replace and grow
reserves. In addition, we use metallurgical test-work of core and bulk samples
as a follow-up activity to prove the amenability of any previously indicated
mineralization to certain methods available on site. We continuously analyze
this information with respect to tonnage, precious-metals average grades,
metallurgical recoveries and economic value and allocate funds preferentially to
those projects that have the best potential to sustain or enhance profitable
mine production in the near-term. Our mining operations are primarily conducted
underground and consist of deposits that are difficult to explore and measure in
advance of mining and in which the value or prospects for ore based on geologic
evidence exceeds the value based on proved reserves throughout most of the life
of mines supported by them, or extramensurate deposits.

      In addition, underground mine infrastructure, such as declines, shafts
and/or dewatering/ore haulage crosscuts, that facilitate access to ore reserves
are constructed and categorized as mine development. We consider such
underground mine infrastructure vital to assure sustainable mine production and
reserve production. The design, construction and implementation of our
underground mine infrastructure are presented and supervised by our Operations
Manager with the Board of Directors' approval. We capitalize mine development
and mineral land costs incurred after we have identified proven and probable
reserves. Upon commencement of production, we amortize these costs over the
expected life of the mining area, based on proven and probable reserves and
other factors.

      We believe that our replacement measures have been effective to increase
reserves. Reserves at our Orcopampa mine, our principal gold mining operation,
have increased steadily over the past five years. Gold reserves at the Orcopampa
mine increased from 304,000 ounces for the year ended December 31, 2002 to
816,000 ounces for the year ended December 31, 2006. Silver reserves at the
Uchucchacua mine, our principal silver mining operation, have increased over the
past five years, from 48.7 million ounces for the year ended December 31, 2002
to 74.3 million ounces for the year ended December 31, 2006.


                                       90



      Our other mining operations are smaller and have variable fluctuations in
production and reserves due to complexities of the ore located in certain mining
operations (such as the Colquijirca mine); the sale of certain mining operations
(such as the Huallanca mine); closures of mining operations (such as the
Shila-Paula and Recuperada mines); and the production of silver only as
by-product of gold (such as the Orcopampa, Antapite and Shila-Paula mines).

      Net income and net distributable income. Under Peruvian law, each company
is required to establish a legal reserve of at least 20 percent of its paid-in
capital on an unconsolidated basis. An annual contribution of at least 10
percent of net income must be made until such legal reserve equals 20 percent of
paid-in capital. The legal reserve may off-set losses or be capitalized.
However, following any instance in which the reserve is used, Peruvian law calls
for mandatory replenishment of the reserve.

      Royalties. Royalty expenses consist mainly of payments made by us pursuant
to lease agreements relating to mining rights for the Orcopampa and Ishihuinca
mines. Specifically, we pay the lessor a royalty of 10 percent of the value of
the concentrates produced in Orcopampa mine, and 7 percent of the value of the
concentrates produced in the Ishihuinca mine.

      In addition, on June 24, 2004, the Peruvian Congress approved Law 28258 -
Mining Royalties Law. This law established a mining royalty that owners of
mining concessions must pay to the Peruvian government for the exploitation of
metallic and non-metallic resources. The mining royalties are calculated on a
sliding scale with rates ranging from 1 percent to 3 percent over the value of
mineral concentrates based on international market prices. See "Item 4.
Information on the Company-The Company-Regulatory Framework-Mining Royalties".

      Environmental protection laws and related regulations. Our business is
subject to Peruvian laws and regulations relating to the exploration and mining
of mineral properties, as well as the possible effects of such activities upon
the environment. We conduct our operations substantially in accordance with such
laws and regulations.

      According to environmental regulations set forth by the MEM, we submitted
EVAPs for our operating mines in 1995. See "Item 4. Information on the
Company--The Company--Regulatory Framework--Environmental Matters". Based on the
results of the EVAPs, PAMAs were prepared and submitted to the MEM in 1996 and
approved by the MEM in 1997.

      Pursuant to the environmental regulations, mines were given a five or
ten-year period to comply with the agreements reflected in each PAMA. See "Item
4. Information on the Company--The Company Regulatory Framework--Environmental
Matters". Upon completion of the project and agreement with regard to the
financial investment, a final report of execution is submitted to the MEM and
the MEM designates a group of independent companies, registered with MEM, to
conduct an audit of each PAMA. Thereafter, the MEM issues a resolution
recognizing compliance with the relevant mine's PAMA and completion of the
adjustment process. Resolutions for each of our mines were issued between
November 2002 and April 2003 and have thereafter been inspection audits each
semester. As of December 31, 2005, the activities defined in the PAMAs for the
Uchucchacua, Julcani, Orcopampa, Colquijirca and Ishihuinca mining units had
been completed.


                                       91



      Throughout this process, we have been in substantial compliance with
applicable maximum emission levels and other legal requirements. In addition,
Law No. 28090 providing for the closing of mines was published on October 14,
2003. The corresponding ruling was approved on August 15, 2005. In May and
August 2006, we submitted a feasibility-level Closure Plan to the MEM for our
mining units and exploration projects. See "Item 4. Information on the
Company-The Company-Regulatory Framework-Environmental Matters".

      On July 6, 2004, the Peruvian Congress enacted Law No. 28271 - Ley que
Regula los Pasivos Ambientales de la Actividad Minera (Law that Regulates the
Environmental Liabilities for the Mining Activity). This law regulates
identification of potential environmental liabilities for mining activities and
the means to remediate the affected areas. In order to comply with Law No.
28271, we are performing reviews in areas currently abandoned or inactive in
which we previously carried out exploitation activities, in order to determine
which remediation activities, if any, are necessary. In August 2006, we
conducted and delivered an environmental liabilities inventory to the MEM for
liabilities related to our former exploration activities. Subsequently, in
December 2006 we presented the Environmental Liabilities Closure Plans for the
MEM's evaluation. See "Item 4. Information on the Company-The Company-Regulatory
Framework-Environmental Matters".

      In 2004, 2005 and 2006, we spent approximately US$1.7, US$2.0 and US$2.3
million, respectively, in connection with environmental protection measures. We
estimate that capital expenditures needed to comply with environmental
regulations will be approximately US$3.0 million in each of 2007 and 2008. This
amount will be used on items such as new equipment and the construction of new
processing plants and leaching fields, as well as the implementation of a
program to minimize the environmental impact and improve the quality of mining
residues. There are currently no legal or administrative proceedings against us
for violation of environmental protection laws or other environmental
regulations in Peru that could have a material adverse effect on our financial
position or results of operations.

      Change of functional and reporting currency, Effective January 1, 2006,
our functional and reporting currency changed from the Nuevo Sol to the Dollar.
This change resulted from an evaluation of the currency denominations of our
cash flows in recent years and, in particular, reflects the increasing
significance to our financial position of dividends from affiliates denominated
in Dollars to our financial position, results of operation and cash flows.
Profit and loss accounts for years ended December 31, 2005 and 2004 have been
translated into Dollars using the average exchange rates for such years, US$1.00
to S/3.305 and S/3.410 for 2005 and 2004, respectively.

Critical Accounting Estimates

      What follows is a discussion of our application of critical accounting
policies that require our management, or the Management, to make assumptions
about matters that are highly uncertain at the time the accounting estimate is
made, and where different estimates that Management reasonably could have used
in the current period - or changes in the accounting estimate that are
reasonably likely to occur from period to period - would have a material impact
on our financial statements. Management has identified the following accounting
estimates as critical:

o     Impairment of long-lived assets;

o     Useful life of property, plant and equipment;

o     Amortization of capitalized mining costs;


                                       92



o     Deferred stripping costs;

o     Deferred income tax asset;

o     Accrual for mine closing costs;

o     Fair value of derivative instruments; and

o     Contingencies.

      We also have certain accounting policies that we consider to be important,
such as our policies for investments carried at fair value, revenue recognition
and exploration costs, that do not meet the definition of critical accounting
estimates as they do not require Management to make estimates or judgments that
are subjective or highly uncertain.

      On January 1, 2006, the Company adopted IFRS 2 "Share-Based Payment".
According to this standard, the cost of a cash-settled transaction is measured
initially at fair value at the grant date using a binomial model. This fair
value is expensed over the period until vesting with recognition of a
corresponding liability. The liability is re-measured at each balance sheet date
up to and including the settlement date with changes in fair value recognized in
the consolidated statement of income. Until December 31, 2005, the cost and
liability were recorded at the intrinsic value of the obligation. The adoption
of IFRS 2 had no significant effect on our financial statements and financial
position.

      Management has discussed the development and selection of our critical
accounting estimates with the Audit Committee of the Board of Directors.

Impairment of long-lived assets

      We review and evaluate the impairment of our long-lived assets if an event
occurs that indicates that the book value of such assets may not be recoverable.
An impairment loss represents the amount by which the book value of an asset
exceeds the higher of its net selling price or use value. The value in-use of an
asset is generally calculated as the present value of estimated future cash
flows expected to be earned from continual use of the asset and from its
disposal at the end of its useful life. An impairment loss recognized in a
previous year may be adjusted if there is any indication that the estimates used
when the impairment loss was recognized should be adjusted to reflect a more
favorable cash flow scenario. Future cash flow assumptions include, but are not
limited to, estimates of recoverable ounces and tons of ore and metal, prices
(which include current and historical prices, price trends and related factors),
production levels and capital costs, all based on mine plans. Such future cash
flow assumptions are valid when estimated but may change significantly when new
information becomes available. Any difference between assumptions and actual
market conditions could have an important effect on our financial condition and
results of the operations.

      In 2006, Management evaluated the impairment of the long-lived assets of
our mining units. As a result of this evaluation, no impairment loss resulted.
Management used future cash flow estimates to evaluate the impairment of
long-lived assets for this year. These estimates incorporate our own assumptions
about the use of the assets, prices and exclude interest charges and income tax.
Management believes such assumptions are reasonable in relation to the
assumptions used by us in developing other information.


                                       93



Useful life of property, plant and equipment

      Depreciation is calculated under the straight-line method of accounting.
The table set forth below reflects the estimated years of useful life for
property, plant and equipment, based on current production levels and market
prices:

      Property, Plant and Equipment              Estimated Years of Useful Life
      ----------------------------------------   -------------------------------
         Buildings, constructions and other...               10 to 20
         Machinery and equipment..............                5 to 10

      Certain of our depreciable assets, primarily buildings and constructions,
have a useful life in excess of the current productive life of the mines because
such assets may be transferred to another mine or converted to another use when
production at the mine where it is currently used ceases. In addition, the
expected productive life of the mine is normally higher than the current life
derived from the proven and probable reserves at year-end. Rather than exploring
long-term reserves, we focus on sustaining current reserves.

Amortization of capitalized mining costs

      We capitalize mine infrastructure and mineral land costs incurred after
Management has identified proven and probable reserves. Upon commencement of
production, we amortize these costs over their expected lives, based on proven
and probable reserves and other factors.

      The process of estimating quantities of reserves is complex, requiring
subjective decisions in the evaluation of all available geological, geophysical,
engineering and economic data. The data for a given ore body may also change
substantially over time as a result of numerous factors, including, but not
limited to, additional exploration and construction activity, evolving
production history and the continual reassessment of the viability of production
under various economic conditions.

      A material revision to existing reserve estimates could occur because of,
among other things: revisions to geological data or assumptions; changes in
assumed prices; and results of drilling and exploration activities. We make
every effort to ensure that reported reserve estimates represent the most
accurate assessment possible. However, because of the subjective decisions
Management has to make, as well as variances in available data for each ore
body, these estimates are generally uncertain.

      Changes in reserve quantities, including changes resulting from gold,
silver, zinc, lead and copper price assumptions, would cause corresponding
changes in amortization expense in periods subsequent to the revision, and could
result in impairment of the carrying amount of property, plant and equipment and
capitalized mining costs.

      We estimate reserves for our direct operations assuming a US$446 per ounce
gold price, a US$8.50 per ounce silver price, a US$1,901 per metric ton zinc
price and a US$1,050 per metric ton lead price.

      The mines where amortization charges would be most significantly affected
by changes in reserve estimates are Uchucchacua, Orcopampa, Colquijirca and
Antapite. These mines generally have the largest amounts of property, plant and
equipment subject to depreciation and the highest per ounce amortization
charges.


                                       94



Deferred stripping costs

      Until December 31, 2004, in order to reasonably match revenues and current
production costs, El Brocal deferred certain costs incurred in the expansion of
the Tajo Norte mining site. These costs are commonly referred to as "deferred
stripping costs" and are incurred in mining activities that are associated with
the removal of waste rock to access the ore body. Costs related to additional
quantities of waste that must be moved to obtain 1 metric ton of mineral were
deferred when the actual waste material extracted was higher than the estimate;
these costs were amortized when actual waste mineral extraction was lower than
the estimate.

      In March 2005, the FASB ratified Emerging Issues Task Force Issue No.
04-06 "Accounting for Stripping Costs Incurred during Production in the Mining
Industry" (EITF 04-6). This addresses accounting for stripping costs incurred
during the production phase of a mine and refers to these costs as variable
production costs that should be included as a component of inventory to be
recognized in costs of sales in the same period as the revenue from the sale of
inventory. As a result, capitalization of stripping costs is appropriate only to
the extent product inventory exists at the end of a reporting period. EITF 04-6
is effective for the first reporting period in fiscal years beginning after
December 15, 2005. This standard may be applied either by the recognition of a
cumulative effect adjustment in the period of the adoption or by restating prior
period financial statements.

      Effective January 1, 2005, El Brocal considers the deferred stripping
costs incurred during the production stage as variable production costs that
should be included in the cost of inventories produced. This accounting change
allowed El Brocal to adopt an accounting policy for deferred stripping that is
consistent and acceptable under both U.S. GAAP and Peruvian GAAP.

Deferred income tax asset

      Effective Income Tax Rate - 2006

      Our income tax expense of US$64.0 million in 2006 differed from our income
tax expense of US$22.8 million in 2005 mainly as a result of the following:

      (a) Increased pre-tax income from US$331.2 million in 2005 to US$580.2
million in 2006.

      (b) Non-taxable income. According to current tax regulations, equity
participation in affiliates, including the receipt of dividends, is not taxable
(permanent item). In 2006, we reduced our income tax expense by US$86.4 million
compared to a US$72.9 million reduction in 2005 due to our equity participation.

      (c) Non-deductible expenses. Pursuant to current tax regulations, the loss
(negative fair value) on derivative instruments entered into with investment
banks is not deductible to the extent it is generated abroad (permanent item).
In 2006, we increased our income tax expense by US$3.7 million, compared to an
increase of US$7.3 million in 2005, due to the non-deductible expense originated
by our derivative contracts.

      (d) Change of status of derivative contract. During 2006, we changed the
terms of certain derivative contracts in order to turn them into normal sales
contracts; according to this change, the related loss (negative fair value)
became a temporary difference under Peruvian tax regulation. Due to the change
from a permanent to a temporary item, we reduced our income tax expense by
US$21.4 million 2006 compared to a US$14.0 million reduction in 2005.


                                       95



      Effective Income Tax Rate - 2005

      Our income tax expense of US$22.8 million in 2005 differed from our income
tax expense of US$29.9 million in 2004 mainly as a result of the following:

      (a) Non-taxable income. According to current tax regulations, equity
participation in affiliates, including the receipt of dividends, is not taxable
(permanent item). In 2005, we reduced our income tax expense by US$72.9 million
compared to US$49.0 million in 2004 due to our equity participation in
investees.

      (b) Non-deductible expenses. Pursuant to current tax regulations, the loss
(negative fair value) on derivative instruments entered into with investment
banks is not deductible to the extent it is generated abroad (permanent item).
In 2005, we increased our income tax expense by US$7.3 million compared to an
increase of US$4.8 million in 2004, due to the non-deductible expenses
originated by our derivative contracts.

      (c) Change of tax status of derivative contracts. During 2005, we revised
the terms of some of our derivative contracts to qualify them as sales
contracts; pursuant to this revision, the related loss (negative fair value)
became a temporary difference under current Peruvian tax regulations. Due to the
change from a permanent to a temporary item, we reduced our income tax expense
by US$14.0 million. In 2004 no derivative contract was qualified as a normal
sale contract.

      The need to record valuation allowances related to our deferred tax assets
depends on the following factors: our (i) long-term estimate of future average
realized metal prices, (ii) levels of production, (iii) proven and probable
reserves, and (iv) the extent to which tax credits can yield a tax benefit in
the future. Significant changes in these and other factors could have a material
impact on the amount of valuation allowances recorded and on income tax expense.

Accrual for mine closing costs

      We record a provision for mine closure when a legally enforceable
obligation arises, which is independent of the full depletion of the mine
reserves. Once such an obligation has been appropriately measured, it is
recorded by creating a liability equal to the amount of the obligation and
recording a corresponding increase to the carrying amount of the related
long-lived asset (mine development cost and property, plant and equipment). Over
time, the amount of the obligation changes, impacting recording and accretion
expenses. Additionally, the capitalized cost is depreciated and/or amortized
based on the useful lives of the related assets.

      Any difference in the settlement of the liability will be recorded in the
results of the period in which such settlement occurs. The changes in the fair
value of an obligation or the useful life of the related assets that occur from
the revision of the initial estimates should be recorded as an increase or
decrease in the book value of the obligation and related asset.

      Following our accounting treatment, during 2006 we have recorded an
increase of US$28.4 million in the book value of the obligation for mine closure
and related assets as a result of new governmental requirements for
environmental responsibilities. Also, we have recorded an expense of US$3.5
million corresponding to the update of the discounted value of the accrual.


                                       96



Fair value of derivative financial instruments

      We did not have futures and options derivative instruments as of December
31, 2006. In March 2006, we modified the terms our gold derivative contracts
maintained as of December 31, 2005 in order to qualify them as a normal sales
contracts. Our silver derivative contracts matured in August 2006. Fair value
estimates are recognized on the consolidated financial statements. See Note 33
to the Financial Statements. These estimates are made by independent parties
pursuant to relevant market information, such as future prices of gold, silver
and zinc, volatility factors, and interest rates. Changes in assumptions and
market conditions could significantly affect these estimates.

      (a) Outstanding derivative contracts

      Effective January 1, 2003, we recognize derivative instruments as assets
or liabilities, measured at their fair value, in our consolidated balance sheets
pursuant to IAS 39, "Financial Instruments -- Recognition and Measurement".

      Management's intention was to use derivative instruments to hedge
fluctuations in metal prices, mainly gold and silver, and not for trading
purposes. However, we do not meet all the criteria established in IAS 39 to
account for the derivative instruments as cash flow hedges. The criteria refer
to formal documentation and testing of the effectiveness of the derivative
instruments . During 2006, we recorded a loss of US$13.3 million due to changes
in the fair value of derivative instruments compared to a loss of US$26.6
million during 2005 and a loss of US$17.4 million during 2004.

      During the first quarter of 2006, our management completed modifications
to the terms of all derivative contracts maintained as of December 31, 2005 in
order to qualify them as normal sales contracts.

      (b) Normal sale contracts

      To minimize future fluctuations in consolidated results of operations,
during 2003, 2005 and 2006 we modified the terms of certain derivative contracts
in order to qualify them as normal sale contracts. These contracts were replaced
with a series of sales contracts requiring physical delivery of gold over future
periods that do not extend beyond December 2012. Under the terms of the
contracts, we will realize fixed or capped prices ranging up to US$451 per ounce
of gold. As of December 31, 2006, the settled value for these contracts was
US$237.2 million and is presented as deferred income from sale of future
production in the consolidated balance sheets. Such amounts will be included as
revenue upon the delivery of the committed ounces.

      On January 15, 2007, we postponed several positions from years 2007 and
2008 to year 2012. Additionally, on May 15 and May 25, 2007, we negotiated with
several counterparties to eliminate the fixed price component on determined
commitments for a total of 971,000 gold ounces. After these transactions we will
continue delivering physical gold as scheduled but will receive the market price
at the time of delivery. Total payment for these transactions was US$315.69
million.

      (c) Reduction of derivative instruments portfolio

      In addition to converting derivative instruments into normal sales
contracts, in January 2004 we reduced our derivative instruments portfolio by
120,000 ounces of gold. This reduction resulted in a payment of US$10.8 million
that was included in the caption "Loss from change in the fair value of
derivative instruments" in the consolidated statements of income.


                                       97



Contingencies

      Contingent liabilities, when identified, are assessed as either remote,
possible or probable. Contingent liabilities are recorded in the consolidated
financial statements when it is probable that future events will confirm them
and when their amount can be reasonably estimated. Contingent liabilities deemed
as possible are only disclosed, together with a possible debit range, when
determinable, in notes to the financial statements.

      Contingent assets are not recognized in the financial statements; however,
they may be disclosed in notes to the financial statements if it is probable
that such contingent assets will be realized. See Note 36 to the Financial
Statements.

Results of Operations for the Twelve Months Ended December 31, 2006 and 2005

      Net sales. Net sales increased by 93.4 percent, from US$283.4 million in
2005 to US$548.1 million, in 2006 due to the following:

      (a) An increase in the price and volume sold of gold, silver,
lead and zinc during 2006. The following tables reflect the average realized
price and volume sold of gold, silver, lead and zinc for 2005 and
2006:

      Price                                    Year ended December 31,
      -----                             -----------------------------------
                                           2005         2006      Variation
                                        ----------   ----------   ---------

        Gold............   US$/Oz           359.75       354.98     -1.33%
        Silver..........   US$/Oz             7.38        11.92     61.52%
        Lead............   US$/MT           973.22     1,319.89     35.62%
        Zinc............   US$/MT         1,299.34     3,407.98    162.29%

      Volume                                   Year ended December 31,
      ------                            -----------------------------------
                                           2005         2006      Variation
                                        ----------   ----------   ---------
        Gold............   Oz              348,634      415,288     19.12%
        Silver..........   Oz           14,517,024   19,207,066     32.31%
        Lead............   MT               30,320       36,570     20.61%
        Zinc............   MT               52,086       59,489     14.21%

      (i)Gold sales. The average sales prices for gold decreased from US$359.75
per ounce in 2005 to US$354.98 per ounce in 2006, however gold sales increased
by 66,654 ounces compared to 2005. The combined effect of these changes resulted
in higher income from sales, which increased by US$22.0 million in 2006 compared
to 2005. This increase in income from sales was largely attributable to the sale
of ounces produced at Orcopampa and Antapite mines.

      (ii) Silver sales. Average silver prices rose from US$7.38 per ounce in
2005 to US$11.92 per ounce in 2006. In addition, the volume of silver sales
increased by 4,690,042 compared to 2005. The combined effect resulted in higher
revenue from sales of US$121.8 million over 2005 levels. This difference was
attributed mainly to the increased silver production in the Uchucchacua and
Colquijirca mines.

      (iii) Lead sales. Average lead prices rose from US$973.2 per metric ton in
2005 to US$1,319.89 per metric ton in 2006. Additionally, the volume sold was
6,250 metric tons greater than in 2005. The combined effect resulted in an
increase of US$18.8 million in our 2006 sales revenues, primarily due to the
sales of ore produced by the Colquijirca mine.


                                       98



      (iv) Zinc sales. Average zinc prices increased from US$1,299.34 per metric
ton in 2005 to US$3,407.98 per metric ton in 2006. The total volume sold also
increased by 7,403 metric tons in 2006. The combined effect of these changes
resulted in higher revenue from zinc sales, totaling US$135.1 million in 2006.
This increase was mainly due to the increased production contributed by the
Colquijirca mine.

      The revenues from gold, silver, lead and zinc mentioned above do not
include the refinery charges and penalties incurred, which amounted to US$79.3
million in 2006, compared to US$46.3 million in 2005. This increase is due to
the increased amount of metric tons of concentrates sold in 2006 compared to
2005.

      Realized income from sale of future production. To minimize future
fluctuations in the consolidated results of operations, we modified the terms of
certain derivative contracts in order to qualify them as normal sales contracts.
During 2005 and 2006 our outstanding derivative contracts were replaced with a
series of sales contracts that required physical delivery of gold over future
periods that do not extend beyond 2012. Under the terms of these new contracts,
our revenue will be capped at between US$332 to US$451 per ounce. The fair
values of the replaced contracts were US$50.6 million and US$77.4 million in
2005 and 2006, respectively, and were calculated immediately prior to the
execution of these contracts and recorded as deferred revenue in each year. The
revenues under these contracts will be included as part of total revenues for
each year in which delivery occurs until 2012.

      In 2006, we delivered 388,00 ounces as a part of the sales contracts
mentioned above compared to 282,000 ounces delivered in 2005. As a result, we
recognized revenues of US$50.3 million in 2006 compared to US$28.1 million in
2005. See Note 33 to the Financial Statements.

      Royalty income. In 2006, royalty income received by S.M.R.L. Chaupiloma
Dos de Cajamarca (Chaupiloma) amounted to US$48.5 million, representing a 5.17
percent increase over the US$46.1 million of royalty income in 2005. This
increase is attributed to the increased sales from Yanacocha in 2006, which
resulted from higher gold prices throughout the reporting period.

      Total costs of operation. Total costs of operation increased by 39.0
percent, from US$190.9 million in 2005 to US$265.3 million in 2006 due to the
following:

      (a) Operating costs increased by 42.1 percent, from US$103.9 million in
2005 to US$147.7 million in 2006, mainly due to increased work commissioned to
third party contractors, increased supply requirements and other items for our
various mining units, as a result of increased volume of ore produced during
2006.

      (b) Exploration and development costs in operational mining sites
increased by 20.3 percent, from US$41.2 million in 2005 to US$49.5 million in
2006. This additional costs were due principally to increased exploration
activity in our Orcopampa, Caraveli and Recuperada mines.

      (c) Depreciation and amortization costs increased by 9.8 percent from
US$33.6 million in 2005 to US$36.9 million in 2006 due principally to additional
depreciation of US$1.6 million recorded in 2006 in connection with a revision of
mine closure costs estimates in such year.


                                       99



      (d) Royalty expenses to third parties and to the Peruvian Government
increased 100 percent from US$12.2 million in 2005 to US$24.4 million in 2006.
This increase was due mainly to (i) an increase in royalties related to the
Sindicato Minero de Orcopampa S.A. from US$7.2 million in 2005 to US$12.3
million in 2006 as a result of the previously discussed increase in our sales
and gold production; and (ii) an increase in the royalties paid to the Peruvian
Government from US$4.3 million in 2005 to US$11.3 million in 2006 as a result of
our increased sales.

      (e) Recognition of an expense for environmental liabilities amounting to
US$6.8 million in 2006

      Total operating expenses. Operating expenses increased by 17.6 percent
from US$67.0 million in 2005 to US$78.8 million in 2006, due to changes in the
following components:

      (a) Exploration costs in non-operational mining areas increased by 30.1
percent from US$27.8 million in 2005 to US$36.2 million in 2006 due to higher
expenditures in exploration areas, primarily in the Tinyaclla, La Zanja, Los
Pircos and Trapiche projects among others. The Company is looking for additional
reserves of gold, silver and copper. See Note 25 to the Financial Statements.

      (b) General and administrative expenses increased by 6.7 percent, from
US$34.3 million in 2005 to US$36.6 million in 2006. This increase was due mainly
to the increase in personnel expenses from US$9.8 million in 2005 to US$12.0
million in 2006 and to the increase in board member's remuneration from US$2.2
million to US$5.9 million, both as a result of the revaluation of the local
currency. These increases were partially off-set by the decrease of long-term
officers' compensation (stock appreciation rights) from US$8.1 million in 2005
to US$3.6 million in 2006 as a result of the decrease in our stock price from
US$.28.3 as of December 31, 2005 to U$27.5 as of December 31, 2006.

      (c) Selling expenses increased 23.5 percent from US$4.8 million in 2005 to
US$5.9 million in 2006, due mainly to the higher freight payments required to
transport concentrates and related services, both required as a result of the
greater volume of sales.

      Operating income. As a result of the foregoing, operating income increased
by 203.8 percent, from US$99.7 million in 2005 to US$302.8 million in 2006.

      Share in affiliated companies. Income from share equity investment in
affiliated companies increased by 18.6 percent, from US$264 million in 2005 to
US$313.2 million in 2006, principally due to the increase in the net earnings of
Yanacocha and Cerro Verde.

      (a) Income from our interest in Yanacocha increased by 1.7 percent, from
US$225.9 million in 2005 to US$229.8 million in 2006, due mainly to the net
effect of (i) an increase in price per ounce realized on gold sales from
US$447.90 ounce in 2005 to US$599.93 per ounce in 2006, and (ii) a decrease in
volume of gold sold from 3.3 million ounces in 2005 to 2.6 million ounces in
2006, off-set in part by an increase in the cost of production per ounce, from
US$150.0 in 2005 to US$198.0 in 2006.

      (b) Income from our interest in Cerro Verde increased by 111 percent from
US$38 million in 2005 to US$80.2 million in 2006, mainly as a result of
increased earnings of this affiliate from US$223.8 million in 2005 to US$445.4
million in 2006. In addition, we acquired an additional interest of 0.29 percent
in the equity of Cerro Verde during 2006.


                                       100



      Loss from change in the fair value of derivative instruments. According to
the IAS 39 ("Financial Instruments - Recognition and Measurement"), our
derivatives instruments have been measured at their fair value. This year the
company suffered net losses resulting from changes in the fair value of its
derivative transactions, amounting to losses of US$13.3 million as compared with
losses of US$26.6 million in 2005. See "--Critical Accounting Estimates" and
Note 33 to the Financial Statements.

      Finance income. Interest income increased by 125.6 percent from US$3.5
million in 2005 to US$7.9 million in 2006 due to increased income on time
deposits by US$2.9 million. We maintained US$73.5 million in time deposits as of
December 31, 2005 compared to US$181.9 million as of December 31, 2006.
Additionally we recorded a gain of US$1.6 million due to change in the fair
value of investment funds. See Note 28 to the Financial Statements.

      Finance expense. Interest expense increased by 46.5 percent from US$4.0
million in 2005 to US$5.9 million in 2006 due mainly to: (i) the bank loan
obtained by Consorcio Energetico de Huancavelica S.A., increasing our
indebtedness to US$10 million in 2006 compared to US$7.6 million in 2005; and
(ii) an increase of US$1.2 million as a result of having updated the reserve for
mine closure. See Note 28 to the Financial Statements.

      Loss from change in the market value of gold certificates. In May 2006, we
acquired one million participations of an Exchange Traded Fund, or Gold ETF,
endorsed by the World Gold Council, equivalent to 100,000 gold ounces, at a cost
of US$68.07 per unit. This Gold ETF has been accounted for as a financial asset
at fair value through profit or loss, in accordance with the intention of our
management at the time of the acquisition. As of December 31, 2006, the fair
value of the Gold ETF was US$63.2 million and, consequently, we have recognized
a loss of US$4.8 million, which is presented in our consolidated statements of
income.

      Other, net. Other, net increased from an expense of US$3.2 million in 2005
to an expense of US$5 million in 2006 mainly due to the voluntary mining
contribution agreed with the Peruvian government of US$1.8 million.

      Workers' profit sharing. Workers' profit sharing expense increased by
450.4 percent, from US$2.6 in 2005 to US$14.3 million in 2006. This amount is
calculated by applying a percentage to the taxable income. See "--Critical
Accounting Estimates--Income Tax".

      Income tax. Income tax expense increased by 180.6 percent from US$22.8
million in 2005 to US$64.0 million in 2006. See "--Critical Accounting
Estimates--Income Tax".

      Minority interest. Minority interest expense increased by 341.4 percent
from US$20 million in 2005 to US$88.1 million in 2006, mainly due to a greater
allocation of profits from Colquijirca S.A. and Chaupiloma.

      Net income. As a result of the foregoing, net income increased by 48.43
percent from US$288.4 million in 2005 to US$428.0 million in 2006. As a
percentage of net sales, net income was 101.8 percent in 2005, compared with
78.1 percent in 2006.


                                       101



Results of Operations for the Twelve Months Ended December 31, 2005 and 2004

      Net sales. Net sales increased 6.4 percent from US$266.4 million in 2004
to US$283.4 million in 2005 due to an increase in the price of silver, lead and
zinc and an increase in the volume sold of silver during 2005, offset by a
decrease in the price of gold for part of 2005. The following tables reflect the
average realized price and volume sold of gold, silver, lead and zinc for 2004
and 2005:

Price                         Year ended December 31,
------------            -----------------------------------
                           2004         2005      Variation
                        ----------   ----------   ---------
Gold........   US$/Oz       373.78       359.75     -3.8%
Silver......   US$/Oz         6.51         7.38     13.4%
Lead........   US$/MT       908.79       973.22      7.1%
Zinc........   US$/MT     1,026.01     1,299.34     26.6%

Volume                        Year ended December 31,
------------            -----------------------------------
                           2004         2005      Variation
                        ----------   ----------   ---------

Gold........   Oz          353,317      348,634     -1.3%
Silver......   Oz       14,252,144   14,517,024      1.9%
Lead........   MT           31,131       30,320     -2.6%
Zinc........   MT           53,001       52,086     -1.7%

      (i) Gold sales. The average sales price of gold decreased from US$373.78
per ounce in 2004 (certain sales contracts had fixed prices and others had spot
prices) to US$359.75 per ounce in 2005 (sales contracts primarily had fixed
prices). The volume of gold sold also experienced a slight decrease of 4,683
ounces of gold in 2005 compared to 2004, mainly due to a delay in shipments at
year-end. The combined effect from the decrease in sales price and volume sold
resulted in lower revenue from sales, which decreased by US$6.6 million in 2005
compared to 2004.

      (ii) Silver sales. The average sales price of silver increased from
US$6.51 per ounce in 2004 to US$7.38 per ounce in 2005. The volume of sales
increased by 264,880 ounces in 2005 compared to 2004 mainly due to increased
production at the Uchucchacua mine as a result of new ore bodies discovered
(Edith and Eva Maria) with higher silver grades. There was also increased silver
production in the Colquijirca mine as a result of higher silver grades. The
combined effect from the increase in sales price and volume sold resulted in a
higher revenue from sales of US$14.3 million in 2005 compared to 2004.

      (iii) Lead sales. The average sales price of lead increased from US$908.79
per metric ton in 2004 to US$973.22 per metric ton in 2005. However, the total
volume sold decreased by 811 metric tons in 2005 due to a slight decrease in the
recovery rate of lead in the Colquijirca mine from 62.82 percent in 2004 to 60.0
percent in 2005. The combined effect of the increase in sales price and decrease
in volume sold resulted in an increase of US$1.2 million in 2005 compared to
2004.

      (iv) Zinc sales. The average sales price of zinc increased from
US$1,026.01 per metric ton in 2004 to US$1,299.34 per metric ton in 2005.
However, the total volume sold decreased by 915 metric tons in 2005 due to the
decrease in the average zinc grade from 1.48 percent in 2004 to 1.39 percent in
2005. The combined effect from the increase in sales price and decrease in
volume sold resulted in increased revenues from sales resulted in a higher
revenue from sales of US$13.3 million in 2005 compared to 2004.

      The revenues of gold, silver, lead and zinc mentioned above do not include
the refinery charges and penalties incurred, which amounted to US$46.3 million
in 2005 compared to US$41.1 million in 2004. This increase was due to an
increase in the volume of concentrates sold in 2005 compared to 2004.


                                       102



      Realized income from sale of future production. To minimize future
fluctuations in the consolidated results of operations, during 2005, we modified
the terms of certain derivative instruments contracts in order to qualify them
as normal sale contracts. These contracts were replaced with a series of sales
contracts requiring physical delivery of gold over future periods that do not
extend beyond 2012. Under the terms of the contracts, our revenue will be capped
between US$332 to US$451. The fair value of the replaced contracts, amounting to
US$50.6 million in 2005, were calculated immediately prior to the execution and
recorded as deferred revenue in 2005 and would be included as part of total
revenues as delivery occurs until 2012. In 2005, we delivered 282,000 ounces of
gold as part of the sales contracts mentioned above compared to 198,000 ounces
of gold delivered in 2004. As a result, we recognized revenues of US$28 million
in 2005 compared to US$20.2 million in 2004.

      Royalty income. Chaupiloma is the legal owner of the mineral rights on the
mining concessions exploited by Yanacocha, and receives a 3 percent royalty on
the net sales of Yanacocha. Royalty income increased 22 percent from US$37.8
million in 2004 to US$46.1 million in 2005, due to a 19.2 percent increase in
Yanacocha's sales of gold from US$1,249.9 million in 2004 to US$1,490.4 million
in 2005.

      Total costs of operation. Total costs of operation increased 13.5 percent
from US$168.3 million in 2004 to US$190.9 million in 2005 due to the following:

      (a) Operating costs, which include cost for labor (including contractor
and personnel expenses), supplies and others, increased by 4 percent from
US$99.9 million in 2004 to US$103.9 million in 2005. Operating costs did not
change significantly due to similar levels of production in 2005 compared to
2004.

      (b) Exploration and development costs in operational mining sites
increased by 10.2 percent from US$37.4 million in 2004 to US$41.2 million in
2005, due principally to an increase of US$4.5 million related to our
exploration activities at our Orcopampa, Antapite and Shila-Paula mines, and an
increase in amortization of development cost of US$1.2 million. These increases
were offset by a decrease of US$1.9 million related to exploration activities at
Uchucchacua and Ishihuinca mines.

      (c) Depreciation and amortization costs increased by 54.9 percent from
US$21.7 million in 2004 to US$33.6 million in 2005, due mainly to additional
depreciation expense which resulted from new estimates of the closing costs for
the Colquirrumi mine, and full year depreciation expense for assets acquired
during 2004.

      (d) Royalty expenses increased by 31.9 percent from US$9.2 million in 2004
to US$12.2 million in 2005, due to royalties paid to the Peruvian government in
connection with the law on mining royalties in force in Peru effective July
2004. Royalties for the full year 2005 were US$4.3 million (US$1.9 million for
six months in 2004).

      Total operating expenses. Operating expenses increased by 24.1 percent
from US$53.9 million in 2004 to US$67 million in 2005, due to changes in the
following components:

      (a) Exploration costs in non-operational mining areas increased by 7.5
percent from US$25.9 million in 2004 to US$27.8 million in 2005 due to higher
expenditures in exploration areas, primarily in the La Zanja, Marcapunta and
Poracota projects. In addition, together with our partners, we continue
conducting exploration activities (mainly exploratory diamond drilling) in the
Soras, Los Pircos, Pampa Andino and Trapiche prospects.

      (b) General and administrative expenses increased by 50.4 percent from
US$22.8 million in 2004 to US$34.3 million in 2005. This increase was primarily
due to a US$7.5 million increase in long-term officers' compensation (stock
appreciation rights) from US$0.6 million in 2004 to US$8.1 million in 2005, as a
result of the increase in our stock price from US$23.8 as of December 31, 2004
to US$28.3 as of December 31, 2005.


                                       103



      (c) Selling expenses decreased by 8.2 percent from US$5.2 million in 2004
to US$4.8 million in 2005, due primarily to lower freight transportation
expenses of concentrates from US$3.8 million in 2004 to US$3.6 million in 2005
and the decrease of other related services from US$1.4 million in 2004 to US$1.2
million in 2005.

      Operating income As a result of the foregoing, operating income decreased
by 2.4 percent from US$102.2 million in 2004 to US$99.7 million in 2005.

      Share in affiliated companies. Income from share equity investment in
affiliated companies increased by 48.8 percent, from US$177.4 million in 2004 to
US$264 million in 2005, and is primarily attributed to Yanacocha's higher
profits combined with our increased participation in Cerro Verde:

      (a) Income from our interest in Yanacocha increased by 33.5 percent, from
US$169.1 million in 2004 to US$225.9 million in 2005, due mainly to (i) an
increase in price per ounce realized on gold sales from US$411 per ounce in 2004
to US$448 per ounce in 2005, and (ii) an increase in volume of gold sold from
3.0 million ounces in 2004 to 3.3 million ounces in 2005, offset in part by an
increase in the cost of production per ounce of gold sold from US$147 in 2004 to
US$150 in 2005.

      (b) Our interest in Cerro Verde increased from 9.17 percent in 2004 to
18.30 percent in 2005. This equity increase allows us to exercise significant
influence on Cerro Verde and, accordingly, we have decided to use the equity
method to account for this investment. In 2005, our interest in this investment
amounted to US$38 million, compared to US$8.1 million in 2004. See Note 13 to
the Financial Statements.

      Loss from change in the fair value of derivative instruments increased
53.2 percent from US$17.4 million in 2004 to US$26.6 million in 2005. The
increase in the fair value from derivative operations was due to a 9 percent
increase in gold prices from US$411 as of December 31, 2004 to US$448 as of
December 31, 2005.

      Loss from exposure to inflation. Effective January 1, 2005, adjustment of
financial statements for inflation was suspended pursuant to Resolution
No.031-2004-EF/93.01. As a result, we did not recognize any gain (loss) related
to exposure to inflation during 2005.

      Exchange difference gain (loss). Exchange difference gain (loss) increased
from a loss of US$3.7 million in 2004 to a gain of US$0.4 million in 2005 as a
result of higher exchange rates in 2005 applied to the assets and liabilities
accounts.

      Workers' profit sharing expense. Workers' profit sharing expense decreased
from US$5.4 million in 2004 to US$2.6 million in 2005. Workers' profit sharing
expense is calculated applying a percentage to the taxable income. See "Critical
Accounting Estimates-Deferred Income Tax Asset" under this Item 5 "Operating and
Financial Review and Prospects".

      Income tax expense. Income tax expense decreased from US$29.9 million in
2004 to US$22.8 million in 2005. See "Critical Accounting Estimates-Deferred
Income Tax Asset" under this Item 5 'Operating and Financial Review and
Prospects'.

      Minority interest. Minority interest expense increased 141.8 percent from
US$8.3 million in 2004 to US$20 million in 2005, primarily due to higher profits
from Inversiones Colquijirca S.A. and Chaupiloma.


                                       104



      Net income. As a result of the foregoing, net income increased 39.6
percent from US$206.6 million in 2004 to US$288.4 million in 2005. As a
percentage of net sales, net income was 101.8 percent in 2005, compared with
77.5 percent in 2004.

Liquidity and Capital Resources

      As of December 31, 2006, we had cash and cash equivalents of US$176.6
million, compared to US$96.8 million at December 31, 2005.

      Cash provided by operating activities. Net cash and cash equivalents
provided by operating activities were US$358.8 million in 2006, US$164.1 million
in 2005 and US$208 million in 2004. The increase in net cash flow provided by
operating activities in 2006 compared with 2005 was mainly attributable to:

      (i) purchase of one million gold exchange traded funds (representing
100,000 gold ounces) at an average price of US$68.07 per share;

      (ii) increased collection from customers, from US$284.4 million in 2005 to
US$497.9 million in 2006;

      (iii) increased collection of dividends primarily from Yanacocha, from
US$76.9 million in 2005 to US$209.5 million in 2006;

      (iv) increased collection of royalties from Chaupiloma; owner of the
mining concessions exploited by Yanacocha, from US$40.1 million in 2005 to
US$55.8 million in 2006, due mainly to the increase of the gold price.

      (v) increased payments to suppliers and third parties, from US$124.3
million in 2005 to US$160.4 million in 2006, as a result of a corresponding
increase in the operating activities in the mining units;

      (vi) increased payments of exploration activities, from US$56.9 million in
2005 to US$72 million in 2006, due to higher expenditures in exploration areas,
primarily in our Orcopampa, Caraveli and Recuperada mines and our Tinyaclla, La
Zanja, Los Pircos and Trapiche projects;

      (vii) increased payments to employees, from US$41.6 million in 2005 to
US$49.3 million in 2006, due mainly to the revaluation of the local currency;

      (viii) increased payments of income tax, from US$25.9 million in 2005 to
US$53.3 million in 2006, as a result of increased earnings by us, Colquijirca
and Chaupiloma; and

      (ix) increased payments of royalties, from US$12.8 million in 2005
compared with US$22.7 million in 2006, as a result of increased royalty payments
to the Peruvian government.


                                       105



      Cash provided by operating activities for the Twelve Months Ended December
31, 2005 and 2004. The decrease in net cash flow provided by operating
activities in 2005 compared with 2004 was mainly attributable to:

      (i) decreased collection of dividends primarily from Yanacocha, from
US$121.7 million in 2004 to US$76.9 million in 2005;

      (ii) increased payments to suppliers and third parties, from US$113.5
million in 2004 to US$124.3 million in 2005, as a result of an increase in the
operating activities in the mining units;

      (iii) increased payments of exploration activities, from US$53.5 million
in 2004 to US$56.9 million in 2005, due to higher expenditures in exploration
areas, primarily in the La Zanja, Marcapunta and Poracota projects;

      (iv) increased payments to employees from US$35 million in 2004 to US$41.6
million in 2005, due mainly to payments of US$4.28 related to stock appreciation
rights;

      (v) increased payments of income tax, from US$13 million in 2004 to
US$25.9 million in 2005, as a result of increased earnings by us, Colquijirca
and Chaupiloma; and

      (vi) increased payments of royalties, from US$7.9 million in 2004 to
US$12.8 million in 2005, as a result of increased royalty payments to the
Peruvian government.

      (vii) increased collection from customers, from US$259.8 million in 2004
to US$284.4 million in 2005.

      Cash used in investing activities. Net cash and cash equivalents used in
investing activities were US$202.3 million in 2006, US$174.1 million in 2005 and
US$79.8 million in 2004.

      Cash used in investing activities for the Twelve Months Ended December 31,
2006 and 2005. The increase in net cash flow used in investing activities in
2005 compared with 2006 was mainly attributable to:

      (i) payments of US$62.9 million in conection with time deposits deposited
in banks compare to proceeds of US$7.1 million related to time deposits matured
in 2005;

      (ii) a US$29.6 million increase in purchase of property, plant and
equipment (US$20.5 million in 2005 as compared to US$50.1 million in 2006);
mainly related to the cyanidation project and water treatment in Uchuchachua
mining unit.

      (iii) disbursements of US$40.3 million related to the acquisitions of
structured notes totaling US$40.0 million and fixed investment funds totaling
US$12.0 million off-set by the settlement of variable investment funds by
US$11.3 million;

      (iv) a US$7.3 million increase in development expenditures (US$16.8
million in 2005 compared to US$24.1 million in 2006) mainly related to increased
exploration activities at our Orcopampa and Antapite mines; and

      (v) These increases were partially offset by a decrease of US$125.5
million in payments related to purchase of investments in shares. In 2006, the
Company made payments of US$22.8 mainly related to the acquisition of minority
interest described in note 2 of financial statements compared to disbursements
of US$148.4 related to acquisition of additional shares in Cerro Verde described
in note 13 of financial statements.


                                       106



      Cash used in investing activities for the Twelve Months Ended December 31,
2005 and 2004. The increase in net cash flow used in investing activities in
2005 compared with 2004 was mainly attributable to:

      (i) payments of US$148.4 million in connection with equity investments,
mainly related to the acquisition of Cerro Verde's shares, compared to payments
of US$2.3 million in 2004;

      (ii) a US$5.6 million increase in development expenditures (US$11.2
million in 2004 compared to US$16.8 million in 2005) mainly related to
stepped-up exploration activity at our Orcopampa, Antapite and Shila mines; and

      (iii) These increases were offset by decreases of US$7.1 million in time
deposits and US$11.3 million in the investment fund in 2005, compared with
increases of US$7.0 million and US$10.2 million in 2004, respectively. In
addition, payments from settled derivative instruments were reduced from US$21.4
million in 2004 to US$7.0 million in 2005, mainly due to the effect of the
derivative contracts turned into normal sale contracts.

      Cash used in financing activities. Net cash and cash equivalents used in
financing activities were US$76.8 million in 2006, US$65.3 million in 2005 and
US$72.2 million in 2004.

      Cash used in financing activities for the Twelve Months Ended December 31,
2006 and 2005. The increase in net cash flow used in financing activities in
2006 compared with 2005 was mainly attributable to:

      (i) a US$15.5 million increase in payments of dividends (US$44.3 million
in 2005 as compared to US$59.8 million in 2006);

      (ii) a US$8.4 million increase in payments of dividends to minority
interest shareholders (US$10.7 million in 2005 as compared to US$19.1 in 2006);
and

      (iii) these increases were partially offset by a decrease of US$14.6
million in long term-debt as a result of repayments according to schedule of
maturity.

      Cash used in financing activities for the Twelve Months Ended December 31,
2005 and 2004. The decrease in net cash flow used in financing activities in
2005 compared with 2004 was mainly attributable to:

      (i) lower payments of long-term debt (US$22.4 million in 2004 compared to
US$14.7 million in 2005); and

      (ii) increased bank loans of US$3.8 million, compared with payments of
US$3.0 million in 2004. This reduction of cash used in financing activities was
mainly offset by increased payments of dividends (US$44.3 million in 2005
compared to US$40.6 million in 2004).

Exploration Costs; Capital Expenditures

      Total capital expenditures and exploration costs for 2007 and 2008
(excluding exploration costs at our principal mines, which are included as part
of their cost of production) are estimated to be approximately US$110.8 million
and US$116.3 million, respectively. These budgeted expenditures include the
following projects (i) the deepening of the Carmen and Socorro mines at
Uchucchacua, which includes the construction of ramp 760 at the Carmen mine, the
construction of ramp 626 at the Socorro mine and the deepening of the master
shaft at the Carmen mine, (ii) the deepening of the Nazareno and Prometida mines
and the Prometida auxiliary shaft at Orcopampa and (iii) the expansion of a
tailing dam to increase capacity at the Orcopampa and Antapite mines. During
2008, we expect that our principal capital expenditures will relate to the
construction of the Poracota plant.


                                       107



      See "Item 4. Information on the Company--The Company--History--Capital
Expenditures". Exploration costs at locations other than our principal mines are
estimated to be approximately US$42.9 million in 2007 and US$35.6 million in
2008. Exploration costs, including such costs at our principal mines are
estimated to be approximately US$56.0 million. These exploration costs include
all of the costs associated with exploration activities such as drilling,
equipment and geological and metallurgical testing. Exploration expenditures for
2007 and 2008 relate primarily to the further evaluation of the following mining
units and projects La Zanja, Tantahuatay, Los Pircos, Mallay, Pampa Andino,
Hueso Sur, Tinyaclla, El Milagro, Trapiche, Poracota, Soras and others. See
"Item 4. Information on the Company--The Company--Business
Overview--Exploration".

      We undertook EVAPs filed with the Peruvian government in March 1995 to
make capital expenditures in respect of environmental projects. In 2004, 2005
and 2006, we incurred capital expenditures in connection with these
environmental projects of approximately US$1.4 million, US$2.0 million and
US$2.4, respectively. We expect to incur approximately US$2.91 million in 2007
and US$3.20 million in 2008 in capital expenditures relating to environmental
projects. Our capital spending plans under the PAMAs were approved by the
Peruvian government. The development of more stringent environmental protection
programs in Peru could impose additional costs and other constraints on our
operations. See "Item 4. Information on the Company--The Company--Business
Overview--Regulatory Framework--Environmental Matters".

We expect that we will meet our working capital, capital expenditure and
exploration expense requirements for the next several years from internally
generated funds, cash on hand and dividends received from our investments in
non-consolidated mining operations, including Yanacocha. Additional financing,
if necessary for the construction of any project, is expected to be obtained
from borrowings under bank loans and the issuance of debt securities. There can
be no assurance, however, that sufficient funding will be available to us from
the internal or external sources to finance any future capital expenditure
program, or that external funding will be available to us for such purpose on
terms or at prices favorable to us. A very significant decline in the prices of
gold and silver would be reasonably likely to affect the availability of such
sources of liquidity. In addition, if we fund future capital expenditures from
internal cash flow, there may be less funds available for the payment of
dividends.

Recent Accounting Pronouncements (U.S. GAAP/Peruvian GAAP)

Income taxes

      In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" ("FIN 48"), an interpretation of FASB Statement No
109, "Accounting for Income Taxes". FIN 48 prescribes a recognition threshold
and measurement attribute for the financial statement recognition and
measurement of a tax position, if that position is more likely than not to be
sustained on audit based on the technical merits of the position. FIN 48 also
provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods and disclosure. The provisions of FIN 48 are
effective beginning January 1, 2007, with the cumulative effect of the change in
accounting principle recorded as an adjustment to the opening balance of
retained earnings, goodwill, deferred income taxes and income taxes payable in
the consolidated balance sheet. We are currently evaluating the impact of
adopting FIN 48 on our consolidated financial position, results of operations
and disclosures.


                                       108



Fair Value Measurements

      In September 2006, the FASB issued FASB Statement No. 157, "Fair Value
Measurement" ("FAS 157"). FAS 157 defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. The provisions of FAS 157 are
effective for the fiscal year beginning January 1, 2008. We are currently
evaluating the impact that the adoption of this statement will have on our
consolidated financial position, results of operations and disclosures.

                                    YANACOCHA

Introduction

      The following discussion should be read in conjunction with the Yanacocha
Financial Statements as of December 31, 2005 and 2006 and for the years ended
December 31, 2004, 2005 and 2006 and the related notes thereto included
elsewhere in this Annual Report. The Yanacocha Financial Statements are prepared
and presented in accordance with U.S. GAAP. Note 20 to the Yanacocha Financial
Statements provides a description of the principal differences between U.S. GAAP
and Peruvian GAAP, as such differences relate to Yanacocha, and provides a
reconciliation to Peruvian GAAP of Yanacocha's net income for the years ended
December 31, 2004, 2005 and 2006 and partners' equity as of December 31, 2005
and 2006. Yanacocha presents its financial statements in U.S. Dollars.

Operating Results

Overview

      Yanacocha, the largest gold producer in Latin America, was established in
Peru in January 1992, and commenced production activities in August 1993.
Yanacocha's operations are located in the Andes mountains in Northern Peru, in
the area of Cajamarca which is located approximately 900 kilometers north of
Lima and north of the City of Cajamarca, at an altitude of 4,000 meters above
sea level. Yanacocha is 51.35 percent owned by Newmont Mining, through its
wholly owned subsidiary Newmont Second, 43.65 percent by us through our wholly
owned subsidiary Condesa, and 5 percent by IFC. Yanacocha is managed by Newmont
Peru S.R.L. See "Item 4. Information on the Company--Yanacocha--Management of
Yanacocha--General Manager/Management Agreement". On October 31, 1999, pursuant
to a public deed, Yanacocha changed its legal structure from a corporation to a
partnership, changing its name from "Minera Yanacocha S.A." to "Minera Yanacocha
S.R.L." As a result, Yanacocha (i) cannot have more than 20 partners; (ii) its
capital stock is represented in participations; (iii) is not required to
maintain a legal reserve (see Note 16 to Yanacocha Financial Statements); and
(iv) will not receive a different income tax treatment under Peruvian law than
it did as a corporation.


                                       109



      The table below highlights key financial and operating results:

                 Summary of Financial and Operating Performance

                                            Year Ending December 31,
                                       ---------------------------------
                                          2006        2005        2004
                                       ---------   ---------   ---------
Gold Sales (US$000)                    1,543,212   1,490,402   1,249,882
Gold ounces sold                       2,572,298   3,327,515   3,039,873
Average gold price received (US$/oz)         600         448         411
Costs applicable to sales (US$/oz)         200.6       152.6       148.3
Other expenses (US$000)                    6,135       6,669      60,790
Net income (US$000)                      525,448     525,474     390,304
Dividends Paid (US$000)                  480,000     180,000     280,000

      Gold sales.

      Gold sales increased 4 percent, or US$52.8 million, from 2005 to 2006, due
principally to a higher average realized price of US$600 per ounce in 2006 as
compared to US$448 per ounce in 2005, which was partially offset by a lower
volume of gold sold, 2.57 million ounces in 2006 as compared to 3.33 million
ounces in 2005, due to lower production in 2006 as a result of lower leach tons
placed, a higher waste to ore ratio and lower placed ore grade. Yanacocha has
not engaged in gold price hedging activities, such as forward sales or option
contracts, to minimize its exposure to fluctuations in the price of gold.

      Costs applicable to sales.

      Costs applicable to sales increased 2 percent from 2005 to 2006, due
primarily to higher operating costs mainly attributed to the increase in cost of
diesel, consumption of cyanide and maintenance supplies, and personnel costs, as
well as increased royalties and workers profit participation expenses, partially
off-set by higher silver by-product credits and increased capitalized cost in
leach pad and precious metal inventories. Costs applicable to sales include: (i)
operating costs, consisting primarily of direct production costs such as mining
and treatment of the ore, which are the most significant components of cost
applicable to sales, (ii) employee profit sharing of 8 percent of pre-tax
profits calculated in accordance with Peruvian GAAP, (iii) royalties of 3
percent of the quarterly net sale value of all gold and silver extracted from
the mining concessions payable to Chaupiloma after deducting refinery and
transportation costs, (iv) management fees payable to Newmont Peru, the operator
of Yanacocha, (v) selling expenses and (vi) other costs.

      Other expenses.

      Other expenses increased by 812 percent from 2005 to 2006, due mainly to
significant expenses recorded during 2006 that were not recorded during 2005,
including a US$21.8 million provision for the negotiated payment, a US$14.9
million charge related to our employee profit sharing plan, a US$9.9 million
accrual related to La Quinua leach pad repair, US$5.1 million for expenses
related to mercury spill litigation, and US$4.0 million related to damages
resulting from the sabotage of treatment water pipes.

      Income tax.

      Yanacocha's financial and operating results were impacted by a tax expense
of US$238.3 million in 2006, as compared to US$235.4 million in 2005, reflecting
its increased profitability.

      Dividends.

      As of December 31, 2006, Yanacocha has paid cumulative dividends of
US$1,768.2 million to partners and has reserved US$396.1 million for two
reinvestment programs.


                                       110



      Forward-looking statements.

      Certain key factors will affect Yanacocha's future financial and operating
results. These include, but are not limited to fluctuations in the price of
gold.

      Yanacocha expects 2007 gold sales to be 1.56 million ounces at costs
applicable to sales per ounce of approximately US$345 per ounce. Sales from 2008
through 2011 are expected to average approximately 1.56 million ounces at costs
applicable to sales of approximately US$346 per ounce, with actual gold sales
and costs being determined by, among other factors, further mine plan
optimization efforts, the discovery and development of additional oxide
deposits, and the development of Conga, currently scheduled to commence
production in 2010.

Critical Accounting Policies

      Yanacocha has furnished us with a discussion of its critical accounting
policies or methods used in the preparation of its financial statements.
Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties and could potentially impact results
under different assumptions and conditions. Note 2 to the Yanacocha Financial
Statements includes a summary of the significant accounting policies and methods
used in the preparation of Yanacocha's Financial Statements. The following is a
brief discussion of the identified critical accounting policies and the
estimates and judgments made by Yanacocha.

Stockpiles, Ore on Leach Pads and Inventories

      As described below, costs that are incurred in, or benefit, the productive
process are accumulated as stockpiles, ore on leach pads and inventories.
Stockpiles, ore on leach pads and inventories are carried at the lower of
average cost or net realizable value. Net realizable value represents the
estimated future sales price of the product based on prevailing and long-term
metals prices, less the estimated costs to complete production and sell the
product. Write-downs of stockpiles, ore on leach pads and inventories resulting
from net realizable value impairments are reported as a component of costs
applicable to sales. The current portion of stockpiles, ore on leach pads and
inventories is determined based on the expected amounts to be processed within
the next twelve months. Stockpiles, ore on leach pads and inventories not
expected to be processed within the next twelve months are classified as
long-term. The major classifications are as follows:

Stockpiles.

      Stockpiles represent ore that has been mined and is available for further
processing. Stockpiles are measured by estimating the number of tons added and
removed from the stockpile, the number of contained ounces (based on assay data)
and the estimated metallurgical recovery rates (based on the expected processing
method). Stockpile ore tonnages are verified by periodic surveys. Costs are
allocated to a stockpile based on relative values of material stockpiled and
processed using current mining costs incurred up to the point of stockpiling the
ore, including applicable overhead, depreciation, depletion and amortization
relating to mining operations, and removed at each stockpile's average cost per
recoverable unit.

Ore on Leach Pads.

      The recovery of gold from certain oxide ores is achieved through heap
leaching. Under this method, ore is placed on leach pads where it is treated
with a chemical solution, which dissolves the gold contained in the ore. The
resulting "pregnant" solution is further processed in a plant where the gold is
recovered. For accounting purposes, costs are added to ore on leach pads based
on current mining costs, including applicable depreciation, depletion and
amortization relating to mining operations. Costs are removed from ore on leach
pads as ounces are recovered based on the average cost per recoverable ounce of
gold on the leach pad.


                                       111



      The estimates of recoverable gold on the leach pads are calculated from
the quantities of ore placed on the pads (measured tons added to the leach
pads), the grade of ore placed on the leach pads (based on assay data) and a
recovery percentage (based on ore type). In general, the leach pads recover
approximately 50 percent to 95 percent of the ultimate recoverable ounces in the
first year of leaching, declining each year thereafter until the leaching
process is complete.

      Although the quantities of recoverable gold placed on the leach pads are
reconciled by comparing the grades of ore placed on the pads to the quantities
of gold actually recovered (metallurgical balancing), the nature of the leaching
process inherently limits the ability to precisely monitor inventory levels. As
a result, the metallurgical balancing process is constantly monitored and
estimates are refined based on actual results over time. Historically,
Yanacocha's operating results have not been materially impacted by variations
between the estimated and actual recoverable quantities of gold on its leach
pads. At December 31, 2006, the weighted-average cost per recoverable ounce of
gold on leach pads was US$271 per ounce (unaudited). Variations between actual
and estimated quantities resulting from changes in assumptions and estimates
that do not result in write-downs to net realizable value are accounted for on a
prospective basis.

      The ultimate recovery of gold from a leach pad will not be known until the
leaching process is concluded. Based on current mine plans excluding any Minas
Conga production, Yanacocha expects to place the last ton of ore on its leach
pads in 2014. Including the estimated time required for residual leaching,
rinsing and reclamation activities, Yanacocha expects that its leaching
operations will terminate within approximately six years following the date that
the last ton of ore is placed on the leach pad.

      The current portion of leach pads is determined based on estimates of the
quantities of gold at the balance sheet date that is expected to be recovered
during the next twelve months.

In-process Inventory

      In-process inventories represent materials that are currently in the
process of being converted to a saleable product. Yanacocha's conversion process
is leach in-circuit. In-process material is measured based on assays of the
material fed into the process and the projected recoveries of the respective
plants. In-process inventories are valued at the average cost of the material
fed into the process attributable to the source material coming from the mines,
stockpiles and/or leach pads plus the in-process conversion costs, including
applicable depreciation relating to the process facilities incurred to that
point in the process.

Amortization of Property, Plant and Mine Development

      Amortization charges for mine development costs are calculated using the
units of production method and are based on Yanacocha's current gold production
as a percentage of total expected gold production over the life of Yanacocha's
mines. The life of the mines is estimated by Yanacocha's geology department
using interpretations of mineral reserves, as determined in accordance with the
SEC's Industry Guide 7. The estimate of the total expected future life of
Yanacocha's mines could be materially different from the actual amount of gold
mined in the future and the actual life of the mines due to changes in the
factors used in determining Yanacocha's mineral reserves, such as the gold price
and operating costs. Any change in management's estimate of the total expected
future life of Yanacocha's mines would impact the amortization charge recorded
in Yanacocha's financial statements.


                                       112



Asset Impairment

      Yanacocha reviews and evaluates its long-lived assets for impairment when
events or changes in circumstances indicate that the related carrying amounts
may not be recoverable. An impairment is considered to exist if the total
estimated future cash flows on an undiscounted basis are less than the carrying
amount of the assets. An impairment loss is measured and recorded based on
discounted estimated future cash flows. Future cash flows are estimated based on
quantities of recoverable minerals, expected gold and other commodity prices
(considering current and historical prices, price trends and related factors),
production levels and cash costs of production and capital, all based on
life-of-mine plans. Existing proven and probable reserves and value beyond
proven and probable reserves, including mineralization other than proven and
probable and other material that is not part of the measured, indicated or
inferred resource base, are included when determining the fair value of mine
site reporting units at acquisition and, subsequently, in determining whether
the assets are impaired. The term "recoverable minerals" refers to the estimated
amount of gold and other minerals that will be obtained from proven and probable
reserves and all related exploration stage mineral interests after taking into
account losses during ore processing and treatment. In estimating future cash
flows, assets are grouped at the lowest level for which there are identifiable
cash flows that are largely independent of cash flows from other asset groups.
Yanacocha's estimates of future cash flows are based on numerous assumptions and
it is possible that actual future cash flows will be significantly different
than the estimates, as actual future quantities of recoverable minerals, gold
and other commodity prices, production levels and operating costs of production
and capital are each subject to significant risks and uncertainties.

Reclamation and Remediation Costs (Asset Retirement Obligations)

      Reclamation costs are allocated to expense over the life of the related
assets and are periodically adjusted to reflect the changes in the estimated
present value resulting from the passage of time and revisions to the estimates
of either the timing or amount of the reclamation or abandonment costs. The
asset retirement obligation is based on when the spending for an existing
environmental disturbance and activity to date will occur. Yanacocha reviews, on
an annual basis, unless otherwise deemed necessary, the asset retirement
obligation at each mine site in accordance with FAS No. 143, "Accounting for
Asset Retirement Obligations".

Results of Operations for the Twelve Months Ended December 31, 2006 and 2005

Sales

      Sales increased 4 percent from US$1,490.4 million in 2005 to US$1,543.2
million in 2006, due primarily to an increase in the average price per ounce of
gold from US$448 in 2005 to US$600 in 2006, partially offset by decreased
production, which resulted in a 23 percent decrease in the quantity of gold
sold, from 3,327,515 ounces in 2005 to 2,572,298 ounces in 2006. Production by
mine was as follows:

Mine             2006        2005
-----------   ---------   ---------
               Ounces       Ounces
Yanacocha     1,035,794   1,198,161
La Quinua     1,246,058   1,674,329
Carachugo       308,600     421,967
Maqui Maqui      21,747      38,631
              ---------   ---------
              2,612,199   3,333,088
              =========   =========


                                       113



      The decrease in ounces of gold produced in 2006 as compared to 2005 was
mainly attributed to lower leach tons placed, 107.5 million dry metric tons and
133.0 million dry metric tons for the periods ended December 31, 2006 and 2005,
respectively, a higher waste to ore ratio, 0.81 grams per ton and 0.50 grams per
ton for the periods ended December 31, 2006 and 2005, respectively, and lower
placed ore grade, 0.88 grams per ton and 0.95 grams per ton for the periods
ended December 31, 2006 and 2005, respectively.

Costs applicable to sales

      Costs applicable to sales increased 2 percent from US$507.8 million in
2005 to US$515.9 million in 2006, due primarily to higher operating costs mainly
attributed to an increase in the cost of diesel, higher consumption of cyanide
and personnel costs, as well as increased royalties and employee profit sharing
expenses, partially off-set by higher by-product credits and increased
capitalized cost in a leach pad and precious metal inventories. Costs applicable
to sales per ounce of gold increased 31 percent from US$152.6 in 2005 to
US$200.6 in 2006, primarily as a result of a higher operating cost per ounce of
US$162 in 2006 as compared to US$122 in 2005, a higher royalty expense per ounce
of US$19 in 2006 as compared to US$14 in 2005, and higher employee profit
sharing costs per ounce of US$30 in 2006 as compared to US$22 in 2005, partially
off-set by an increased by-product metal sales credit per ounce of US$16 as
compared to US$10 in 2005, due to an increase in silver ounces sold.

      Operating costs increased from US$428.2 million in 2005 to US$485.2
million in 2006. Operating costs consist primarily of drilling, blasting,
loading and hauling costs which increased in 2006 primarily as a result of an
increase in fuel price from an average of US$2.57 per gallon in 2005 to US$2.71
per gallon in 2006. Additional increases in operating costs resulted from the
greater consumption of critical items such as drills, nitrate, tires, cyanide
and lime (from increase tonnage mined and treated), electricity, increase of
personnel costs related to new employees hired (as part of the self performance
program) and greater expenses on donations and charitable contributions as a
part of the social responsibility plan.

      The increase in the royalty expense paid to S.M.R.L. Chaupiloma Dos de
Cajamarca (equivalent to 3 percent of net sales) was directly related to the
increase in sales revenues. Royalty expense was US$45.6 million in 2005 as
compared to US$48.5 million in 2006. Workers' profit participation expense is
calculated based on taxable net income and in accordance with Peruvian labor
legislation. See "Item 4. Information on the Company--Yanacocha--Employees." The
increase in workers' profit participation expense is directly related to the
increase of taxable net income. Workers' profit participation was US$68.8
million in 2005 and US$76.0 million in 2006.

Depreciation, depletion and amortization

      Depreciation, depletion and amortization decreased 11 percent from
US$193.6 million in 2005 to US$171.7 million in 2006. This decrease was
attributable principally to the increase in the volume of inventories, which
resulted in a higher amount of capitalized depreciation and a lower amount
charged to the results of the year and higher depreciation expense in connection
with its asset retirement cost as a result of the adoption of SFAS No. 143 from
US$7.1 million in 2005 to US$11.9 million in 2006.

Exploration Expenses

      Exploration costs decreased US$0.6 million from US$32.9 million in 2005 to
US$32.3 million in 2006.


                                       114



Other expenses

      Other expenses increased in 2006 to US$60.8 million, primarily due to
US$21.8 million related to a new mining payment negotiated with the Peruvian
government intended to support government efforts to alleviate poverty and
US$14.9 million related to an employee profit sharing plan accrual as a result
of the different criteria established by the applicable law and its regulations.

      Peruvian mining companies, represented by the Sociedad Nacional de
Mineria, Petroleo y Energia, agreed to a mining payment equivalent to 3.75
percent of net income after taxes. On December 21, 2006, the Peruvian Government
issued Supreme Decree No. 071-2006-EM, which regulates the conditions under
which the negotiated payment will be paid by Peruvian mining companies. The
payment amounts to 3.75 percent of Peruvian net income after income tax,
including 2.75 percent to be paid to a local mining fund and 1 percent to be
paid to a regional mining fund. This payment is payable from 2006 through 2010,
contingent on the price of gold.

      Yanacocha will be released from paying the negotiated payment if Yanacocha
has to undertake major obligations arising from new taxes or from the
modification of existing taxes, and in particular taxes related to mining
activities. Yanacocha also will be released if the gold price decreases below
the average price for the prior year set by the London Bullion Market
Association. The negotiated payment will recommence if gold prices subsequently
rise above the reference price.

      In 1998, the Peruvian Government issued additional regulations regarding
the calculation of the workers participation, which limited to 18 monthly
salaries the total amount to which each employee is entitled. However, there is
a difference in the criteria for the calculation between the law and its
regulations. Yanacocha followed the criteria established by the law in
determining the amount to be paid to its employees since 1998. As of December
31, 2006, Yanacocha recorded a charge of US$14.9 million to cover any payment
derived from the different criteria established to make these payments by both
the law and the regulation.

Interest expense and other income

      Interest expense and other income increased 93 percent to US$6.8 million
in 2006 from US$3.5 million in 2005. This increase was due primarily to
increased interest income from an increase in average cash available in banks
with higher interest rates during 2006.

Income tax provision

      The increase in income tax provision was directly related to Yanacocha's
increase in taxable income. The net effective tax rate was 30.9 percent in 2005
compared to 31.2 percent in 2006. The statutory rate for both years was a blend
of 30 percent. The factors that most significantly impacted Yanacocha's net
effective tax rate were related to non-deductible expenses and penalties.

      The uniform income tax rate in Peru was 27 percent of taxable income in
2003. Effective January 1, 2004, the income tax rate in Peru is 30 percent of
taxable income (Yanacocha, as explained below, has a stabilized corporate tax
rate of 30 percent, excluding income from the La Quinua mine which had a tax
rate of 27 percent until December 31, 2003 and 29 percent since January 1, 2004)
and for financial statement purposes is calculated for Yanacocha in accordance
with U.S. GAAP. Pursuant to Supreme Decree No. 027-98-EF, mining companies can
obtain a tax benefit in the form of an investment credit, by effectively
reinvesting non-distributed earnings into capital expansion projects that
increase Yanacocha's productivity. This investment credit is based on 80 percent
of amounts reinvested and is obtained by application to and approval by the MEM.


                                       115



      Yanacocha has entered into Mining Law Stabilization Agreements under the
General Mining Law with the Peruvian government. A Mining Law Stabilization
Agreement is a standardized agreement prepared by the MEM, the Ministry of
Economy and Finance, the Central Bank and other Peruvian governmental
ministries. Such agreements (i) provide stabilized corporate tax rates, (ii)
grant the ability to obtain VAT credit, (iii) provide full access to foreign
currency and guarantee treatment in all foreign exchange matters as is given to
Peruvian nationals, (iv) protect against foreign exchange controls and (v) grant
the right to freely dispose of and export mineral products. Yanacocha has
entered into such agreements with regard to the following mines: Carachugo/San
Jose, Maqui Maqui, Cerro Yanacocha and La Quinua. Pursuant to these agreements,
the income tax rate in Peru is 30 percent of taxable income, excluding income
from the La Quinua mine which had a tax rate of 27 percent until December 31,
2003 and 29 percent since January 1, 2004.

Net Income

      As a consequence of the foregoing, net income decreased by US$0.1 million
from US$525.5 million in 2005 to US$525.4 million in 2006. As a percent of
sales, net income decreased from 35 percent in 2005 to 34 percent in 2006.

Liquidity and Capital Resources

      At December 31, 2006, Yanacocha had cash and cash equivalents of US$379.9
million, substantially all of which were held in U.S. Dollars, as compared to
US$295.5 million at December 31, 2005.

Cash provided by operating activities

      Yanacocha's operations generated a net cash flow of US$637.2 million in
2006, US$665.4 million in 2005 and US$545.0 million in 2004. The decrease in net
cash flow provided by operating activities in 2006 was primarily attributable to
increased operating costs, higher levels of materials and supplies inventories,
lower depletion, depreciation and amortization expenses and higher income tax
pre-payments. The increase in net cash flow provided by operating activities in
2005 is primarily attributable to higher sales revenues, partially offset by
increased operating costs and higher level of materials and supplies
inventories. The increase in net cash flow provided by operating activities in
2004 was primarily attributable to the increase in production and sales of gold,
partially off-set by higher costs applicable to sales and income tax
pre-payments.

Cash used in investing activities

      Net cash used in investing activities was US$268.4 million in 2006,
US$223.6 million in 2005 and US$228.2 million in 2004. Investing activities in
2006 consisted primarily of US$157.8 million for mine and leach pad expansions
of Carachugo (stage 10) and La Quinua (stage 6), US$9.3 million for
environmental site and regional water management projects, US$11.9 million for
mining equipment, US$44.8 million for the Yanacocha gold mill facility, US$11.1
million for the Conga project and US$32.7 million for work related to other
ongoing expansions. In 2005, investing activities consisted primarily US$56.0
million for capital expenditures associated with the expansions of the La Quinua
(stages 5 and 6), Cerro Yanacocha (stage 7) and Carachugo (stage 10) leach pads,
US$23.9 million for mine development of Chaquicocha, Cerro Yanacocha and La
Quinua, US$30.2 million for new mine equipment and US$12.0 million for
environmental projects. In addition, Yanacocha invested US$17.4 million in
developing the Minas Conga project. In 2004, investing activities consisted
primarily of capital expenditures associated with the expansions of the La
Quinua (stage 4) and Cerro Yanacocha (stage 6) leach pads. Yanacocha invested
US$22.2 million and US$14.5 million, respectively, in 2004 for these projects.
In addition, Yanacocha invested US$13.1 million in the construction of the new
carbon column plant and stripping circuit for Carachugo mine, US$36.9 million in
new mining equipment, US$20.4 for environmental and regional water management
projects and the remaining balance in other ongoing expansion work.


                                       116



Cash used in financing activities

      Net cash used in financing activities was US$284.4 million in 2006,
US$216.1 million in 2005 and US$293.4 million in 2004. Financing activities in
2006 consisted primarily of dividends of US$480 million distributed to partners,
partially off-set by proceeds received from debt of US$200 million. In 2005,
financing activities consisted of the repayment of US$34.2 million of long-term
debt and dividends of US$180 million distributed to partners. In 2004, financing
activities consisted basically of the repayments of long-term debt of US$95.5
million and dividends distributed to partners of US$280 million, slightly
off-set by proceeds received from debt of US$65.5 million.

Exploration Costs; Capital Expenditures

      Exploration

      Yanacocha's basic and advanced exploration costs during the period from
1992 through 2006 were financed with a combination of internally generated
funds, advances from partners, loans from DEG and IFC and proceeds from the
Yanacocha Receivables Securitization. See Note 11 to the Yanacocha Financial
Statements. During 2004, 2005 and 2006, Yanacocha incurred US$35.2 million,
US$32.9 million and US$32.3, respectively, in exploration costs. During 2007,
Yanacocha plans to spend approximately US$33.4 million on exploration. These
exploration costs include all of the costs associated with exploration
activities such as drilling services (which are subcontracted), geologists and
metallurgical testing. See "Item 4. Information on the
Company--Yanacocha--Exploration."

      Capital Expenditures

      Yanacocha's capital expenditures from its formation in 1992 through 2006
were financed with a combination of internally generated funds, advances from
partners, loans from DEG and IFC and proceeds from the Yanacocha Receivables
Securitization (see Note 11 to the Yanacocha Financial Statements). Such capital
expenditures have related principally to the construction of the Carachugo,
Maqui Maqui, San Jose, Cerro Yanacocha and La Quinua mining operations, the
construction of the two plants at Carachugo and Yanacocha that include a leach
solution processing facility and a smelter at each plant, the construction of
four carbon column plants, at Cerro Yanacocha and La Quinua, the acquisition of
both new and used mining equipment, the construction of two dams, the
construction of one agglomeration plant at La Quinua, the construction of a gold
mill facility at Yanacocha and the expansion of the leach pads for the
Carachugo, Maqui Maqui, Cerro Yanacocha and La Quinua mining operations.
Yanacocha's capital expenditures from its formation through December 31, 2006
totaled approximately US$2,134 million. Yanacocha anticipates that its capital
expenditures for 2007 will be approximately US$355 million, in connection with
the Yanacocha gold mill facility, the Minas Conga project, construction of an
alternate road to the coast of Peru, the expansion of the La Quinua stage 6 and
the Carachugo stages 10 and 11 leach pads, the construction of Yanacocha stage 5
leach pad, construction of the AWTP plant at La Quinua, and the acquisition of
real property, heavy mining equipment and various other equipment.


                                       117



Research and Development

      Yanacocha is a mining exploration and production company and does not
engage in research and development activities.

Trend Information

The Company's Trend Information

      Other than as disclosed in this Annual Report, we are not aware of any
trends, uncertainties, demands, commitments or events which are reasonably
likely to have a material effect upon our net sales or revenues, income from
continuing operations, profitability, liquidity or capital resources, or that
would cause reported financial information to be not necessarily indicative of
future operating results or financial condition.

      For our exploration activities, there is no production, sales or inventory
in a conventional sense. Our financial success is dependent upon the extent to
which we are capable of discovering mineralization and the economic viability of
exploration properties. The construction and operation of such properties may
take years to complete and the resulting income, if any, cannot be determined
with certainty. Further, the sales value of mineralization discovered by us is
largely dependent upon factors beyond our control, including the market value at
any given time of the metals produced.

Yanacocha's Trend Information

      Other than as disclosed in this Annual Report, Yanacocha has informed us
that it is not aware of any trends, uncertainties, demands, commitments or
events which are reasonably likely to have a material effect upon Yanacocha's
net sales or revenues, income from continuing operations, profitability,
liquidity or capital resources, or that would cause reported financial
information to not necessarily be indicative of future operating results or
financial condition.

Off-Balance Sheet Arrangements

Our Off-Balance Sheet Information

      There are no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.

Yanacocha's Off-balance Sheet Information

      There are no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on Yanacocha's financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
investors.


                                       118



Tabular Disclosure of Contractual Obligations

Our Contractual Obligations

      The following table shows our contractual obligations as of December 31,
2006:

<TABLE>
<CAPTION>
                                                Payments Due By Period (US$ in millions)
                                                ----------------------------------------
                                                   Less than    1-3    4-5   After 5
                                        Total        1 year    years  years   years
                                        -----      ----------  -----  -----  -------
<S>                                      <C>          <C>        <C>   <C>     <C>
Long-Term Debt(*)....................    10.0         10.0      --     --      --
Total Contractual Cash Obligations...    10.0         10.0      --     --      --
</TABLE>

----------
(*)   Represents a US$10.0 million short-term bank loan outstanding as of
      December 31, 2006, which was converted into long-term debt payable over
      five years in June 2007.

      As of December 31, 2006, we had no other commercial commitments.

Yanacocha's Contractual Obligations

      The following table shows Yanacocha's contractual obligations as of
December 31, 2006:

<TABLE>
<CAPTION>
                                                             Payments Due By Period
                                                        (in thousands of U.S. Dollars)
                                                     -------------------------------------
                                                     Less than    1-3       4-5    After 5
                                            Total      year      years     years    years
                                           -------   ---------  ------    ------   --------
<S>                                        <C>        <C>       <C>       <C>       <C>
Long-Term Debt .........................   200,000    10,345    49,379    59,586    80,690
Capital Lease Obligations ..............        --        --        --        --        --
Reclamation and Remediation Liability      140,832     4,724    12,566     8,443   115,099
Open purchase orders ...................     5,635     5,635        --        --        --
Other Long-Term Obligations (*) ........    78,657    53,228    15,290    10,139        --

Total Contractual Cash Obligations .....   425,124    73,932    77,235    78,168   195,789
</TABLE>

----------
(*)   Other long-term contracts include deferred workers compensation
      obligations, power and fuel supply contract commitments and fuel and
      inventory obligations.

ITEM 6. Directors, Senior Management and Employees

Board of Directors and Senior Management

      Our Board of Directors is responsible for policy decisions and our overall
direction and other corporate matters in accordance with our By-laws and the
Peruvian Companies Law. Our executive officers oversee our business and are
responsible for the execution of the policy decisions of the Board of Directors.
The Board of Directors, which must be comprised of seven members, is elected at
the annual obligatory meeting of shareholders, or the Annual Obligatory Meeting
for a three year term. The last election took place on March 25, 2005, and the
next election is scheduled for March 2008. See Item 10. "Additional
Information--Memorandum and Articles of Association".


                                       119



               Our current directors and executive officers are as follows:

<TABLE>
<CAPTION>
                                                                                     Date First    Current
Name                              Age                     Position                   Appointed     Term Ends
-------------------------------   ---   ------------------------------------------   ----------  -----------
<S>                                <C>                                                  <C>      <C>
Directors
  Alberto Benavides(1).........    86   Chairman of the Board                           1980      March 2008
  Norman Anderson..............    76   Director                                        1994      March 2008
  Luis Coleridge...............    70   Director                                        2000      March 2008
  Aubrey Laurence Paverd.......    68   Director                                        2002      March 2008
  Felipe Ortiz-de-Zevallos.....    59   Director                                        2003      March 2008
  Roque Benavides(2)...........    52   Director                                        2004      March 2008
  German Suarez(3).............    65   Director                                        2005      March 2008

Executive Officers
  Roque Benavides(1)...........    52   President and Chief Executive Officer           2001
  Carlos E. Galvez ............    54   Vice President and Chief Financial Officer      2001
  Raul Benavides(1)............    51   Business Development Vice President             1997
  Francois Muths...............    55   Operations Vice President                       1992
  Jose Miguel Morales(1).......    61   General Counsel                                 1970
  Cesar E. Vidal...............    52   Explorations Vice President                     1996
  Carlos Humberto Rodriguez....    62   Comptroller                                     1984
</TABLE>

---------
(1)   Alberto Benavides de la Quintana is the father of Roque Benavides Ganoza
      and Raul Benavides Ganoza, the father-in-law of Jose Miguel Morales Dasso
      and the brother of Jorge Benavides de la Quintana.

(2)   Roque Benavides Ganoza replaced Jorge Benavides de la Quintana, who was a
      Director until July 2004

(3)   German Suarez replaced Carlos Plenge Washburn, who was Director until
      March 2005.

      Set forth below is biographical information concerning members of our
management:

      Alberto Benavides, Founder, Chairman and member of the Compensation
Committee and Nominating/Corporate Governance Committee. Mr. Alberto Benavides
served as our Chief Executive Officer from 1953 to February 2001 and as a
director from 1953 to 1964 and from 1971 to the present, serving as Chairman
since 1980. He has been Vice Chairman of Yanacocha's Executive Committee since
1992. He also has served as a director of numerous other mining and
mining-related companies that are our subsidiaries. He spent 17 years (1944-1952
and 1964-1971) with Cerro de Pasco Corporation, a Delaware corporation engaged
in the mining business that has since been expropriated by the Peruvian
government and renamed Centromin Peru, where he was in various management and
executive positions involved in the exploration and geology of mines in Peru,
including serving as President from 1964 to 1971. He served as President of the
Privatization Committee for Centromin from 1992 to 1994 and as director of the
Banco Central de Reserva del Peru (the Central Reserve Bank of Peru) from 1992
to 2000. He received a B.S. degree in Engineering from the Universidad Nacional
de Ingenieria (National University of Engineering, or UNI) in Peru in 1941 and
an M.S. in Geology from Harvard University in 1944 and completed the Advanced
Management Program at the Harvard Business School in 1971.

      Norman Anderson, Director and member of the Nominating/Corporate
Governance Committee. Mr. Anderson has been a director since 1994. He is
currently President of Anderson & Associates, a Canadian consulting firm. In
1991, he was elected Chairman of the Board of International Corona Corporation,
a Canadian gold mining company that has since merged with a wholly owned
subsidiary of Homestake Company, a U.S. mining company. From 1980 to 1986, he
was Chief Executive Officer and Chairman of the Board of Teck Cominco. He was
employed from 1970 to 1973 by AMAX Inc., a company that has since merged with
Cyprus Minerals Company to create Cyprus Amax, and from 1953 to 1970 by Teck
Cominco. He is currently a Chairman and Chief Executive Officer of EuroZink
Mining Corporation and is a director or officer of other minor mining companies.
Mr. Anderson graduated from the University of Manitoba with a B.S. in Geological
Engineering in 1953.

      Luis Coleridge, Director, Financial Expert, Chairman of the Audit
Committee and member of Nominating/Corporate Governance Committee. Mr. Coleridge
was elected a director on March 29, 2000. He is presently an independent
business consultant. A retired partner of Arthur Andersen & Co., Mr. Coleridge's
career spanned 33 years, in which he rose to the position of Managing Partner of
Peruvian operations and retired in 1997. He was also professor of accounting and
auditing at the Universidad Nacional Mayor de San Marcos, or UNMSM, and other
Peruvian universities and colleges. Mr. Coleridge graduated from UNMSM with a
B.S. degree in 1962 and completed post-graduate studies in Economics in 1964.


                                       120



      Aubrey Laurence Paverd, Director and member of the Nominating/Corporate
Governance Committee. Dr. Paverd is currently a private consultant based in
Melbourne, Australia. He has been a director since 2002. From 1994 to 2000, he
held the position of Group Executive Exploration with North Ltd., a diversified
mining company with gold and base metal mines in Australia, Europe, North and
South America. His career with Newmont Mining Corporation spanned 21 years. He
began as Chief Geologist of South Africa in 1973, rising through the positions
of Chief Geologist at Tsumeb Corporation Ltd., Namibia, a subsidiary of Newmont,
to assistant to the Vice President of Exploration in New York in 1979, Director
of Foreign Exploration in 1981 and ultimately Vice President of Exploration when
he left Newmont in 1994. Mr. Paverd was also a lecturer in geology at Rhodes
University during 1972 and 1973 and worked as a field and mining geologist in
Australia and Zambia during the period from 1962 to 1969. He received B.S.
(Hons) and M.S. degrees from Rhodes University in 1961 and 1966 respectively and
a Ph.D. from the University of James Cook North Queensland in 1972. Mr. Paverd
is currently also a director of Randgold Resources Ltd., a London listed West
African gold mining company.

      Felipe Ortiz-de-Zevallos, Director and member of the Audit Committee,
Compensation Committee and Nominating/Corporate Governance Committee. Mr.
Ortiz-de-Zevallos has been a director since August 2003 and was named President
of the Universidad del Pacifico de Lima for a term from June 15, 2004 to June
15, 2009. Mr. Ortiz-de-Zevallos received a degree in Industrial Engineering from
The National Engineering University in 1968, received an M.S. in Administration
and System Analysis from the University of Rochester in 1970 and completed the
Owner/President Management program at Harvard in 1996. He is currently
ambassador of Peru in the United States of North America.

      Roque Benavides,, Director, President and Chief Executive Officer and
member of the Nominating/Corporate Governance Committee. Mr. Benavides has been
a director since July 2004 and was our Chief Financial Officer from 1985 to
February 2001, when he was appointed President and Chief Executive Officer.
Prior to that time, he served as Assistant to our Chairman of the Board from
1980 to 1985 and as a Project Engineer from 1977 to 1979. Mr. Benavides also has
been an alternate member of the Executive Committee of Yanacocha since 1992. In
addition, he is an alternate board member of Cerro Verde and was the General
Manager of Recuperada S.A., formerly one of our majority-owned subsidiaries that
has since merged into us, from 1981 to 1996. He currently is serving as an
executive officer and as a director of several of our related companies. He also
has served as a director of the Sociedad Nacional de Mineria, Petroleo y Energia
(National Association of Minerals, Petroleum and Energy) since 1988, serving as
Chairman of the Board from 1993 to 1995. Mr. Benavides served as chairman of the
Confederacion Nacional de Instituciones Empresariales Privadas (National
Confederation of Private Companies, or CONFIEP) from 1999 to March 2001. In 2007
he was appointed as chairman of the World Gold Council and vice president of The
Silver Institute. Mr. Benavides received a B.S. in Engineering from Pontificia
Universidad Catolica del Peru (Pontifical Catholic University of Peru) in Lima,
Peru in 1977 and an M.B.A. from Henley, The Management College of Brunnel
University in 1980, completed the Program for Management Development at the
Harvard Business School in 1985 and the Advanced Management Program at Templeton
College of Oxford University in 1997.

      German Suarez, Director and member of the Audit Committee, Compensation
Committee and Nominating/Corporate Governance Committee. Mr. Suarez has been a
director since March 2005. Mr. Suarez is an economist who was employed by the
Central Bank from 1964 to 1990. From 1979 to 1980, Mr. Suarez represented Brazil
and Peru at the International Monetary Fund, or IMF, and from 1981 to 1990 he
served as an Official of the Ministry of Economy and Finance. Mr. Suarez served
as Chairman of Banco de la Nacion from 1990 to 1992 and Chairman of the Central
Bank of Peru from 1992 to 2001. He has also served as a representative of Banco
de la Nacion at Bladex, Extebandes and Arlabank, a member of the board of
directors of Latin American Reserves Fund, and currently is member of the board
of directors of La Pampilla Refinery, or Relapasa, and Credicorp Ltd. From 1993
to 2001, he served as Governor of the IMF and Alternate Governer of the
Inter-American Development. From 2000 to 2001 Mr. Suarez served as Chairman of
the IMF G-24. Mr. Suarez graduated from UNMSM with a B.S. in Economics in 1965
and received an M.A. in Economics from Columbia University in 1969.


                                       121



      Carlos E. Galvez, Vice President and Chief Financial Officer. Mr. Galvez
was the Deputy Manager, Finance and Information Systems, from 1985 to February
2001, when he was appointed Vice President and Chief Financial Officer. He
served as Deputy Manager of our Treasury from 1980 to 1985, and as Treasurer
from 1978 to 1980. Mr. Galvez has also served as director of the Colquirrumi and
Coimolache, two of our subsidiaries, he was appointed Manager of Conenhua in
1994 and Managing Director in 2000, director of El Brocal in 2002 and director
of Contacto S.A. in 2005. He has been an alternate member of the Executive
Committee of Yanacocha since 2003 and an alternate board member of Cerro Verde.
He also has served as director of the Sociedad de Mineria, Petroleo y Energia
del Peru (Mining, Petroleum and Energy Society of Peru) since 2000. Prior to
joining us, Mr. Galvez served as Managerial Adjunct for Finance and Credit from
1977 to 1978 at Banco Minero del Peru (Mining Bank of Peru). He has also served
as a board member of the Comite de Operacion Economica del Sistema Electrico
Nacional (Committee of Economic Operation of the National Electric System). Mr.
Galvez received his B.A. in Economics from the Universidad Nacional Federico
Villarreal in 1976, his M.B.A. from the Universidad del Pacifico de Lima in 1980
and completed the Program for Management Development, in 1997, and the Advanced
Management Program, in 2005, at The Harvard Business School

      Raul Benavides Ganoza, Business Development Vice President. Mr Benavides
has been our Business Development Vice President since 1992. He is also
currently an alternate member of the Executive Committee of Yanacocha (1992-to
date), board member of Cerro Verde and several of our related companies. From
1984 to 1996 he was Manager of the Orcopampa mine. Prior to that time, Mr
Benavides was a Manager of Operations from 1983 to 1984 and Chief of Mining from
1980 to 1983 at Colquirrumi. Since 1995, he has been a professor of mining
administration at Pontificia Universidad Catolica del Peru. Mr. Benavides also
has served as Vice President of the Instituto de Ingenieros de Minas (Institute
of Mining Engineering) since 1994 and was also the President of the Instituto de
Seguridad Minera del Peru (Mining Safety Institute of Peru) from 1996 to 2000.
Mr. Benavides was a member of the Consulting Board for the National Occupational
Safety Association from 2003 to 2004. Mr. Benavides received a B.S. in Mining
Engineering from the University of Missouri-Rolla in 1980, an M.S. in Mineral
Engineering-Management from Pennsylvania State University in 1984 and completed
the Advanced Management Program at The Harvard Business School in 2001.

      Francois Muths, Vice President of Operations. Mr. Muths was appointed Vice
President of Operations in February 2007. Prior to that time, Mr. Muths served
as a director and general manager of Inversiones Mineras del Sur S.A., our
wholly owned subsidiary from 2005 to 2006, general manager from 1985 to 2005 and
superintendent of the Uchucchacua mine from 1981 to 1983. He received a B.S. in
engineering from the National Engineering University of Peru and a M.S. in
mining from the Colorado School of Mines. In 2005, Mr. Muths completed the
Program for Management Development at Harvard Business School.


                                       122



      Jose Miguel Morales, General Counsel. Mr. Morales has been our General
Counsel since 1973. From 1992 to 1995, Mr. Morales served as an alternate member
of the Executive Committee of Yanacocha. Mr. Morales has also served as a member
of the Executive Committee of Yanacocha since 1995. Mr. Morales currently serves
as a director of seven of our nineteen mining and mining-related subsidiaries or
affiliates. In addition, he has served as a director of the Instituto Nacional
de Derecho de Mineria y Petroleo (National Institute of Mining and Petroleum
Law), serving as its President from 1989 to 1990 and as a director of the
Sociedad de Mineria y Petroleo del Peru (Mining and Petroleum Society of Peru)
since 1998, serving as its vice chairman since 2000. He has been a director of
the following non-mining related companies: Almacenera del Peru S.A. from 1992,
Inversiones Cosepa S.A. from 1979, Hotel Costa del Pacifico S.A. from 1994 and
El Pacifico--Peruana Suiza Compania de Seguros from 1979. Since 1973, he also
has been a partner of Estudio Aurelio Garcia Sayan--Abogados, a Lima law firm.
In February 2003, Mr. Morales was elected president of the Sociedad Nacional de
Mineria, Petroleo y Energia (National Association of Minerals, Petroleum and
Energy). On January 31, 2005, Mr. Morales ended his tenure as President of
Sociedad Nacional de Mineria, Petroleo y Energia and was elected on March 16,
2005 President of Confederacion Nacional de Instituciones Empresariales Privadas
(National Confederation of Private Companies, or CONFIEP) until 2007. Mr.
Morales received his law degree from Pontificia Universidad Catolica del Peru in
1968 and completed the Sloan Program at Stanford University's Graduate School of
Business in 1976.

      Mario Santillan, Operations Vice President (since 1992 to February 2007).
Mr. Santillan served as our Vice Manager of Operations from 1982 to 1992,
Superintendent of our Julcani mine from 1977 to 1982, Superintendent of our
Orcopampa mine from 1974 to 1977 and Division Chief/Captain of our Julcani mine
from 1970 to 1974. From 1968 to 1970, he was Chief of Mining at Mina Yuritala, a
Peruvian mining company. He is a member of the Colegio de Ingenieros del Peru
(Engineering Association of Peru). Mr. Santillan received a B.S. in Mining
Engineering from UNI in 1968 and also studied advanced courses in mining at
Pontificia Universidad Catolica del Peru, UNI, the Universidad del Pacifico
(University of the Pacific) in Peru and the Colorado School of Mines. He retired
in February 2007.

      Cesar E. Vidal, Explorations Vice President. Mr. Vidal has been our
Explorations Vice President since the beginning of 1996. Mr. Vidal also
currently serves as director of El Brocal and Coimolache. From 1981 to 1987, he
served as a geologist for BISA. Prior to joining us, from 1991 to 1995, he
served as an independent economic geologist consultant to several mining
companies, including us. From 1987 to 1991, he served as the chief geologist for
Perubar S.A., a Peruvian zinc mining company. Mr. Vidal received his B.S. in
Geology from UNI in 1977, a Ph.D. in Geology from the University of Liverpool in
1980 and certification as an engineering geologist in Peru from UNI in 1984. He
also was a post-doctoral research fellow at the Universitat Heidelberg (the
University of Heidelberg) from 1985 to 1986. He completed the Advanced
Management Program at Templeton College of Oxford University in 2005.

      Carlos Humberto Rodriguez, Comptroller. Mr. Rodriguez has served as our
Comptroller since 1984 and as Secretary of our Audit Committee. In February
2003, Mr. Rodriguez was elected our Compliance and Ethics Officer. He also
served as Comptroller at Cyanamid Peruana S.A., a Peruvian chemical and
pharmaceutical company, from 1965 to 1975, and as General Accountant at
Petrolera Amotape S.A., a Peruvian oil company devoted to exploration and
development of oil, from 1963 to 1964. Mr. Rodriguez received his B.S. in
Economic and Commercial Sciences and Accounting from Pontificia Universidad
Catolica del Peru in 1972. In 1988, Mr. Rodriguez obtained a degree in
Management from Universidad de Piura.


                                       123



Compensation

      During the year ended December 31, 2006, the aggregate amount of
compensation that we paid to all directors and executive officers was
approximately S/.29.0 million, including director's fees accrued in 2005 and
paid in 2006. We do not disclose to our shareholders or otherwise make available
public information as to the compensation of our individual directors or
executive officers.

      We have a long-term stock appreciation program, with a term of ten years
once initiated, that allows certain executives to receive a cash remuneration
equivalent to any excess of the market value at a future date over a stated
price of a stated number of our ADSs. This program is in effect as long as the
executives are employed by us at the settlement date of the program. See Note 18
to the Financial Statements.

Board Practices

The Audit Committee

      The Audit Committee, composed entirely of independent directors as defined
in Section 303A.02 of the New York Stock Exchange's Listed Company Manual, is
responsible for assisting the Board of Directors in the appointment of
independent auditors, upon delegation of such responsibility by the shareholders
at the general meeting of shareholders, or General Meeting, and reviewing the
scope of internal and external audits. The Audit Committee also reviews
compliance with internal control systems, reviews our annual and quarterly
financial statements, reviews financial statements before their presentation to
the Comision Nacional Supervisora de Empresas y Valores (National Supervisory
Commission of Business and Securities, or CONASEV), the Bolsa de Valores de Lima
(Lima Stock Exchange) and the Commission and maintains the integrity of the
preparation of audits. The members of the Audit Committee are currently Messrs.
Coleridge, Ortiz-de-Zevallos and Suarez.

The Compensation Committee

      The Compensation Committee is responsible for evaluating executive
performance and approving executive compensation, including compensation of the
chief executive officer and any stock option compensation plans. The members of
the Compensation Committee are currently Messrs. Benavides de la Quintana,
Ortiz-de-Zevallos and Suarez.

Nominating/Corporate Governance Committee

      The Nominating/Corporate Governance Committee is responsible for preparing
the proposals for the general meetings in respect of the composition of the
Board of Directors along with the director remuneration to be approved by the
shareholders, and monitoring issues and practices related to corporate
governance and to propose necessary actions in respect thereof. The members of
the Nominating/Corporate Governance Committee are currently Messrs. Benavides de
la Quintana, Anderson, Coleridge, Paverd, Ortiz-de-Zevallos, Benavides Ganoza
and Suarez.

Employees

      At December 31, 2006, we and our subsidiaries had 2,045 employees, of
which 1,567 were on our payroll. In addition, we have entered into arrangements
with independent contractors, which employed 4,343 persons who worked at our
operations. We have sought to strengthen our workforce by implementing a
qualifications-based hiring policy and, with respect to employees working in the
mines, reducing the average age of the workforce. As of December 31, 2006, the
average tenure of our permanent laborers at the Julcani, Uchucchacua, Orcopampa,
Recuperada, Ishihuinca and Antapite mines (the only mines for which we have
long-term historical records) was approximately 16 years.


                                       124



      Of our 1,567 permanent employees, approximately 62.35 percent are members
of nine different labor unions (three unions and one labor union committee for
clerical workers and five unions for permanent laborers), which represent all
clerical workers and laborers in collective bargaining negotiations with us.
Each of the labor unions is a company-based union with an affiliation to a
national union. Administrative personnel are not represented by unions. Labor
relations for unionized and non-unionized employees in our production
facilities, including compensation and benefits, are governed by collective
bargaining agreements, the terms and length of which are negotiated throughout
the year as the various collective bargaining agreements come up for renewal.
These collective bargaining agreements are typically one year in length, and set
wages for the applicable period and include increases as negotiated and certain
other employee benefits, such as overtime, bonuses and family benefits.

      Compensation received by our employees includes salary, other cash
payments (such as overtime, vacation pay and bonuses including, but not limited
to, high altitude and underground mining bonuses) and non-cash benefits.
Non-cash benefits include medical insurance, life insurance and training
programs for workers and administrative staff. For mine and processing plant
workers, benefits also include transportation services, meals or food
allowances, education for children of our employees and housing, hospitals and a
full range of social services for our permanent employees and their families at
townsites near our mines in compliance with mining regulations. We voluntarily
provide power, water and sewage services for the camp and houses of the workers
as well as for certain towns nearby. In addition, pursuant to a profit-sharing
plan mandated by Peruvian labor legislation, employees of mining companies in
Peru are entitled to receive the Employee Profit Sharing Amount, four percent of
such profits to be distributed based on the number of days each employee worked
during the preceding year and the remaining four percent of such profits to be
distributed among the employees based on their relative salary levels. Effective
January 1, 1997, the annual payment to each employee under the profit sharing
plan cannot exceed 18 times such employee's monthly salary, and any difference
between the Employee Profit Sharing Amount and the aggregate amount paid to
employees must be contributed by us to the Fondo Nacional de Capacitacion
Laboral de Promocion del Empleo (FONDO EMPLEO), a fund established to promote
employment and employee training.

      Under Peruvian law, we may dismiss workers for cause by following certain
formal procedures. We may dismiss a worker without cause, provided that we pay
such worker a layoff indemnification in an amount equal to one and a half
month's salary for each full year worked plus the pro rata portion for any
uncompleted year, not to exceed in the aggregate 12 months' salary. Several
decisions adopted by the Peruvian Constitutional Court, holding that an employee
is entitled for reinstatement if no cause for dismissal is expressed by the
employer or for failure to present evidence supporting the employer's grounds,
have limited our ability to dismiss a worker without cause. However, all
employees are entitled to a severance payment upon termination of their
employment, regardless of the reason for such termination, equal to one month's
salary for each full year worked plus the pro rata portion for any uncompleted
year. Pursuant to the Peruvian labor laws enacted in 1991, we deposit funds for
severance payments in a bank account selected by each employee and for the
benefit of such employee, in both May and November of each year.

      Our permanent employees receive the benefit of one of two types of pension
arrangements. All workers can choose to enroll in the ONP or in AFPs. We are
required to withhold from each of the salaries of the employees enrolled in the
ONP system approximately 13 percent of such employee's salary, and pay such
amount to the ONP system and withhold from the salary of each employee enrolled
in the AFP system approximately 13 percent of such employee's salary, and pay
such amounts to the respective AFP (exact amount varies from one AFP to
another). Additionally, for workers involved in mining and metallurgical
processes, an additional 2 percent is withheld from their salaries, and we
contribute an additional 2 percent to increase their pension funds. We have no
liability for the performance of these pension plans. In addition, our
independent contractors are responsible for covering severance and pension
payments with respect to their employees.


                                       125



      In addition, we pay ES-SALUD nine percent of our total payroll for general
health services for all permanent employees. Prior to May 1997, we were required
to pay to ES-SALUD one percent of our payroll of blue collar employees for
employment related illness and accidents, or the Workers Compensation Fund
Payment. In addition, Law No. 26790 also requires us to provide private
insurance representing an average payment equal to 1.30 percent of the payroll
of covered employees for employment-related incapacity and death for blue collar
employees and other employees exposed to mining-related hazards. As of December
1, 2004, we are no longer required to pay a total of 2 percent of our total
payroll for the Extraordinary Solidarity Tax.

      Prior to April 30, 2007, we had not experienced any strikes during the
past five years. On April 30, 2007, we experienced a 5-day labor stoppage at the
Uchucchacua mine, which coincided with a strike called by the national mining
and metallurgical union.

Share Ownership

      At April 30, 2007, our directors and executive officers, as a group, owned
25,986,387 Common Shares, representing 20.43 percent of all the 127,221,164
shares outstanding. Our directors and executive officers do not own any
Investment Shares.

ITEM 7. Major Shareholders and Related Party Transactions

Major Shareholders

      As of April 30, 2007, we had 137,444,962 Common Shares, including
10,580,130 treasury shares, and 372,320 Investment Shares, including 30,988
treasury shares. The Common Shares are voting securities. The table below sets
forth certain information concerning ownership of (i) the Common Shares and
Investment Shares and (ii) the aggregate Common Shares and Investment Shares, as
of April 30, 2007 with respect to each shareholder known to us to own more than
2.5 percent of the outstanding Common Shares and with respect to all directors
and executive officers as a group.

                             Control of the Company*

<TABLE>
<CAPTION>
                                                                                                                     Percentage
                                                            Percentage                 Percentage     Number of      Beneficial
                                                            Beneficial                 Beneficial      Common      Ownership of
                                                             Ownership    Number of   Ownership of   Shares and    Common Shares
                                              Number of     of Common    Investment    Investment    Investment   and Investment
               Shareholder                  Common Shares    Shares(2)     Shares        Shares        Shares         Shares
-----------------------------------------   -------------   ----------   ----------   ------------   ----------   --------------
<S>                                           <C>             <C>          <C>            <C>        <C>               <C>
Blackrock Investment Management (UK) Ltd.     10,118,000       7.36            --            --      10,118,000         7.35
Benavides
  Family(1) .............................     37,532,697      27.31        79,200         21.27      37,611,897        27.29
Fidelity Management & Research ..........      4,867,700       3.54            --            --       4,867,700         3.53
Cia Minera Condesa S.A ..................     10,580,130       7.70        30,988          8.32      10,611,118         7.70
Merrill Lynch IIF-World Gold Fund .......      5,275,000       3.83            --            --       5,275,000         3.82
Fidelity Low Priced Stock Fund ..........      3,433,600       2.50            --            --       3,433,600         2.49
AFP, Prima ..............................      4,688,225       3.41            --            --       4,688,225         3.40
AFP, Integra ............................      6,396,451       4.65            --            --       6,396,451         4.64
AFP Horizonte ...........................      4,628,792       3.37            --            --       4,628,792         3.36
Directors and Executive
  Officers as a Group ...................     25,986,387      18.91            --            --      25,986,387        18.86
</TABLE>

----------
(1)   Includes Common Shares directly or indirectly owned by Alberto Benavides
      de la Quintana and certain members of his immediate and extended family
      and their spouses.


                                       126



(2)   The beneficial ownership of Common Shares adds up to more than 100 percent
      due to participation by certain members of the Benavides Family as
      Directors and/or Executive Officers.

*     At April 30, 2007.

      As of April 30, 2007, we estimate that 66,419,164 ADSs are held in the
United States, which represent approximately 52 percent of Common Shares
outstanding. The number of institutional record holders of our Common Shares (or
of ADSs representing our Common Shares) in the United States was 21 institutions
at April 30, 2007.

Related Party Transactions

      Except as otherwise disclosed herein, no director, senior officer,
principal shareholder or any associate or affiliate thereof, had any material
interest, direct or indirect, in any transaction since the beginning of our last
financial year that has materially affected us, or in any proposed transaction
that would materially affect us. Except as otherwise disclosed herein, we have
entered into no transactions with parties that are not "related parties" but who
would be able to negotiate terms not available on an arm's-length basis. From
time to time in the ordinary course of business, we enter into management,
exploration, mine construction, engineering and employment contracts with joint
venture companies in which one or more of our direct or indirect subsidiaries
holds equity or partnership interests.

      Chaupiloma is the legal owner of the mineral rights operated by Yanacocha
and receives a 3 percent royalty based on quarterly sales, after deducting
refinery and transportation costs. Royalties amounted to US$37.8 million,
US$46.1 million and US$48.5 million in 2004, 2005 and 2006, respectively, and
are presented as royalty income in the consolidated statements of income.

      Condesa received cash dividends from Yanacocha of approximately US$121.7
million, US$77.0 million and US$209.5 million in 2004, 2005 and 2006,
respectively.

      Cash dividends received from Cerro Verde amounted to approximately US$1.4
million in 2004, US$12.8 million in 2005. No cash dividends were received from
Cerro Verde in 2006.

      In March 2002, Buenaventura Ingenieros S.A. signed a technical service
agreement with Yanacocha to perform a number of specialized activities and
services. Pursuant to the agreement, the services performed will be related to
the construction of mining projects and will include completion of analysis and
studies, work plan design, and functions related to planning, monitoring and
administrating the infrastructure projects required by Yanacocha in its
operations. This contract expired on December 31, 2004 and was renewed in
January 2005 under the same terms. The revenues related to this service contract
amounted to approximately US$5.1 million for the year ended December 31, 2006,
US$3.7 million for the year ended December 31, 2005 and US$3.0 million for the
year ended December 31, 2004.

      In November 2000, Conenhua signed an agreement with Yanacocha for the
construction and operation of a 220 kw transmission line between Trujillo and
Cajamarca, a 60 kw transmission line between Cajamarca and La Pajuela, and the
Cajamarca Norte substation; this agreement also encompassed activities necessary
to enlarge the Trujillo substation. Pursuant to this contract, the construction
work was completed in October 2001. Concurrently, we and Yanacocha signed a
10-year agreement covering electric energy transmission and infrastructure
operation beginning in November 2001. In exchange for us operating and managing
the transmission project, Yanacocha will pay an annual fee of US$3.7 million.
The revenues for these services amounted to approximately US$3.9 million in
2006, 2005 and 2004, respectively.


                                       127



Interests of Experts and Counsel

      Not applicable.

ITEM 8. Financial Information

Consolidated Financial Statements

      See "Item 19. Exhibits" for a list of financial statements filed under
Item 18.

Other Financial Information

Legal Proceedings

      Other than the legal proceeding relating to Yanacocha described in "Item
4. Information on the Company--Yanacocha--Legal Proceedings" and as described
below, we and Yanacocha are each parties to certain other legal proceedings
arising in the normal course of business, none of which, individually or in the
aggregate, is material.

Dividends and Dividends Policy

      We can distribute three kinds of dividends: (i) cash dividends, which are
paid out of our net distributable income for each year, (ii) stock dividends
that are akin to stock splits rather than distributions of earnings, which are
issued for the purpose of adjusting the book value per share of our stock, and
(iii) stock dividends for the purpose of capitalizing profits, in each case as
described in more detail below. All shares outstanding and fully paid are
entitled to share equally in any dividend declared based on the portion of our
capital represented by such share. Shares of capital stock, which are only
partially paid participate in a dividend or distribution in the same proportion
that such shares have been paid at the time of the dividend or distribution. No
cash dividend may be declared in respect of a given year unless we have earned
net distributable income in respect of such year. However, a company may declare
dividends during the year. We may make interim provisional payments to
shareholders in respect of net distributable income for the current fiscal year,
which are referred to as "provisional dividends", as explained below.

      The Board of Directors, following the end of each fiscal year, makes a
recommendation to the annual obligatory shareholders' meeting regarding the
amount and timing of payments, if any, to be made as dividends on our Common
Shares and Investment Shares.

      The dividend policy establishes that dividends will be not less than 20
percent of our net profits. In principle there are two kinds of dividend
payments: the interim dividends which are approved by the Board and are
generally paid during the fourth quarter of the year, and the final dividend
payment which will be paid in accordance with the general shareholders' meeting
resolutions. However, the amount and timing of such payments is subject to the
final approval at such annual obligatory shareholders' meeting and Board
meeting, as well as to the availability of earnings to distribute. According to
Peruvian Corporate Laws, there is an exception that permits holders of at least
20 percent of total Common Shares outstanding, require that not less than 50
percent of our after-tax profits during the previous year and legal reserve
allocation be paid out in the form of dividends.


                                       128



      Available earnings are subject to the following priorities. First, the
mandatory employee profit sharing of eight percent of pre-tax profits (which may
differ from pre-tax profits determined under Peruvian GAAP due to different
depreciation treatment and different adjustments of non-taxable income and/or
non-deductible expenses) is paid. Next, remaining earnings are taxed at the
standard corporate income tax rate, which is 30 percent since January 1, 2004.
Not less than ten percent of such after-tax net profits must then be allocated
to a legal reserve, which is not available thereafter except to cover future
losses or for use in future capitalizations. Amounts reserved are nevertheless
included in taxable income. The obligation to fund this reserve continues until
the reserve constitutes 20 percent of the paid-in share capital. In addition,
the holders of Common Shares can allocate any portion of the net profits to any
special reserve. The remainder of the net profits is available for distribution
to shareholders. Any dividend approved by a shareholders' meeting after December
31, 2002 is subject to an additional withholding tax at the rate of 4.1 percent
of the total amount of dividends distributed to the shareholders who either are
(i) individuals, whether domiciled or non-domiciled in Peru, or (ii) a
non-domiciled company or entity. Dividends paid to domiciled companies or
entities are not subject to such withholding tax. If any tax or other
governmental charge will become payable by Banco Wiese Sudameris of Lima Peru,
as custodian, the Depositary or us with respect to any ADR or any deposited
securities represented by the ADSs evidenced by such ADR, such tax or other
governmental charge will be payable by the owner or beneficial owner of such ADR
to the Depositary.

      Dividends on issued and outstanding Common Shares and Investment Shares
are distributed in accordance with the proportion of the total capital
represented by such respective shares. Dividends are distributed pro rata in
accordance with the number of Common Shares or Investment Shares. Accordingly,
any dividend declared would be apportioned 99.73 percent to the holders of
Common Shares and 0.27 percent to the holders of Investment Shares. This
proportion will not change in the future except and to the extent holders of
Common Shares and Investment Shares exercise their preemptive rights
disproportionately in any future issuance of Common Shares and Investment
Shares, or we issue Common Shares without preemptive rights in accordance with
Article 259 of the Peruvian Companies Law.

      Holders of Common Shares and Investment Shares are not entitled to
interest on dividend payments.

      Holders of ADRs are entitled to receive dividends with respect to the
Common Shares underlying the ADSs evidenced by such ADRs, subject to the terms
of the related Amended and Restated Deposit Agreement, to the same extent as
owners of Common Shares.

      To the extent that we declare and pay dividends on the Common Shares,
owners of the ADSs on the relevant record date are entitled to receive the
dividends payable in respect of the Common Shares underlying the ADSs, subject
to the terms of the Amended and Restated Deposit Agreement. Cash dividends are
paid to the Depositary in Nuevos Soles and, except as otherwise described under
the Amended and Restated Deposit Agreement, are converted by the Depositary into
U.S. Dollars and paid to owners of ADRs net of currency conversion expenses.
Under the Amended and Restated Deposit Agreement, the Depositary may, and will
if we so request, distribute stock dividends in the form of additional ADRs
evidencing whole ADSs resulting from a dividend or free distribution of Common
Shares by us received by the Depositary. Cash dividends paid with respect to the
Common Shares and amounts distributed with respect to ADSs are currently subject
to Peruvian withholding income tax of 4.1 percent. See "Item 10. Additional
Information--Taxation--Peruvian Tax Considerations".


                                       129



      We issue stock dividends for value per share of our stock. The book value
of our share capital is based on the nominal (par) value of each share but is
adjusted to account for inflation; thus, in inflationary periods, our book value
will increase while the nominal value will remain constant. In order to adjust
the book value of each share to equal or approximate the nominal value, we
periodically issue new shares that are distributed as stock dividends to each
existing shareholder in proportion to such shareholder's existing holdings,
unless it increases the nominal value of the existing shares. These stock
dividends (which under the Peruvian income tax law are not considered dividends)
do not change a stockholder's percentage of interest in us. In addition, we may
from time to time capitalize profits and, in such case, we have to distribute
stock dividends representing the profits capitalized.

      Dividends not collected within ten years will be retained by us,
increasing our legal reserve, and the right to collect such dividends will
expire.

      Under Peruvian law, each company may make formal cash distributions only
out of net distributable income (calculated on an individual, unconsolidated
basis and demonstrated by a balance sheet at any given time). We, however, may
pay provisional dividends. Payment of provisional dividends will be approved on
the basis of financial statements which show the existence of net distributable
income obtained during the current fiscal year. In the event that, following
such an interim provisional payment, we suffer a loss or if we finish the fiscal
year with a net income that is lower than the amount of provisional dividends
paid during such fiscal year, we could legally require all shareholders
(including holders of ADRs) to return such payment to us with interest. However,
it has been and continues to be our policy not to require shareholders to return
such payment of provisional dividends, but rather to cover such contingency
through a "dividends paid in advance" account to be off-set by future net
distributable income.

      The following table sets forth the amounts of interim and final cash
dividends and the aggregate of cash dividends paid with respect to the years
2002 to 2006. Prior to May 3, 2003, cash dividends with respect to were paid per
Series A Share, Series B Share and ADS. Effective on May 3, 2002, we
redesignated our Series B Shares and Series A Shares as Common Shares and each
of our ADSs, which previously represented two Series B Shares, represented two
Common Shares. Effective November 12, 2003, we modified the ratio of our ADSs
from two Common Shares per ADS to one Common Share per ADS. Dividends with
respect to the years 2002 to 2006 were paid per Common Share and ADS. See "Item
4. Information on the Company--The Company--History and
Development--History--Redesignation of the Company's Shares and ADSs":

<TABLE>
<CAPTION>
                           Per                        Per                         Per
                      Common Share                    ADSs                  Investment Share
Year ended     -------------------------   -------------------------   -------------------------
December 31,   Interim    Final    Total   Interim    Final    Total   Interim    Final    Total
-------------  -------   ------   ------   -------   ------   ------   -------   ------   ------
<S>             <C>      <C>      <C>       <C>      <C>      <C>       <C>      <C>      <C>
2002(1)         0.3202    0.303   0.6232    0.6404    0.606   1.2464    0.3202   0.3030   0.6232
2003(2)         0.5453       --   0.5453    1.0906       --   1.0906    0.5453       --   0.5453
2003(2)         0.3282   0.5536   0.8818    0.3282   0.5536   0.8818    0.3282   0.5536   0.8818
2004(3)         0.5312    0.585   1.1162    0.5312    0.585   1.1162    0.5312    0.585   1.1162
2005(4)         0.6102   0.7216   1.3318    0.6102   0.7216   1.3318    0.6102   0.7216   1.3318
2006(5)           0.25     0.37     0.62      0.25     0.37     0.62      0.25     0.37     0.62
</TABLE>

----------
(1)   Interim and final dividend amounts are expressed in nominal Nuevos Soles
      as of December 31, 2002.

(2)   Interim and final dividend amounts are expressed in nominal Nuevos Soles
      as of December 31, 2003.

(3)   Interim and final dividend amounts are expressed in nominal Nuevos Soles
      as of December 31, 2004.

(4)   Interim and final dividend amounts are expressed in nominal Nuevos Soles
      as of December 31, 2005.

(5)   Interim and final dividend amounts are expressed in U.S. Dollars.

      In addition to the above mentioned cash dividends, in November 2002, we
distributed stock dividends, which in the aggregate were equivalent to S/.2.8
million, in the form of El Brocal shares. In August 2003, we distributed an
extraordinary stock dividend as of S/.0.5453 per share.


                                       130



Minority Shareholders

      Law No. 28370, published on October 30, 2004, included in the Peruvian
Companies Law certain provisions for the protection of the minority shareholders
that were formerly contained in Law No. 26985. Pursuant to Article 262-A of the
Peruvian Companies Law, we will publish within sixty days after the Annual
Obligatory Shareholders Meeting the total number and value of any shares not
claimed by shareholders, the name of such shareholders, the share quote in the
securities market for such shares; the total amount of uncollected dividends;
and where shares and dividends pending claim are available for the minority
shareholders. The publication must be made in the official gazette "El Peruano"
and on our website. Article 262-B describes the procedure to request share
certificates and/or dividends. Pursuant to Article 262-C, we are required to
submit to CONASEV the list of shareholders that have and have not picked-up
their share certificates and/or have or have not collected their dividends
within 60 days of the required publication in El Peruano. Article 262-F
describes the procedure for handling any claim that the minority shareholders
may file, such claims to be solved by CONASEV.

Significant Changes

      No significant change in our financial affairs has occurred since the date
of the annual financial statements included in this Annual Report.

ITEM 9. The Offer and Listing

Offer and Listing Details

      Not applicable.

Plan of Distribution

      Not applicable.

Trading Markets

      Effective on May 3, 2002, we redesignated our Series B Shares and Series A
Shares as Common Shares. From such date, each of our ADSs, which previously
represented two Series B Shares, represented two Common Shares. Effective
November 12, 2003, we modified the ratio of our ADSs from two Common Shares per
ADS to one Common Share per ADS. See "Item 4. Information on the Company--The
Company--History and Development--History--Redesignation of the Company's Shares
and ADSs". Accordingly, since May 3, 2002, the Common Shares and ADSs
representing the Common Shares (each ADS representing two Common Shares) have
been listed and traded on the New York Stock Exchange under the symbol "BVN". In
addition, the Common Shares are listed and traded on the Lima Stock Exchange.
The Investment Shares have been listed and traded on the Lima Stock Exchange
since 1979.

      As of May 31, 2007, the share capital with respect to the Common Shares
was S/.549,779,848 represented by 137,444,962 shares and the share capital with
respect to the Investment Shares was S/.1,489,280 represented by 372,320 shares.
The Common Shares represent 100 percent of our outstanding share capital. The
Investment Shares have no voting rights and are not, under Peruvian law and
accounting rules, characterized as share capital. As of May 31, 2007, there were
1,351 owners of record of the Common Shares and 1,019 owners of record of the
Investment Shares.


                                       131



Historical Information

      The Series B Shares and the ADSs which represented the Series B Shares
(each ADS represented two Series B Shares) were listed, and the ADSs were
traded, on the New York Stock Exchange from May 31, 1996 until May 2, 2002,
under the symbol "BVN". In addition, the Series B Shares were listed and traded
on the Lima Stock Exchange from May 15, 1996 until May 2, 2002. The ADSs which
represented the Series B Shares were issued under the terms of a Deposit
Agreement dated May 20, 1996, among ourselves, The Bank of New York, as
depositary, and the owners and beneficial owners of ADSs. The Series A Shares
were listed and traded on the Lima Stock Exchange since 1971.

      The creation of the Series B Shares was authorized at an extraordinary
meeting of shareholders held on March 20, 1996. At that meeting, outstanding
common shares were renamed as Series A Shares, and a capital increase of a new
class of common shares, designated Series B Shares, was approved. On May 31,
1996, the Series B Shares began trading on the Lima Stock Exchange and on May
15, 1996, the ADSs began trading on the New York Stock Exchange. On November 26,
1997, we consummated the Series A Exchange Offer, pursuant to which we exchanged
32,472,952 Series A Shares for an equal number of Series B Shares. Immediately
prior to the Series A Exchange Offer, there were 98,995,000 Series A Shares and
19,154,617 Series B Shares. Upon consummation of the exchange, there were
66,522,048 Series A Shares and 51,627,569 Series B Shares.

      On December 10, 1998, we consummated an exchange offer pursuant to which
we exchanged 18,666,198 Labor Shares (now known as Investment Shares) for
18,666,198 Series B Shares. On December 3, 1999, we commenced an exchange offer,
pursuant to which we offered to exchange on a one-for-one basis, all outstanding
Series A Shares and Investment Shares for our Series B Shares, or the Redemption
and Exchange Offer. The Redemption and Exchange Offer terminated, in accordance
with its terms, on January 13, 2000. As a result of the Redemption and Exchange
Offer, 23,433,294 Series A Shares and 629,147 Investment Shares were tendered
for redemption and/or exchange and accepted by us and were exchanged for equal
numbers of Series B Shares. At December 31, 1999 (prior to the consummation of
the Redemption and Exchange Offer), the share capital with respect to the Series
A Shares was S/.66,522,048 represented by 66,522,048 shares; the share capital
with respect to the Series B Shares was S/.70,293,767 represented by 70,293,767
shares; and the share capital with respect to the Investment Shares was
S/.1,011,467 represented by 1,001,467 shares. Following the consummation of the
Redemption and Exchange Offer, the share capital with respect to the Series A
Shares was S/.43,088,754 represented by 43,088,754 shares; the share capital
with respect to the Series B Shares was S/.94,356,208 represented by 94,356,208
shares and the share capital with respect to the Investment Shares was
S/.372,320 represented by 372,320 shares.


                                       132



Trading Information

      The table below sets forth the trading volume and the high and low closing
prices of the Common Shares and Investment Shares in Nuevos Soles. The table
also includes for the same periods the trading volume and the high and low
closing prices of the ADSs representing the Common Shares in U.S. Dollars from
the date after the redesignation of our Series B Shares and Series A Shares as
Common Shares on May 3, 2002. See "Item 4. Information on the Company--The
Company--History and Development--History--Redesignation of the Company's Shares
and ADSs":

<TABLE>
<CAPTION>
                                   Common Shares(1)                      ADSs(2)                    Investment Shares(1)
                           -------------------------------   -------------------------------   ------------------------------
                              Trading                           Trading                           Trading
                               Volume       High      Low        Volume       High      Low        Volume       High     Low
                           -------------   ------   ------   -------------   ------   ------   -------------   -----   ------
                           (in millions)     (in nominal     (in millions)   (in US$per ADS)   (in millions)    (in nominal
                                            S/. per share)                                                     S/. per share)
<S>                             <C>        <C>      <C>          <C>          <C>     <C>          <C>         <C>     <C>
Annual highs and lows
  2002 (after May 3,
  2002)                         8.18        54.53    24.98        51.26       16.00    9.86         0.15       37.00   16.80
  2003                          4.56       109.50    39.70        66.99       31.81   12.00         0.13       56.00   26.03
  2004                          2.21       105.00    66.80       109.38       30.49   18.46         0.18       70.20   48.00
  2005                          3.03       109.00    65.06       106.57       32.54   19.93         0.09       80.70   51.00
  2006                          2.33       106.50    77.12       173.71       32.49   22.81         0.04        88.0    73.0

Quarterly highs and lows

2005
  1st quarter                   0.46        76.50    68.57        25.41       23.68   20.62         0.01       64.30   62.00
  2nd quarter                   0.57        74.44    67.44        20.32       23.41   20.59         0.03       56.69   54.34
  3rd quarter                   1.27        87.05    76.22        24.82       27.14   23.39         0.02       61.34   55.77
  4th quarter                   0.73       105.17    86.99        36.02       31.42   25.26         0.03       78.90   75.34

2006
  1st quarter                   0.83       106.50    77.12        49.74       31.34   22.81         0.02        75.0    73.0
  2nd quarter                   0.86       101.40    77.50        57.85       32.49   23.30        0.002        78.0    75.0
  3rd quarter                   0.37        99.00    83.00        35.41       30.93   24.91         0.02        88.0    76.0
  4th quarter                   0.27        91.50    78.00        30.71       28.68   23.72        0.003        85.0    80.0

Monthly highs and lows

2006
  November                      0.11        91.49    82.0          8.94       28.65   25.55       0.0003        84.0    82.0
  December                      0.08        91.50    85.0          7.28       28.68   26.30       0.0015        85.0    83.0

2007
  January                       0.17        92.90    82.50        11.04       29.08   24.97        0.004        85.0    82.0
  February                      0.07        96.00    87.00         7.68       30.50   27.30        0.003        85.0    82.0
  March                         0.01         95.5    84.10        11.96       30.31   26.08        0.002       83.30   82.00
  April                         0.21       109.45    95.00        10.61       34.86   29.80        0.002       84.01   83.00
  May                           0.09       110.70   100.58         9.61       35.20   31.32        0.002       84.01   84.00
</TABLE>

----------
(1)   Source: Lima Stock Exchange

(2)   Source: Bloomberg; Yahoo Finance

      For the periods indicated prior to May 3, 2002, the table below sets forth
the trading volume and the high and low closing prices of the Series A Shares,
Series B Shares and Investment Shares in Nuevos Soles. The table also includes
for the same periods the trading volume and the high and low closing prices of
the ADSs representing the Series B Shares in U.S. Dollars. The following
information is not restated in constant Nuevos Soles:

<TABLE>
<CAPTION>
                               Series A Shares(1)         Series B Shares(1)              ADSs(2)             Investment Shares(1)
                           -------------------------  -------------------------  ------------------------  -------------------------
                            Trading                    Trading                    Trading                   Trading
                             Volume    High     Low     Volume    High     Low     Volume    High    Low     Volume    High    Low
                           ---------  -----    -----  ---------  -----   ------  ---------  -----   -----  ---------  -----   ------
                              (in       (in nominal      (in       (in nominal      (in          (in          (in       (in nominal
                           millions)  S/. per share)  millions)  S/. per share)  millions)    US$per ADS)  millions)  S/. per share)
<S>                           <C>     <C>      <C>       <C>     <C>      <C>      <C>      <C>     <C>       <C>     <C>      <C>
Quarterly highs and lows
2002
  1st quarter ..........      0.18    37.47    31.00     3.78    44.69    37.69    11.74    26.12   21.79     0.04    30.86    22.87
  2nd quarter
    (through May 3,
    2002) ..............      0.25    46.87    45.48     1.34    47.50    45.94    13.96    30.77   25.68     0.05    35.67    31.51
</TABLE>

----------
(1)   Source: Lima Stock Exchange

(2)   Source: The New York Stock Exchange, Inc.


                                       133



Selling Shareholders

      Not applicable.

Dilution

      Not applicable.

ITEM 10. Additional Information

Share Capital

      Not applicable.

Memorandum and Articles of Association

Organization and Register

      We were formed on September 7, 1953 by public deed as a Peruvian sociedad
anonima. However, in May of 1998, our By-laws were changed to conform with the
new Peruvian Companies Law. The term of existence is indefinite and our
principal place of business is Lima, Peru.

      We are managed by the General Meeting, the Board of Directors and the
management.

Objectives and Purposes

      Our legal purpose is to engage in mining operations and related activities
either directly or through majority-owned subsidiaries and controlled companies.
Likewise, we may hold shares of companies performing mining operations.

Directors

      The Board of Directors, which must be comprised of seven members, is
elected at the Annual Obligatory Meeting. Any changes in the Board of Directors
require the approval of the shareholders. The removal of the Board of Directors
must be approved at a shareholders' meeting, attended by holders of 75 percent
of the Common Shares in the first summons and 70 percent of the Common Shares in
the second summons, by resolution approved by, at least, two thirds of the total
number of Common Shares outstanding. In the case of resignation of Directors,
the Board of Directors may appoint substitute Directors who will serve until the
next shareholders' meeting.

      Directors are elected as a group for a term of three years and may be
reelected indefinitely. Pursuant to Article 29 of our By-laws, Directors are not
required to be shareholders. The Board of Directors, in its first meeting after
the Annual Obligatory Meeting during which elections are held, must choose from
among its members a Chairman and a Vice Chairman. The Peruvian Companies Law
requires that all companies (sociedades anonimas) provide for the representation
of minority shareholders on their Boards of Directors. To that effect, each of
our Common Shares gives the holder the right to as many votes as there are
directors to be elected. Each holder may pool his votes in favor of one person
or distribute them among various persons. Those candidates for the Board who
receive the most votes are elected directors.

      The Board of Directors meets when called by the Chairman of the Board, who
is appointed by the Board. The Board of Directors is validly convened when all
Directors are present and unanimously agree to carry out the meeting for the
purpose of transacting the business that has been proposed. Pursuant to article
177 of the Peruvian Companies Law, Directors may be jointly and severally liable
to us, the shareholders and third parties for their actions if they act with
willful misconduct, gross negligence or abuse their powers.


                                       134



      Our By-laws do not contain any provisions related to a director's power to
vote on matters in which the director is materially interested. However, Article
180 of the Peruvian Companies Law requires a director with an interest that
conflicts with an interest of ours on a specific matter to disclose such
interest to us and abstain from participating in the deliberation and decision
of the said matter. A director that contravenes such requirement is liable for
the damages suffered by us and can be removed by the Board of Directors or a
shareholders' meeting upon the request of any shareholder or any member of the
Board.

      Our By-laws also do not contain any provisions with respect to the power
of the Directors to vote upon matters relating to their own compensation.
Nevertheless, Article 30 of the By-laws requires that the Board of Directors
receive compensation of no more than 4 percent of the profits of each fiscal
year after making deductions for workers' profit sharing, taxes, reinvestment of
profits for tax benefits and legal reserves. This amount will be submitted for
ratification by the General Meeting during the annual obligatory meeting, at
which time it approves the balance sheet, taxes, reinvestment of profits for tax
benefits and legal reserves.

      Our By-laws contain no provision relating to the directors' power to
borrow from us. However, Article 179 of the Peruvian Companies Law provides that
directors of a company may enter into an agreement with such company only in the
event that the agreement relates to operations the company performs in the
regular course of business and in an arms-length transaction. Further, a company
may provide a loan to a director or grant securities in his favor only in
connection with operations that the company usually performs with third parties.
Agreements, credits, loans or guarantees that do not meet the requirements set
forth above require prior approval from at least two thirds of the members of
the company's Board of Directors. Directors are jointly liable to the company
and the company's creditors for contracts, credit, loans or securities executed
or granted without complying with Article 179 of the Peruvian Companies Law.

      Neither our By-laws nor the Peruvian Companies Law contain age limit
requirements for the retirement or non-retirement of directors.

Shares and Voting Rights

      We have two classes of shares, the Common Shares and the Investment
Shares. The Common Shares represent 100 percent of our outstanding share
capital. The Investment Shares have no voting rights and are not, under Peruvian
law and accounting rules, characterized as share capital.

      Holders of Common Shares are entitled to one vote per share, with the
exception of the election of the Board of Directors, where each such holder is
entitled to one vote per share per nominee. Each holder's votes may be cast all
for a single nominee or distributed among the nominees at the holder's
discretion. Holders of Common Shares may attend and vote at shareholder meetings
either in person or through a proxy. Additionally, holders of Common Shares have
the right to participate in the distribution of dividends and shareholder equity
resulting from liquidation. Our By-laws do not establish a maximum time limit
for the payment of the dividends. However, according to Article 232 of the
Peruvian Companies Law, the right to collect past-due dividends in the case of
public companies that are sociedades anonimas abiertas, as we are, expires at 10
years from the date on which the payment was due in accordance with the dividend
declaration.


                                       135



      Our share capital may be increased by holders of Common Shares at a
shareholder meeting. Capital reductions may be voluntary or mandatory and must
be approved by holders of Common Shares at a shareholder meeting. Capital
reductions are mandatory when accumulated losses exceed 50 percent of capital to
the extent such accumulated losses are not off-set by accumulated earnings and
capital increases within the following fiscal year. Capital increases and
reductions must be communicated to CONASEV, the Lima Stock Exchange and the
Superintendencia Nacional de Administracion Tributaria (SUNAT) and published in
the official gazette El Peruano and in a widely circulated newspaper in the city
in which we are located.

      The Investment Shares do not represent our stock obligations. Holders of
Investment Shares are neither entitled to exercise voting rights nor to
participate in shareholder meetings. However, Investment Shares confer upon the
holders thereof the right to participate in the dividends distributed according
to their nominal value, in the same manner as Common Shares.

Changes in the Rights of Shareholders

      Our By-laws do not contain special provisions relating to actions
necessary to change the rights of holders of the classes of shares. However,
Article 88 of the Peruvian Companies Law establishes that all shares of a same
class must have the same rights and obligations, and that in the event that we
decide to establish different rights and obligations we must create a different
class of shares, which creation will be agreed upon by the General Meeting in
accordance with the requirements for modification of the By-laws. The Common
Shares are the only class of shares representing 100 percent of our share
capital, and, therefore, each share has the same rights and obligations of each
other share. These requirements are described under "--Shares and Voting Rights"
above.

      The rights of any class of shares may not be reduced except in accordance
with the Peruvian Companies Law.

Shareholders' Meetings

      Pursuant to Peruvian law and our By-Laws, the Annual Obligatory Meeting
must be held during the three-month period after the end of each fiscal year.
Additional General Meetings may be held during the year. Because we are a
sociedad anonima abierta, we are subject to the special control of CONASEV, as
provided in Article 253 of the Peruvian Companies Law. If we do not hold the
Annual Obligatory Meeting during the three-month period after the end of each
fiscal year or any other shareholder meeting required by the Peruvian Companies
Law or our By-Laws, CONASEV will directly, or at the request of at least one
shareholder of the Common Shares, call for such a meeting, which will take place
in a reasonable period of time. Other shareholder meetings are convened by the
Board of Directors when deemed convenient for us or when it is requested by the
holders of at least five percent of the Common Shares. If, at the request of
holders of five percent of the Common Shares, the shareholder meeting is not
convened by the Board of Directors within 15 business days of the receipt of
such request, CONASEV will call for such meeting. In CONASEV calls for a
shareholders meeting, CONASEV will indicate the place, time and hour of the
meeting, the agenda and the person who will preside. If it is a meeting other
than the Annual Obligatory Meeting or a shareholder meeting required by the
Peruvian Companies law or the By-Laws, the agenda will contain those matters
requested by the shareholders who requested the meeting. Resolucion CONASEV No.
111-2003-EF-94.10, as amended by Resolucion CONASEV No. 016-2004-EF/94.10 and
Resolucion CONASEV No. 015-2005-EF/94.10, approved provisions related to the
right of the minority shareholders to obtain information regarding a sociedad
anonima abierta such as us and to request CONASEV to call a shareholders meeting
if it is not called by the sociedad anonima abierta upon request, for which
purpose Resolucion CONASEV No. 007-2006-EF/94.10 shall apply. Notwithstanding
the notice requirements as described in the preceding two sentences, any
shareholder meeting will be deemed called and legally installed, provided that
the shareholders representing all of the voting shares are present, and provided
that every present shareholder, whether or not such shareholder has paid the
full price of such shareholder's shares, agrees to hold the shareholder meeting
and accepts the business to be discussed therein. Holders of Investment Shares
have no right to request the Board to convene shareholder meetings.


                                       136



      Since we are a sociedad anonima abierta, notice of shareholders' meetings
must be given by publication of a notice, with the publication occurring at
least 25 days prior to any shareholders' meeting, in El Peruano and in a widely
circulated newspaper in the city in which we are located. The notice requirement
may be waived at the shareholder meeting by holders of 100 percent of the
outstanding Common Shares. According to Article 25 of the By-Laws and Article
257 of the Peruvian Companies Law, shareholder meetings called for the purpose
of considering a capital increase or decrease, the issuance of obligations, a
change in the By-Laws, the sale in a single act of assets with an accounting
value that exceeds 50 percent of our capital stock, a merger, division,
reorganization, transformation or dissolution, are subject to a first, second
and third quorum call, each of the second and third quorum to occur upon the
failure of the preceding one. A quorum for the first call requires the presence
of shareholders holding 50 percent of our total voting shares. For the second
call, the presence of shareholders holding at least 25 percent of our total
voting shares constitutes a quorum, and for the third call there is no quorum
requirement. These decisions require the approval of the majority of the voting
shares represented at the shareholder meeting. General Meetings convened to
consider all other matters are subject to a first and second quorum call, the
second quorum call to occur upon the failure of the first quorum.

      In the case of shareholder meetings called for the purpose of considering
the removal of members of the Board of Directors, at least 75 percent and 70
percent of the total number of Common Shares outstanding are required to be
represented at the shareholder meeting on the first quorum call and second
quorum call respectively. Provided such quorum is attained, the affirmative vote
of no less than two thirds of the total number of Common Shares outstanding is
required to effect the removal of members of the Board of Directors. The special
quorum and voting requirements described above cannot be modified at a
shareholder meeting called for the purpose of considering the removal of members
of the Board of Directors.

      Under our By-Laws, the following actions are to be taken at the annual
obligatory shareholders' meetings: approval of our balance sheets, profit and
loss statements and annual reports; approval of management performance;
allocation of profits; election of external auditors; election of the members of
the Board of Directors; and any other matters submitted by the Board of
Directors. The following actions are to be taken at the same annual
shareholders' meetings if the quorum and majority requirements are met or at any
other shareholders' meeting: any amendment of the By-Laws; any decision to
increase or reduce capital; any decision to issue debt; initiating
investigations or requesting auditor's reports; liquidating, merging,
consolidating, dissolving, or changing our business form or structure.

      In accordance with Article 21 of the By-laws, only those holders of Common
Shares whose names are inscribed in the Share Register not less than 10 days in
advance of a meeting will be entitled to attend shareholder meetings and to
exercise their rights.

Limitations on the Rights of Nonresident or Foreign Shareholders

      There are no limitations in our By-laws or the Peruvian Companies Law on
the rights of nonresident or foreign shareholders to own securities or exercise
voting rights on our securities.


                                       137



Change in Control

      There are no provisions in our By-laws that would have the effect of
delaying, deferring or preventing a change in control.

Disclosure of Share Holdings

      There are no provisions in our By-laws governing the ownership threshold
above which share ownership must be disclosed. However, according to Regulation
No. 009-2006-EF.94.10 of the CONASEV, which became effective on May 3, 2006, as
amended by Regulation No. 020-2006-EF.94.10, when an individual or financial
group acquires, in one act or various successive acts, a significant percentage
(more than 25 percent) of the voting shares of a company, a procedure known as
Oferta Publica de Adquisicion, or Takeover Bid, must be followed. This has the
effect of alerting other shareholders and the market that an individual or
financial group has acquired a significant percentage of a company's voting
shares, and gives other shareholders the opportunity to sell their shares at the
price offered by the purchaser. In addition, CONASEV and the Lima Stock Exchange
must be notified of any transfer of more than 5 percent of our paid-in-capital.

Changes in the Capital

      Our By-laws do not establish special conditions for increases or
reductions of capital that are more stringent than is required by the Peruvian
Companies Law. Furthermore, the Peruvian Companies Law forbids sociedades
anonimas abiertas, such as us, from including in their by-laws stipulations
limiting the transfer of their shares or restraining their trading in other
ways.

Corporate Governance

      In November 2003, the Commission approved changes to the New York Stock
Exchange's listing standards related to the corporate governance practices of
listed companies. Under these rules, listed foreign private issuers, like us,
must disclose any significant ways in which their corporate governance practices
differ from those followed by United States domestic companies under the New
York Stock Exchange, or NYSE, listing standards.

      There are significant differences in the corporate governance practices
followed by us as compared to those followed by United States domestic companies
under the NYSE's listing standards. The NYSE listing standards provide that the
board of directors of a United States domestic listed company must consist of a
majority of independent directors and that certain committees must consist
solely of independent directors. Under Peruvian corporate governance practices,
a Peruvian company is not required to have a majority of the members of the
board of directors be independent.

      The listing standards for the NYSE also require that United States
domestic companies have an audit committee, a nominating/corporate governance
committee and a compensation committee. Each of these committees must consist
solely of independent directors and must have a written charter that addresses
certain matters specified in the listing standards. Peruvian corporate
governance practices permit the Board of Directors of a Peruvian company to form
special governance bodies in accordance with the needs of such company and does
not require that these special governance bodies be composed partially or
entirely of independent directors. We maintain three committees, which include
the Audit Committee, the Compensation Committee and the Nominating/Corporate
Governance Committee. Our Board of Directors has determined that our Audit
Committee is composed entirely of independent directors, as defined in the
NYSE's Listed Company Manual.


                                       138



      The NYSE's listing standards also require United States domestic companies
to adopt and disclose corporate governance guidelines. In July 2002, CONASEV and
a committee composed by regulatory agencies and associations prepared and
published a list of suggested corporate governance guidelines called "Principles
of Good Governance for Peruvian Companies." These principles are disclosed on
Conasev web page http://www.conasev.gob.pe. Our code of business conduct and
ethics establishes our principles of good corporate governance and, as indicated
in "Item 16B. Code of Ethics," is posted on our website.

Material Contracts

      On March 16, 2005, we, along with Sumitomo Metal Mining Co., Ltd.,
Sumitomo Corporation, Summit Global Management B.V., Phelps Dodge, Cyprus Amax
Minerals Company, Cyprus Metals Company, Cyprus Climax Metals Company and
Sociedad Minera Cerro Verde S.A.A., entered into a participation agreement, or
the Participation Agreement, whereby, subject to certain closing conditions, we
agreed to increase our ownership interest in Cerro Verde up to 20.1 percent and
Sumitomo Metal Mining Co., Ltd., Sumitomo Corporation and Summit Global
Management B.V., or the Sumitomo Group, agreed to acquire an ownership interest
in Cerro Verde of between 21.0 and 24.99 percent in connection with a US$850
million expansion of the Cerro Verde operation to mine a primary sulfide ore
body. On June 1, 2005, Cerro Verde conducted a capital increase whereby we
subscribed 42,925,975 shares, increasing our interest in Cerro Verde from 9.17
percent to 18.21 percent and Sumitomo Metal Mining Co., Ltd. and Sumitomo
Corporation acquired equity positions in Cerro Verde totaling 21 percent. The
remaining minority shareholders own 7.2 percent of Cerro Verde through shares
publicly traded on the Lima Stock Exchange. As a result of the transaction,
Cerro Verde received cash totaling US$441.8 million, net of US$1.0 million in
expenses, and Phelps Dodge's interest in Cerro Verde was reduced to 53.6 percent
from 82.5 percent. Since that time, we purchased additional common shares on the
Lima Stock Exchange, and currently own 18.5 percent of Cerro Verde as of May 31,
2006.

      On September 30, 2005, Cerro Verde obtained debt financing facilities in
the overall amount of US$450 million, subject to certain conditions for the
expansion. The above-mentioned cash invested by the Sumitomo Group and us to
establish or increase ownership interest in Cerro Verde is also a major source
of funds for the expansion. Approximately US$300 million has been spent on the
Cerro Verde expansion. The current copper production at Cerro Verde is
approximately 100,000 short tons per year of copper cathode. After completion of
the expansion, copper production is expected to be approximately 300,000 short
tons per year.

      On December 30, 2005 and January 2, 2006, we acquired 50 percent and 25
percent, respectively, of the capital stock of Minas Poracota S.A., or Minas
Poracota, for a purchase price of US$4.5 million. According to the shareholders
agreement we executed with Teck Cominco, if a preliminary study to be carried
out by us and Teck Cominco indicates a probability of gold production that is
greater than 300,000 ounces per year, Teck Cominco will have the right to
increase its equity interest in Minas Poracota to 50 percent and operate the
project. Teck Cominco will prepare a feasibility study with a production of
300,000 ounces of gold. In October 2006, we purchased the remaining 25 percent
interest from Teck Cominco for US$2.25 million. See Note 38(b) to the Financial
Statements.

Exchange Controls

      Since August 1990, there have been no exchange controls in Peru and all
foreign exchange transactions are based on free market exchange rates. Prior to
August 1990, the Peruvian foreign exchange market consisted of several
alternative exchange rates. Additionally, during the last two decades, the
Peruvian currency has experienced a significant number of large devaluations,
and Peru has consequently adopted, and operated under, various exchange rate
control practices and exchange rate determination policies, ranging from strict
control over exchange rates to market determination of rates. Current Peruvian
regulations on foreign investment allow the foreign holders of equity shares of
Peruvian companies to receive and repatriate 100 percent of the cash dividends
distributed by such companies. Such investors are allowed to purchase foreign
exchange at free market currency rates through any member of the Peruvian
banking system and transfer such foreign currency outside Peru without
restriction.


                                       139



Taxation

      The following summarizes the material Peruvian and United States tax
consequences under present law of the purchase, ownership and disposition of
ADSs or Common Shares. The discussion is not a full description of all tax
considerations that may be relevant to a decision to purchase ADSs or Common
Shares. In particular, this discussion deals only with holders that hold ADSs or
Common Shares as capital assets and that have the U.S. Dollar as their
functional currency. The summary does not address the tax treatment of certain
investors that may be subject to special tax rules, such as banks, securities
dealers, insurance companies, tax-exempt entities, persons that will hold ADSs
or Common Shares as a position in a "straddle" or "conversion transaction" for
tax purposes and holders of ten percent or more of our voting shares. There is
no tax treaty currently in effect between Peru and the United States, except for
a treaty to exchange tax information. The information to be exchanged is defined
in such treaty as any data or declaration that may be relevant or essential to
the administration and application of taxes. Accordingly, the discussions below
of Peruvian and U.S. tax considerations are based on the domestic law of each of
Peru and the United States which are subject to change and possibly with
retroactive effect.

      As used herein, "Peruvian holder" means an owner of ADSs or Common Shares
that is (i) an individual domiciled in Peru, (ii) a business entity created
under the laws of Peru, or (iii) a Peruvian branch, agency or permanent
establishment of a non-Peruvian individual or entity. "U.S. Holder" means a
beneficial owner of ADSs or Common Shares that is (i) a United States citizen or
resident, (ii) a domestic corporation or partnership, (iii) a trust subject to
the control of a U.S. fiduciary and the primary supervision of a U.S. court or
(iv) estate the income of which is subject to United States Federal income
taxation regardless of its source.

Peruvian Tax Considerations

Cash Dividends and Other Distributions

      Cash dividends paid with respect to the Common Shares and amounts
distributed with respect to ADSs are currently subject to Peruvian withholding
income tax, at a rate of 4.1 percent of the dividend paid, when the dividend is
paid to shareholders that are: (i) individuals, whether domiciled or
non-domiciled in Peru or (ii) non-domiciled companies or entities. Distributions
of additional Common Shares representing profits, distribution of shares which
are not distribution of earnings or profits, as well as distribution of
preemptive rights with respect to Common Shares that are made as part of a pro
rata distribution to all shareholders generally will not be subject to Peruvian
income or withholding taxes.

Capital Gains

      Pursuant to Article 19, paragraph l, item 1, of the Peruvian Income Tax
Law, as amended by Legislative Decree 945 effective since January 1, 2004, and
by Legislative Decree 970 effective since January 1, 2007, capital gains
resulting from the sale or other disposition of ADSs or Common Shares are
exempted from Peruvian income tax if (i) in the case of individuals, the
transaction is effected on or before December 31, 2008; and (ii) in the case of
shareholders other than individuals, the transaction is effected on a Peruvian
stock exchange (floor session) on or before December 31, 2008. Legislative
Decree 945 also amended Article 2 of the Peruvian Income Tax Law to define: (i)
capital gains as any revenue coming from the sale of capital assets; and (ii)
capital assets as those assets whose purpose is not to be traded in the regular
course of business of the owner of the assets. This definition of capital gains
could imply that the gains effected from the sale or disposition of Common
Shares on the Peruvian stock exchange (floor session) are not exempted from
Peruvian income tax if such Common Shares are deemed not to be capital assets as
defined in Article 2 of the Preuvian Income Tax Law. However, Article 2 of the
Peruvian Income Tax Law also provides that the sale of shares and similar
securities is an operation which produces capital gains. Therefore, capital
gains resulting from the sale or other disposition of ADSs or Common Shares are
exempted from Peruvian income tax if the seller is an individual and the
transaction is effected on or before December 31, 2008 or, if the seller is not
an individual, the transaction is effected on a Peruvian stock exchange (floor
session) on or before December 31, 2008. There is no assurance that this
exemption will be extended beyond December 31, 2008.


                                       140



      An entity organized in Peru will be subject to Peruvian tax on capital
gains from sales of Common Shares after December 31, 2008 or from any sale on or
before such date not effected on a Peruvian stock exchange. In addition, if
Common Shares sold or disposed of on a Peruvian stock exchange are deemed not to
be capital assets, they will not produce capital gains for purposes of enjoying
the exemption described above. The amount of any taxable capital gain will be
the excess of the sale price of the Common Shares over the price of Common
Shares when acquired by the holder.

      An individual holder will be taxed on capital gains from the sale or other
disposition of Common Shares only if (a) such individual (i) in the case of an
individual domiciled in Peru, "customarily transacts in shares or other
securities" or (ii) in the case of an individual not domiciled in Peru,
"customarily transacts in shares issued by Peruvian companies" and (b) the sale
of such shares (i) is made on or before December 31, 2008 and is not effected on
a Peruvian stock exchange or (ii) is effected after December 31, 2008, unless
the first paragraph of Article 2 of the Peruvian Income Tax Law, as amended by
Legislative Decree 945, is interpreted to deem that Common Shares are not
capital assets and therefore they do not produce capital gains for purposes of
enjoying the exemption described above. For this purpose, an individual
"customarily transacts in shares or other securities" if such person makes at
least ten purchases and at least ten sales of shares or other securities during
the taxable year, and an individual "customarily transacts in shares issued by
Peruvian companies" if such person makes at least ten purchases and at least ten
sales of shares issued by Peruvian companies during the taxable year. The amount
of any taxable gain will be the excess of the sale price of the Common Shares
over the price of Common Shares when acquired by the holder.

Other Considerations

      No Peruvian estate or gift taxes are imposed on the gratuitous transfer of
ADSs or Common Shares. No stamp, transfer or similar tax applies to any transfer
of Common Shares, except for commissions payable by seller and buyer to the Lima
Stock Exchange (0.15 percent of value sold), fees payable to CONASEV (0.05
percent of value sold), brokers' fees (about 0.05 percent to 1 percent of value
sold) and added taxes (at the rate of 19 percent) on commissions and fees. Any
investor who sells its Common Shares on the Lima Stock Exchange will incur these
fees and taxes upon purchase and sale of the Common Shares.

United States Federal Income Tax Considerations

      Assuming the obligations contemplated by the Amended and Restated Deposit
Agreement are being performed in accordance with its terms, holders of ADSs (or
ADRs evidencing ADSs) generally will be treated for United States federal income
tax purposes as the owners of the Common Shares represented by those ADSs.


                                       141



Cash Dividends and Other Distributions

      Cash dividends paid with respect to Common Shares or Common Shares
represented by ADSs generally are includible in the gross income of a U.S.
Holder as ordinary income. Dividends generally are treated as foreign source
income. Dividends paid to a U.S. Holder that is a corporation are not eligible
for the dividends received deduction available to corporations. Under current
law, a maximum 15 percent U.S. tax rate is imposed on the dividend income of an
individual U.S. holder with respect to dividends paid by a domestic corporation
or "qualified foreign corporation" if certain holding period requirements are
met. A qualified foreign corporation generally includes a foreign corporation if
(i) its shares are readily tradable on an established securities market in the
U.S. or (ii) it is eligible for benefits under a comprehensive U.S. income tax
treaty. Clause (i) will apply with respect to ADSs if such ADSs are readily
tradable on an established securities market in the U.S. The ADSs are traded on
the New York Stock Exchange. As a result, we believe that we should be treated
as a qualified foreign corporation and, therefore, dividends paid to an
individual U.S. holder with respect to ADSs for which the minimum holding period
requirement is met should be taxed at a maximum rate of 15 percent. The maximum
15 percent tax rate is effective with respect to dividends included in income
during the period beginning on or after January 1, 2003, and ending December 31,
2010. Dividends paid in Nuevos Soles are includible in a United States dollar
amount based on the exchange rate in effect on the date of receipt (which, in
the case of ADSs, will be the date of receipt by the Depositary) whether or not
the payment is converted into U.S. Dollars at that time. Any gain or loss
recognized upon a subsequent sale or conversion of the Nuevos Soles for a
different amount of U.S. Dollars will be United States source ordinary income or
loss. Distributions to U.S. Holders of additional Common Shares or preemptive
rights with respect to Common Shares that are made as part of a pro rata
distribution to all of our shareholders generally will not be subject to United
States federal income tax but in other circumstances may constitute a taxable
dividend.

      A U.S. Holder will be entitled to a foreign tax credit for Peruvian taxes
imposed by withholding or otherwise, subject to generally applicable limitations
and restrictions. In the case of U.S. individuals for whom the reduced rate of
tax on dividends applies, such limitations and restrictions will appropriately
take into account the rate differential under rules similar to section
904(b)(2)(B) of the Internal Revenue Code. The rules governing foreign tax
credits are complex and U.S. Holders should consult their tax advisors regarding
their application to the particular circumstances of such holder.

      A non-U.S. Holder generally is not subject to United States Federal income
or withholding tax on dividends paid with respect to Common Shares or Common
Shares represented by ADSs, unless such income is effectively connected with the
conduct by the non-U.S. Holder of a trade or business within the United States.

Capital Gains

      U.S. Holders will recognize capital gain or loss on the sale or other
disposition of ADSs or Common Shares (or preemptive rights with respect to such
shares) held by the U.S. Holder or by the Depositary. U.S. Holders will not
recognize gain or loss on deposits or withdrawals of Common Shares in exchange
for ADSs or on the exercise of preemptive rights. Any gain recognized by a U.S.
Holder generally will be treated as United States source income. Consequently,
in the case of a disposition of Common Shares or ADSs in a transaction subject
to Peruvian tax, the U.S. Holder may not be able to claim the foreign tax credit
for any Peruvian tax imposed on the gain unless it has sufficient foreign source
income from other sources against which it can apply the credit. Generally, gain
or loss will be a long-term capital gain or loss if the U.S. Holder's holding
period for such Common Shares or ADSs exceeds one year. Long-term capital gain
for an individual U.S. Holder is generally subject to a reduced rate of tax.
With respect to sales occurring on or after May 6, 2003, but before January 1,
2011, the long-term capital gain tax rate for an individual U.S. Holder is 15
percent. For sales occurring before May 6, 2003, or after December 31, 2010,
under current law the long-term capital gain rate for an individual U.S. Holder
is 20 percent.


                                       142



      A non-U.S. Holder of ADSs or Common Shares will not be subject to United
States income or withholding tax on gain from the sale or other disposition of
ADSs or Common Shares unless (i) such gain is effectively connected with the
conduct of a trade or business within the United States or (ii) the non-U.S.
Holder is an individual who is present in the United States for at least 183
days during the taxable year of the disposition and certain other conditions are
met.

Passive Foreign Investment Company

      We believe that we are not and will not become a passive foreign
investment company for United States Federal income tax purposes. A foreign
corporation is a passive foreign investment company, or PFIC, in any taxable
year in which, after taking into account the income and assets of certain
subsidiaries pursuant to the applicable look-through rules, either (i) at least
75 percent of its gross income is passive income or (ii) at least 50 percent of
the average value of its assets is attributable to assets that produce passive
income or are held for the production of passive income.

      If we were a PFIC in any year during which a U.S. Holder owned ADSs or
Common Shares, we would not be treated as a "qualified foreign corporation" for
purposes of qualifying dividends paid to a U.S. Holder for the preferential 15
percent maximum U.S. tax rate noted above and the U.S. Holder would be subject
to additional taxes on any excess distributions received from us and any gain
realized from the sale or other disposition of ADSs or Common Shares (regardless
of whether we continued to be a PFIC). A U.S. Holder has an excess distribution
to the extent that distributions on ADSs or Common Shares during a taxable year
exceed 125 percent of the average amount received during the three preceding
taxable years (or, if shorter, the U.S. Holder's holding period for the ADSs or
Common Shares). To compute the tax on an excess distribution or any gain, (i)
the excess distribution or the gain is allocated ratably over the U.S. Holder's
holding period for the ADSs or Common Shares, (ii) the amount allocated to the
current taxable year is taxed as ordinary income and (iii) the amount allocated
to other taxable years is taxed at the highest applicable marginal rate in
effect for each year and an interest charge is imposed to recover the deemed
benefit from the deferred payment of the tax attributable to each year.

      If we were a PFIC, U.S. holders of interests in a holder of ADSs or Common
Shares may be treated as indirect holders of their proportionate share of the
ADSs or Common Shares and may be taxed on their proportionate share of any
excess distribution or gain attributable to the ADSs or Common Shares. An
indirect holder also must treat an appropriate portion of its gain on the sale
or disposition of its interest in the actual holder as gain on the sale of the
ADSs or Common Shares.

Information Reporting and Backup Withholding

      Dividends in respect of the ADSs or Common Shares and the proceeds from
the sale, exchange, or redemption of the ADSs or Common Shares may be reported
to the United States Internal Revenue Service and a backup withholding tax may
apply to such amounts unless the holder (i) is a domestic corporation (which may
be required to establish its exemption by carrying its status on U.S. Internal
Revenue Service Form W-9), (ii) in the case of a U.S. Holder other than a
corporation, provides an accurate taxpayer identification number in the manner
required by applicable law, (iii) in the case of a non-U.S. Holder, provides a
properly executed U.S. Internal Revenue Service Form W-8BEN; or other successor
Form, or (iv) otherwise establishes a basis for exemption. The amount of any
backup withholding from a payment to a U.S. Holder generally will be allowed as
a credit against the U.S. Holder's United States Federal income tax liability.


                                       143



Dividends and Paying Agents

      Not applicable.

Statement by Experts

      Not applicable.

Documents on Display

      We are subject to the informational requirements of the United States
Securities Exchange Act of 1934, as amended. In accordance with these
requirements, we file annual reports and other information to the Commission.
These materials, including this Annual Report on Form 20-F and the exhibits
hereto, may be inspected and copied at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 233
Broadway, New York, New York 10279-0001. Copies of the materials may be obtained
from the Public Reference Room of the Commission at 100 F Street, N.E.,
Washington, D.C. 20549 at prescribed rates. The public may obtain information on
the operation of the Commission's Public Reference Room by calling the
Commission in the United States at 1-800-SEC-0330. The Commission also maintains
a web site at http://www.sec.gov that contains reports, proxy statements and
other information regarding registrants that file electronically with the
Commission. Form 20-F reports and some of the other information submitted by us
to the Commission may be accessed through this web site.

Subsidiary Information

      Not applicable.

ITEM 11. Quantitative and Qualitative Disclosures About Market Risk

      The following discussion contains forward looking statements that are
subject to risks and uncertainties, many of which are out of our control. Our
primary market risks are related to fluctuations in the prices of gold, silver,
zinc and lead. To a lesser extent, we are subject to market risk related to
fluctuations in US$/Nuevo Sol exchange rates and to market risk related to
interest rate fluctuation on our cash balances.

Gold Commodity Contracts

Gold and silver hedging and sensitivity to market price

      Our revenues and expenses are to a great extent influenced by world market
prices for gold, silver, zinc and lead that fluctuate widely and over which we
have no control. Until 1998, we pursued a limited economic hedging and options
strategy, locking in metals prices on a medium-term basis when we considered
market prices attractive. However, in 1998 we adopted a new hedging strategy, in
order to focus on long-term position-taking on the price of precious metals.


                                       144



      Yanacocha has informed us that it has generally not engaged in, and is
currently not engaged in, gold price hedging activities, such as forward sales
or option contracts, to minimize its exposure to fluctuations in the price of
gold.

      In October 2004 our Board of Directors issued a mandate not to enter into
new hedging transactions. To avoid future fluctuations in the consolidated
results of operations, since 2003, we have been modifying the terms of certain
gold derivative instruments in order to qualify them as normal sales contracts.
In March 2006, we closed out all of our outstanding gold derivative contracts
that were maintained as of December 31, 2005 and replaced them with sales
contracts that require physical delivery of gold (normal sales) at fixed or
maximum prices. On January 15, 2007, we transferred 208,000 gold ounces that had
been committed for 2007 and 108,000 gold ounces that had been committed for 2008
to 2012, without any cash disbursement. On March 9, 2007, we negotiated with
several counterparties to eliminate the fixed or maximum price component on
determined commitments for a total of 483,000 gold ounces scheduled for delivery
from 2008 to 2012, which required us to make aggregate payments of US$144.99
million. Additionally, on May 15 and May 25, 2007, we negotiated with several
counterparties to eliminate the fixed or maximum price component on all of our
2007, 2008 and 2009 gold commitments for a total of 488,000 gold ounces, which
required us to make aggregate payments of US$170.70 million. After these
transactions we will continue delivering physical gold as scheduled but will
receive the prevailing market price at the time.

      Under the terms of the normal sales contracts at fixed prices, we will
realize capped prices ranging from the applicable gold market price to US$451
per ounce. As of May 31, 2007, we were committed to sell 922,000 ounces of gold
at market price of up to US$451 per ounce between January 2010 and December
2012. In 2005 and 2006, we delivered 282,000 and 388,000 ounces of gold at an
average price of US$341.58 and US$338.94, respectively, as part of the sales
contracts mentioned above. See further discussion in Note 33 to our Financial
Statements.

Silver Derivatives Contracts

      As of May 31, 2007, we had no silver derivative contracts in place.

Gold Convertible Put Option Contracts

      We had the following gold convertible put option contracts as of May 31,
2007:

Gold Convertible Put
Option Contracts        2007     2008     2009     2010    After 2010    Total
--------------------   ------   ------   ------   ------   ----------   -------
Knock-in contracts
Ounces                     --       --       --       --         --          --
Average price US$/oz       --       --       --       --         --          --
Knock-out contracts
Ounces                 37,500   60,000   60,000   30,000     22,500     210,000
Average price US$/oz   345.00   345.00   345.00   345.00     345.00      345.00


                                       145



      Knock-out/knock-in option contracts are contingent bought put options that
might terminate (or knock-out) or convert (or knock-in) to bought put options,
depending on certain market conditions. Referred contingent option contracts are
marked to market with changes reflected in income. Fair value of these contracts
as of May 31, 2007 was insignificant.

Normal Sales

      We had the following normal sales contracts with fixed or capped prices
outstanding at May 31, 2007:

<TABLE>
<CAPTION>
Normal Sales            2007   2008    2009    2010     After 2010     Total
--------------------    ----   ----    ----   -------   ----------   -------
<S>                      <C>    <C>      <C>  <C>         <C>        <C>
Ounces                   --      --      --   273,000     649,000    922,000

Average price - cap
US$/oz                   --      --      --    390.25      384.99     386.55
</TABLE>

      We regularly examine our strategy with regard to hedging. Our Chief
Executive Officer, Chief Financial Officer and Treasurer coordinate our
day-to-day economic hedging activities. Mark to market value of these contracts
as of May 31, 2007 was negative US$315.3 million.

Foreign currency risk

      We buy and sell our products and obtain capital facilities and investment
in U.S. Dollars. The assets and liabilities in different currencies from the
U.S. dollar (Nuevos Soles) are not significant. We estimate that the future
exchange rate fluctuations of Peruvian currency versus the U.S. dollar will not
significantly affect the results of our future operations.

Interest Rate Sensitivity

      We reduce our exposure to the risks due to variations in interest rates by
engaging in financial obligations and capital leasing with fixed interest rates.
See Note 34(b) to the Financial Statements. Consequently, we do not use
derivative instruments to manage this risk and we do not expect to incur
significant losses based on interest risks.

ITEM 12. Description of Securities Other Than Equity Securities

      Not applicable.

PART II

ITEM 13. Defaults, Dividend Arrearages and Delinquencies

      Not applicable.

ITEM 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds

      Not applicable.


                                       146



ITEM 15. Controls and Procedures

      Evaluation of disclosure controls and procedures. As of December 31, 2006,
we carried out an evaluation under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. There are inherent limitations to the effectiveness of
any system of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide
reasonable assurance of achieving their control objectives. Based upon and as of
the date of our evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures are effective to
provide reasonable assurance that information required to be disclosed in the
reports we file and submit under the United States Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported as and when
required.

Management's Annual Report on Internal Control over Financial Reporting

      Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with generally accepted accounting
principles. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Our management has assessed
the effectiveness of our internal control over financial reporting as of
December 31, 2006. In making its assessment, management has utilized the
criteria set forth by the Committee of Sponsoring Organizations (COSO) of the
Treadway Commission in Internal Control--Integrated Framework. Our management
concluded that based on its assessment, our internal control over financial
reporting was effective as of December 31, 2006. Our management's assessment of
the effectiveness of our internal control over financial reporting as of
December 31, 2006 has been audited by Medina, Zaldivar, Paredes & Asociados, an
independent registered public accounting firm, as stated in their report which
appears elsewhere in this Annual Report.

      Attestation Report of the Independent Registered Public Accounting Firm To
the Board of Directors and Shareholders of Compania de Minas Buenaventura S.A.A.

      We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Compania
de Minas Buenaventura S.A.A. (a Peruvian company) and subsidiaries maintained
effective internal control over financial reporting as of December 31,2006,
based on criteria established in Internal Control--Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (the
COSO criteria). Compania de Minas Buenaventura S.A.A.'s management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the company's internal control
over financial reporting based on our audit.

      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
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.


                                      147



      A company's internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

      Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

      In our opinion, management's assessment that Compania de Minas
Buenaventura S.A.A. and subsidiaries maintained effective internal control over
financial reporting as of December 31, 2006, is fairly stated, in all material
respects, based on the COSO criteria. Also, in our opinion, Compania de Minas
Buenaventura S.A.A. and subsidiaries maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2006,
based on the COSO criteria.

      We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheets of Compania de Minas Buenaventura S.A.A. and subsidiaries as of December
31, 2006 and 2005, and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2006 and our report dated June 14, 2007, expressed an
unqualified opinion thereon.


/S/ MEDINA, ZALDIVAR, PAREDES & ASOCIADOS
-----------------------------------------
Countersigned by:


/S/ VICTOR BURGA
----------------------------------------
Victor Burga
C.P.C. Register No.14859

Lima, Peru
June 14, 2007

      Changes in internal controls.

      There has been no change in our internal control over financial reporting
during 2006 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.


                                      148



ITEM 16A. Audit Committee Financial Expert

      The Board of Directors has determined that Mr. Luis Coleridge Alcantara is
the Audit Committee financial expert as defined in Item 16A of Form 20-F. The
Board of Directors has also determined that Mr. Coleridge and each of the other
members of the Audit Committee are "independent directors" as defined in Section
303A.02 of the NYSE's Listed Company Manual.

ITEM 16B. Code of Ethics

      We have adopted a written code of business conduct and ethics that applies
to our principal executive officer, principal financial officer, principal
accounting officer and controller, or persons performing similar functions, as
well as all other employees. Our code of business conduct and ethics is posted
on, and within five days following the date of any amendment or waiver we intend
to disclose any amendments to or waivers from our code of business conduct and
ethics on, our website which is located at http://www.buenaventura.com. The
information on our website is not a part of, nor incorporated into, this
document.

ITEM 16C. Principal Accountant Fees and Services

      Medina, Zaldivar, Paredes & Asociados, a member firm of Ernst & Young
International, has served as our independent public accountant for each of the
fiscal years in the two-year period ended December 31, 2005 and 2006, for which
audited financial statements appear in this annual report on Form 20-F. The
auditor is elected annually at the General Meeting. The Audit Committee proposed
at the General Meeting that Medina, Zaldivar, Paredes & Asociados be elected as
the independent auditor for 2007.

      The following table presents the aggregate fees for professional services
and other services rendered by Medina, Zaldivar, Paredes & Asociados for 2005
and 2006.

                           Year ended December 31,
                           -----------------------
                              2005        2006
                           ----------   ----------
      Audit Fees           US$330,500   US$490,646
      Audit-Related Fees   US$150,200           --
      Tax Fees              US$80,000   US$160,500
                           ----------   ----------
      Total                US$560,700   US$651,146

      Audit Fees. Audit fees in the above table are the aggregate fees billed by
Medina, Zaldivar, Paredes & Asociados in connection with the audit of our annual
financial statements, the review of our quarterly financial statements and
statutory and regulatory audits.

      Audit-related Fees. In 2005, audit-related fees were incurred in
connection with a quality assurance review of the initial implementation of the
United States Sarbanes-Oxley Act of 2002 and in 2006, audit related fees were
incurred in connection with the audit of management's assessment on Internal
Control Over Financial Reporting .

      Tax Fees. Tax fees in the above table are fees billed by Medina, Zaldivar,
Paredes & Asociados in connection with review of income tax filings, transfer
pricing studies and tax consultations.


                                       149



Audit Committee Pre-approval Policies and Procedures

      Our Audit Committee is responsible for the oversight of the independent
auditor. The Audit Committee has adopted a policy regarding pre-approval of
audit services provided by our independent auditors, or the Policy. In
accordance with the Policy, the Audit Committee must pre-approve the provision
of services by our independent auditor for all audit and non-audit services
prior to commencement of the specified service. The requests for pre-approval
are submitted to the Audit Committee by the Chief Financial Officer and
following approval by audit committee members and engagement letter is executed.
The Audit Committee approved all audit, tax and audit-related fees in 2006.

ITEM 16D. Exemptions from the Listing Standards for Audit Committees

      Not applicable.

ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

      For the year ended December 31, 2006, neither we nor any person acting on
our behalf made any purchase of our common shares.

PART III

ITEM 17. Financial Statements

      Not applicable.

ITEM 18. Financial Statements

      Please refer to Item 19.


                                       150



ITEM 19.       Exhibits

(b) Index to Exhibits

1.1   By-Laws (Estatutos) of Compania de Minas Buenaventura S.A.A., as amended
      April 30, 2002 (incorporated by reference from Compania de Minas
      Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December
      31, 2002, filed on June 25, 2003)

1.2   By-Laws (Estatutos) of Minera Yanacocha S. R. L., as amended October 18,
      1999 (incorporated by reference from Compania de Minas Buenaventura S.A.A.
      Annual Report on Form 20-F for the year ended December 31, 2002, filed on
      June 25, 2003)

4.1   Participation Agreement among Sumitomo Metal Mining Co., Ltd., Sumitomo
      Corporation, Summit Global Management B.V., Compania de Minas Buenaventura
      S.A.A., Phelps Dodge Corporation, Cyprus Amax Minerals Company, Cyprus
      Metals Company, Cyprus Climax Metals Company and Sociedad Minera Cerro
      Verde S.A.A. dated March 16, 2005 (incorporated by reference from Compania
      de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended
      December 31, 2004, filed on May 27, 2005)

4.2   Shareholders Agreement among SMM Cerro Verde Netherlands B.V., Sumitomo
      Metal Mining Co., Ltd., Sumitomo Corporation, Summit Global Management
      B.V., Compania de Minas Buenaventura S.A.A., Cyprus Climax Metals Company,
      Phelps Dodge Corporation and Sociedad Minera Cerno Verde S.A.A. dated June
      1, 2005 (incorporated by reference from Compania de Minas Buenaventura
      S.A.A. Annual Report on Form 20-F for the year ended December 31, 2005,
      filed on June 6, 2006)


                                       151



11    Code of Conduct and Ethics (incorporated by reference from Compania de
      Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended
      December 31, 2002, filed on June 25, 2003)

12.1  Certification of Chief Executive Officer of Compania de Minas Buenaventura
      S.A.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

12.2  Certification of Chief Financial Officer of Compania de Minas Buenaventura
      S.A.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

13.1  Certification of Chief Executive Officer of Compania de Minas Buenaventura
      S.A.A. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

13.2  Certification of Chief Financial Officer of Compania de Minas Buenaventura
      S.A.A. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


                                       152



                                    SIGNATURE

      Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, as amended, the registrant certifies that it meets all of the
requirements for filing on Form 20-F and has duly caused this annual report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                        COMPANIA DE MINAS BUENAVENTURA S.A.A.


                                        By: /S/ CARLOS E. GALVEZ PINILLOS
                                            ------------------------------------
                                             Carlos E. Galvez Pinillos
                                             Chief Financial Officer

Dated:  June 27, 2007



Index to the Financial Statements


<TABLE>
<CAPTION>
                                                                                                          Page
<S>                                                                                                       <C>
Compania de Minas Buenaventura S.A.A. and subsidiaries

Report of Independent Registered Public Accounting Firm, issued by Medina,
Zaldivar, Paredes & Asociados                                                                             F-2

Consolidated financial statements

         Consolidated Balance Sheets as of December 31, 2005 and 2006                                     F-4
         Consolidated Statements of Income for the years ended December 31, 2004, 2005
         and 2006                                                                                         F-5
         Consolidated Statements of Changes in Shareholders' Equity for the years ended
         December 31, 2004, 2005 and 2006                                                                 F-6
         Consolidated Statements of Cash Flows for the years ended December 31, 2004,
         2005 and 2006                                                                                    F-7
         Notes to the Consolidated Financial Statements                                                   F-8


Minera Yanacocha S.R.L.

Report of Independent Registered Public Accounting Firm                                                   F-48
Financial statements

         Statements of Income for the years ended December 31, 2004, 2005 and 2006                        F-49
         Balance Sheets as of December 31, 2005 and 2006                                                  F-50
         Statements of Cash Flows for the years ended December 31, 2004, 2005 and 2006                    F-51

         Statements of Changes in Partners' Equity for the year ended December 31, 2004,
         2005 and 2006                                                                                    F-52
         Notes to the Financial Statements                                                                F-53


Sociedad Minera Cerro Verde S.A.A

Report of Independent Registered Public Accounting Firm                                                   F-75
</TABLE>


                                      F-1


ERNST & YOUNG                                          Medina, Zaldivar, Paredes
                                                      & Asociados Sociedad Civil

Report of Independent Registered Public Accounting Firm

To the Shareholders of Compania de Minas Buenaventura S.A.A.

We have audited the accompanying consolidated balance sheets of Compania de
Minas Buenaventura S.A.A. (a Peruvian company) and subsidiaries (together, the
Company) as of December 31, 2006 and 2005, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 2006. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements of Minera Yanacocha S.R.L. (an equity
accounted affiliated entity in which the Company has an 43.65 percent interest)
and the financial statements of Sociedad Minera Cerro Verde S.A. A. (an equity
accounted affiliated entity in which the Company has an 18.299 percent and 18.5
percent interest as of December 31, 2005 and 2006, respectively) as of December
31, 2006 and 2005 and for each of the three years in the period ended December
31, 2006, have been audited by other auditor whose reports have been furnished
to us, and our opinion, insofar as it relates to the amounts included for Minera
Yanacocha S.R.L. and Sociedad Minera Cerro Verde S.A.A., is based solely on the
reports of the other auditor. In the consolidated financial statements of the
Company, as derived from the financial statements of Minera Yanacocha S.R.L.,
and Sociedad Minera Cerro Verde S.A.A., the Company's investment and share in
the net income in these entities are US$754.2 million and US$647.4 million as of
December 31, 2006 and 2005, and US$314.7, US$266.2 million and US$179.7 million
for the years ended December 31, 2006, 2005 and 2004, respectively.

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
consolidated 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 and the reports of the independent auditors of Minera Yanacocha S.R.L.
and Sociedad Minera Cerro Verde S.A.A. provide a reasonable basis for our
opinion.

In our opinion, based on our audits and the reports of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Compania de Minas
Buenaventura S.A.A. and subsidiaries as of December 31, 2006 and 2005, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2006, in conformity with Peru
generally accepted accounting principles, which differ in certain respects from
U.S. generally accepted accounting principles (see notes 39 and 40 to the
consolidated financial statements).

                                      F-2


As mentioned in note 4, El Brocal and the affiliate Sociedad Minera Cerro Verde
S.A.A. modified its accounting policy for recording mining stripping costs.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Compania de
Minas Buenaventura S.A.A.'s internal control over financial reporting as of
December 31, 2006, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated June 14, 2007 expressed an unqualified opinion
thereon.


/S/ MEDINA, ZALDIVAR, PAREDES & ASOCIADOS
-----------------------------------------

Countersigned by:

/S/ VICTOR BURGA
----------------

Victor Burga
C.P.C. Register No.14859

Lima, Peru
June 14, 2007

                                      F-3


Compania de Minas Buenaventura S.A.A. and subsidiaries

Consolidated Balance Sheets

As of December 31, 2005 and 2006

<TABLE>
<CAPTION>
                                                                     Note           2005             2006
                                                                                  US$(000)         US$(000)
<S>                                                                   <C>        <C>              <C>
Assets
Current assets

Cash and cash equivalents                                             6              96,851          239,533
Financial assets at fair value through profit or loss (Gold
   Certificates)                                                      7                  --           63,210
Available-for-sale financial assets                                   8              15,423           56,549
Trade accounts receivable                                             9              27,225           77,422
Other accounts receivable, net                                        10              5,567            4,481
Accounts receivable from affiliates                                   37             19,259           11,714
Inventories, net                                                      11             27,507           30,621
Current portion of prepaid tax and expenses                           12              7,705            7,961
                                                                                  ---------        ---------
Total current assets                                                                199,537          491,491

Long - term other accounts receivable                                 10              1,471            1,524
Prepaid tax and expenses                                              12              8,506           10,501
Investment in shares                                                  13            732,486          839,129
Property, plant and equipment, net                                    14            170,002          215,643
Mine development costs, net                                           15             47,777           64,753
Other assets                                                                          1,547            1,283
Deferred income tax and workers' profit sharing asset, net            30             89,796          111,447
                                                                                  ---------        ---------
Total assets                                                                      1,251,122        1,735,771

Liabilities and shareholders' equity, net
Current liabilities
Bank loans                                                            16              7,645           10,000
Trade accounts payable                                                17             15,473           28,539
Income tax payable                                                                   10,871           34,485
Other current liabilities                                             18             48,761           59,779
Derivative instruments                                                33             66,207                -
Current portion of long-term debt                                                       475              491
Deferred income from sale of future production                        33             31,209           43,032
                                                                                  ---------        ---------
Total current liabilities                                                           180,641          176,326

Other long-term liabilities                                           18             28,229           64,651
Long-term debt                                                                          397              115
Deferred income from sale of future production                        33            178,896          194,173
                                                                                  ---------        ---------
Total liabilities                                                                   388,163          435,265

Shareholders' equity, net                                             19
Capital stock, net of treasury shares of US$14,474,000 in 2005
   and 2006                                                                         173,930          173,930
Investment shares, net of treasury shares of US$37,000 in 2005
   and 2006                                                                             473              473
Additional capital                                                                  177,713          177,713
Legal reserve                                                                        37,679           37,679
Other reserves                                                                          269              269
Retained earnings                                                                   483,484          852,148
Cumulative translation loss                                                         (34,075)         (34,075)
Cumulative  unrealized gain on investments in shares carried at
   fair value                                                                            70              932
                                                                                  ---------        ---------
                                                                                    839,543        1,209,069
Minority interest                                                                    23,416           91,437
                                                                                  ---------        ---------

Total shareholders' equity, net                                                     862,959        1,300,506
                                                                                  ---------        ---------

Total liabilities and shareholders' equity, net                                   1,251,122        1,735,771
                                                                                  =========      ==========
</TABLE>

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

                                      F-4


Compania de Minas Buenaventura S.A.A. and subsidiaries

Consolidated Statements of Income

For the years ended December 31, 2004, 2005 and 2006

<TABLE>
<CAPTION>
                                                                       Note        2004            2005           2006
                                                                                  US$(000)        US$(000)        US$(000)

<S>                                                                            <C>             <C>             <C>
Operating revenues
Net sales of goods and  services                                        21         266,405         283,387         548,072
Realized income from sale of future production                          33          20,187          28,064          50,325
Royalties income                                                        37          37,797          46,094          48,475
                                                                               -----------     -----------     -----------
Total revenues                                                                     324,389         357,545         646,872
                                                                               -----------     -----------     -----------
Costs of operations
Cost of good sold exclusive of depreciation and amortization            22          99,911         103,881         147,664
Exploration and development costs in operational mining sites           23          37,371          41,166          49,534
Depreciation and amortization                                                       21,723          33,640          36,931
Royalties                                                               26           9,254          12,209          24,420
Environmental liability expense                                         18               -               -           6,764
                                                                               -----------     -----------     -----------
Total costs of operations                                                          168,259         190,896         265,313
                                                                               -----------     -----------     -----------
Gross margin                                                                       156,130         166,649         381,559
                                                                               -----------     -----------     -----------
Operating expenses
General and administrative                                              24          22,833          34,350          36,639
Exploration costs in non-operational mining sites                       25          25,877          27,812          36,190
Selling                                                                 27           5,231           4,800           5,928
                                                                               -----------     -----------     -----------
Total operating expenses                                                            53,941          66,962          78,757
                                                                               -----------     -----------     -----------
Operating income                                                                   102,189          99,687         302,802
                                                                               -----------     -----------     -----------
Other income (expenses), net
Share in affiliated companies, net                                    13(b)        177,423         263,994         313,168
Finance income                                                          28           3,558           3,523           7,949
Loss from change in the fair value of derivative instruments            33         (17,360)        (26,588)        (13,268)
Finance expense                                                         28          (4,273)         (4,060)         (5,948)
Loss from change in the market value of gold certificates               7               --              --          (4,861)
Exchange difference gain (loss)                                                     (3,706)            448            (308)
Loss from exposure to inflation                                                     (2,888)             --              --
Other, net                                                              29          (4,811)         (3,227)         (5,026)
                                                                               -----------     -----------     -----------
Total other income (expenses), net                                                 147,943         234,090         291,706
                                                                               -----------     -----------     -----------
Income before workers' profit sharing, income tax and minority
   interest                                                                        250,132         333,777         594,508

Workers' profit sharing                                                 30          (5,383)         (2,593)        (14,271)
Income tax                                                              30         (29,911)        (22,816)        (64,033)
                                                                               -----------     -----------     -----------
Net income                                                                         214,838         308,368         516,204

Net income attributable to minority interest                                        (8,261)        (19,971)        (88,147)
                                                                               -----------     -----------     -----------
Net income attributable to Buenaventura                                            206,577         288,397         428,057
                                                                               ===========     ===========     ===========

Basic and diluted earnings per share, stated in U.S. dollars              31          1.62            2.27            3.36
                                                                               ===========     ===========     ===========

Weighted average number of shares outstanding                                  127,236,219     127,229,844     127,221,164
                                                                               ===========     ===========     ===========
</TABLE>

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

                                      F-5


Compania de Minas Buenaventura S.A.A. and subsidiaries

Consolidated Statements of Changes in Shareholders' Equity

For the years ended December 31, 2004, 2005 and 2006

<TABLE>
<CAPTION>
                                     Capital stock, net of
                                        treasury shares
                                    -----------------------
                                       Number       Common     Investment    Additional      Legal        Other       Retained
                                     of shares      shares      shares        capital       reserve      reserves     earnings
                                                   US$(000)     US$(000)      US$(000)      US$(000)     US$(000)     US$(000)
<S>                                 <C>           <C>          <C>           <C>           <C>         <C>           <C>
Balance as of January 1, 2004,
   before modifications             126,879,832      173,930          491       177,983        28,938           --       65,555
Gain (loss) to apply the equity
   method in investment in
   Sociedad Minera Cerro Verde
   S.A.A., maintained initially
   at fair value, note 13(c)                 --           --           --            --            --           --       15,434
Cumulative loss of change in
   accounting principle in El
   Brocal, note 4                            --           --           --            --            --           --       (3,007)
Cumulative gain of change in
   accounting principle in
   Sociedad Minera Cerro Verde
   S.A.A., note 4                            --           --           --            --            --           --        4,221
                                    -----------   ----------   ----------    ----------    ----------   ----------   ----------
Balance modified as of
   January 1, 2004                  126,879,832      173,930          491       177,983        28,938           --       82,203
Declared and paid dividends,
   note 19(e)                                --           --           --            --            --           --      (40,648)
Fair value of derivative
   instruments classified as
   hedging instruments held by El
   Brocal, note 33                           --           --           --            --            --           --           --
Transfer to legal reserve                    --           --           --            --         8,741           --       (8,741)
Increase of the capital stock of
   minority interest shareholder             --           --           --            --            --           --           --
Cumulative loss for translation
   of investment in Minera
   Yanacocha S.R.L., maintained
   through Compania Minera
   Condesa S.A., and Sociedad
   Minera Cerro Verde S.A.A                  --           --           --            --            --           --           --
Loss on translation to U.S.
   dollar, note 3(f)                         --           --           --            --            --           --           --
Other                                        --           --           --            --            --          269           --
Net income                                   --           --           --            --            --           --      206,577
                                    -----------   ----------   ----------    ----------    ----------   ----------   ----------
Balance as of December 31, 2004     126,879,832      173,930          491       177,983        37,679          269      239,391
Declared and paid dividends,
   note 19(e)                                --           --           --            --            --           --      (44,304)
Investments in shares maintained
   at fair value                             --           --           --            --            --           --           --
Fair value of derivative
   instruments classified as
   hedging instruments held by El
   Brocal, note 33                           --           --           --            --            --           --           --
Capitalization of accounts
   payable to minority interest
   shareholder in Minera
   Minasnioc S.A.C                           --           --           --            --            --           --           --
Investment shares acquired by
   Subsidiary                                --           --          (18)         (270)           --           --           --
Cumulative gain for translation
   of investment in Minera
   Yanacocha S.R.L., maintained
   through Compania Minera
   Condesa S.A., and Sociedad
   Minera Cerro Verde S.A.A                  --           --           --            --            --           --           --
Gain on translation to U.S.
   dollar, note 3(f)                         --           --           --            --            --           --           --
Other                                        --           --           --            --            --           --           --
Net income                                   --           --           --            --            --           --      288,397
                                    -----------   ----------   ----------    ----------    ----------   ----------   ----------
Balance as of December 31, 2005     126,879,832      173,930          473       177,713        37,679          269      483,484
Declared and paid dividends,
   note 19(e)                                --           --           --            --            --           --      (59,767)
Capitalization of accounts
   payable to minority interest
   shareholder in Minera La Zanja
   S.R.L                                     --           --           --            --            --           --           --
Acquisition of minority interest
   in Inversiones Mineras del Sur
   S.A. and Minas Poracota S.A               --           --           --            --            --           --           --
Available-for-sale financial
   assets, note 8                            --           --           --            --            --           --           --
Investments in shares maintained
   at fair value                             --           --           --            --            --           --           --
Other                                        --           --           --            --            --           --          374
Net income                                   --           --           --            --            --           --      428,057
                                    -----------   ----------   ----------    ----------    ----------   ----------   ----------
Balance as of December 31, 2006     126,879,832      173,930          473       177,713        37,679          269      852,148


<CAPTION>
                                                                    Cumulative
                                    Cumulative      Cumulative      unrealized
                                    translation     nunrealized       loss on                                         Total
                                        lost          gain on        derivative                        Minority     shareholders'
                                                    investments     instruments         Total         interest        equity
                                      US$(000)        US$(000)        US$(000)         US$(000)       US$(000)        US$(000)
<S>                                 <C>             <C>             <C>             <C>             <C>              <C>
Balance as of January 1, 2004,
   before modifications                  (13,709)         60,953          (1,849)        492,292          14,131         506,423
Gain (loss) to apply the equity
   method in investment in
   Sociedad Minera Cerro Verde
   S.A.A., maintained initially
   at fair value, note 13(c)                (928)        (60,869)             --         (46,363)             --         (46,363)
Cumulative loss of change in
   accounting principle in El
   Brocal, note 4                             --              --              --          (3,007)         (7,486)        (10,493)
Cumulative gain of change in
   accounting principle in
   Sociedad Minera Cerro Verde
   S.A.A., note 4                             --              --              --           4,221              --           4,221
                                    ------------    ------------    ------------    ------------    ------------    ------------
Balance modified as of
   January 1, 2004                       (14,637)             84          (1,849)        447,143           6,645         453,788
Declared and paid dividends,
   note 19(e)                                 --              --              --         (40,648)         (9,770)        (50,418)
Fair value of derivative
   instruments classified as
   hedging instruments held by El
   Brocal, note 33                            --              --           1,546           1,546           4,016           5,562
Transfer to legal reserve                     --              --              --              --              --              --
Increase of the capital stock of
   minority interest shareholder              --              --              --              --           1,130           1,130
Cumulative loss for translation
   of investment in Minera
   Yanacocha S.R.L., maintained
   through Compania Minera
   Condesa S.A., and Sociedad
   Minera Cerro Verde S.A.A              (36,475)             --              --         (36,475)             --         (36,475)
Loss on translation to U.S.
   dollar, note 3(f)                      (3,291)             --              --          (3,291)            (16)         (3,307)
Other                                         --              --              --             269           1,636           1,905
Net income                                    --              --              --         206,577           8,261         214,838
                                    ------------    ------------    ------------    ------------    ------------    ------------
Balance as of December 31, 2004          (54,403)             84            (303)        575,121          11,902         587,023
Declared and paid dividends,
   note 19(e)                                 --              --              --         (44,304)        (10,737)        (55,041)
Investments in shares maintained
   at fair value                              --             (14)             --             (14)             --             (14)
Fair value of derivative
   instruments classified as
   hedging instruments held by El
   Brocal, note 33                            --              --             303             303             462             765
Capitalization of accounts
   payable to minority interest
   shareholder in Minera
   Minasnioc S.A.C                            --              --              --              --             748             748
Investment shares acquired by
   Subsidiary                                 --              --              --            (288)             --            (288)
Cumulative gain for translation
   of investment in Minera
   Yanacocha S.R.L., maintained
   through Compania Minera
   Condesa S.A., and Sociedad
   Minera Cerro Verde S.A.A               19,896              --              --          19,896              --          19,896
Gain on translation to U.S.
   dollar, note 3(f)                         432              --              --             432            (765)           (333)
Other                                         --              --              --              --           1,835           1,835
Net income                                    --              --              --         288,397          19,971         308,368
                                    ------------    ------------    ------------    ------------    ------------    ------------
Balance as of December 31, 2005          (34,075)             70              --         839,543          23,416         862,959
Declared and paid dividends,
   note 19(e)                                 --              --              --         (59,767)        (19,111)        (78,878)
Capitalization of accounts
   payable to minority interest
   shareholder in Minera La Zanja
   S.R.L                                      --              --              --              --           6,213           6,213
Acquisition of minority interest
   in Inversiones Mineras del Sur
   S.A. and Minas Poracota S.A                --              --              --              --          (7,240)         (7,240)
Available-for-sale financial
   assets, note 8                            834             834              --             834              --             834
Investments in shares maintained
   at fair value                              28              28              --              28              --              28
Other                                         --              --              --             374              12             386
Net income                                    --              --              --         428,057          88,147         516,204
                                    ------------    ------------    ------------    ------------    ------------    ------------
Balance as of December 31, 2006          (34,075)            932              --       1,209,069          91,437       1,300,506
</TABLE>

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

                                      F-6


Compania de Minas Buenaventura S.A.A. and subsidiaries

Consolidated Statements of Cash Flows

For the years ended December 31, 2004, 2005, and 2006

<TABLE>
<CAPTION>
                                                                2004        2005         2006
                                                              US$(000)    US$(000)     US$(000)

<S>                                                           <C>         <C>         <C>
Operating activities
Collection from customers                                      259,762     284,451     497,875
Collection of dividends                                        123,103      89,748     209,520
Collection of royalties                                         35,246      40,101      55,821
Recovery of value added tax                                     13,159       9,936      16,322
Collection of interest                                           1,932       3,227       7,496
Payments to suppliers and third parties                       (113,540)   (124,295)   (160,365)
Payments of exploration expenditures                           (53,493)    (56,938)    (71,982)
Acquisition of Gold Certificates                                    --          --     (68,071)
Payments of income tax                                         (12,964)    (25,908)    (53,296)
Payments to employees                                          (35,087)    (41,601)    (49,316)
Payments of royalties                                           (7,934)    (12,817)    (22,742)
Payments of interest                                            (2,204)     (1,754)     (2,413)
Net cash provided by operating activities                      207,980     164,150     358,849
Investing activities
Decrease (increase) on time deposits                            (7,069)      7,069     (62,933)
Purchase of property, plant and equipment                      (28,128)    (20,476)    (50,127)
Settlement (acquisition) of available-for-sale
 financial assets                                              (10,124)     11,329     (40,292)
Development cost expenditures                                  (11,254)    (16,784)    (24,112)
Payments by purchase of investments in shares                   (2,260)   (148,401)    (22,829)
Payments by derivative instruments settled, net                (21,394)     (7,041)     (2,050)
Proceeds from sale of plant and equipment                          465         193          32
Net cash used in investing activities                          (79,764)   (174,111)   (202,311)
Financing activities
Payments of dividends                                          (40,648)    (44,304)    (59,767)
Payments of dividends to minority interest shareholders         (9,770)    (10,737)    (19,111)
Decrease of long-term debt                                     (22,356)    (14,678)       (266)
Increase (decrease) of bank loans, net                          (3,005)      3,812       2,355
Increase of long-term debt                                       3,540         580          --
Net cash used in financing activities                          (72,239)    (65,327)    (76,789)
Net increase (decrease) in cash during the year                 55,977     (75,288)     79,749
Cash at beginning of year                                      116,162     172,139      96,851
Cash at year-end, note 6                                       172,139      96,851     176,600
                                                              ========    ========    ========
</TABLE>


<TABLE>
<CAPTION>
                                                                2004        2005         2006
                                                              US$(000)    US$(000)     US$(000)

<S>                                                           <C>         <C>         <C>
Reconciliation  of net  income  to  net  cash  provided  by
operating activities
Net income                                                     206,577     288,397     428,057
Add (deduct)
Minority interest                                                8,261      19,971      88,147
Depreciation and amortization                                   22,426      34,300      37,470
Loss from change in the fair value of derivative
instruments                                                     17,360      26,588      13,268
Amortization of development costs                                9,755      10,315      11,270
Loss from change in the market value of Gold Certificates           --          --       4,861
Stock appreciation rights                                          626       8,134       3,634
Accretion expense                                                2,069       2,306       3,535
Net cost of retired plant and equipment                            220       1,049         998
Exchange difference loss (gain)                                  3,706        (448)        308
Share in affiliated  companies, net of dividends received
in cash                                                        (55,073)   (174,246)   (103,648)
Realized income from sale of future production                 (20,187)    (28,064)    (50,325)
Loss (gain) for  deferred  income tax and  workers' profit
sharing                                                         11,099     (12,960)    (21,651)
Accrual (reversal) for slow moving and obsolescence
supplies                                                           842       2,839      (1,507)
Loss from exposure to inflation                                  2,888          --          --
Other                                                             (718)       (619)         32
Net changes in assets and liabilities accounts
Decrease (increase) of operating assets -
Financial assets at fair value through profit or loss
(gold certificates)                                                 --          --     (68,071)
Trade accounts receivable                                       (6,643)      1,064     (50,197)
Other accounts receivable                                        3,057      (2,178)      1,033
Accounts receivable from affiliates                             (2,442)     (5,829)      7,545
Inventories                                                      1,402      (8,637)        348
Prepaid tax and expenses                                          (418)       (317)     (2,251)
Increase (decrease) of operating liabilities -
Trade accounts payable                                           2,474      (2,361)     13,066
Income tax payable                                               7,328       3,543      23,614
Other current liabilities                                       (6,629)      1,303      19,313
                                                              --------    --------    --------
Net cash provided by operating activities                      207,980     164,150     358,849
                                                              ========    ========    ========
Transactions that did not affect cash flows:
Transfer from  derivative  instruments  to deferred  income
from sale of future production                                      --      50,553      77,425
Increase of the book value of long-term assets                   7,240       8,151      28,379
</TABLE>

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

                                      F-7


Compania de Minas Buenaventura S.A.A. and subsidiaries
Notes to the Consolidated Financial Statements
As of December 31, 2004, 2005 and 2006

1.     Business activity
       Compania de Minas Buenaventura S.A.A. (hereafter "Buenaventura") is a
       public company incorporated in 1953. It is engaged in the exploration
       (individually and in association with third parties), extraction,
       concentration and commercialization of polymetallic ores. Buenaventura's
       legal address is Carlos Villaran Avenue 790, Santa Catalina, Lima, Peru.

       The Company operates directly six mining units located in Peru:
       Uchucchacua, Orcopampa, Julcani, Recuperada, Antapite and Ishihuinca
       (these last two mining units as a result of the merger with Inversiones
       Mineras del Sur S.A., occurred on December 31, 2006). The Company also
       has a controlling interest in Sociedad Minera El Brocal S.A.A., which
       operates the mining unit of Colquijirca, and in Compania de
       Exploraciones, Desarrollo e Inversiones Mineras S.A.C., which operates
       the mining units of Shila and Paula. In addition, the Company holds
       interests in a number of other mining companies; the most important of
       such interests is in Minera Yanacocha S.R.L. (hereafter "Yanacocha") and
       Sociedad Minera Cerro Verde S.A.A. (hereafter, "Cerro Verde"). The
       Company owns an electric power distribution company and a mining
       engineering services consulting company.

       As of December 31, 2005 and 2006, the number of employees at Buenaventura
       and its subsidiaries (together "the Company") is as follows:

                                                               2005    2006

       Officers                                                  87      68
       Employees                                                974   1,326
       Blue-collar                                            1,066   1,093
                                                              -----   -----
                                                              2,127   2,487
                                                              =====   =====

       The 2006 consolidated financial statements were approved in Shareholders'
       meetings held on March 28, 2007. Consolidated financial statements as of
       December 31, 2005 were approved in the Shareholders' meeting held on
       March 30, 2006.

                                      F-8


Notes to the consolidated financial statements (continued)

       The consolidated financial statements include the financial statements of
       the following subsidiaries:

                                                Ownership percentages as of
                                          -------------------------------------
                                          December 31, 2005   December 31, 2006
                                          -----------------  ------------------
                                           Direct  Indirect   Direct   Indirect

       Ownership of the mining
           concessions,  exploration and
           exploitation of minerals

       Compania de Exploraciones,
           Desarrollo e Inversiones
           Mineras S.A.C. - CEDIMIN         44.83     55.17    44.83      55.17
        Compania Minera Condesa S.A         99.99        --    99.99         --
        Compania Minera Colquirrumi S.A     90.00        --    90.00         --
        Inversiones Colquijirca S.A         61.42        --    61.42         --
        Minas Conga S.R.L                      --     60.00       --      60.00
        S.M.R.L. Chaupiloma Dos de
           Cajamarca                        20.00     40.00    20.00      40.00
        Minera La Zanja S.R.L               53.06        --    53.06         --
        Minas Poracota S.A                  50.00        --   100.00         --
        Minera Minasnioc S.A.C              60.00        --    60.00         --
        Inversiones Mineras del Sur S.A     78.04        --       --         --

       Transmission of electric power
        Consorcio Energetico de
           Huancavelica S.A                 99.99       0.01    99.99       0.01

        Other activities
        Buenaventura Ingenieros S.A        100.00         --   100.00         --
        Contacto Corredores de Seguros
           S.A                                 --      99.99       --      99.99

2.     Acquisition of minority interest and merger by absorption of Inversiones
       Mineras del Sur S.A. On August 21, 2006 Inversiones Mineras del Sur S.A.
       (INMINSUR) acquired 21.96 % of its common shares by a payment of
       US$17,300,000 to minority shareholders. The difference between the amount
       paid and the book value of the additional interest acquired was
       US$11,662,000 and it has been recorded as a Mining Right within the
       Property, Plant and Equipment caption, see note 14. As consequence of
       this operation, Buenaventura obtained the control of 100 % of INMINSUR's
       common shares.

       The Shareholders' meeting held on November 2, 2006 approved the merger of
       the Company, as absorbent entity, with its subsidiary Inversiones Mineras
       del Sur S.A., as absorbed entity. INMINSUR was dissolved without being
       liquidated. The effective date of the merger was December 31, 2006.

3.     Significant accounting principles and practices

       In the preparation and presentation of the consolidated financial
       statements, Management has followed International Financial Reporting
       Standards (IFRS) effective in Peru as of December 31, 2004, 2005 and
       2006, which differ in certain respects from accounting principles
       generally accepted in the United States of America ("U.S. GAAP"). A
       description of these differences and their effects on net income and
       shareholders' equity is set forth in Notes 39 and 40. The consolidated
       financial statements arise from the statutory consolidated financial
       statement presentation and include certain additional disclosures in
       order to conform more closely to the form and content of financial
       statements required by the Securities and Exchange Commission of the
       United States of America (the "SEC"). To the date of the consolidated
       financial statements, the Peruvian Accounting Standards Board has
       approved the use of IAS 1 to 41, IFRS 1 to 6, and the Interpretations 1
       to 33.

       The main accounting principles and practices used in accounting for the
       transactions and in preparing the consolidated financial statements are:

       (a)    Basis of presentation -
              The financial statements have been prepared in accordance with
              generally accepted accounting principles in Peru, which comprises
              International Financial Reporting Standards (IFRS) duly approved
              by the Peruvian Accounting Standards Board as of December 31,
              2006.

                                      F-9


Notes to the consolidated financial statements (continued)

              The accompanying consolidated financial statements are presented
              in U.S. dollars, see (f).

       (b)    Use of estimates and assumptions -
              The preparation of consolidated financial statements requires
              Management to make certain estimates and assumptions. To determine
              the reported amounts of assets and liabilities and disclosure of
              contingent assets and liabilities at the date of the consolidated
              financial statements, as well as the reported amounts of revenues
              and expenses for the years ended December 31, 2004, 2005 and 2006.
              Actual results could differ from those estimates.

       (c)    Principles of consolidation -
              The consolidated financial statements include the accounts of
              Buenaventura and the accounts of those subsidiaries in which
              possess more than 50 percent equity participation and/or exercises
              control. All significant inter-company balances and transactions
              have been eliminated. The minority interest is presented
              separately in the consolidated balance sheets and in the
              consolidated statements of income.

              See companies included in the consolidated financial statements in
              Note 1.

       (d)    Business combination -
              Business combinations are accounted for using the purchase
              accounting method. This involves recognizing identifiable assets
              and liabilities of the acquired business at fair value. The excess
              of the cost of the acquisition over the Company's interest in the
              fair value of the acquiree's identifiable assets and liabilities
              is recorded as Mining Rights within the Property, Plant and
              Equipment caption, and is amortized using the units-of-production
              method based on the proven and probable reserves.

              In the case of mergers with entities under common control (note
              2), the Company uses the pooling of interest method. According to
              this method, the transaction is recorded at historical book value.
              The comparative financial information is modified to give effect
              to the merger.

       (e)    Investment in associates
              Investments in entities in which the Company's ownership is lower
              than 50 percent but greater than 20 percent or exercise
              significant influence are accounted for using the equity method.
              Under this method, the investment in the associate is carried in
              the consolidated balance sheet at cost plus cost acquisition
              changes in the Company's share of net assets of the associate. The
              amount paid in excess of the fair value of the share of net assets
              of the associate is included in the carrying amount of the
              investment and is amortized using the units-of-production method
              based on proven and probable reserves. The functional and
              reporting currency of the affiliates Yanacocha and Cerro Verde is
              the U.S. dollar. Until December 31, 2005, the translation of the
              financial statements of Yanacocha and Cerro Verde resulted in
              exchange differences arising from translating (a) income and
              expense items at the exchange rates of transaction dates, (b)
              assets and liabilities at the closing exchange rate, and (c)
              equity accounts at the historical exchange rates. The net exchange
              difference is classified in equity until further disposal of the
              net investment. The consolidated statement of income reflects the
              share of the results of operations of the associate. Profits and
              losses resulting from transactions between the Company and the
              associate are eliminated to the extent of the interest in the
              associate.

              The reporting dates of the associates and the Company are
              identical and the associates' accounting policies are consistent
              to those used by the Company for like transactions and events in
              similar circumstances.

              After the application of the equity method, the Company determines
              whether it is necessary to recognize an additional impairment loss
              of the Company's investment in associates. The Company determines
              at each consolidated balance sheet date whether there is any
              objective evidence that the investment in associate is impaired.
              If this is the case, the Company calculates the amount of
              impairment as being the difference between the fair value of the
              associate and the book value and recognizes the amount in the
              consolidated statement of income.

       (f)    Foreign currency translation -

              Change of functional and reporting currency
              Effective January 1, 2006, the functional and reporting currency
              of the Company is U.S. dollar (Nuevos Soles until December 31,
              2005). In past years, Management of the Company has been
              monitoring the evolution of the currency of its cash inflows and
              cash outflows, and noted a series of changes in the underlying
              transactions related to its operation and activities, which have
              caused a change in the functional currency, of the Company from
              Nuevos Soles to U.S. dollars. The main indicators that Management
              has taken into account to conclude about the change in functional
              currency are as follows: (i) the growing significance of the
              dividends in U.S. dollars from affiliates in the financial
              position, results of operations and cash flows of the Company;
              (ii) the gradual increase in costs denominated in U.S. dollars;
              (iii) the Company's decision to pay dividends in U.S. dollars and
              (iv) the continuous cash increase in U.S. dollars with respect to
              the Company's total cash balance resulting from the growing
              importance of dividends before mentioned.

                                      F-10


Notes to the consolidated financial statements (continued)

              This conclusion was confirmed by the Company's Board of Directors
              Meeting held on July 26, 2006 having approved the adoption of the
              U.S. dollar as the Company's functional and reporting currency as
              from January 1, 2006.

              The change of the functional and reporting currency has been made
              prospectively effective January 1, 2006. To give effect to this
              change, the Company has made the following:

               -     The assets and liabilities in Nuevos Soles as of December
                     31, 2005 have been translated into U.S. dollars using the
                     exchange rates for buying and selling one U.S. dollar,
                     respectively, published by the Banking Insurance and
                     Private Pension Funds Administrators Superintendence as of
                     such date (S/3.429 for buying and S/3.431 for selling).
                     Equity accounts have been translated using the exchange
                     rate for selling of S/3.431.

               -     Profit and loss accounts for years 2005 and 2004 have been
                     translated into U.S. dollars using the average exchange
                     rates of such years (S/3.305 for 2005 and S/3.410 for
                     2004).

               -     The Company has recognized in the equity net a translation
                     effect as a result of the conversion of the initial
                     balances of the consolidated balance sheet and the
                     consolidated statements of income of US$3,291,000 in 2004
                     and US$432,000 in 2005.

              The Company will continue to use its financial statements in
              Nuevos Soles for tax purposes.

              Transactions and balances
              Transactions in foreign currency (any currency different to the
              functional currency) are initially recorded at the functional
              currency rate in effect at the date of the transaction. Monetary
              assets and liabilities denominated in foreign currencies are
              remeasured at the functional currency rate of exchange in effect
              at the consolidated balance sheet date. Non-monetary items that
              are measured in historical cost in a foreign currency are
              translated using the exchange rates as of the dates of the
              original transactions. Exchange differences resulting from the
              settlement of the transactions in foreign currencies and from the
              translation of the monetary assets and liabilities at the exchange
              rates at year-end, are recognized in the consolidated statement of
              income.

       (g)    Cash and cash equivalents -
              Cash and cash equivalents include all cash on hand and deposited
              in banks. For the consolidated statements of cash flows, cash
              balances and cash equivalent includes cash on hand, time deposits
              and highly liquid investments with original maturities of three
              months or less.

       (h)    Investments and other financial assets -
              Financial assets within the scope of IAS 39 are classified as
              either financial assets at fair value through profit and loss,
              loans and receivables, and available for sale financial assets.
              When financial assets are recognized initially, they are measured
              at fair value. The Company determines the classification of its
              financial assets after initial recognition and, where allowed and
              appropriate, re-evaluates this designation at each financial year
              end.

              Financial assets at fair value through profit or loss
              Financial assets at fair value through profit or loss includes
              financial assets held for trading and financial assets designated
              upon initial recognition as at fair value through profit or loss.
              Derivatives are also classified as held for trading unless they
              are designated as effective hedging instruments. Assets within
              this category are classified as current assets if they are held
              for trading or are expected to be realized within the next twelve
              months from the balance sheet date. Gain or losses on investments
              held for trading are recognized in consolidated statement of
              income. The Company has classified the gold certificates within
              this category as of December 31, 2006.

              Loans and receivables
              Loans and receivables are non-derivative financial assets with
              fixed or determinable payments that are not quoted in an active
              market. After initial measurement, loans and receivables are
              subsequently carried at amortized cost using the effective
              interest method less any allowance for impairment. Gains and
              losses are recognized in the consolidated statement of income when
              the loans and receivables are derecognized or impaired.

                                      F-11


Notes to the consolidated financial statements (continued)

              The allowance for doubtful accounts is recognized when there is
              objective evidence that the Company will not be able to collect
              all of the amounts due under the original terms of the invoice or
              loan. The carrying amount of the receivable is reduced through an
              allowance account. The amount of the loss is recognized in the
              consolidated statement of income. Impaired receivables are
              derecognized when they are assessed as uncollectible.

              If in a subsequent period, the amount of the impairment loss
              decreases, the previously recognized impairment loss is reversed
              through profit or loss.

              Available-for-sale financial assets
              Available-for-sale financial assets are those non-derivative
              financial assets that are designated as available-for-sale or are
              not classified in any of the other categories. After initial
              measurement, available for sale financial assets are measured at
              fair value with unrealized gains or losses being recognized
              directly in equity, net of taxes. When the investment is disposed
              of, the cumulative gain or loss previously recorded in equity is
              recognized in the consolidated statement of income. The Company
              has classified the variable investment funds, the fixed investment
              funds and the structured notes within this category.

       (i)    Inventories -
              Inventories are stated at the lower of average cost or net
              realizable value. Net realizable value is defined as the estimated
              sales price obtainable in the ordinary course of business, less
              estimated costs of completion and estimated costs necessary to
              make the sale. Cost is determined using the average method.

              The accrual for obsolescence is based on an item-by-item analysis
              completed by the Company's management and related amounts are
              charged to expense in the period in which the obsolescence is
              deemed to have occurred.

       (j)    Property, plant and equipment -
              Property, plant and equipment are stated at cost, net of
              accumulated depreciation and impairment in value. Such cost
              includes the cost of replacing part of the plant and equipment if
              the capitalization criteria are met.

              Depreciation is calculated under the straight-line method of
              accounting considering the lower of estimated useful lives of the
              asset or estimated reserves of the mining unit. The useful lives
              are the following:

                                                                     Years

              Buildings, constructions and other                    10 and 20
              Machinery and equipment                                5 and10
              Transportation units                                      5
              Furniture and fixtures                                8 and 10
              Computer equipment                                        4

              When each major improvement is performed, its cost is recognized
              in the carrying amount of the asset as a replacement if the
              recognition criteria are satisfied.

              An item of property, plant and equipment is derecognized upon
              disposal or when no future economic benefits are expected from its
              use or disposal. Any gain or loss arising from the derecognition
              of the asset is included in the consolidated statement of income
              in the year the asset is derecognized.

              The asset's useful lives and methods of depreciation are reviewed,
              and adjusted if appropriate, at each financial year end.

       (k)    Exploration and mine development costs -
              Exploration costs are charged to expense as incurred. When it is
              determined that a mineral property can be economically developed,
              the costs incurred to develop it, including the costs to further
              delineate the ore body and remove overburden to initially expose
              the ore body, are capitalized. In addition, expenditures that
              increase significantly the economic reserves in the mining units
              under exploitation are capitalized. Mine development costs are
              amortized using the units-of-production method, based on proven
              and probable reserves. On-going development expenditures to
              maintain production are charged to operations as incurred.

       (l)    Mining concessions -
              The mining concessions balance corresponds to the amounts paid in
              excess of fair value of net assets acquired in the purchase of
              mining entities. The mining concessions are shown as a part of the
              property, plant and equipment caption and represent the ownership
              of the mining sites which contains the mineral reserves acquired.
              The mining concessions are amortized using the units-of-production
              method, based on the proven and probable reserves.

                                      F-12


Notes to the consolidated financial statements (continued)

       (m)    Impairment of non-financial assets -
              The Company assesses at each reporting date whether there is an
              indication that an asset may be impaired. If any such indication
              exists, the Company makes an estimate of the asset's recoverable
              amount. An asset's recoverable amount is the higher of an asset's
              fair value less costs to sell and its value in use and is
              determined for an individual asset, unless the asset does not
              generate cash inflows that are largely independent of those from
              other assets or groups of assets. When the carrying amount of an
              asset exceeds its recoverable amount, the asset is considered
              impaired and is written down to its recoverable amount. In
              assessing value in use, the estimated future cash flows are
              discounted to their present value using a discount rate that
              reflects current market assessments of the time value of money and
              the risks specific to the asset.

              Impairment losses are recognized in the statement of income in
              those expense categories consistent with the function of the
              impaired asset.

              A previously recognized impairment loss is reversed only if there
              has been a change in the estimates used to determine the asset's
              recoverable amount since the last impairment loss was recognized.
              The increased amount cannot exceed the carrying amount that would
              have been determined, net of depreciation, had no impairment loss
              been recognized for the asset in prior years. Such reversal is
              recognized in the consolidated statement of income.

       (n)    Borrowings -
              All loans and borrowings are initially recognized at the fair
              value of the consideration received less directly attributable
              transaction costs. After initial recognition, interest bearing
              loans and borrowings are subsequently measured at amortized cost
              using the effective interest method.

       (o)    Share-Based payments -
              Senior executives of the Company are granted share appreciation
              rights, which can only be settled in cash (cash-settled
              transactions). For cash-settled transactions, the liability is
              measured at each reporting date until settlement.

              On January 1, 2006, the Company adopted IFRS 2 "Share-Based
              Payments". According to this standard, the cost of cash-settled
              transactions is measured initially at fair value at the grant date
              using a binomial model (see more details in Note 18). This fair
              value is expensed over the period until vesting with recognition
              of a corresponding liability. The liability is re-measured at each
              balance sheet date up to and including the settlement date with
              changes in fair value recognized in consolidated statement of
              income. Until December 31, 2005, the cost and liability were
              recorded at the intrinsic value of the obligation; the adoption of
              IFRS 2 had no significant effect in the prior year consolidated
              financial statements.

       (p)    Provisions -
              General
              Provisions are recognized when the Company has a present
              obligation (legal or constructive) as a result of a past event, it
              is probable that an outflow of resources embodying economic
              benefits will be required to settle the obligation and a reliable
              estimate can be made of the amount of the obligation. The expense
              relating to any provision is presented in the consolidated
              statement of income. Provisions are discounted using a current
              rate that reflects, where appropriate, the risks specific to the
              liability. When discounting is used, the increase in the provision
              due to the passage of time is recognized as a financial expense.

              Mine closure costs
              The Company records a provision for mine closure when a legally
              enforceable obligation arises, independently of the full depletion
              of the reserves. Once such obligation has been appropriately
              measured, it is recorded by creating a liability equal to the
              amount of the obligation and recording a corresponding increase to
              the carrying amount of the related long-lived assets (mine
              development costs and property, plant and equipment). Changes in
              the amount of the obligation resulting from the passage of time
              are recognized as an accretion expense; additionally, the
              capitalized cost is depreciated and/or amortized based on the
              useful lives of the related asset. Any difference in the
              settlement of the liability will be recorded in the results of the
              period in which such settlement occurs. The changes in the fair
              value of the obligation or useful life of the related assets that
              occur from the revision of the initial estimates should be
              recorded as an increase or decrease in the book value of the
              obligation and the related asset.

       (q)    Contingencies -
              Loss contingencies are recorded in the consolidated financial
              statements when it is probable their occurrence and they can be
              reasonably estimated. In other case, they are only disclosed in
              notes to the consolidated financial statements.

                                      F-13


Notes to the consolidated financial statements (continued)

              Contingent assets are not recognized in the consolidated financial
              statements; however, they are disclosed in notes to the
              consolidated financial statements if it is probable that such
              contingent assets will be realized.

       (r)    Treasury shares -
              The Company, through a subsidiary, has treasury shares (common and
              investment shares). The nominal values of these shares are
              presented net of the capital stock and investment shares amounts.

              The effect of the dividends income arising from the treasury
              shares held by the subsidiary are eliminated in the consolidated
              financial statements.

       (s)    Revenue recognition -
              Revenue is recognized to the extent that it is probable that the
              economic benefits will flow to the Company and the revenue can be
              reliably measured. Revenue is measured at the fair value of the
              consideration received, excluding discounts and other sales taxes
              or duty. The following specific recognition criteria must also be
              met before revenue is recognized:

              Sale of goods
              Exports of polymetallic concentrates are recognized as sales once
              the shipments occur. Domestic sales of concentrates are recognized
              as such at the time of shipment. Initially, sales of concentrates
              are recorded at their estimated value according to preliminary
              billings and, subsequently, they are adjusted in the period in
              which the final liquidations are issued. When it is evident that
              the quotations to be used in the final billings are lower than
              those used in preliminary billings, the excess is reversed in the
              period in which final prices are known.

              Sales of ounces of gold are recorded at the time of the delivery
              and passage of the title to the client.

              Interest income
              Revenue is recognized once interest accrues.

       (t)    Borrowing costs -
              Borrowing costs that are directly attributable to the acquisition,
              construction or production of a qualifying asset are capitalized
              until assets are ready for their intended use. Such costs are
              capitalized for all assets that require more than one year to get
              them ready for their intended use.

       (u)    Income tax and workers' profit sharing -
              Current income tax and workers' profit sharing
              Income tax and workers' profit sharing for the current period are
              measured at the amount expected to be paid to the taxation
              authorities and workers, respectively. The rates and laws used to
              compute the amount are those that are enacted by the balance sheet
              date.

              Deferred income tax and workers' profit sharing
              Deferred income tax and workers' profit sharing are provided using
              the liability method on temporary differences at the consolidated
              balance sheet date between the tax basis of assets and liabilities
              and their carrying amounts for financial reporting purposes.

              Deferred income tax and workers' profit sharing liabilities are
              recognized for all taxable temporary differences, except for
              taxable temporary differences associated with investments in
              subsidiaries and associates where the timing of the reversal of
              the temporary differences can be controlled and it is probable
              that the temporary differences will not reverse in the foreseeable
              future.

              Deferred income tax and workers' profit sharing assets are
              recognized for all deductible temporary differences and tax loss
              carry-forwards, to the extent that is probable that taxable profit
              will be available against which the deductible temporary
              differences and unused tax losses can be utilized. The carrying
              amount of the deferred income tax and workers' profit sharing
              assets is reviewed at each consolidated balance sheet date and
              reduced to the extent that it is no longer probable that
              sufficient taxable profit will be available to allow all or part
              of the deferred asset to be utilized. Unrecognized deferred assets
              are reassessed at each consolidated balance sheet date and are
              recognized to the extent that it has become probable that future
              taxable profit will allow the deferred asset to be recovered.

              Deferred income tax assets and deferred income tax liabilities are
              offset, if a legally enforceable right exists to set off current
              tax assets against current income tax liabilities and the deferred
              income taxes relate to the same taxable entity and the same
              taxation authority.

                                      F-14


Notes to the consolidated financial statements (continued)

       (v)    Derivative instruments -
              Derivatives not designated as hedging instrument
              Derivative contracts are recognized as assets and liabilities at
              fair value in the consolidated balance sheet. Changes in the fair
              value of derivative contracts not qualifying as hedging
              instruments are recorded in the caption "Loss from Change in the
              Fair Value of Derivative Instruments" in the consolidated
              statements of income.

              Normal sales
              Gain and losses on derivative contracts qualifying as normal sales
              are initially deferred in the consolidated balance sheets and then
              recognized as income in the years in which the Company makes a
              physical delivery of the committed ounces of gold and tones of
              mineral, see Note 33.

       (w)    Basic and diluted earnings per share -
              Basic and diluted earnings per share have been calculated based on
              the weighted average number of common and investment shares
              outstanding at the date of the consolidated balance sheets;
              treasury shares have been excluded from the calculation.

       (x)    Segments -
              A business segment is a group of assets and operations engaged in
              providing products or services that are subject to risks and
              returns that are different from those of other business segments.
              A geographical segment is engaged in providing products or
              services within a particular economic environment that are subject
              to risks and return that are different from those of segments
              operating in other economic environments.

       (y)    Comparative consolidated financial statements -
              No significant reclassifications to the 2006 consolidated
              financial statements to make them comparable with the 2005 and
              2004 consolidated financial statements.

4.     Changes in accounting principles

       Sociedad Minera El Brocal S.A.A. - Until December 31, 2004, with the
       intent to reasonably match revenues and current production costs, El
       Brocal was deferring certain costs incurred in the expansion of the Tajo
       Norte mining site. Effective January 1, 2005, El Brocal considers the
       deferred stripping costs incurred during the production stage as variable
       production costs that should be included in the cost of the inventories
       produced. This accounting change allows El Brocal to adopt international
       industry practices.

       Effective January 1, 2004, El Brocal has given retroactive effect to this
       account change; therefore, it reduced the retained earnings in
       US$3,007,000. This accounting change had no effect in the consolidated
       financial statements of 2004 due to the fact that the stripping costs
       incurred in such period were treated consistent with the policy adopted
       in 2005.

       Sociedad Minera Cerro Verde S.A.A. -
       In December 2006, Cerro Verde restated its financial statements of
       previous years to give retroactive effect to accounting changes related
       to: (i) the deferred stripping costs incurred during the production phase
       of the mine. Until December 31, 2005, deferred stripping costs were
       charged directly to the cost of finished products; starting 2006, these
       costs are considered variable production costs that should be included in
       the cost of all inventories produced; and (ii) costing of inventories,
       from the Last-In, First-Out (LIFO) method of inventory valuation to the
       First-in, First-out (FIFO) method. The Company has not restated the share
       in Cerro Verde's income in 2004 and 2005, because the effects of these
       accounting changes were not significant for the consolidated financial
       statements in those years. The Company's share in the retroactive effect
       of these changes as of January 1, 2004 amounted to US$4,221,000 and
       increased the retained earnings at that date.

5.     Transactions in Nuevos Soles
       Translations to Nuevos Soles are completed using exchange rates published
       by the Banking Insurance and Private Pension Funds Administrators
       Superintendence. As of December 31, 2006, the exchange rates published
       for this currency by this Institution were US$0.3194 for buying and
       US$0.3197 for selling (US$0.3429 for buying and US$0.3431 for selling as
       of December, 31 2005) and and have been applied for the assets and
       liabilities accounts, respectively.

       As of December 31, 2006 and 2005, the Company had the following assets
       and liabilities denominated in Nuevos soles.

<TABLE>
<CAPTION>
                                                        2005                    2006
                                              -----------------------  ------------------------
                                                        Equivalent to             Equivalent to
                                              S/(000)      US$(000)     S/(000)     US$(000)
       <S>                                    <C>       <C>             <C>       <C>
       Assets
       Cash and cash equivalents               28,255           8,240    92,109          28,838
       Other accounts receivable (including
         current portion)                      15,930           4,646     6,554           2,052
       Account receivable from affiliates         194              57        --              --
                                              -------   -------------   -------   -------------
                                               44,379          12,943    98,663          30,890
                                              -------   -------------   -------   -------------
       Liabilities
       Bank loans                                 497             145        --              --
       Trade accounts payable                  24,516           7,145    19,067           5,964
       Other current liabilities
       - Income tax payable                    37,299          10,871    97,934          30,633
       - Other                                 88,743          25,865   116,240          36,359
                                              -------   -------------   -------   -------------
                                              151,055          44,026   233,241          72,956
                                              -------   -------------   -------   -------------

       Net liability position                 106,676          31,083   134,578          42,066
                                              =======   =============   =======   =============
</TABLE>

                                      F-15

Notes to the consolidated financial statements (continued)

6.     Cash and cash equivalents (a) This item is made up as follows:

<TABLE>
<CAPTION>
                                                                                  2005                2006
                                                                                US$(000)            US$(000)

              <S>                                                               <C>                 <C>
              Cash                                                                    315                 349
              Demand deposits accounts                                             23,053              32,237
              Time deposits (b)                                                    73,483             118,949
              Liquidity fund (c)                                                       --              25,065
                                                                                ---------           ---------
              Cash balances included in the consolidated statements of
                cash flow                                                          96,851             176,600
              Time deposits with an original maturity of more than 90
                days (d)                                                               --              62,933
                                                                                ---------           ---------

                                                                                   96,851             239,533
                                                                                =========           =========
</TABLE>

       (b)    As of December 31, 2006, it corresponds to time deposits in U.S.
              dollars, with annual interest rates ranging from 5.05 % to 5.26%,
              and original maturities from 30 to 90 days.

       (c)    The Company maintains investments of US$25,000,000 in a liquidity
              fund structured by Investment Bank Lehman Brothers. The fund,
              composed by a diversified portfolio of high quality assets and
              short-term maturity, is focused in preserving the capital and
              assuring the immediate liquidity, and has no a defined maturity.
              The quote value of this fund is constant, the gains are collected
              the next month of its generation and the annual average return is
              approximately 5.18%.

       (d)    As of December 31, 2006, it corresponds to a time deposit in U.S.
              dollars, with annual interest rate of 5.10% and final maturity in
              March 2007 (original maturity of 187 days).

7.     Financial assets at fair value through profit or loss (Gold Certificates)

                                      F-16


Notes to the consolidated financial statements (continued)

       In May 2006, the Company acquired one million participations of an
       Exchange Traded Fund ("Gold ETF"), endorsed by the World Gold Council,
       equivalent to 100,000 gold ounces, with a cost per unit of US$68.07.
       These Gold ETF have been accounted for as a financial asset at fair value
       through profit or loss, in concordance with the intention of the
       management at the time of the acquisition. As of December 31, 2006, the
       fair value of the Gold ETF was US$63,210,000; consequently, the Company
       has recognized a loss of US$4,861,000, which is presented in the
       consolidated statements of income.

8.     Available-for-sale financial assets
       Buenaventura's management has decided to invest its cash excess in
       financial assets, which have been designated as available-for-sale.
       According to note 3(h), the Company recorded in 2006 an increase in the
       investment of US$834,000, with a credit to the equity, to carry the
       investments at fair value as of December 31, 2006. This item is made up
       as follows:

                                                              2005       2006
                                                            US$(000)   US$(000)

       Structured notes                                           --     40,154
       Fixed Investment fund                                      --     12,325
       Variable Investment fund                               15,423      4,070
                                                            --------   --------
                                                              15,423     56,549
                                                            ========   ========

       Structured notes -
       On September 1, 2006, the Company invested US$40,000,000 in structured
       notes issued by Deutsche Bank, with AA/Aa3 risk rating and final maturity
       in March 2008. The interest rate is variable and is determined at the
       beginning of each 90 days period based on the interest rate for the
       United States Treasury Bonds for 2 years, 5 years or 10 years, whichever
       is the higher. The interest is collected at the end of each period.
        For the outstanding period (September-December 2006), the interest rate
       is 4.83%. To adjust this investment to its fair value, the Company
       recorded a credit to equity of US$154,000.

       Fixed Investment fund -
       The company has the following fixed investment funds, which were issued
       on September 11, 2006:

       Issuer                                                Rate  Nominal value
                                                              %          US$

       Franklin Templeton Global Bond (i)                    5.91     6,000,000
       Morgan Stanley US Bond (ii)                           5.74     6,000,000
                                                                   ------------
                                                                     12,000,000
                                                                   ============

       (i)    This fund is composed of global bonds issued by different
              governments with an A+ average risk rating and an average maturity
              of 2.5 years. In management's opinion, this fund is highly liquid.

       (ii)   This fund is composed of financial instruments issued in U.S.
              dollars with an A risk rating or superior and an averaged maturity
              of 4.1 years. In management's opinion, this fund is highly liquid.

       The fair value of the fixed investment fund is determined based on its
       fair value as of December, 31, 2006 and is US$12,325,000. To carry this
       investment at its fair value, the Company has recorded a credit to equity
       of US$325,000.

       Variable Investment fund -
       As of December, 31, 2006, this caption includes mainly funds managed by
       Compass Group S.A., which are represented by 2,112 quotes with a value
       per quote of US$1,431 (12,000 quotes, with a value per quote of US$1,285
       as of December, 31, 2005). To carry this investment at its fair value,
       the Company has recorded a credit to equity of US$355,000.


9.     Trade accounts receivable
       This item is made up as follows:

                                      F-17


Notes to the consolidated financial statements (continued)

                                                             2005        2006
                                                           US$(000)    US$(000)

       Consorcio Minero S.A. - CORMIN                         6,829      24,872
       Glencore International A.G.                               --      22,957
       BHL Peru S.A.C.                                        5,165      11,557
       Doe Run Peru S.R.L.                                    9,682       9,290
       A y S S.A.                                             1,223       2,601
       Refineria de Cajamarquilla S.A.                        2,169          --
       Other                                                  2,157       6,145
                                                          ---------   ---------
                                                             27,225      77,422
                                                          =========   =========

       Trade accounts receivable are denominated in U.S. dollars, have current
       maturity, earn no interest and do not have specific guarantees.

       In Management's opinion, no allowance is needed at the date of the
       consolidated balance sheets.

10.    Other accounts receivable, net (a) This item is made up as follows:

                                                         2005         2006
                                                       US$(000)     US$(000)

              Account receivable from sale of shares       1,441        1,538
              Claims to tax authorities                    1,268        1,268
              Advances to suppliers and third parties        921        1,057
              Loans to employees                             742          695
              Interest receivable                             77          530
              Value added tax receivable, note 20(d)       2,424           --
              Other accounts receivable                    2,046        3,012
                                                       ---------    ---------
                                                           8,919        8,100

              Allowance for doubtful accounts (b)         (1,881)      (2,095)
                                                       ---------    ---------
                                                           7,038        6,005
              Non - current portion                       (1,471)      (1,524)
                                                       ---------    ---------

              Current portion                              5,567        4,481
                                                       =========    =========


       (b)    Movement of the allowance for doubtful accounts is shown bellow:

<TABLE>
<CAPTION>
                                                              2004      2005        2006
                                                            US$(000)  US$(000)    US$(000)

              <S>                                         <C>         <C>         <C>
              Beginning balance                               4,190       1,890      1,881
              Accrual for the year, note 24                     332          22         76
              Result from the exposure to inflation            (196)         --         --
              Exchange difference gain                           --          --        138
              Write-off                                      (2,436)        (31)        --
                                                          ---------   ---------   --------

              Ending balance                                  1,890       1,881      2,095
                                                          =========   =========   ========
</TABLE>

       In Management's opinion, the allowance for doubtful accounts is
       sufficient to cover bad debt risk at the date of the consolidated balance
       sheets.

11.    Inventories, net
       (a)    This item is made up as follows:

                                      F-18


Notes to the consolidated financial statements (continued)

<TABLE>
<CAPTION>
                                                                        2005       2006
                                                                      US$(000)   US$(000)

              <S>                                                     <C>        <C>
              Spare parts and supplies                                    7,177     17,261
              Products in process                                         9,346     10,286
              Finished products                                          16,279      6,862
                                                                      ---------  ---------
                                                                         32,802     34,409

              Slow moving and obsolescence supplies reserves (b)         (5,295)    (3,788)
                                                                      ---------  ---------

                                                                         27,507     30,621
                                                                      =========  =========
</TABLE>

       The Company expects to use its supplies inventory in the normal course of
operations.

       (b) The reserve for supplies had the following movements during 2004,
2005 and 2006:

                                                 2004       2005       2006
                                               US$(000)   US$(000)   US$(000)

              Beginning balance                   1,929      2,771      5,295
              Accrual for the year, note 22         842      2,839        138
              Accrual reversed, note 22              --         --     (1,645)
              Write-off                              --       (315)        --
                                               --------   --------   --------

              Ending balance                      2,771      5,295      3,788
                                               ========   ========   ========

       In Management's opinion, the reserve above is sufficient to cover the
       risks of slow moving and obsolete supplies at the date of the
       consolidated balance sheets.


12.    Prepaid taxes and expenses (a) This item is made up as follows:

                                                               2005       2006
                                                             US$(000)   US$(000)

              Value added tax credit                            7,134      9,449
              Additional income tax prepayment (b)              3,838      3,838
              Pre-paid insurance                                1,304      1,518
              Deferred costs                                    1,364      1,436
              Tax on net assets                                   790        691
              Other                                             1,781      1,530
                                                            ---------  ---------
                                                               16,211     18,462

              Less - Current portion
              Additional income tax prepayment (b)              3,838      3,838
              Value added tax credit (c)                        4,668      6,663
                                                            ---------  ---------
                                                                8,506     10,501
                                                            ---------  ---------

              Current portion                                   7,705      7,961
                                                            =========  =========

              (b)    On November 13, 2004, the Peruvian Constitutional Court
                     enacted a law by means of which the Additional Income Tax
                     Advance was considered unconstitutional; consequently, this
                     advance is no longer in force effective such date.
                     Buenaventura has applied for its reimbursement in
                     accordance with the regulations of the Peruvian Tax Code.
                     In management's opinion, this excess payment will be
                     recovered in the mid-term.

                                      F-19


Notes to the consolidated financial statements (continued)

              (c)    As of December 31, 2005 and 2006, it mainly includes the
                     value added tax originated by the exploration activities of
                     Minera La Zanja S.R.L. In Management's opinion, this credit
                     will be offset with the future value added tax liability to
                     be generated when the exploitation activities begin, in the
                     mid-term.

13.    Investments in shares
       (a)    This item is made up as follows:

<TABLE>
<CAPTION>
                                                    Equity ownership         Amount
                                                    ----------------  -------------------
                                                    2005      2006      2005       2006
                                                      %         %     US$(000)   US$(000)

              <S>                                   <C>       <C>       <C>      <C>
              Equity method investments
              Minera Yanacocha S.R.L. (c)           43.65     43.65
                Equity share                                            499,686   522,568
                Amount paid in excess of fair
                  value of assets and
                  liabilities, net                                       23,325    20,710
                                                                       --------  --------
                                                                        523,011   543,278
                                                                       --------  --------
              Sociedad Minera Cerro Verde
                S.A.A. (c)
                Equity share                       18.299     18.50     147,683   231,641
                Amount paid in excess of fair
                  value of assets and
                  liabilities, net                                       60,735    59,928
                                                                       --------  --------
                                                                        208,418   291,569
                                                                       --------  --------

              Available for sale investments
              Ferrocarril Central Andino S.A.       10.00     10.00         643       643
              Other                                                         414     3,639
                                                                       --------  --------
                                                                          1,057     4,282
                                                                       --------  --------

                                                                        732,486   839,129
                                                                       ========  ========
</TABLE>

       (b)    The detail of share in affiliated companies is:

                                                   2004       2005       2006
                                                 US$(000)   US$(000)   US$(000)

              Minera Yanacocha S.R.L.              169,135    225,858    229,787
              Sociedad Minera Cerro Verde S.A.A.     8,092     37,993     80,171
              Other                                    196        143      3,210
                                                 ---------  ---------  ---------

                                                   177,423    263,994    313,168
                                                 ---------  ---------  ---------


                                      F-20


Notes to the consolidated financial statements (continued)


       (c)    The investment in Yanacocha (a gold mine located in Cajamarca,
              Peru) and Cerro Verde (a copper mine located in Arequipa, Peru),
              represent the most significant investments of Buenaventura. The
              share in affiliated companies has been significant for the
              Company's net income in the years 2004, 2005 and 2006. The
              movement of the equity investment in Yanacocha and Cerro Verde is
              as follows:

<TABLE>
<CAPTION>
                                                               Yanacocha                           Cerro Verde
                                                   ----------------------------------   ----------------------------------
                                                     2004        2005         2006        2004         2005        2006
                                                   US$(000)    US$(000)     US$(000)    US$(000)     US$(000)    US$(000)

<S>                                                  <C>         <C>          <C>          <C>          <C>        <C>
              Beginning balance                      320,911     335,817      499,686      22,293       27,506     147,683
              Share in affiliated companies          171,605     228,239      232,402       8,092       37,993      82,300
              Acquisition of additional share             --                                  --
                (*)                                                   --           --                   87,666       1,658
              Cumulative translation gain (loss)     (35,024)     12,585           --      (1,451)       7,311           -
              Dividends received                    (121,675)    (76,955)    (209,520)     (1,428)     (12,793)          -
                                                   ---------   ---------    ---------   ---------    ---------   ---------

              Ending balance                         335,817     499,686      522,568      27,506      147,683     231,641
                                                   =========   =========    =========   =========    =========   =========
</TABLE>

              (*)    These amounts do not include US$60,735,000 in 2005 and
                     US$1,322,000 in 2006 which represent the amount paid over
                     the fair value of assets and liabilities of Cerro Verde.

       Following the movement of the amount paid over fair value of assets and
       liabilities of Yanacocha and Cerro Verde:

<TABLE>
<CAPTION>
                                                     Yanacocha             Cerro Verde
                                               -------------------     -------------------
                                                 2005        2006        2005       2006
                                               US$(000)    US$(000)    US$(000)   US$(000)

<S>                                              <C>         <C>                    <C>
              Balance at beginning of year       25,706      23,325          --     60,735
              Amount paid over fair value of         --          --      60,735      1,322
                assets and liabilities
              Amortization                       (2,381)     (2,615)         --     (2,129)
                                               --------    --------    --------   --------

              Balance at year-end                23,325      20,710      60,735     59,928
                                               --------    --------    --------   --------
</TABLE>

       Acquisition of additional shares in Cerro Verde -
       In 2005, Buenaventura raised its share in Cerro Verde from 9.17% to
       18.214%. As of December 31, 2006 the share is 18.50%. The share increase
       in Cerro Verde allows Buenaventura to exercise significant influence,
       which is evidenced by its representation in the Board of Directors; the
       participation in policy-making processes, including participation in
       decisions about dividends; and participation as guarantor of Cerro Verde
       in the loan agreements entered by this entity with several foreign banks
       in connection with the financing of the construction of the primary
       sulfide plant. As a consequence, Buenaventura has decided to account for
       its investment in Cerro Verde using the equity method retrospectively.
       Following, we describe the main accounting effects:

              -      A charge to the account "Cumulative unrealized gain on
                     investments at fair value" by US$60,869,000, and a credit
                     to the captions of investment in shares by US$59,133,000
                     and retained earnings by US$1,736,000.

              -      The effect as of December 31, 2003, arising from the
                     application of the equity method since the date of the
                     initial acquisition occurred in 1996, was US$13,698,000.
                     This amount was recorded by a charge to the investment
                     caption and by a credit to the retained earnings caption of
                     2004.

              -      Buenaventura recognized an amount of US$60,735,000, as a
                     result of comparing the acquisition cost with the share in
                     the fair values of the assets and liabilities of Cerro
                     Verde. This amount is included in the investment caption
                     and amortized based on the proven and probable reserves of
                     Cerro Verde.

              -      For year 2004, the change represented an increase on the
                     share in affiliated companies in the consolidated statement
                     of income from US$169,331,000 to US$177,423,000 and an
                     increase in net income attributable to Buenaventura from
                     US$198,485,000 to US$206,577,0000, In addition, the basic
                     and diluted earnings per share increased from US$1.56 to
                     US$1.62.

                                      F-21


Notes to the consolidated financial statements (continued)

              Reinvestment Programs -
              Mining companies can obtain a tax benefit ("Investment Credit")
              by reinvesting undistributed profits into capital expansion
              projects that increase the Company's productivity ("Reinvestment
              Program"). Investment Credits must be approved by the Ministry of
              Energy and Mines and are granted for an amount equal to 80
              percent of the reinvested amount.

              In the case of Yanacocha, this entity has restricted earnings by
              US$189.6 million according to the its reinvestment program for
              years 2002- 2004. According to the law, Yanacocha should
              capitalize this amount in 2007 and cannot be distributed in the
              four years subsequent to its capitalization.

              In the case of Cerro Verde, this entity has restricted earnings
              by US$470 million in connection with its reinvestment program for
              years 2004-2007. According to law, Cerro Verde will capitalize
              the restricted amount once the Ministry of Energy and Mines
              approves the reinvestment program and cannot be distributed in
              the four years subsequent to its capitalization.

       Summary of financial information based on the Yanacocha and Cerro Verde
       financial statements - Presented below is certain summary financial
       information extracted from the Yanacocha's and Cerro Verde's
       financial statements and adjusted to conform to accounting practices and
       principles of the Company:

<TABLE>
<CAPTION>
                                                    Yanacocha                             Cerro Verde
                                      ------------------------------------    -----------------------------------
                                         2004         2005         2006         2004         2005          2006
                                       US$(000)     US$(000)     US$(000)     US$(000)     US$(000)      US$(000)
             <S>                       <C>          <C>          <C>            <C>          <C>         <C>
             Balance sheet
             Total assets              1,207,748    1,539,074    1,824,853      426,844      893,851    1,637,584
             Total liabilities           396,574      388,464      628,444      138,414       87,042      385,405
             Shareholders' equity        811,174    1,150,610    1,196,409      288,430      806,809    1,252,179

             Statements of income
             Total revenues            1,249,884    1,490,402    1,560,899      260,782      358,928      667,671
             Operating income            571,867      760,881      763,790      140,211      207,054      524,875
             Net income                  390,306      519,436      531,485       87,663      223,803      445,370
</TABLE>

14.    Property, plant and equipment, net
       The 2006 movement with the cost and accumulated depreciation accounts is
       show below:

<TABLE>
<CAPTION>
                                      Beginning                                                                 Ending
                                       Balance       Additions    Retirements       Sales       Transfers       Balance
                                       US$(000)      US$(000)       US$(000)      US$(000)       US$(000)      US$(000)
<S>                                        <C>             <C>                                                     <C>
       Cost
       Land                                2,255           111             --            --             --         2,366
       Mining lands                        7,327            --             --            --             --         7,327
       Mining concessions                 71,049        11,972             --            --             --        83,021
       Building, constructions and
         other                           126,636           117           (316)           --          5,309       131,746
       Machinery and equipment           158,127        16,387           (667)          (81)         2,873       176,639
       Transportation units                6,262         1,556            (28)         (297)            41         7,534
       Furniture and mixtures              4,226            53             (4)           --            152         4,427
       Work in progress                    4,199        31,903           (206)           --         (8,375)       27,521
       Mine closure costs                 13,294        22,469         (1,259)           --             --        34,504
                                       ---------     ---------      ---------     ---------      ---------     ---------
                                         393,375        84,568         (2,480)         (378)            --       475,085
                                       ---------     ---------      ---------     ---------      ---------     ---------
       Accumulated depreciation
         and amortization
       Mining lands                        3,769           571             --            --             --         4,340
       Mining concessions                 27,356         5,866             --            --             --        33,222
       Building, constructions and
         other                            64,921         7,536           (179)           --             --        72,278
       Machinery and equipment           110,481        12,743           (611)          (78)            --       122,535
       Transportation units                3,997           612              9          (268)            --         4,350
       Furniture and mixtures              1,735           269             (4)           --             --         2,000
       Mine closure costs                 11,114        10,300           (697)           --             --        20,717
                                       ---------     ---------      ---------     ---------      ---------     ---------
                                         223,373        37,897         (1,482)         (346)            --       259,442
                                       ---------     ---------      ---------     ---------      ---------     ---------
       Net cost                          170,002                                                                 215,643
                                       =========                                                               =========
</TABLE>

                                      F-22


Notes to the consolidated financial statements (continued)

       Mining concessions -
       The 2006 movement of cost and accumulated amortization of mining
       concessions by mining unit are shown below:

<TABLE>
<CAPTION>
                                                                         Balance as of           Balance as of
                                                  January 1, 2006          Additions           December 31, 2006
                                                      US$(000)              US$(000)                 US$(000)

<S>                                               <C>                    <C>                   <C>
       Cost
       Compania de Exploraciones, Desarrollo e
         Inversiones Mineras S.A.C.- CEDIMIN               51,138                    --                   51,138
       Inversiones Colquijirca S.A                         12,380                    --                   12,380
       Minas Poracota S.A                                   2,554                   310                    2,864
       Sociedad Minera El Brocal S.A.A                      3,405                    --                    3,405
       Minera Paula 49 S.A.C                                1,572                    --                    1,572
       Inversiones Mineras del Sur S.A., note 2                --                11,662                   11,662
                                                  ---------------        --------------        -----------------
                                                           71,049                11,972                   83,021
                                                  ---------------        --------------        -----------------
       Accumulated amortization
       Compania de Exploraciones, Desarrollo e
         Inversiones Mineras S.A.C. - CEDIMIN              18,949                 3,609                   22,558
       Inversiones Colquijirca S.A                          7,092                   947                    8,039
       Sociedad Minera El Brocal S.A.A                        740                   478                    1,218
       Minera Paula 49 S.A.C                                  575                   443                    1,018
       Inversiones Mineras del Sur S.A                         --                   389                      389
                                                  ---------------        --------------        -----------------
                                                           27,356                 5,866                   33,222
                                                  ---------------        --------------        -----------------

       Net cost                                            43,693                                         49,799
                                                 ================                              =================
</TABLE>

       The Company's management estimates that the amortization of the
       mining concession for each of the next five years will be approximately
       US$6.5 million.

       Work in progress -
       During 2006, the Company had work in progress related mainly to the
       cyanidation project and water treatment plant in the mining unit of
       Uchucchacua as well as the construction of the plant and transmission
       line in the mining unit of Orcopampa.

       Fully depreciated assets -
       Fully depreciated assets as of December 31, 2005 and 2006 amount to
       US$108,818,000 and US$86,038,000, respectively. Currently, these assets
       are being used by the Company.

15.    Mine development costs, net
       Movement of the cost and accumulated amortization by mining unit is show
       below:

<TABLE>
<CAPTION>
                                   Balance as of                       Balance as of
                                  January 1, 2006     Additions      December 31, 2006
                                     US$(000)         US$(000)           US$(000)

<S>                               <C>               <C>              <C>
       Cost
       Uchucchacua                         28,414            3,005              31,419
       Orcopampa                           29,036           10,299              39,335
       Antapite                            18,126            1,185              19,311
       Ishihuinca                           5,065               --               5,065
       Poracota                             3,574            8,716              12,290
       Shila and Paula                        307              484                 791
       Julcani                                 --              188                 188
       Recuperada                              --              235                 235
       Mine closure costs                   6,394            5,910              12,304
                                  ---------------   --------------   -----------------

                                           90,916           30,022             120,938
                                  ---------------   --------------   -----------------
       Accumulated amortization
       Uchucchacua                         15,867            2,686              18,553
       Orcopampa                            9,213            4,653              13,866
       Antapite                             8,788            3,889              12,677
       Ishihuinca                           4,771              226               4,997
       Mine closure costs                   4,500            1,592               6,092
                                  ---------------   --------------   -----------------
                                           43,139           13,046              56,185
                                  ---------------   --------------   -----------------

       Net cost                            47,777                               64,753
                                  ===============                    =================
</TABLE>

                                      F-23


Notes to the consolidated financial statements (continued)

16.    Bank loans
       Bank loans, mainly denominated in U.S. dollars, consist of:
                                                          2005     2006
                                                        US$(000)  US$(000)

       Inversiones Mineras del Sur S.A
       Banco de Credito del Peru                          1,000        --
       Banco Wiese Sudameris                              6,500        --

       Consorcio Energetico de Huancavelica S.A
       BBVA Banco Continental                                --    10,000

       Other subsidiaries                                   145        --
                                                        -------   -------

                                                          7,645    10,000
                                                        =======   =======

       As of December 31, 2005, this caption is mainly conformed by pre and
       post-export loans obtained from various domestic banks. The weighted
       average annual interest rate on bank loans was 4.85 percent.

       In May 2006, Consorcio Energetico Huancavelica S.A. obtained a bank loan
       by US$10,000,000 with maturity on January 31, 2007. The interest rate on
       this loan was three-month Libor plus 1.25 percent. No guarantees have
       been granted.

17.    Trade accounts payable
       Trade accounts payable are mainly originated by the acquisition of
       materials, supplies and spare parts. These obligations are mainly stated
       in U.S. dollar, have current maturities and do not accrue interest. No
       guarantees have been granted.

18.    Other liabilities This item is made up as follows:

                                                         2005        2006
                                                       US$(000)    US$(000)

       Accrual for mine closure costs                   26,922      54,287
       Workers' profit sharing payable                   4,272      18,701
       Stock appreciation rights                        17,291      14,214
       Remuneration and similar benefits payable         4,984       8,001
       Other taxes payable                               5,986       7,692
       Accrual for environmental liabilities                --       6,764
       Accrual for labor contingencies                   1,383       2,933
       Accounts payable to a partner                     5,310       2,609
       Royalties payable to the Peruvian Government      1,115       2,434
       Voluntary mining contribution payable                --       1,786
       Royalties payable to third parties                  944       1,197
       Dividends payable                                   663         664
       Hedging payable                                   2,361          --
       Other liabilities                                 5,759       3,148
                                                      --------    --------
                                                        76,990     124,430
                                                      --------    --------
       Long - term portion
       Accrual for mine closing costs                  (12,934)    (46,143)
       Stock appreciation rights                        (9,985)     (9,135)
       Accounts payable to a partner                    (5,310)     (2,609)
       Accrual for environmental liabilities                --      (6,764)
                                                      --------    --------
                                                       (28,229)    (64,651)
                                                      --------    --------

       Current portion                                  48,761      59,779
                                                      ========    ========

                                      F-24


Notes to the consolidated financial statements (continued)

       Accrual for mine closure costs
       Movements within the accrual for mine closure costs follow:

                                                                  US$(000)

       Balance as of January 1, 2005                                19,680

       Disbursements, note 36(a)                                    (3,130)
       Additions and changes in estimates                            8,151
       Accretion expense, note 28                                    2,306
       Loss for translation to U.S. dollar                             (85)
                                                                  --------
       Balance as of December 31, 2005                              26,922

       Disbursements, note 36(a)                                    (4,549)
       Additions and changes in estimates                           28,379
       Accretion expense, note 28                                    3,535
                                                                  --------

       Balance as of December 31, 2006                              54,287
                                                                  --------

       The accrual for mine closure costs is based on studies completed by
       independent parties, in accordance with current environmental protection
       regulations, see note 36(a). The accrual for mine closing costs
       corresponds mainly to activities that have to be completed for the
       restoration of the mining units and affected areas as a consequence of
       the exploitation activities. The main works that have to be completed are
       land movements, reforestation labor and removal of the mining plants.

       Due to new governmental requirements for 2006, the Company made an
       estimation of environmental obligations which resulted in additional
       liability of US$28,379,000 for all its mining units. The Company believes
       that this liability is enough to comply with current environmental
       regulation enacted by Peruvian government. This additional amount will
       generate in future additional annual depreciation of approximately US$1.7
       millions.

       As of December 31, 2006, the undiscounted liability for mine closure
       costs amounted to US$84,396,000 and was discounted using the rate of 8%,
       which is the credit-adjusted risk-free rate in effect at December 31,
       2006, resulting in accrual of US$54,287,000.

       The long-term portion of the accrual for mine closure costs is as
follows:

       Year ended as of December, 31                             US$(000)

       2008                                                         8,836
       2009                                                         6,050
       2010                                                         5,199
       2011                                                         5,542
       Thereafter                                                  20,516
                                                                 --------

                                                                   46,143
                                                                  -------

       Stock Appreciation Rights
       Senior executives of the Company are granted share appreciation rights,
       which can only be settled in cash, if the executive is working for the
       Company at each program's settlement date. These programs are mainly
       structured in a ten-year term, allocated in several programs with
       progressive maturities. The average price of the granted programs is
       assigned based on the last quarter market quotation of the shares before
       the grant date and the settlement is determined based on the variation of
       the market prices at the maturity date as compared to the price at the
       date of the grant.

                                      F-25


Notes to the consolidated financial statements (continued)

       As mentioned in the note 3(o), as of January 1, 2006, the Company adopted
       IFRS 2 "Share-Based payments"; consequently, the Company's management
       estimated the fair value of the Stock Appreciation Rights based on the
       Black-Scholes-Merton formula. As a result of adopting IFRS 2, the
       Company's income before workers' profit sharing and income tax and the
       net income for the year ended December 31, 2006 are US$4,833,000 and
       US$3,112,000 lower, respectively, than if had continued to account for
       share-based compensation using the intrinsic method (APB Opinion 25 for
       U.S. GAAP purposes), as the Company did in the comparable prior year
       periods. Basic and diluted earnings per share for the year ended December
       31, 2006 are US$0.02 lower if the Company had continued to account for
       share-based compensation using the intrinsic method. The total income tax
       (expense) benefit recognized in the consolidated statement of income for
       share-based compensation arrangements was (US$44,000), US$265,000 and
       (US$1,297,000) for years 2006, 2005 and 2004, respectively. Compensation
       costs have been recorded as administrative expenses since all share-based
       benefits are granted exclusively to officers.

       IFRS 2 requires that all entities recognize an expense for all employee
       services received in share-based payment transactions, using the
       fair-value-based method that is similar in most respects to the
       fair-value-based method established in Statement 123 R Share Based
       Payment.

       The main assumptions used by the Company to estimate the fair value as of
       December, 31, 2006 are as follow:

       Expected volatility                                        48.5%
       Risk-free interest rate                                    4.63% - 4.90%
       Dividend yield                                             1.49%
       Covering period for the program                            5.6 years
       Market value of the shares at the year-end                 US$26.52

       The Company has used the implied volatility of the share price determined
       from the market price of traded options.

       The movement of the shares subject to the stock appreciation rights
       program for the years 2005 and 2006 is as follows:

                                                             Number of shares
                                                      -----------------------
                                                         2005         2006

      Beginning balance                               2,265,200    2,364,600
      Granted during the year                           400,000      400,000
      Settled during the year                          (300,600)    (383,400)
      Expired during the year                                 -     (151,200)
                                                      ---------    ---------
      Ending balance                                  2,364,600    2,230,000
                                                      =========    =========

       The number of shares units which will be granted to executives subject to
       the stock appreciation rights bonus is as follow: 371,400 in 2007;
       378,800 in 2008; 342,100 in 2009; 277,450 in 2010; 271,850 in the year
       2011; and 588,400 thereafter.

       The average price for the programs granted during the year 2006 was
       US$28.38 per each share (US$23.57 per each share during the year 2005).

       The movement of the stock appreciation rights liability for the years
2005 and 2006 is as follows:

                                                         2005        2006
                                                       US$(000)    US$(000)

      Beginning balance                                  13,712      17,291
      Accrual for the year                                8,134       4,519
      Payments during the year                           (4,555)     (7,306)
      Expired programs during the year                        -        (885)
      Gain for translation to U.S. dollar                     -         595
                                                      ---------    --------
      Ending balance                                     17,291      14,214
                                                      =========    ========

                                      F-26


Notes to the consolidated financial statements (continued)

19.    Shareholders' equity

       (a)    Capital stock -
       The Company has common shares entitled to exercise voting rights that
       represent the 100 percent of its outstanding share capital. The nominal
       value of the treasury shares is presented netted from the capital stock.
       The detail of the capital stock as of December 31, 2006 and 2005 is as
       follows:

<TABLE>
<CAPTION>
                                                                         Result from
                                                Number       Nominal     exposure to     Capital        Capital
                                             of shares         value      inflation       stock          stock
                                                              S/(000)       S/(000)       S/(000)       US$(000)

<S>                                         <C>           <C>            <C>            <C>           <C>
              Common shares                  137,444,962       549,780         96,634       646,414        188,404
              Treasury shares                (10,565,130)      (42,261)        (7,398)      (49,659)       (14,474)
                                            ------------  ------------   ------------   -----------   ------------
                                             126,879,832       507,519         89,236       596,755        173,930
                                            ============  ============   ============   ===========   ============
</TABLE>

       The market value of the common shares is US$27.55 as of December 31, 2006
       (US$28.30 as of December 31, 2005).

       (b)    Investment shares -
              The investment shares are not entitled to exercise voting rights
              and do not represent the Company's stock obligation, they are
              entitled the participation and dividends'distribution. The nominal
              value of the investment shares held in treasury is presented
              netted from the investment shares. The detail of the investment
              shares as of December 31, 2006 and 2005 is as follows:

<TABLE>
<CAPTION>
                                                                             Result from
                                                    Number of    Nominal     exposure to   Investment   Investment
                                                     shares       value       inflation      shares      shares
                                                                  S/(000)      S/(000)       S/(000)     US$(000)

<S>                                                 <C>          <C>          <C>          <C>          <C>
              Investment shares                        372,320        1,489          260        1,749          510
              Investment shares held in treasury       (30,988)        (124)          (3)        (127)         (37)
                                                    ----------   ----------   ----------   ----------   ----------
                                                       341,332        1,365          257        1,622          473
                                                    ==========   ==========   ==========   ==========   ==========
</TABLE>

       (c)    Additional capital -
              The additional capital of the Company includes the following as of
              December 31, 2006:

              -      The premium received on the issuance of Series B common
                     shares for US$159,381,000.
              -      The proceeds from the sale of ADR for US$8,827,000, and
              -      The difference between constant nominal values of treasury
                     shares (common and investment), held by the subsidiary
                     Condesa, and the cost of such shares of US$9,505,000.

       (d)    Legal reserve -
              According to the Ley General de Sociedades (General Corporations
              Law), a minimum of 10 percent of distributable income in each
              year, after deducting income tax, shall be transferred to a legal
              reserve, until such reserve is equal to 20 percent of capital
              stock. This legal reserve may be used to offset losses or may be
              capitalized; however, if used to offset losses or if capitalized,
              the reserve must be replenished with future profits.

       (e)    Declared and paid dividends -
              The information about declared and paid dividends in the years
              2004, 2005 and 2006 is as follows:

<TABLE>
<CAPTION>
                                                                       Declared    Dividends
             Meeting/Board                                     Date    Dividends   per share
                                                                          US$         US$

             <S>                                        <C>           <C>          <C>
             Dividends 2004
             Mandatory annual shareholders' meeting     March 26      22,682,000        0.16
             Board of Directors                         October 28    21,337,000        0.15
                                                                      44,019,000
             Less - Dividends paid to Condesa                         (3,371,000)
                                                                      40,648,000
             Dividends 2005
             Mandatory annual shareholders' meeting     March 31      23,498,000        0.17
             Board of Directors                         October 26    24,511,000        0.18
                                                                      48,009,000
             Less - Dividends paid to Condesa                         (3,705,000)
                                                                      44,304,000
                                                                      ==========
             Dividends 2006
             Mandatory annual shareholders' meeting     March 31      30,320,000        0.24
             Board of Directors                         October 26    34,454,000        0.25
                                                                      64,774,000
             Less - Dividends paid to Condesa                         (5,007,000)
                                                                      59,767,000
                                                                      ==========
</TABLE>

                                      F-27


Notes to the consolidated financial statements (continued)

20.    Taxation
       (a) Buenaventura and their subsidiaries are subject to Peruvian tax law.
       As of December 31, 2006, the statutory income tax rate in Peru is 30
       percent.

       Non - domiciled companies in Peru and individuals must pay an additional
       tax of 4.1 percent on dividends received.

       (b) The tax authorities are legally entitled to review and, if necessary,
       adjust the income tax calculated by the Company during the four years
       subsequent to the year of the related tax return filing. The income tax
       and value added tax returns of the following years are pending review by
       the tax authorities:

<TABLE>
<CAPTION>
                                                                        Years open to review by tax
             Entity                                                             authorities

             <S>                                                      <C>
             Compania de Minas Buenaventura S.A.A.                    2002, 2004, 2005 and 2006
             Buenaventura Ingenieros S.A.                             2002, 2003, 2004, 2005 and 2006
             Compania de Exploraciones, Desarrollo e Inversiones
               Mineras S.A.C. - CEDIMIN                               2003, 2004, 2005 and 2006
             Compania Minera Condesa S.A.                             2002, 2004, 2005 and 2006
             Compania Minera Colquirrumi S.A.                         2002, 2003, 2004, 2005 and 2006
             Consorcio Energetico de Huancavelica S.A.                2002, 2003, 2004, 2005 and 2006
             Contacto Corredores de Seguros S.A.                      2002, 2003, 2004, 2005 and 2006
             Sociedad Minera El Brocal S.A.A.                         2002, 2004, 2005 and 2006
             Inversiones Mineras del Sur S.A.                         2002, 2003, 2004, 2005 and 2006
             Minas Conga S.R.L.                                       2002, 2003, 2004, 2005 and 2006
             S.M.R.L. Chaupiloma Dos de Cajamarca                     2002, 2003, 2004, 2005 and 2006
             Minera La Zanja S.R.L.                                   2004, 2005 and 2006
             Minas Poracota S.A.                                      2005 and 2006
             Minera Minasnioc S.A.C.                                  2004, 2005 and 2006
</TABLE>

       The income tax of Buenaventura for 2000 and 2003 were reviewed by the Tax
       Administration. As a consequence, Buenaventura received an assessment
       that reduced the tax loss carryforward in US$51,828,000 (S/177,822,000)
       as of December 31, 2000 and in US$14,472,000 (S/49,652,000) as of
       December 31, 2003. The main issue is that the Company considered certain
       revenues (dividends and equity participation) as deductible for
       determining the tax loss carryforward. In the opinion of the Company's
       legal advisors, the assessment does not have solid grounds. The Company
       expects to obtain a favorable opinion in the administrative process
       initiated against the tax authority.

                                      F-28


Notes to the consolidated financial statements (continued)

       The 2002 income tax of Cedimin was reviewed by the Tax Administration. As
       a consequence, Cedimin received an assessment that reduced the tax loss
       carryforward. The main issue is that Cedimin considered the loss from the
       sale of its shares in Minera Huallanca S.A.C. and Minera Yanaquihua S.A
       by US$7,907,000 (S/27,129,000) as deductible. In the opinion of
       Cedimin's legal advisors, such assessment has no solid grounds and
       therefore, it is expected that Cedimin will obtain a favorable opinion in
       the administrative process initiated against the tax authority.

       Additionally, the 2000, 2001 and 2003 income tax of Condesa were reviewed
       by the Tax Administration. As a consequence, Condesa received tax
       assessments that reduced the tax loss carrryforward by US$396,000
       (S/1,359,000), US$4,545,000 (S/15,594,000) and US$4,049,000 (S/
       13,892,000), respectively. In addition, the tax authority determined an
       omitted tax of US$336,000 (S/1,153,000) and a fine of US$ 167,000
       (S/573,000), related to the 2001 income tax mainly as a consequence of
       the reduction of the tax loss carryforward of year 2000. In those
       periods, the main issue was that Condesa considered certain revenues -
       dividends and equity participation - as non-taxable for determining the
       tax loss carryforward. In the opinion of Condesa's legal advisors,
       such assessment has no solid grounds and therefore, it is expected that
       Condesa obtains a favorable opinion in the administrative process
       initiated against the tax authority.

       During 2006, the tax authorities reviewed the income tax for 2003 of
       Sociedad Minera El Brocal S.A.A. and determined additions to the book
       income by US$668,000, equivalent to S/2,292,000, by omission of sales
       (undue deductions of freights and insurance related to exporting
       concentrates), resulting in a reduction of the tax loss carryforward of
       that year. The tax assessment of US$169,000 (equivalent to S/541,000,
       including interest as of December 12, 2006) has not been accepted by El
       Brocal and is under claim.

       Due to various possible interpretations of current legislation, it is not
       possible to determine whether or not future reviews will result in tax
       liabilities for the Company. In the event that additional taxes payable,
       interest and surcharges result from tax authority reviews, they will be
       charged to expense in the period assessed and paid. However, in
       Management's and legal advisory opinion, any additional tax assessment
       would not be significant to the consolidated financial statements as of
       December 31, 2005 and 2006.

       (c) With the purpose of determining the income tax and the value added
       tax, the transfer prices among related parties and for transactions with
       companies domiciled in countries considered tax havens, prices should be
       supported by documentation containing information about the valuation
       methods applied and criteria used in its determination. Based on an
       analysis of the Company's operations, Management and its legal advisors
       do not believe that the new regulations will result in significant
       contingencies for the Company as of December 31, 2005 and 2006.

       (d) The Company has the ability to recover the value added tax of the
       sales export. Therefore, the tax paid on purchase can be applied to the
       tax from its sales or other tax obligations, or the Company can request a
       refund.

       During 2006, Buenaventura has asked for the refund of the valued added
       tax for US$13,898,000 equivalent to S/45,506,000 (US$11,535,000
       equivalent to S/39,570,000 as of December 31, 2005), which was fully
       collected as of December 31, 2006.

21.    Net sales by geographic region sales agreements
       The Company's revenues primarily result from the sale of silver-lead,
       silver-gold, zinc and lead-gold-copper concentrates and ounces of gold.
       The following table shows net sales by geographic region and by product:

       Net sales by geographic region            2004      2005      2006
                                               US$(000)  US$(000)  US$(000)
       Peru                                     128,273   131,830   310,001
       Europe                                   118,608    65,977    86,919
       North America                             14,879    48,415    70,196
       Asia                                       4,645    13,406    57,497
       Oceania                                       --    23,591    23,459
       South America                                 --       168        --
                                               --------  --------  --------
                                                266,405   283,387   548,072
                                               ========  ========  ========

       Net sales by goods and services           2004      2005      2006
                                               US$(000)  US$(000)  US$(000)
       Products
       Gold                                     120,323   121,286   147,116
       Silver                                    11,582    20,840    83,518
       Lead-Silver concentrates                  85,932    87,832   160,123
       Zinc concentrates                         28,775    40,959   140,030
       Silver-Gold concentrates                  10,980     1,850     1,659
                                               --------  --------  --------
                                                257,592   272,767   532,446
       Services                                   8,813    10,620    15,626
                                               --------  --------  --------
                                                266,405   283,387   548,072
                                               ========  ========  ========

                                      F-29


Notes to the consolidated financial statements (continued)

       In 2006, the Company's three largest customers accounted for 13%, 14% and
       17%, respectively, of total sales (18%, 17% and 13% of total sales in
       2005). As of December 31, 2006, 49% of the trade accounts receivable is
       related to these customers (61% as of December 31, 2005). Some of these
       customers have sales contracts with the Company that guarantee them the
       production output from specified Company mines at prices based on market
       quotations or previously agreed. Currently, the production of the mining
       units of the Company is subject to such sale agreements; these agreements
       have various maturity dates but do not extend beyond December 31, 2012.

22.    Cost of good sold exclusive depreciation and amortization This item is
       made up as follows:

<TABLE>
<CAPTION>
                                                               2004      2005      2006
                                                             US$(000)  US$(000)  US$(000)

       <S>                                                  <C>        <C>       <C>
       Contractors                                             36,013    41,703    51,988
       Supplies                                                24,729    26,756    37,486
       Personnel expenses                                      24,309    22,803    25,278
       Other                                                   14,018     9,780    34,419
       Slow moving and obsolescence supplies reserve              842     2,839       138
       Reversed accruals for slow moving and obsolete
       supplies                                                    --        --    (1,645)
                                                            ---------  --------  --------
                                                               99,911   103,881   147,664
                                                            =========  ========  ========
</TABLE>

23.    Exploration and development cost in operational mining sites This item is
       made up as follows:

<TABLE>
<CAPTION>
                                                              2004      2005      2006
                                                             US$(000)  US$(000)  US$(000)

       <S>                                                  <C>        <C>       <C>
       Exploration expenses
       Uchucchacua                                             11,177    10,528    11,847
       Orcopampa                                                6,636     7,957    10,853
       Shila                                                    2,391     3,806     4,908
       Ishihuinca                                               2,007     1,475     4,104
       Antapite                                                 4,051     5,660     3,275
       Julcani                                                  1,229     1,425     1,881
       Recuperada                                                  --        --     1,396
       Other                                                      754        --         -
                                                            ---------  --------  --------
                                                               28,245    30,851    38,264
       Amortization of development costs                        9,126    10,315    11,270
                                                            ---------  --------  --------

                                                               37,371    41,166    49,534
                                                            =========  ========  ========
</TABLE>

24.    General and administrative expenses This item is made up as follows:

<TABLE>
                                                              2004       2005      2006
                                                            US$(000)   US$(000)  US$(000)

       <S>                                                  <C>        <C>       <C>
       Personnel expenses                                       9,326     9,794    12,010
       Sundry expenses                                          3,869     5,431     6,125
       Professional fees                                        5,445     6,349     6,102
       Board members' remuneration                              1,365     2,241     5,940
       Stock Appreciation Rights, note 18                         626     8,134     3,634
       Insurance                                                  635       596       794
       Supplies                                                   484       466       631
       Maintenance                                                196       673       585
       Rentals                                                    264       373       481
       Amortization of other assets                               291       271       261
       Allowance for doubtful account receivables                 332        22        76
                                                            ---------  --------  --------

                                                               22,833    34,350     36,639
                                                            =========  ========  =========
</TABLE>

                                      F-30


Notes to the consolidated financial statements (continued)


25.    Exploration costs in non-operational mining sites This item is made up as
       follows:

<TABLE>
<CAPTION>
                                                               2004      2005      2006
                                                             US$(000)  US$(000)  US$(000)

       <S>                                                  <C>        <C>       <C>
       In external areas to the mining sites
       Tinyaclla Project                                           --        --     4,450
       La Zanja Project                                         8,615     3,286     4,449
       Los Pircos - Cirato Project                                357       962     3,442
       Trapiche Project                                            --       852     3,279
       Hatun Orcco Project                                      1,185     1,167     2,546
       Other                                                   13,138    16,290    10,379
                                                            ---------  --------  --------
                                                               23,295    22,557    28,545

       In mining sites
       Marcapunta                                               1,257     3,367     6,002
       Huachocolpa                                              1,325     1,888       268
       Other                                                       --        --     1,375
                                                            ---------  --------  --------
                                                                2,582     5,255     7,645
                                                            ---------  --------  --------

                                                               25,877    27,812    36,190
                                                            =========  ========  ========
</TABLE>

26.    Royalties
       This item is made up as follows:

<TABLE>
<CAPTION>
                                                               2004      2005      2006
                                                             US$(000)  US$(000)  US$(000)
       <S>                                                  <C>        <C>       <C>
       Sindicato Minero de Orcopampa S.A.                       6,659     7,241    12,332
       Peruvian Government                                      1,942     4,299    11,260
       Minera El Futuro de Ica S.R.L.                             653       669       828
                                                            ---------  --------  --------

                                                                9,254    12,209    24,420
                                                            =========  ========  ========
</TABLE>

27.    Selling expenses This item is made up as follows:

<TABLE>
<CAPTION>
                                                               2004      2005      2006
                                                             US$(000)  US$(000)  US$(000)

        <S>                                                 <C>        <C>       <C>
       Freight                                                  3,787     3,601    4,390
       Sundry services                                          1,001       641    1,028
       Other                                                      443       558      510
                                                            ---------  --------  -------

                                                                5,231     4,800    5,928
                                                            =========  ========  =======
</TABLE>

28.    Finance income and expense This item is made up as follows:

<TABLE>
<CAPTION>
                                                               2004      2005        2006
                                                             US$(000)  US$(000)    US$(000)

        <S>                                                 <C>        <C>       <C>
       Finance income
       Interest on deposits                                     1,679     2,584     5,534
       Gain of investment fund                                     --        --     1,597
       Interest on loans                                        1,879       939       818
                                                            ---------  --------  --------

                                                                3,558     3,523     7,949
                                                            ---------  --------  --------

       Finance expense
       Accretion expense                                        2,069     2,306     3,535
       Interest on loans                                        1,353       854     1,167
       Other                                                      851       900     1,246
                                                            ---------  --------  --------

                                                                4,273     4,060     5,948
                                                            =========  ========  ========
</TABLE>

                                      F-31


Notes to the consolidated financial statements (continued)

29.    Other, net
       This item is made up as follows:

<TABLE>
<CAPTION>
                                                              2004       2005       2006
                                                            US$(000)   US$(000)   US$(000)

       <S>                                                  <C>        <C>       <C>
       Other revenues
       Revenue from insurance                                      80        279      186
       Net gain on sale of property, plant and
         equipment                                                 76        351       24
                                                            ---------  ---------  -------

                                                                  156        630      210
                                                            ---------  ---------  -------

       Other expenses
       Voluntary mining contribution                                -          -    1,783
       Disbursements for local communities                        271        872    1,780
       Labor contingencies                                      1,010        485    1,319
       Depreciation                                               412        217      211
       Damages in Colquijirca mining unit                           -        703        -
       Other                                                    3,274      1,580      143
                                                            ---------  ---------  -------
                                                                4,967      3,857    5,236
                                                            ---------  ---------  -------

       Other, net                                              (4,811)    (3,227)  (5,026)
                                                            ---------  ---------  -------
</TABLE>

30.    Income tax and workers' profit sharing
       (a) Buenaventura and their subsidiaries recognize temporary differences
       between tax and book basis of assets and liabilities through the
       recording of deferred tax assets and liabilities. The income tax and
       workers' profit sharing asset is composed of the following:

<TABLE>
<CAPTION>
                                                                         Credit (debit) to the
                                                                       consolidated statements of
                                                                                 income
                                                                       ---------------------------
                                                                                                       Balance as of
                                                      Balance as of                    Workers'         December 31,
                                                     January 1, 2006   Income tax   profit sharing          2006
                                                        US$(000)       US$(000)       US$(000)             US$(000)

<S>                                                 <C>                <C>           <C>               <C>
              Deferred asset
              Deferred income from sale of
                 future production                           71,694         7,480             2,168           81,342
              Accrual for mine closure costs                  6,620         2,693               781           10,094
              Different of depreciation and
                 amortization useful lives                    3,702         1,778               513            5,993
              Stock appreciation rights                       3,730           (34)              (10)           3,686
              Loss for translation into U.S.
                 dollar                                          --         2,621               760            3,381
              Accrual for labor contingencies                   874         1,180               342            2,396
              Slow moving and obsolescence
                 supplies reserves                            2,585          (377)             (109)           2,099
              Impairment of property, plant and
                 equipment                                    1,588           (86)              (25)           1,477
              Unrealized gain with affiliates                 1,064          (119)              (34)             911
              Other                                           1,530         2,141               621            4,292
                                                    ---------------    ----------    --------------    -------------
                                                             93,387        17,277             5,007          115,671
              Less - Allowance for deferred asset            (2,325)         (971)             (281)          (3,577)
                                                    ---------------    ----------    --------------    -------------

              Deferred asset                                 91,062        16,306             4,726          112,094

              Less - Deferred liability                      (1,266)          480               139             (647)
                                                    ---------------    ----------    --------------    -------------

              Deferred asset, net                            89,796        16,786             4,865          111,447
                                                    ===============    ==========    ==============    =============
</TABLE>

                                      F-32


Notes to the consolidated financial statements (continued)

       The Company has not recorded a deferred income tax and workers' profit
       sharing liability originated by the excess of the book basis over the tax
       basis of the investments in shares due to the following:

       -      In the case of the affiliate Cerro Verde, Buenaventura has not
              recorded a deferred income tax and workers' profit sharing
              liability by US$44,193,000, because, under any circumstance -
              dividend distribution or sale of the investment, the reversal of
              the basis difference will not be taxable. Cerro Verde S.A. is a
              company that quotes its shares in the Lima Stock Exchange and, in
              accordance with the Peruvian tax regulations, any gain or losses
              arising from the disposition of these shares are not taxable.
              Additionally, dividends distributions are income tax exempt.

       -      In the case of the affiliate Yanacocha, Buenaventura has not
              recorded a deferred income tax and workers' profit sharing
              liability by US$168,151,000, because Buenaventura's management has
              the intention and the ability of maintaining the investment until
              the date of the depletion of its gold and silver reserves; in this
              sense, it considers that the temporary difference will be reverted
              through future dividends, which are not taxable. On the other
              hand, Buenaventura's management has the ability of reversing the
              temporary difference, by other manners besides dividends
              distributions, without any tax effects.

       (b) The current and deferred portions of the income tax and workers'
       sharing expense (benefit) amounts for the years 2004, 2005 and 2006
       included in the consolidated statements of income are made up as follow:

<TABLE>
<CAPTION>
                                                                2004      2005     2006
                                                              US$(000)  US$(000)  S$(000)

             <S>                                             <C>        <C>       <C>
             Expense (benefit) for income tax
             Current
             Inversiones Colquijirca S.A.                        2,454     8,504   48,752
             Compania de Minas Buenaventura S.A.A.               3,034     5,980   15,375
             S.M.R.L. Chaupiloma Dos de Cajamarca               11,000    13,607   14,096
             Cedimin S.A.C.                                        308       650    1,288
             Consorcio Energetico de Huancavelica S.A.             623       380      726
             Inversiones Mineras del Sur S.A.                    3,707     3,579       --
             Other                                                 182       163      582
                                                             ---------  --------  -------
                                                                21,308    32,863   80,819
                                                             ---------  --------  -------

             Deferred
             Compania de Minas Buenaventura S.A.A.               6,329    (8,536) (13,904)
             Inversiones Colquijirca S.A.                        2,161      (363)  (2,800)
             Inversiones Mineras del Sur S.A.                       --      (973)      --
             Other                                                 113      (175)     (82)
                                                             ---------  --------  -------
                                                                 8,603   (10,047) (16,786)
                                                             ---------  --------  -------

             Total                                              29,911    22,816   64,033
                                                             =========  ========  =======
</TABLE>

                                      F-33


Notes to the consolidated financial statements (continued)

<TABLE>
<CAPTION>
                                                               2004      2005       2006
                                                             US$(000)  US$(000)   US$(000)

              <S>                                           <C>        <C>        <C>
              Expense (benefit) for workers' profit
                  sharing (i)
              Current
              Inversiones Colquijirca S.A.                        711      2,465   14,130
              Compania de Minas Buenaventura S.A.A.               879      1,733    4,444
              Cedimin S.A.C.                                       89        168      374
              Consorcio Energetico de Huancavelica S.A.           109         67      127
              Inversiones Mineras del Sur S.A.                  1,074      1,038       --
              Other                                                25         35       61
                                                            ---------  ---------  -------
                                                                2,887      5,506   19,136
                                                            ---------  ---------  -------

              Deferred
              Compania de Minas Buenaventura S.A.A.             1,835     (2,474)  (4,030)
              Inversiones Colquijirca S.A.                        626       (105)    (811)
              Inversiones Mineras del Sur S.A.                     35       (283)      --
              Other                                                --        (51)     (24)
                                                            ---------  ---------  -------
                                                                2,496    (2,913)  (4,865)
                                                            ---------  ---------  -------

              Total                                             5,383      2,593   14,271
                                                            =========  =========  =======
</TABLE>

              (i)   In accordance with Peruvian legislation, mining companies
                    that have more 20 employees should accrue an amount equal to
                    8 percent of annual taxable income to be distributed under
                    an employee profit-sharing plan. As of December 31, 2004,
                    2005 and 2006, S.M.R.L. Chaupiloma Dos de Cajamarca Contacto
                    Corredores de Seguros S.A. and Compania Minera Condesa S.A.
                    have less than 20 employees.

       (c) During 2004, 2005 and 2006 the provision for tax and workers' profit
       sharing recorded in the consolidated income statement is as follow:

<TABLE>
<CAPTION>
                                                            2004        2005       2006
                                                          US$(000)    US$(000)   US$(000)
<S>                                                         <C>         <C>        <C>
              Income before income tax and workers'
                profit sharing                              250,132     333,777    594,508
              Legal combined rate                            35.60%      35.60%     35.60%
                                                          ---------  ----------  ---------
              Expected income tax and workers' profit
                sharing according to the legal
                combined rate                                89,047     118,825    211,645

              Permanent differences:
              Effect of fair value of derivative
                contracts turned into normal sale
                contracts                                        --     (18,585)   (27,563)
              Share in affiliated companies                 (63,163)    (93,982)  (111,488)
              Effect of fair value of derivative
                instruments                                   6,180       9,465      4,723
              Loss from change in the fair value of
                gold certificates                                --          --      1,731
              Allowance for deferred asset                       --         357      1,252
              Gain on exchange difference of
                derivative instruments                           --         571        640
              Gain in normal sale contracts due to
                price changes                                    --       1,139         --
              Other permanent items                           3,230       7,619     (2,636)
                                                          ---------  ----------  ---------
                                                            (53,753)    (93,416)  (133,341)
                                                          ---------  ----------  ---------

                                                             35,294      25,409     78,304
                                                          =========  ==========  =========
</TABLE>

                                      F-34


Notes to the consolidated financial statements (continued)

31. Basic and diluted earning per share
       The computation of the Basic and diluted earning per share for the year
       ended December 31, 2004, 2005 and 2006 is presented below:

<TABLE>
<CAPTION>
                                                                2004          2005           2006

<S>                                                          <C>           <C>           <C>
              Net income (numerator) - US$                   206,577,000   288,397,000   428,057,000
              Shares (denominator)                           127,236,219   127,229,844   127,221,164
                                                             -----------   -----------   -----------


              Basic and diluted net income per share - US$          1.62          2.27          3.36
                                                             ===========   ===========   ===========
</TABLE>

       The number of shares to be used as the denominator in the calculation of
       basic and diluted earnings per share for the years ended December 31,
       2004, 2005 and 2006 was determined as follows:

<TABLE>
<CAPTION>
                                                                   2004            2005            2006

<S>                                                           <C>             <C>             <C>
              Common shares                                    137,444,962     137,444,962     137,444,962
              Investment shares                                    372,320         372,320         372,320
                                                              ------------    ------------    ------------
                                                               137,817,282     137,817,282     137,817,282

              Less - Treasury shares                           (10,581,063)    (10,596,118)    (10,596,118)
                                                              ------------    ------------    ------------

                                                               127,236,219     127,221,164     127,221,164
                                                              ------------    ------------    ------------

              Weighted average number of shares outstanding    127,236,219     127,229,844     127,221,164
                                                              ============    ============    ============
</TABLE>

32.    Disclosure about information by segments\
       International Accounting Standard (IAS) 14, requires enterprises to
       disclose financial information by business and/or geographical segment.
       Companies should consider their organizational and management structure
       and their internal financial reporting system when identifying segments.
       A business segment is a distinguishable component of an entity that is
       engaged in providing an individual product or service or a group of
       related products or services and that is subject to risks and returns
       that are different from those of other business segments. A geographical
       segment is a distinguishable component of an entity that is engaged in
       providing products or services within a particular economic environment
       and that is subject to risks and returns that are different from those of
       components operating in other economic environments. The most important
       segment is Mining, which activities are carried out through nine
       companies. Management considers that these mining companies can be
       combined into one reportable mining segment because they show similar
       financial performance and similar characteristics related to the nature
       of their products, the nature of their production process, their clients
       and legal environment. The electric, mining consulting and insurance
       segments are not significant and, therefore, are not considered in the
       evaluation of business development. Therefore, management considers that
       the Company's only reportable segment is mining.

       The Company's geographical segments are based on the location of the
       Company's assets that is Peru. Sales to external customers disclosed in
       geographical segments are based on the geographical location of its
       customers.

33.    Derivative financial instruments
       Derivative contracts -
       In March 2006, Buenaventura completed the change of the terms of its gold
       derivative contracts maintained as of December 31, 2005 in order to
       qualify them as normal sale contracts. In previous years, the Company
       made similar modifications. As of December 31, 2006, the Company has put
       option contracts, which gives the right to sell 232,500 gold ounces at
       average price of US$345 per ounce depending on certain market conditions.
       The contract's dates expire in different dates until December 31, 2012
       and the fair value of these contracts as of December 31, 2006 was
       insignificant according to current market quotations, Except for the
       contracts above mentioned, the Company does not maintain gold derivative
       contracts as of December 31, 2006. Likewise, silver derivative contracts
       maintained by the Company matured in August 2006.

                                      F-35


Notes to the consolidated financial statements (continued)

       Related to the derivative instruments contracts maintained during 2004,
       2005 and 2006, Buenaventura and El Brocal recorded the following:

       -      In 2006, Buenaventura recognized a loss of US$13,268,000 (losses
              of US$6,557,000 and US$26,588,000 in 2004 and 2005) due to the
              changes in fair value occurred during this period. In addition, it
              recognized expenses of US$10,803,000 related to the reduction of
              the Company's hedge book exposure in 120,000 ounces of gold during
              the first quarter of 2004. These amounts are presented in the
              caption "Loss from change in the fair value of derivative
              instruments".

       -      In 2004 and 2005, El Brocal credited US$1,546,000 and US$303,000,
              net of minority interest, to the equity account "Cumulative
              unrealized loss on derivative instruments", due to the changes in
              fair value occurred during those periods. As of December 31, 2005
              and 2006, El Brocal did not have derivative contracts to offset
              the risk of metal price fluctuations.

       The liability presented in the consolidated balance sheets as of
       December, 31, 2005, for US$66,207,000, corresponded to the fair value of
       derivative instruments outstanding as of such date.

       Normal sale contracts -
       As a consequence of the modification of derivative contracts above
       mentioned, the Company has committed a significant portion of its future
       production to prices previously agreed. In 2006, Buenaventura delivered
       388,000 ounces of gold (282,000 ounces and 198,000 during the years 2005
       and 2004) as part of such sales contracts. As a consequence, Buenaventura
       recognized revenues of US$50,325,000 in the caption "realized revenue
       from sale of future production" in the consolidated statements of income
       (US$20,187,000 and US$28,064,000 during 2004 and 2005).

       Following is a movement of the deferred income from sale of future
production for the years 2005 and 2006:

<TABLE>
<CAPTION>
                                                              2005                                     2006
                                              --------------------------------------    --------------------------------------
                                                                    Deferred income                          Deferred income
                                                   Committed          from sale of          Committed           from sale of
                                                ounces of gold     future production     ounces of gold      future production
                                                                         US$(000)                                 US$(000)

<S>                                           <C>                  <C>                  <C>                  <C>
       Beginning balance                              1,844,000              187,616            1,981,000              210,105
       Transfer from derivative instruments
         to deferred income from sale of
         future production                              419,000               50,553              340,000               77,425
       Realized income from sale of future
          production                                   (282,000)             (28,064)            (388,000)             (50,325)
                                              -----------------    -----------------    -----------------    -----------------
       Ending balance                                 1,981,000              210,105            1,933,000              237,205

       Less- Non current portion                     (1,673,000)            (178,896)          (1,565,000)            (194,173)
                                              -----------------    -----------------    -----------------    -----------------

       Current portion                                  308,000               31,209              368,000               43,032
                                              =================    =================    =================    =================
</TABLE>

       As of December 31, 2006 Buenaventura is committed to sell 1,933,000
       ounces of gold at prices ranging from US$332 to US$451 per ounce until
       December 2012.

       The fair value of this normal sales contracts is US$585,662,000 as of
       December 31, 2006.


34.    Financial risk management
       The Company's activities it expose to a different financial risks: market
       risk (including interest rate risk, foreign currency risk and the risk
       arises from changes in market prices of minerals), credit risk and
       liquidity risk. The Company's financial risk management program focus to
       mitigate the potential adverse effects in its financial performance.

                                      F-36


Notes to the consolidated financial statements (continued)

       The Company's Management knows the conditions prevailing in the market
       and based on its knowledge and experience manages the risks related to
       foreign currency, interest rate, credit and liquidity, according to the
       policies approved by the Board of Directors. The most important aspects
       for the management of these risks are summarized below:

       (a)    Foreign currency risk -
             The Company buys, sells its products, and obtains working capital
             facilities and investments in U.S. dollars. The assets and
             liabilities in different currencies from the U.S. dollar (Nuevos
             Soles) are not significant. Management estimates that the future
             exchange rate fluctuations of Peruvian currency versus the US
             dollar will not significantly affect the results of the Company's
             future operations.

       (b)    Interest rate risk -
             The Company's exposure to this risk arises by the changes in
             interest rates in its financial assets and financial liabilities.
             The Company manages neither financial assets nor financial
             liabilities with floating interest rates. Consequently, the Company
             does not expect to incur in significant losses related to interest
             risk.

       (c)    Credit risk -
             The Company trades only with creditworthy local and international
             third parties. It is the Company's policy that all customers who
             wish to trade on credit terms are subject to credit verification
             procedures. The maximum exposure to credit risk related to accounts
             receivable is given by its book value.

             With respect to credit risk arising from other financial assets of
             the Company (comprise mainly balances deposited in banks, the gold
             certificates and available-for-sale financial assets), the
             Company's exposure to credit risk arises from default of the
             counterparty, with a maximum exposure equal to the carrying amount
             of these financial assets.

       (d)    Liquidity risk -
             The Company holds enough funds to comply with its commitments;
             therefore, the Company's management considers that is not exposed
             to liquidity risks.

35.    Fair value of financial instruments
       The information about fair value of the financial instruments, including
       derivatives, is presented below:

       -      Current assets and liabilities approximate their fair value due to
              the short-term maturities of these financial instruments.

       -      The market quotation of the investment in Sociedad Minera Cerro
              Verde S.A.A. is US$929,237,000 as of December 31, 2006
              (US$272,239,000 as of December 31, 2005).

36.    Commitments and Contingencies (a) Environmental matters -

              Mine closing costs
              The Company's mining and exploration activities are subject to
              environmental protection standards. In order to comply with these
              standards, the Company has presented preliminary studies covering
              of environmental and Environmental Adjustment and Management
              Programs (PAMA) for each of the mining units. The Ministry of
              Energy and Mines has approved the PAMA's related to Uchucchacua,
              Julcani, Orcopampa, Colquijirca, Ishihuinca, Shila, Paula and
              Huachocolpa. As of December 31, 2006, the activities, as defined
              in the PAMA's respective to the Uchucchacua, Julcani, Orcopampa,
              Colquijirca and Ishihuinca units, had been completed.

              On October 14, 2003, the Congress issued the Law 28090 which
              regulates the procedures and commitments that the mining
              activities must follow in order to elaborate, file and implement a
              mining site closing plan, as well as establishes the constitution
              of a guarantee to ensure the compliance of the committed plan in
              connection with protection, conservation and recuperation of the
              environment standards. On August 15, 2005 the corresponding ruling
              was approved. In accordance with the first regulation, the mining
              site closing plans approved before the issuance of this ruling
              have to be adequate to the new disposals in a term no greater than
              nine months since its publication.

              During the year 2006, in order to comply with that law, the
              Company completed its mining site closing plans for each of the
              mining units. Up to the date of this report, the mining site
              closing plans are subject to approval by the Ministry of Energy
              and Mines.

              In 2006, the Company made disbursements in connection with
              activities included in the mining site closing plans by
              US$4,549,000 (US$1,659,000 and US$3,130,000 during the years 2004
              and 2005, respectively). As of December 31, 2006, the Company has
              recognized a liability of US$54,287,000 (US$26,922,000 as of
              December 31, 2005) related to its future obligations for the
              closing of the mining units, see note 18.

                                      F-37


Notes to the consolidated financial statements (continued)

              Environmental liabilities
              On July 2, 2004, the Peruvian government enacted the Law No. 28271
              ("Environmental Liabilities Law") that regulates the procedures to
              identify environmental liabilities of mining activities, the
              responsibility and the financing for its remediation.
              Environmental liabilities include those facilities, remains or
              deposits of residues produced by mining operations, which are
              currently abandoned or inactive and that constitute a permanent
              and potential risk for the health of the population, the
              surrounding ecosystem and the property. On December 7, 2005 the
              corresponding ruling was approved and the mining companies had a
              year to estimate an amount for environmental liabilities and to
              file a plan. According to this ruling, the Ministry of Energy and
              Mines had to elaborate a preliminary inventory of environmental
              liabilities, identifying a responsible for each remediation area.
              This inventory was published through Ministerial Resolution No.
              290-2006 of June 15, 2006 and the holders of mining concession had
              sixty days to add new liabilities and for making the corresponding
              observations.

              The Company conciliated the affected areas identified by the
              Ministry of Energy and Mines in its inventory with its own
              records, and proceeded to estimate the corresponding liabilities,
              recording an operating expense of US$6,764,000 (US$4,980,000
              related to Santa Barbara's mining unit and US$1,784,000 related to
              Buenaventura's mining units) as of December 31, 2006.
              Environmental Liabilities Plans were determined by an independent
              party duly authorized by the Ministry of Energy and Mines. The
              Company expects to settle this liability in the next three years.

              The Company considers that the recorded liability is enough to
              comply with current environmental regulations enacted by Peruvian
              government.

       (b)    Land and mineral rights leases -

              Sindicato Minero Orcopampa S.A.
              The Company pays a 10 percent of the production obtained from land
              and mineral rights leases by Sindicato Minero Orcopampa S.A. This
              land lease contract is in force until the year 2043.

              Minera El Futuro de Ica S.R.L.:
              INMINSUR signed a contract with Minera El Futuro de Ica S.R.L., to
              operate mining concessions lease in the Arequipa region, the
              contractual terms and conditions establish that the lease will be
              subject to a royalty payment equivalent to 7 percent of monthly
              concentrates revenues. As part of the merger explained in the note
              2, Buenaventura has assumed this contract, which will be in force
              until the year 2015.

              Royalties are presented as costs of operations in the consolidated
              statements of income and amounted to US$13,160,000 in 2006
              (US$7,312,000 and US$7,910,000 in 2004 and 2005), see note 26.

       (c)    Legal and tax processes -

              Legal processes of Buenaventura
              Demand presented at the Federal Court at the United States of
              America - Buenaventura and Condesa, together with Newmont Mining,
              Newmont Second and certain individual persons, were cited in a
              legal action in the Federal Court of the United States of America
              - Tenth Circuit (Colorado). A French citizen informed the court
              that he was affected by the revocation of Bureau de Recherches
              Geologiques et Minieres (BRGM), Mine Or and their related entities
              over preferential rights on the shares of CEDIMIN.

              On March 16, 2005 all the involved parts reached to an
              extrajudicial agreement. As a consequence of this agreement, the
              demand, pending of motion at the Federal Court of the United
              States of America - Tenth Circuit and subsequently dismissed by
              the District Court, was settled definitively.

              Other -
              From time to time in the normal course of its activities, the
              Company is involved in various legal proceedings of diverse
              nature. Management believes that any possible loss, which may
              result from these lawsuits, will not have a materially adverse
              effect on the Company's financial position.

              Legal processes of Yanacocha -
              Mercury spill in Choropampa
              In June 2000, a Yanacocha's contractor spilled approximately 11
              liters of mercury near Choropampa, located at 85 kilometers from
              Yanacocha. After the spill, a comprehensive health and
              environmental remediation program was undertaken by Yanacocha. In
              August 2000, Yanacocha under protest paid a fine of S/1,740,000
              Peruvian Nuevos Soles (approximately US$0.5 million) to the
              Peruvian Government (Ministery of Energy and Mines). Yanacocha
              entered into settlement agreements with a number of individuals
              impacted by the incident. In addition, it has entered into
              agreements with three of the communities impacted by this incident
              to provide a variety of public works as compensation for the
              disruption and inconvenience caused by the incident. As a result
              of the accident, Yanacocha and other defendants were named in a
              lawsuit by over 1,100 Peruvian citizens and the Provincial
              Municipality of Cajamarca in the Denver District Court of the
              State of Colorado, United States of America (hereinafter "the
              Court"). This action seeks compensatory and punitive damages based
              on claims associated with the mercury spill incident. In February
              2005, Yanacocha responded to this complaint in the Court. The
              parties in these cases have agreed to submit these matters to
              binding arbitration.

                                      F-38


Notes to the consolidated financial statements (continued)

              In May 2002, additional lawsuits related to the Choropampa
              incident were filed against Yanacocha in two of the local courts
              of Cajamarca in Peru by over 900 Peruvian citizens. Such lawsuits
              seek the payment of US$229.4 million and S/1,245,000 Peruvian
              Nuevos Soles. As of December 31, 2006, Yanacocha has entered into
              settlement agreements with approximately 40% of the plaintiffs for
              amounts considerably lower than those initially claimed in their
              lawsuits, significantly reducing the contingency that these
              lawsuits created.

              In addition, more than half of the remaining plaintiffs in these
              Peruvian cases had previously entered into settlement agreements
              with the Company prior to filing their lawsuits. Yanacocha has
              filed motions to dismiss based on these previous settlements and
              has obtained positive judgments by the Civil Court of the
              Cajamarca Superior Court. The Plaintiffs have appealed many of
              these rulings to Peru's Supreme Court where they remain pending.

              As of December 31, 2006 Yancocha has spent approximately US$27.7
              million, which has been offset by approximately US$12.8 million of
              insurance proceeds, on public works, remediation efforts, personal
              compensation and compensation to the communities as well as fines,
              attorneys' fees and other related costs and expenditures.
              Yanacocha cannot predict the amount of additional expenditures
              related to this matter or the result of any of these lawsuits.

              Conga
              Yanacocha is involved in a dispute with the Provincial
              Municipality of Celendin regarding the authority of that
              governmental body to regulate the development of the Conga ore
              deposit. In 2004, the Municipality of Celendin enacted an
              ordinance declaring the area around Conga to be a mining-free
              reserve and naturally protected area. As in the Cerro Quilish case
              (see below), Yanacocha has challenged this ordinance on the
              grounds that, under Peruvian law, local governments lack the
              authority to create such areas, denying the rights granted by
              Yanacocha's mining concessions. Based on the precedents
              established by the Constitutional Tribunal, Yanacocha believes
              that a similar finding protecting Yanacocha's rights will be made.

              Hacienda Los Negritos
              On October 21, 2002, Yanacocha was sued by Grimaldina Malpica
              Rojas, seeking: (i) the repossession of the "Los Negritos"
              property, which is currently held and utilized by Yanacocha, and
              (ii) a payment for damages of up to $65 million.

              Yanacocha has opposed the lawsuit and all its terms, requesting
              that her registration of the property in the Public Registry of
              Cajamarca be declared void. The legal proceeding is currently
              pending resolution in Cajamarca's court of first instance.
              Yanacocha believes that the plaintiff's claim is without merit.

              Banos del Inca
              On September 11, 2006 the Municipality of Banos del Inca issued a
              declaration designating an area that includes the Carachugo
              Expansion and San Jose Projects as reserved and protected areas.
              Based on previous experience and actions taken by the
              Constitutional Tribunal (Peru Court of Last instance for
              Constitutional issues) in respect of Cerro Quilish in which it was
              ruled that such declaration did not affect Yanacocha's mining
              rights, Yanacocha believes that Banos del Inca's declaration,
              should not impact Yanacocha's legal rights to exploit these
              concessions.

              Tax processes -
              As of December 31, 2006, tax authorities have reviewed the income
              tax and value added tax returns up to year 2003. As a result of
              these reviews, tax authorities have presented certain tax
              assessments with which Yanacocha and its legal advisors do not
              agree. In 2004 and 2006, Yanacocha made payments of US$11,500,000
              and US$7,600,000, respectively, in order to avoid the accruing of
              interest and penalties on the proposed assessments that are
              related to timing of the deductions. Yanacocha has accrued a
              liability for financial purposes in an amount that represents
              management's best judgment as a result of the current tax review.
              In the opinion of Yanacocha's Management, the resolution of the
              income tax controversy will not have a material impact on the
              financial statements or liquidity of Yanacocha.

                                      F-39


Notes to the consolidated financial statements (continued)

              Other contingencies - Cerro Quilish
              Yanacocha was involved in a dispute with the Provincial
              Municipality of Cajamarca regarding the authority of that
              governmental body to regulate the development of the Cerro Quilish
              ore deposit. Cerro Quilish is located in the same watershed in
              which the City of Cajamarca is located. The Municipality enacted
              an ordinance declaring Cerro Quilish and its watershed to be a
              reserve and naturally protected area. Yanacocha challenged this
              ordinance on the grounds that, under Peruvian law, local
              governments lack authority to create such areas. The Peruvian
              Constitutional Tribunal heard the case in early 2003 and ruled on
              April 7, 2003. The ruling established that Yanacocha's rights were
              not impacted by the ordinance; that Yanacocha would complete a
              full environmental impact study prior to initiating any
              development at Cerro Quilish; and, adopt mitigation measures
              necessary to protect the quality and quantity of the water supply
              of the City of Cajamarca. In July 2004, Yanacocha received a
              drilling permit and commenced exploration activities on the Cerro
              Quilish deposit. During September 2004, individuals from the
              Cajamarca region conducted a sustained blockade of the road
              between the City of Cajamarca and the mine site, in protest of
              these exploration activities. Yanacocha suspended all drilling
              activities at Cerro Quilish and the blockade was resolved. In
              November 2004, in recognition of the communities' concerns,
              Yanacocha requested and received the revocation of its Cerro
              Quilish drilling permit. In this regard, Yanacocha has been
              working on re-establishing its "social license to operate" with
              the purpose of improving its relationship with the community of
              Cajamarca.

       (d)    Guarantees granted -
              On September 30, 2005, Cerro Verde signed agreements with several
              export credit agencies and commercial banks (lenders) in
              connection with an original financing of US$450 million for the
              expansion of its operations. This amount was subsequently reduced
              to US$360 million as a result of the issuance of Corporate Bonds
              in April 2006. In addition, Cerro Verde agreed with the lenders to
              reduce the original financing for up to US$202 million. The
              financing requires the granting of mortgages and pledges over the
              Cerro Verde's assets, and that Phelps Dodge, Sumitomo and
              Buenaventura comply with maintaining a minimum shareholders'
              equity (US$600 million for Buenaventura). The company that does
              not comply with this requirement must grant a stand-by letter for
              the representative of the commercial banks that participate in the
              financing. Additionally, shares in Cerro Verde owned by
              Buenaventura are pledged in favor of such lenders.

              Corporate Bonds are secured with the same mortgages and pledges
              granted to the lenders.

37.    Transaction with affiliated companies
       The Company had the following transactions with its affiliated companies
       during the years ended December 31, 2004, 2005 and 2006:

       S.M.R.L.  Chaupiloma Dos de Cajamarca ("Chaupiloma") -
       Chaupiloma is the legal owner of the mineral rights on the mining
       concessions exploited by Yanacocha, and receives a 3 percent royalty on
       the net sales of Yanacocha. In 2006, royalties earned amounted to
       US$48,475,000 (US$37,797,000 and US$46,094,000 in 2004 and 2005,
       respectively) and are presented as "Royalties income" in the consolidated
       statements of income.

       Compania Minera Condesa S.A. ("Condesa") -

       During 2006, Compania Minera Condesa S.A. received cash dividends from
       Yanacocha for approximately US$209,520,000 (US$121,675,000 and
       US$76,955,000 in 2004 and 2005, respectively).

       Sociedad Minera Cerro Verde S.A.A. ("Cerro Verde") -
       In 2004 and 2005, Buenaventura received cash dividends from Cerro Verde
       amount to US$1,428,000 and US$12,793,000, respectively. In 2006, no
       dividends were received from Cerro Verde.

       Buenaventura Ingenieros S.A. ("Bisa") -
       Since March 2002, Buenaventura Ingenieros S.A. enters into annual master
       agreements with Yanacocha to perform activities related to planning,
       monitoring and administrating the infrastructure projects, as well as
       analysis, studies and work plan design required by Yanacocha in its
       operations. On January 1, 2005 these entities signed the service contract
       GEN-005/05 effective for a period of two years. In 2006, the revenues
       related to this service contract amounted to approximately US$5,109,000
       (US$2,984,000 and US$3,735,000 in 2004 and 2005, respectively).

       Consorcio Energetico de Huancavelica S.A. ("Conenhua") -
       In November 2000, Conenhua signed an agreement with Yanacocha for the
       construction and operation of a 220 kv transmission line between Trujillo
       and Cajamarca, a 60 kv transmission line between Cajamarca and La
       Pajuela, and the Cajamarca Norte substation; this agreement also
       encompassed activities necessary to enlarge the Trujillo substation.
       Pursuant to this contract, the construction work finished in October
       2001. In addition, Yanacocha and Conenhua signed a 10-year agreement
       covering electric energy transmission and infrastructure operation
       beginning November 2001. In exchange for operating and managing the
       transmission project, Yanacocha will pay an annual fee of US$3.7 million.
       During 2006, the revenues for these services amounted to approximately
       US$3,873,000 (US$3,890,000 and US$3,877,000 in 2004 and 2005,
       respectively).

                                      F-40


Notes to the consolidated financial statements (continued)

       As a result of the above and other minor transactions, the Company has
       the following accounts receivable from affiliated companies:

                                                          2005      2006
                                                        US$(000)  US$(000)

       Minera Yanacocha S.R.L                            19,150    11,329
       Other                                                109       385
                                                        -------   -------

                                                         19,259    11,714
                                                        =======   =======

38.    Subsequent events
       (a)    During January 2007, the Company modified the schedule of
              commitments of ounces of gold with two of its clients. As
              consequence of this modification, the new schedule of commitments
              of ounces gold for the next years is the following:

              Years                                          Ounces of gold

              2007                                                 160,000
              2008                                                 280,000
              2009                                                 383,000
              2010                                                 380,000
              2011                                                 354,000
              2012                                                 376,000
                                                                 ---------

                                                                 1,933,000
                                                                 =========

              In addition, from February 26, 2007 to the date of this report,
              Buenaventura revised the normal sales contracts with six of its
              clients in order to eliminate the fixed priced clause of certain
              number of ounces committed and to sell those ounces between the
              period 2008- 2012 at market prices. As a result of such revision,
              Buenaventura was released from the obligation to sell 971,000
              ounces of gold at fixed prices; consequently, they will be sold at
              the market price prevailing at the date of the physical delivery
              of the gold committed. Buenaventura made a payment of
              US$315,727,000 to have the right to sell such ounces of gold at
              market prices

        (b)   On November 10, 2006, the Company acquired 25 per cent of the
              capital stock of Minas Poracota S.A. by a payment of US$2,250,000.
              As a result, Buenaventura has the ownership of 100 per cent of the
              capital stock of Minas Poracota S.A.

              Effective date January 2, 2007, Buenaventura has decided to merge
              with Minas Poracota S.A.

       (c)    In January 2006, Buenaventura entered into an arbitration process
              at the Center of Arbitration and National and International
              Conciliation of the Lima Chamber of Trade against the companies
              Fort Vermillion Finance S.A. and Grisha Management Inc.
              (hereafter, the sellers), related to the purchase price adjustment
              for the acquisition of ADRA International Holding Corp. (ADRA),
              owner of Inversiones Colquijirca S.A. shares. In accordance with
              the Share Sales Contract signed in 1999, Buenaventura considered
              that the date for ADRA to pursue the price adjustment expired on
              February 24, 2004. However, the sellers considered that such date
              was indefinitive.

              On February 26, 2007, Buenaventura received the arbitration award
              that resolves this dispute, extending the initial term for the
              sellers to exercise the above-mentioned option until October 24,
              2006. On June 8, 2007, Buenaventura agreed to pay to the sellers
              US$23,906,843 in connection with the price adjustment of the
              shares, which will result in an increase to the Mining Rights
              caption on the balance sheet. Out of this total, Buenaventura paid
              US$19,923,037 and remains outstanding US$3,983,806. The dispute
              has finally been settled.

                                      F-41


Notes to the consolidated financial statements (continued)

39.    Summary of significant differences between accounting principles followed
       by the Company and U.S. generally accepted accounting principles

       The Company's consolidated financial statements have been prepared in
       accordance with Peruvian GAAP which differs in certain respects from U.S.
       GAAP. The effects of these differences are reflected in Note 40 and are
       principally related to the items discussed in the following paragraphs:

       Shares in Yanacocha and Cerro Verde
       Peruvian GAAP - Under Peruvian GAAP, specifically IAS 28 - Accounting for
       Investments in Associates, the investor's financial statements are
       usually prepared using uniform accounting policies for like transactions
       and events in similar circumstances. In many cases, if an associate uses
       accounting policies other than those adopted by the investor for like
       transactions and events in similar circumstances, appropriate adjustments
       are made to the associate's financial statements when they are used by
       the investor in applying the equity method. Based on the above mentioned,
       under Peruvian GAAP, the Company recognizes the equity participation in
       Yanacocha and Cerro Verde using the financial statements of these
       entities prepared under U.S. GAAP because these statements recognize the
       appropriate adjustments to reflect the current accounting policies of
       Buenaventura.

       U.S. GAAP - The consolidated results and shareholders' equity include the
       shares in Yanacocha and Cerro Verde obtained from those entities
       financial statements prepared in accordance with U.S. GAAP.

       Under U.S. GAAP, the mining concession in Yanacocha and Cerro Verde must
       be kept in the same functional and reporting currency of these entities,
       which is U.S. dollars, and not Peruvian Nuevos Soles. As of December 31,
       2005, the effect of amortizing the mining concession using the U.S.
       dollars basis instead of Peruvian Nuevos Soles originated reconciliation
       items, in results of operations and in comprehensive income. Effective
       January 1, 2006, as a result of changing the functional and reporting
       currency from Nuevos Soles to U.S. dollar, the financial statements under
       Peruvian GAAP of 2004 and 2005 were retroactively modified to consider
       such adjustments in the corresponding years; consequently no
       reconciliation items are shown in the reconciliation between Peruvian
       GAAP and U.S. GAAP in those years.

       Deferred Income Tax
       Peruvian GAAP - Under paragraph 70 of IAS 1, Presentation of Financial
       Statements, deferred tax assets and liabilities are always classified as
       non-current assets or liabilities.

       U.S.GAAP - Deferred income tax liabilities and assets shall be classified
       as current or non-current based on the classification of the related
       asset or liability for financial reporting purposes.

       Under Peruvian GAAP, specifically paragraph 41 of IAS 12 - Income Taxes,
       the Company must consider the effect on the deferred income tax and
       workers' profit sharing generated by maintaining book basis in U.S.
       dollars and a tax basis in Nuevos Soles (for tax purposes, the functional
       currency is Nuevos Soles). US GAAP, FAS 109 - Accounting for Income
       Taxes, prohibits the recognition of a deferred tax liability or asset for
       differences related to non-monetary assets and liabilities that, under
       FASB 52 "Foreign Currency Translation", are remeasured from the local
       currency into the functional currency using historical exchange rates and
       that result from changes in exchange rates. Therefore, the deferred
       income tax recorded under Peruvian GAAP has been included as a
       reconciliation item, see note 40.

       Workers' profit sharing
       Peruvian GAAP - Workers' profit sharing expense (income) is separately
       presented in the consolidated statements of income in a similar way as
       income tax expense (income). Also, deferred workers' profit sharing asset
       (liability) is separately presented in the consolidated balance sheets in
       a similar way as deferred income tax assets (liabilities).

       U.S. GAAP - The practice is to recognize the workers' profit sharing
       expense (income) as part of operating expense (income). Also, deferred
       workers' profit sharing assets (liabilities) shall be classified as
       current or non-current based on the classification of the related assets
       or liability for financial reporting purposes.

       See also discussion on recognition of deferred tax liability or asset
       arising from remeasurement from the local currency into the functional
       currency in the section Deferred Income Tax above.

       Guarantees
       Peruvian GAAP - Under Peruvian GAAP, when an enterprise issues a
       guarantee, this commitment has to be disclosed in the notes to financial
       statements. A liability related to the guarantee will be recognized when
       it is probable that resources of the Company will be required to settle
       the obligation and it can be reasonably estimated.

                                      F-42


Notes to the consolidated financial statements (continued)

       U.S. GAAP - U.S. GAAP, FIN 45 - Guarantor's Accounting and Disclosure
       Requirements for Guarantees, requires that upon issuance of certain
       guarantees, a guarantor must recognize a liability for the fair value of
       an obligation assumed under the guarantee.

       As a guarantor, Buenaventura is involved in financial guarantees related
       to Cerro Verde debt-financing facility, see note 36(d) to the
       consolidated financial statements. As of December 31, 2005 and 2006,
       under U.S. GAAP, such guarantees should be accounted for at fair value,
       which was deemed insignificant.

       Equity accounts translation
       Peruvian GAAP - Under Peruvian GAAP, based on IAS 21 - The Effects of
       Changes in Foreign Exchange Rates, when there is a change in an entity's
       functional currency, the entity shall apply the translation procedures
       applicable to the new functional currency prospectively from the date of
       the change using the exchange rate at the date of the change. The
       resulting translated amounts for non-monetary items are treated as their
       historical cost. Therefore, for Peruvian GAAP purposes, the Company has
       translated equity accounts into U.S. dollars using the exchange rate as
       of December 31, 2005.

       U.S. GAAP - Under U.S. GAAP, based on FAS 52 - Foreign Currency
       Translation, equity accounts should be translated into U.S. dollars using
       historical exchange rates. If the Company had applied historical exchange
       rates to translate its equity accounts, the detail of equity accounts as
       of December 31, 2005 and 2006, would have been the following:

<TABLE>
<CAPTION>
                                                          2005                               2006
                                              ----------------------------      ----------------------------
                                              U.S. GAAP    Peruvian GAAP        U.S. GAAP     Peruvian GAAP

                                               US$(000)       US$(000)           US$(000)        US$(000)
<S>                                         <C>              <C>              <C>              <C>
       Capital stock, net of treasury
          shares of US$11,212,000 in 2005
          and 2006                                134,645          173,930          134,645          173,930
       Investment shares, net of treasury
          shares of US$33,000 in 2005 and
          2006                                        357              473              357              473
       Additional capital                         176,633          177,713          176,633          177,713
       Legal reserve and other reserves            37,313           37,948           37,313           37,948
       Retained earnings                          509,471          483,484          874,775          852,148
       Cumulative translation loss                (19,323)         (34,075)         (19,323)         (34,075)
       Cumulative unrealized gain on
          investments in shares carried
          at fair value                                66               70              928              932
                                            -------------    -------------    -------------    -------------

       Total shareholders' equity, net
          (not including minority
          interest under Peruvian GAAP)           839,162          839,543        1,205,328        1,209,069
                                            =============    =============    =============    =============
</TABLE>

       Presentation of minority interests
       Under Peruvian GAAP, based on IAS 1 - Presentation of Financial
       Statements, minority interests should be presented within equity, but
       separate from the parent shareholders' equity.

       Under U.S. GAAP, minority interests shall be presented outside equity,
       between liabilities and equity. Consequently, minority interest has been
       included as a reconciliation item, see note 40.

       Acquisition of minority interests
       Peruvian GAAP - In November 30, 2006, Buenaventura acquired a minority
       interest in its subsidiary INMINSUR. IFRS 3, Business Combinations,
       states that the acquisition of a minority interest is not a business
       combination; therefore, Buenaventura has recorded the difference between
       the cost of acquisition and the book value of the minority interest
       acquired as Mining Rights (the "Parent entity extension method"). This is
       an acceptable method of accounting for acquisition of minority interests.

                                      F-43


Notes to the consolidated financial statements (continued)

       US GAAP - Under SFAS No. 141, Business Combinations, the acquisition of
       some or all of the non-controlling interests in a subsidiary is not a
       business combination. However, paragraph 14 of this Statement specifies
       that such acquisition - whether acquired by the parent, the subsidiary
       itself, or another affiliate - shall be accounted for using the purchase
       method. Any difference between the cost of acquisition and the fair value
       of the minority interest acquired is recorded as Mining Right. The
       difference between the book value and the fair value of the net assets
       acquired in INMINSUR is immaterial and is not presented as a
       reconciliation item between Peruvian GAAP and US GAAP.

40.    Reconciliation between net income and shareholders' equity determined
       under Peruvian GAAP and U.S. GAAP

       Until December 31, 2005, the Company had designated Peruvian Nuevos Soles
       as its functional and reporting currency. Effective January 1, 2006, the
       functional and reporting currency of the Company is U.S. dollar for
       Peruvian GAAP and U.S. GAAP purposes. The methodology of translation from
       Nuevos Soles into U.S. dollars and the reasons supporting this change are
       described in note 3(f) of the consolidated financial statements.

       The following is a summary of the adjustments to net income for the years
       ended December 31, 2004, 2005 and 2006 and to shareholders' equity as of
       December 31, 2005 and 2006 that would be required if U.S. GAAP had been
       applied instead of Peruvian GAAP in the consolidated financial
       statements:

<TABLE>
<CAPTION>
                                                           2004        2005       2006
                                                         US$(000)    US$(000)    US$(000)

<S>                                                      <C>         <C>         <C>
       Net Income                                         206,577     288,397     428,057
       Items increasing (decreasing) reported net
         income
       Deferred Income tax and workers' profit sharing
         arising from having a functional currency
         different from the currency used for tax              --
         purposes                                              --      (3,381)
       Other                                                  168         142          32
       Deferred Income tax and worker's profit sharing
         assets, net                                          (60)        (51)        (11)
                                                         --------    --------    --------
       Net adjustments                                        108          91       3,360
                                                         --------    --------    --------

       Net  income under  U.S. GAAP                       206,685     288,488     424,697
                                                         ========    ========    ========

       Other comprehensive income (loss)
       Investments in shares held at fair value                --         (14)         28
       Financial Investments maintained at fair value          --          --         834
       Cumulative translation adjustment                  (36,475)     19,896          --
       Gain (loss) on translation to U.S. dollar           (3,291)        432
       Fair value of derivative instruments classified
         as hedging instruments                             1,546         303          --
       Other                                                  269          --         374
                                                         --------    --------    --------

       Total comprehensive income under U.S. GAAP         168,734     309,105     425,933
                                                         ========    ========    ========

       Accumulated other comprehensive income (loss)
          under U.S. GAAP
       Investments in shares maintained at fair value          84          70          98
       Financial Investments maintained at fair value          --          --         834
       Cumulative translation loss                        (54,403)    (34,075)    (34,075)
       Cumulative unrealized loss on derivative              (303)
       instruments                                             --          --
       Other                                                  269         269         643
                                                         --------    --------    --------
       Total accumulated other comprehensive income
         under U.S. GAAP                                  (54,353)    (33,736)    (32,500)
                                                         --------    --------    --------

       Basic and diluted income per share under U.S.
         GAAP                                                1.62        2.27        3.34
                                                         ========    ========    ========
</TABLE>

                                      F-44


Notes to the consolidated financial statements (continued)

<TABLE>
<CAPTION>
                                                                            2005         2006
                                                                          US$(000)     US$(000)
<S>                                                                       <C>         <C>
       Shareholders' equity according to the financial statements under
         Peruvian GAAP                                                     862,959     1,300,506
       Minority interest presented within equity under Peruvian GAAP       (23,416)      (91,437)
       Deferred income tax and worker's profit sharing arising from
         having a functional currency different from the currency used
         for tax purposes                                                       --        (3,381)
       Other                                                                  (591)         (559)
       Deferred income tax and workers' profit sharing assets, net             210           199
                                                                          --------    ----------
       Shareholders' equity according to the financial statements under
         U.S. GAAP                                                         839,162     1,205,328
                                                                          ========    ==========
</TABLE>

      The following is a roll forward of the components of shareholders'  equity
      under U.S. GAAP:

<TABLE>
<CAPTION>
                                                                                       US$(000)
<S>                                                                                   <C>
       Shareholders' equity under U.S. GAAP at January 1, 2004                           446,563
       Net Income in accordance with U.S. GAAP                                           206,685
       Declared and paid dividends                                                       (40,648)
       Fair value of derivative instruments classified as hedging instruments
          held by El Brocal                                                                 1,546
       Cumulative translation adjustment                                                 (36,475)
       Loss on translation to U.S. dollar                                                 (3,291)
       Other                                                                                 269
                                                                                      ----------
       Shareholders' equity under U.S. GAAP at December 31, 2004                         574,649

       Net Income in accordance with U.S. GAAP                                           288,488
       Declared and paid dividends                                                       (44,304)
       Fair value of derivative instruments classified as hedging instruments
          held by El Brocal                                                                   303
       Investments shares acquired by Subsidiary                                            (288)
       Cumulative translation adjustment                                                  19,896
       Gain on translation to U.S. dollar                                                    432
       Investments in shares held at fair value                                              (14)
                                                                                      ----------
       Shareholders' equity under U.S. GAAP at December 31, 2005                         839,162

       Net Income in accordance with U.S. GAAP                                           424,697
       Declared and paid dividends                                                       (59,767)
       Other                                                                                 374
       Financial Investments held at fair value                                              834
       Investments in shares held at fair value                                               28
                                                                                      ----------
       Shareholder's equity under U.S. GAAP at December 31, 2006                       1,205,328
                                                                                      ==========
</TABLE>

                                      F-45


Notes to the consolidated financial statements (continued)

41.    Recently Issued Accounting Pronouncements

       Income taxes
       In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
       Uncertainty in Income Taxes", ("FIN 48") an interpretation of FASB
       Statement No 109, "Accounting for Income Taxes". FIN 48 prescribes a
       recognition threshold and measurement attribute for the financial
       statement recognition and measurement of a tax position, if that position
       is more likely than not of being sustained on audit, based on the
       technical merits of the position. FIN 48 also provides guidance on
       derecognition, classification, interest and penalties, accounting in
       interim periods and disclosure. The provisions of FIN 48 are effective
       beginning January 1, 2007 with the cumulative effect of the change in
       accounting principle recorded as an adjustment to the opening balance of
       retained earnings, goodwill, deferred income taxes and income taxes
       payable in the consolidated balance sheet. The Company is currently
       evaluating the impact of adopting FIN 48 on the consolidated financial
       position, results of operations and disclosures.

       Fair Value Measurements
       In September 2006, the FASB issued FASB Statement No. 157, "Fair Value
       Measurement" ("FAS 157"). FAS 57 defines fair value, establishes a
       framework for measuring fair value in generally accepted accounting
       principles, and expands disclosures about fair value measurements. The
       provisions of FAS 157 are effective for the Company's fiscal year
       beginning January 1, 2008. The Company is currently evaluating the impact
       that the adoption of this statement will have on the consolidated
       financial position, results of operations and disclosures.

       The Fair Value Option for Financial Assets and Financial Liabilities
       In February 2007, the FASB issued FASB Statement No.159, "The Fair Value
       Option for Financial Assets and Financial Liabilities". FAS 159 allows
       entities to voluntarily choose, at specified election dates, to measure
       many financial assets and financial liabilities (as well as certain
       nonfinancial instruments that are similar to financial instruments) at
       fair value (the "fair value option"). The election is made on an
       instrument-by-instrument basis and is irrevocable. If the fair value
       option is elected for an instrument, the Statement specifies that all
       subsequent changes in fair value for that instrument shall be reported in
       earnings. The provisions of FAS 157 are effective for the Company's
       fiscal year beginning January 1, 2008. The Company is currently
       evaluating the impact that the adoption of this statement will have on
       the consolidated financial position, results of operations and
       disclosures.

                                      F-46


MINERA YANACOCHA S.R.L.
FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005



<TABLE>
<CAPTION>
CONTENTS                                                                                                  Page
                                                                                                          ----
<S>                                                                                                       <C>
Report of Independent Registered Public Accounting Firm...................................................F-48

Statements of income for each of the three years ended December 31, 2006..................................F-49

Balance sheets as of December 31, 2006 and 2005...........................................................F-50

Statements of cash flows for each of the three years ended December 31, 2006..............................F-51

Statements of changes in partners' equity for each of the three years ended December 31, 2006.............F-52

Notes to the financial statements.........................................................................F-53
</TABLE>

                                      F-47



PRICEWATERHOUSECOOPERS                   Dongo-Soria Gaveglio y Asociados
                                         Sociedad Civil
                                         Firma Miembro de PricewaterhouseCoopers


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

February 23, 2007

To the Partners and the Executive Committee of

Minera Yanacocha S.R.L.

In our opinion, the accompanying balance sheets and the related statements of
income, changes in partners' equity and cash flows, present fairly, in all
material respects, the financial position of Minera Yanacocha S.R.L. at December
31, 2006 and 2005, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 2006 in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements 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 of financial statements includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

Accounting principles generally accepted in the United States of America vary in
certain significant respects from accounting principles generally accepted in
Peru. The application of the latter would have affected the determination of net
income for the three years in the period ended December 31, 2006 and the
determination of partners' equity and financial position at December 31, 2006
and 2005 to the extent summarized in Note 20 to the financial statements.

/S/ DONGO-SORIA GAVEGLIO Y ASOCIADOS
------------------------------------

Countersigned by

/S/ LUIS W. MONTERO

Luis W. Montero

Peruvian Public Accountant

Registration No. 17729


                                      F-48


                             MINERA YANACOCHA S.R.L.

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                                           -----------------------------------------
                                                               2006           2005           2004
                                                           -----------    -----------    -----------
                                                                     (dollars in thousands)

<S>                                                        <C>            <C>            <C>
Revenues ...............................................   $ 1,543,212    $ 1,490,402    $ 1,249,882
                                                           -----------    -----------    -----------

Costs and expenses
   Costs applicable to sales (exclusive of depreciation,
      depletion and amortization shown separately below)
                                                               515,883        507,806        450,825
   Depreciation, depletion and amortization ............       171,730        193,587        179,441
   Exploration and advanced projects ...................        32,254         32,884         35,236
   General and administrative ..........................         5,589          5,453          4,986
   Other expense, net (Note 3) .........................        60,790         (6,669)         6,135
                                                           -----------    -----------    -----------
                                                               786,246        733,061        676,623
                                                           -----------    -----------    -----------

Other income (expense), net
   Other income (Note 4) ...............................        19,202          4,774            860
   Interest expense, net of capitalized interest of
      $4,146, $1,390 and $2,016, respectively ..........       (12,377)        (1,234)        (2,252)
                                                           -----------    -----------    -----------
                                                                 6,825          3,540         (1,392)
                                                           -----------    -----------    -----------

Income before income taxes .............................       763,791        760,881        571,867
Income tax expense (Note 5) ............................      (238,343)      (235,407)      (181,563)
                                                           -----------    -----------    -----------
Net income .............................................   $   525,448    $   525,474    $   390,304
                                                           ===========    ===========    ===========
</TABLE>

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

                                      F-49


                             MINERA YANACOCHA S.R.L.

                                 BALANCE SHEETS

                                                          At December 31,
                                                      -----------------------
                                                         2006         2005
                                                      ----------   ----------
                                                        (dollars in thousands)
ASSETS
Cash and cash equivalents .........................   $  379,923   $  295,511
Accounts receivable (Note 6) ......................       29,501       20,038
Due from related parties (Note 12) ................          121          365
Inventories (Note 7) ..............................       85,018       67,958
Stockpiles and ore on leach pads (Note 8) .........       82,196       65,875
Deferred income tax assets (Note 5) ...............        8,141           --
Other current assets (Note 9) .....................       13,182       21,966
                                                      ----------   ----------
   Current assets .................................      598,082      471,713

Property, plant and mine development, net (Note 10)    1,045,357      943,263
Long-term stockpiles and ore on leach pads (Note 8)      175,317      129,189
Other long-term assets ............................        6,097        5,418
                                                      ----------   ----------
   Total assets ...................................   $1,824,853   $1,549,583
                                                      ==========   ==========

LIABILITIES
Current portion of long-term debt (Note 11) .......   $   10,345   $    3,160
Accounts payable ..................................       32,415       27,299
Due to related parties (Note 12) ..................       13,191       20,875
Workers' participation (Note 13) ..................       53,228       39,904
Income taxes payable ..............................       24,107       55,181
Other current liabilities (Note 14) ...............       92,731       48,760
                                                      ----------   ----------
   Current liabilities ............................      226,017      195,179

Long-term debt (Note 11) ..........................      189,655           --
Reclamation and remediation liabilities (Note 15) .      136,108      112,942
Deferred workers' participation (Note 13) .........       11,416       17,320
Deferred income tax liabilities (Note 5) ..........       51,235       61,282
Other long-term liabilities .......................       14,013        6,212
                                                      ----------   ----------
   Total liabilities ..............................      628,444      392,935
                                                      ----------   ----------

Commitments and contingencies (Note 19)

PARTNERS' EQUITY
Partners' contributions ...........................      208,616      208,616
Additional contributions ..........................          226          226
Restricted earnings ...............................      189,600      189,600
Retained earnings .................................      797,967      758,206
                                                      ----------   ----------
   Total partners' equity (Note 16) ...............    1,196,409    1,156,648
                                                      ----------   ----------
   Total liabilities and partners' equity .........   $1,824,853   $1,549,583
                                                      ==========   ==========

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

                                      F-50


                             MINERA YANACOCHA S.R.L.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                                        -----------------------------------
                                                          2006         2005         2004
                                                        ---------    ---------    ---------
                                                               (dollars in thousands)
<S>                                                     <C>          <C>          <C>
Operating activities:
   Net income .......................................   $ 525,448    $ 525,474    $ 390,304
   Adjustments to reconcile net income to net cash
      provided from operating activities
       Depreciation, depletion and amortization .....     171,730      193,587      179,441
       Deferred income taxes ........................     (15,263)      (9,053)     (17,932)
       Deferred workers' participation ..............      (4,944)      (3,886)      (2,433)
       Accretion of reclamation obligations .........       7,918        7,059        6,025
       Other operating adjustments ..................       3,310      (12,381)         657
   (Increase) decrease in operating assets:
       Inventories, stockpiles and ore on leach pads      (73,261)     (45,398)      14,212
       Other assets .................................      (1,445)      (8,079)        (601)
   Increase (decrease) in operating liabilities:
       Accounts payable and other accrued liabilities      31,821       24,803      (19,286)
       Reclamation liabilities ......................      (8,133)      (6,721)      (5,386)
                                                        ---------    ---------    ---------
Net cash provided from operations ...................     637,181      665,405      545,001
                                                        ---------    ---------    ---------

Investing activities:
   Additions to property, plant and mine development     (269,293)    (225,846)    (231,378)
   Proceeds from sale of assets .....................         935        2,289        3,152
                                                        ---------    ---------    ---------
Net cash used in investing activities ...............    (268,358)    (223,557)    (228,226)
                                                        ---------    ---------    ---------

Financing activities:
   Proceeds from debt, net ..........................     198,785           --       65,500
   Repayments of debt ...............................      (3,160)     (34,157)     (95,540)
   Distributions to partners ........................    (480,000)    (180,000)    (280,000)
   Change in restricted cash ........................         (36)      (1,978)      16,672
                                                        ---------    ---------    ---------
Net cash used in financing activities ...............    (284,411)    (216,135)    (293,368)
                                                        ---------    ---------    ---------
Net change in cash and cash equivalents .............      84,412      225,713       23,407
Cash and cash equivalents at beginning of the year ..     295,511       69,798       46,391
                                                        ---------    ---------    ---------
Cash and cash equivalents at end of the year ........   $ 379,923    $ 295,511    $  69,798
                                                        =========    =========    =========
</TABLE>


See Note 17 for supplemental cash flow information.

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

                                      F-51


                             MINERA YANACOCHA S.R.L.

                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY
<TABLE>
<CAPTION>
                                                                                                            Total
                                         Partners'      Additional      Restricted       Retained         partners'
                                       contributions   contributions     earnings        earnings          equity
                                       -------------   -------------   -------------   -------------    -------------
                                                                 (dollars in thousands)
<S>                                    <C>             <C>             <C>             <C>              <C>
Balance at January 1, 2004.........$         208,616   $         226   $     189,600   $     302,428    $     700,870
   Distributions of profits
      to the partners ..............              --              --              --        (280,000)        (280,000)
   Net income ......................              --              --              --         390,304          390,304
                                       -------------   -------------   -------------   -------------    -------------
Balance at December 31, 2004
                                       $     208,616   $         226   $     189,600   $     412,732    $     811,174
   Distributions of profits
    to the partners ................              --              --              --        (180,000)        (180,000)
   Net income ......................              --              --              --         525,474          525,474
                                       -------------   -------------   -------------   -------------    -------------
Balance at December 31, 2005
                                       $     208,616   $         226   $     189,600   $     758,206    $   1,156,648
 Cumulative effect of
    adjustment referred to
    stripping costs (Note 2) .......              --              --              --          (5,687)          (5,687)
 Distributions of profits to
    the partners ...................              --              --              --        (480,000)        (480,000)
   Net income ......................              --              --              --         525,448          525,448
                                       -------------   -------------   -------------   -------------    -------------
Balance at December 31, 2006
                                       $     208,616   $         226   $     189,600   $     797,967    $   1,196,409
                                       =============   =============   =============   =============    =============
</TABLE>


                                      F-52


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

1.    BUSINESS ACTIVITIES

Minera Yanacocha S.R.L. (the "Company"), formerly Minera Yanacocha S.A., was
incorporated in Peru on January 14, 1992 and commenced operations in 1993. The
Company is engaged in the production of and exploration for gold under the
mining concessions it owns or that are owned by S.M.R.L. Chaupiloma Dos de
Cajamarca ("Chaupiloma").

The Company is owned 51.35% by Newmont Second Capital Corporation, a 100%
indirectly owned subsidiary of Newmont Mining Corporation ("Newmont"), 43.65%
owned by Compania Minera Condesa S.A., which is 100% owned by Compania de Minas
Buenaventura S.A.A. ("Buenaventura") and 5% owned by the International Finance
Corporation.

The majority partners of the Company (or their affiliates) also own the majority
interest in Chaupiloma. In accordance with a mining lease, amended effective
January 1, 1994, the Company pays Chaupiloma a 3% royalty based on quarterly
production sold at current market prices, after deducting refinery and
transportation costs. The royalty agreement expires in 2012, but can be extended
at the Company's option.

Located in the Cajamarca province of Peru, the Company's operation consists of
five separate open pit mines: the Carachugo, Maqui Maqui, Cerro Yanacocha, San
Jose and La Quinua mines. Reclamation and/or backfilling activities in the
mining areas of Carachugo, San Jose and Maqui Maqui are currently underway.
Cerro Yanacocha and La Quinua are still active pits. Gold-bearing ores are
transported to one of four leach pads for gold recovery using conventional
heap-leaching cyanidation, followed by Merrill-Crowe zinc precipitation and
smelting where a final dore product is poured. The dore is then shipped offsite
for refining and is sold in worldwide gold markets.

Proven and probable reserves contained approximately 29.3 million (unaudited)
and 32.6 million (unaudited) ounces of gold at December 31, 2006 and 2005,
respectively and 3.2 billion (unaudited) pounds of copper at December 31, 2006
and 2005.

The Conga project consists of two gold-copper porphyry deposits located
northeast of the Yanacocha operating area in the provinces of Celendin,
Cajamarca and Hualgayco. The Conga project has proven and probable reserves of
11.8 million (unaudited) ounces of gold and 3.2 billion (unaudited) pounds of
copper at December 31, 2006 and December 31, 2005, and is included in the total
Company proven and provable reserves described above.

During 2006, 2005 and 2004, the Company sold 2.57 million, 3.33 million and 3.04
million ounces of gold, respectively.

Gold mining requires the use of specialized facilities and technology. The
Company relies heavily on such facilities and technology to maintain production
levels. Also, the cash flow and profitability of the Company's operations are
significantly affected by the market price of gold. Gold prices can fluctuate
widely and are affected by numerous factors beyond the Company's control.

                                      F-53


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

2.    SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of the Company's financial statements requires the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the related disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The more significant areas requiring the
use of management estimates and assumptions relate to mineral reserves that are
the basis for future cash flow estimates utilized in impairment calculations and
units-of-production depreciation, depletion and amortization calculations;
environmental, reclamation and closure obligations; estimates of recoverable
gold and other minerals in stockpile and leach pad inventories; write-downs of
inventory to net realizable value; employee benefit liabilities; valuation
allowances for deferred tax assets; workers' participation; and reserves for
contingencies and litigation. The Company bases its estimates on the Company's
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances. Accordingly, actual results may differ
significantly from these estimates under different assumptions or conditions.

Currency

The financial statements are stated in U.S. dollars, the Company's functional
currency, as most of its transactions are traded, collected and paid in such
currency. All amounts are rounded to the nearest thousand ($000) unless
otherwise stated. Transactions in other currencies are recorded in U.S. dollars
based on exchange rates prevailing at the time of such transactions. Monetary
assets and liabilities denominated in other currencies are translated into the
U.S. dollar at exchange rates prevailing at the balance sheet dates, and any
resulting gains or losses are reflected in current earnings.

Cash and Cash Equivalents

Cash and cash equivalents consist of all cash balances and deposits in banks
with an original maturity of three months or less. Because of the short maturity
of these balances, the carrying amounts approximate their fair value.

Stockpiles, Ore on Leach Pads and Inventories

As described below, costs that are incurred in or benefit the productive process
are accumulated as stockpiles, ore on leach pads and inventories. Stockpiles,
ore on leach pads and inventories are carried at the lower of average cost or
net realizable value. Net realizable value represents the estimated future sales
price of the product based on current and long-term metals prices, less the
estimated costs to complete production and bring the product to sale.
Write-downs of stockpiles, ore on leach pads and inventories resulting from net
realizable value impairments are reported as a component of Costs applicable to
sales. The current portion of stockpiles, ore on leach pads and inventories is
determined based on the expected amounts to be processed within the next twelve
months. Stockpiles, ore on leach pads and inventories not expected to be
processed within the next twelve months are classified as long-term. The major
classifications are as follows:

                                      F-54


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

Stockpiles

Stockpiles represent ore that has been mined and is available for further
processing. Stockpiles are measured by estimating the number of tons added and
removed from the stockpile, the number of contained ounces (based on assay data)
and the estimated metallurgical recovery rates (based on the expected processing
method). Stockpile ore tonnages are verified by periodic surveys. Costs are
allocated to a stockpile based on relative values of material stockpiled and
processed using current mining costs incurred up to the point of stockpiling the
ore, including applicable overhead, depreciation, depletion and amortization
relating to mining operations, and removed at each stockpile's average cost per
recoverable unit.

Ore on Leach Pads

The recovery of gold from certain gold oxide ores is achieved through heap
leaching. Under this method, ore is placed on leach pads where it is treated
with a chemical solution, which dissolves the gold contained in the ore. The
resulting "pregnant" solution is further processed in a plant where the gold is
recovered. Costs are added to ore on leach pads based on current mining costs,
including applicable depreciation, depletion and amortization relating to mining
operations. Costs are removed from ore on leach pads as ounces are recovered
based on the average cost per recoverable ounce of gold on the leach pad.

The estimates of recoverable gold on the leach pads are calculated from the
quantities of ore placed on the pads (measured tons added to the leach pads),
the grade of ore placed on the leach pads (based on assay data) and a recovery
percentage (based on ore type). In general, the leach pads recover approximately
50% to 95% of the ultimate recoverable ounces in the first year of leaching,
declining each year thereafter until the leaching process is complete.

Although the quantities of recoverable gold placed on the leach pads are
reconciled by comparing the grades of ore placed on the pads to the quantities
of gold actually recovered (metallurgical balancing), the nature of the leaching
process inherently limits the ability to precisely monitor inventory levels. As
a result, the metallurgical balancing process is constantly monitored and
estimates are refined based on actual results over time. Historically, the
Company's operating results have not been materially impacted by variations
between the estimated and actual recoverable quantities of gold on its leach
pads. Variations between actual and estimated quantities resulting from changes
in assumptions and estimates that do not result in write-downs to net realizable
value are accounted for on a prospective basis.

In-process Inventory

In-process inventories represent materials that are currently in the process of
being converted to a saleable product. The Company's conversion process is leach
in-circuit. In-process material is measured based on assays of the material fed
into the process and the projected recoveries of the respective plants.
In-process inventories are valued at the average cost of the material fed into
the process attributable to the source material coming from the mines,
stockpiles and/or leach pads plus the in-process conversion costs, including
applicable depreciation relating to the process facilities incurred to that
point in the process.

Precious Metals Inventory

Precious metals inventories include gold dore and/or gold bullion. Precious
metals that result from the Company's mining and processing activities are
valued at the average cost of the respective in-process inventory incurred prior
to the refining process, plus applicable refining costs.

                                      F-55


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

Materials and Supplies

Materials and supplies are valued at the lower of average cost or net realizable
value. Cost includes applicable taxes and freight.

Property, Plant and Mine Development

Expenditures for new facilities or equipment or expenditures that extend the
useful lives of existing facilities or equipment are capitalized and depreciated
using the straight-line method at rates sufficient to depreciate such costs over
the estimated productive lives of such facilities, which do not exceed the
related estimated mine lives, of such facilities based on proven and probable
reserves.

Mineral exploration costs are expensed as incurred. When it has been determined
that a mineral property can be economically developed as a result of
establishing proven and probable reserves, costs incurred prospectively to
develop the property are capitalized as incurred and are amortized using the
units-of-production ("UOP") method over the estimated life of the ore body based
on the estimated recoverable ounces or pounds mined from proven and probable
reserves. These costs include costs to further delineate the ore body and remove
overburden to initially expose the ore body.

Major development costs incurred after the commencement of production are
amortized using the UOP method based on estimated recoverable ounces mined from
proven and probable reserves. To the extent that these costs benefit the entire
ore body, they are amortized over the estimated life of the ore body. Costs
incurred to access specific ore blocks or areas that only provide benefit over
the life of that area are amortized over the estimated life of that specific ore
block or area.

Interest costs allocable to the cost of developing mining properties and to
constructing new facilities is capitalized until assets are ready for their
intended use.

Mineral Interests

Mineral interests are recorded at fair value at the time of acquisition, in
Property, plant and mine development, and represent mineral use rights
regardless of whether the Company owns the related surface rights ("mining
concessions"). The Company's mineral interests represent mineral use rights
related to production, development or exploration stage properties, and the
value of such mineral interests is primarily driven by the nature and amount of
mineralized content believed to be contained in such properties. Development
stage mineral interests represent interests in properties under development that
contain proven and probable reserves. Exploration stage mineral interests
represent interests in properties that are believed to potentially contain
mineralized material consisting of (i) other mineralized material such as
inferred material within pits; measured, indicated and inferred material with
insufficient drill spacing to qualify as proven and probable reserves; and
inferred material in close proximity to proven and probable reserves; (ii)
around-mine exploration potential such as inferred material not immediately
adjacent to existing reserves and mineralization but located within the
immediate mine infrastructure; (iii) other mine-related exploration potential
that is not part of measured, indicated or inferred material and is comprised
mainly of material outside of the immediate mine area; or (iv) greenfields
exploration potential that is not associated with any other production,
development or exploration stage property, as described above. The Company's
mining concessions are enforceable regardless of whether proven and probable
reserves have been established. In addition, these mining concessions provide
for both the right to explore and exploit. However, the Company must first
obtain the respective exploration and exploitation permits, which are generally
granted in due course. The Company may retain mining concessions indefinitely by
paying annual fees and, during exploitation, complying with production
obligations or paying assessed fines. Mining concessions are freely assignable
or transferable.

Asset Impairment

The Company reviews and evaluates its long-lived assets for impairment when
events or changes in circumstances indicate that the related carrying amounts
may not be recoverable. An impairment is considered to exist if the total of the
assets estimated future cash flows on an undiscounted basis are less than the
carrying amount of the assets. An impairment loss is measured and recorded based
on discounted estimated future cash flows. Future cash flows are estimated based
on quantities of recoverable minerals, expected gold and other commodity prices
(considering current and historical prices, price trends and related factors),
production levels and operating costs of production and capital, all based on
life-of-mine plans. Existing proven and probable reserves and value beyond
proven and probable reserves, including mineralization other than proven and
probable and other material that is not part of the measured, indicated or
inferred resource base, are included when determining the fair value of mine
site reporting units at acquisition and, subsequently, in determining whether
the assets are impaired. The term "recoverable minerals" refers to the estimated
amount of gold and other minerals that will be obtained after taking into
account losses during ore processing and treatment. In estimating future cash
flows, assets are grouped at the lowest level for which there are identifiable
cash flows that are largely independent of cash flows from other asset groups.
The Company's estimates of future cash flows are based on numerous assumptions
and it is possible that actual future cash flows will be significantly different
than the estimates, as actual future quantities of recoverable minerals, gold
and other commodity prices, production levels and operating costs of production
and capital are each subject to significant risks and uncertainties.

                                      F-56


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

Revenue Recognition

Revenue is recognized from a sale when the price is determinable, the product
has been delivered, the title has been transferred to the customer and
collection of the sales price is reasonably assured. Revenues from silver sales
are credited to Costs applicable to sales as a by-product credit.

Reclamation and Remediation Costs (Asset Retirement Obligations)

Reclamation costs are allocated to expense over the life of the related assets
and are periodically adjusted to reflect changes in the estimated present value
resulting from the passage of time and revisions to the estimates of either the
timing or amount of the reclamation or abandonment costs. The asset retirement
obligation is based on when the spending for an existing environmental
disturbance and activity to date will occur. The Company reviews, on an annual
basis, unless otherwise deemed necessary, the asset retirement obligation at
each mine site in accordance with FAS No. 143, "Accounting for Asset Retirement
Obligations."

Income Tax and Profit Sharing

The Company accounts for income tax and legally required profit sharing using
the liability method, recognizing certain temporary differences between the
financial reporting basis of the Company's liabilities and assets and the
related income tax basis for such liabilities and assets. This method generates
a net deferred income tax liability and profit sharing liability or net deferred
income tax asset and profit sharing asset for the Company, as measured by the
statutory tax and profit sharing rates in effect as enacted. The Company derives
its deferred income tax charge or benefit and profit sharing charge or benefit
by recording the change in the net deferred income tax liability and profit
sharing liability or net deferred income tax asset and profit sharing asset
balance for the year, based on Peruvian income tax and profit sharing rates.

The Company's deferred income tax assets include certain future tax benefits.
The Company records a valuation allowance against any portion of those deferred
income tax assets when it believes, based on the weight of available evidence,
it is more likely than not that some portion or all of the deferred income tax
asset will not be realized.

Stripping Costs

Stripping costs incurred during the production phase of a mine are variable
production costs that are included as a component of inventory to be recognized
in Costs applicable to sales in the same period as the revenue from the sale of
inventory. Capitalization of post-production stripping costs is appropriate only
to the extent product inventory exists at the end of a reporting period.

                                      F-57


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

On January 1, 2006 the Company adopted Emerging Issues Task Force Issue No.
04-06 ("EITF 04-06"), "Accounting for Stripping Costs Incurred during Production
in the Mining Industry." The guidance required application through recognition
of a cumulative effect adjustment to opening retained earnings in the period of
adoption, with no charge to current earnings for prior periods. The cumulative
effect adjustment reduced opening retained earnings by $5.7 million, reduced
property, plant and mine development, net by $11.3 million, increased ore on
leach pads by $1.3 million, and decreased deferred income tax liabilities by $
3.3 million and workers' participation liabilities by $1.0 million. Adoption of
EITF 04-06 had no impact on the Company's cash position or net cash from
operations.

Reclassifications

Certain amounts in prior years have been reclassified to conform to the 2006
presentation. The significant items include Proceeds from sale of assets that
were reclassified from the operating to the investing section in the cash flow
statement as well as reclassifying prepaid assets previously recorded as
Accounts receivable to Other current assets in the Balance Sheet.

Recently Issued Accounting Pronouncements

Income Taxes

In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes," ("FIN 48") an interpretation of FASB Statement No.
109, "Accounting for Income Taxes." FIN 48 prescribes a recognition threshold
and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. FIN
48 requires that the Company recognize in its financial statements, the impact
of a tax position, if that position is more likely than not of being sustained
on audit, based on the technical merits of the position. FIN 48 also provides
guidance on derecognition, classification, interest and penalties, accounting in
interim periods and disclosure. The provisions of FIN 48 are effective beginning
January 1, 2007 with the cumulative effect of the change in accounting principle
recorded as an adjustment to the opening balance of retained earnings, deferred
income taxes and income taxes payable in the Balance Sheets. The Company is
currently evaluating the impact of FIN 48 on the Company's financial position,
results of operations and disclosures.

                                      F-58


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


Fair Value Measurements

In September 2006, the FASB issued FASB Statement No. 157, "Fair Value
Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. The provisions of FAS 157 are
effective for the Company's fiscal year beginning January 1, 2008. The Company
is currently evaluating the impact that the adoption of this statement will have
on the Company's financial position, results of operations, cash flows and
disclosures.

3.       OTHER EXPENSE, NET

                                                  Years Ended December 31,
                                          --------------------------------------
                                              2006         2005          2004
                                          ----------   ----------    ----------
Negotiated payment .....................  $   21,839   $       --    $       --
Workers' participation reserve (Note 13)      14,900           --            --
La Quinua leach pad repair .............       9,911           --            --
Mercury spill (Note 19) ................       5,110           --            --
Tax Contingencies ......................       2,536           --            --
Reclamation and remediation ............       1,741      (10,766)       (8,746)
Write-down of long-lived assets ........       1,514           --         4,201
Other ..................................       3,239        4,097        10,680
                                          ----------   ----------    ----------
                                          $   60,790   $   (6,669)   $    6,135
                                          ==========   ==========    ==========

Negotiated payment

Mining companies represented by the Sociedad Nacional de Mineria, Petroleo y
Energia (SNMPE) agreed to a mining payment equivalent to 3.75% of net income
after taxes. The funds will be managed by a trust fund or association designated
by the Company. The trust fund or association can be established by the Company.
The mining companies are contributing these funds to participate in the
government efforts to eradicate poverty in Peru in the current favorable
economic environment.

The Peruvian Government issued on December 21, 2006 a law (Supreme Decree
N(degree)071-2006-EM) that regulates the conditions in which the negotiated
payment will be paid by Peruvian mining companies. The payment amounts to 3.75%
of Peruvian net income after income tax (2.75% to be paid to a local mining fund
and 1% to be paid to a regional mining fund), and is payable for 2006 and the
following four years depending on the price of gold.

The Company will be released from paying the negotiated payment if the Company
has to undertake major obligations arising from new taxes or from the
modification of those existing and specifically imposed taxes related to mining
activities; or if the gold price decreases below the average price for the prior
year set by the London Bullion Market Association (LBMA). The negotiated payment
will recommence if prices subsequently rise above the reference price.


                                      F-59


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

4.       OTHER INCOME, NET

                                              Years Ended December 31,
                                       ---------------------------------------
                                           2006         2005          2004
                                        ----------   ----------    ----------
Interest income .....................   $   16,127   $    4,472           758
Gain (loss) on sale of assets .......          237           46          (566)
Foreign currency exchange gain (loss)          206         (159)           --
Other ...............................        2,632          415           668
                                        ----------   ----------    ----------
                                        $   19,202   $    4,774           860
                                        ==========   ==========    ==========

5.    INCOME TAXES

Tax Stabilization Agreements

The Company has entered into the following tax stability agreements, each with a
term of 15 years:

                                          Date of the           Tax regimes
Mine                  Effective           tax agreement         in force
------------------    ---------------     ------------------    ----------------
Carachugo/San Jose    January 1, 1995     May 19, 1994          October 29, 1999
Maqui Maqui           January 1, 1997     September 12, 1994    May 6, 1994
Cerro Yanacocha       January 1, 2000     September 16, 1998    May 22, 1997
La Quinua             January 1, 2004     August 25, 2003       August 25, 2003

These agreements guarantee the Company's use of the tax regimes shown in the
table above and permit maintenance of its accounting records in U.S. dollars.

The Company has determined the taxable income according to its understanding,
and that of its legal advisors, of the applicable tax legislation. This
legislation requires adding to and deducting from accounting income as
determined in the financial statements, those items that the referred
legislation recognizes as taxable and non-taxable, respectively.

For the years ended December 31, 2006, 2005 and 2004 the income tax rate was 30%
except for the La Quinua mine for which a 29% income tax rate applied.

Reinvestment of Earnings

Pursuant to Supreme Decree N(0)027-98-EF, mining companies can obtain a tax
benefit ("Investment Credit") by effectively reinvesting non-distributed
earnings into capital expansion projects that increase the Company's
productivity ("Reinvestment Program"). Investment Credits, based on 80% of
amounts reinvested, are obtained by application to and approval by the Ministry
of Energy and Mines ("MEM").

On March 4, 2003, the Company received a resolution from the MEM dated February
28, 2003, in which it approved the reinvestment program for the years from 2002
to 2004 for an amount of $189.6 million.

                                      F-60


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

The Company received a subsequent resolution from the MEM dated June 27, 2003,
with the following rulings: a) amended the years to be included in the
reinvestment program (from 2001 to 2004) and b) confirmed that the investment
that would be part of the program between 2002 and 2004 amounts to $189.6
million.

The Company transferred from retained earnings to restricted earnings $189.6
million according with the above reinvestment program in prior years. The
reinvestment tax credit reduced current income tax expense by $7.1 million in
2004.

Undistributed earnings associated with these investment credits are presented as
restricted earnings as of December 31, 2006 and 2005.

On December 26, 2006, the Company received the resolution from the MEM approving
the reinvestment program for the periods 2001 to 2004. According to the law, the
Company should capitalize this amount in 2007.

Peruvian Income Tax and Workers Participation

The current income tax and workers participation expense (Note 13) was
determined as follows:

<TABLE>
<CAPTION>

                                                                        Years Ended December 31,
                                                              --------------------------------------
                                                                 2006          2005          2004
                                                              ----------    ----------    ----------
<S>                                                           <C>           <C>           <C>
Income before workers' participation and income tax
   in accordance with Peruvian GAAP .......................   $  893,027    $  852,316    $  659,662
                                                              ----------    ----------    ----------
Plus:
   Reclamation liability ..................................       19,823         3,374         3,134
   Non-deductible expenses ................................       52,419        18,495        13,760
   Income tax recorded as other expenses ..................       21,354        14,983        20,318
   Provision for obsolescence of inventories ..............        1,148           352         1,392
   Other ..................................................        1,615         3,862         4,469
                                                                  96,359        41,066        43,073
                                                              ----------    ----------    ----------
Less:
   Depreciation of mine development and mineral
      interests ...........................................      (30,980)      (19,487)      (22,118)
   Depreciation straight line .............................           --        (7,778)           --
   Reclamation (environmental) expense ....................       (8,133)       (6,721)       (5,386)
   Other ..................................................           --            --        (2,016)
                                                              ----------    ----------    ----------
                                                                 (39,113)      (33,986)      (29,520)
Base to calculate the workers' profit sharing .............      950,273       859,396       673,215
Workers' participation (8%) ...............................      (76,022)      (68,752)      (53,857)
                                                              ----------    ----------    ----------
Taxable income............................................$      874,251    $  790,644    $  619,358
                                                              ==========    ==========    ==========

Income tax (30%) ..........................................   $  262,275    $  237,193    $  185,807
Credit for charitable donations ...........................       (1,553)       (1,767)       (1,260)
Adjustment due to the income tax rate applicable to
   La Quinua ..............................................       (4,240)       (3,931)       (3,098)
                                                              ----------    ----------    ----------
Current income tax........................................$      256,482    $  231,495    $  181,449
                                                              ==========    ==========    ==========
</TABLE>

                                      F-61


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

Income tax - Reconciliation from Peru Tax Return to U.S. GAAP and Tax Balance
Sheets

The Company's income tax provision consisted of the following:

                                                Years Ended December 31,
                                     ------------------------------------------
                                         2006           2005           2004
                                     -----------    -----------    -----------
Current Peru tax return ..........   $   256,482    $   231,495    $   181,449
Income tax prior years adjustments        (2,876)        12,965         18,046
                                     -----------    -----------    -----------
Current U.S. GAAP ................       253,606        244,460        199,495
Deferred .........................       (15,263)        (9,053)       (17,932)
                                     -----------    -----------    -----------
Income tax expense ...............   $   238,343    $   235,407    $   181,563
                                     ===========    ===========    ===========

Income tax expense differs from the amount computed by applying the statutory
Peruvian corporate income tax rate of 30% to pre-tax income as a result of the
following:

<TABLE>
<CAPTION>

                                                       Years Ended December 31,
                                             --------------------------------------------
                                                2006            2005            2004
                                             -----------     -----------     -----------
<S>                                          <C>             <C>             <C>
Income before tax provision ..............   $   763,791     $   760,881     $   571,867
Peruvian statutory rate ..................            30%             30%             30%
Income tax at statutory rate .............       229,137         228,264         171,560
Investment credit ........................            --              --          (7,104)
Income tax recognized through refilling of
   tax returns ...........................            --           5,255           8,993
Difference due to the income tax rate of
   La Quinua .............................        (4,240)         (3,931)         (3,098)
Income tax from tax disputes .............           230             894           5,394
Negotiated payment .......................         6,551              --              --
                                             -----------     -----------     -----------
Donations ................................         3,728           3,311           2,361
                                             -----------     -----------     -----------
Other (non-deductible expense and tax
   credits) ..............................         2,937           1.614           3,457
                                             -----------     -----------     -----------
Total income tax expense .................   $   238,343     $   235,407     $   181,563
                                             ===========     ===========     ===========
</TABLE>

Components of deferred income tax liabilities and assets were as follows:

                                                          At December 31,
                                                     --------------------------
                                                         2006          2005
                                                     -----------   -----------
Deferred tax liabilities
Property, plant and mine development costs .......   $    86,623   $    84,309
Inventories ......................................        11,736         7,719
Debt issuance costs ..............................           384           169
Other ............................................           278          (752)
                                                     -----------   -----------
                                                          99,021        91,445
                                                     ===========   ===========



                                      F-62


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

                                                          At December 31,
                                                     --------------------------
                                                         2006           2005
                                                     -----------    -----------
Deferred tax assets
Reclamation and remediation costs ................       (32,515)       (24,418)
Accounts receivable ..............................       (10,099)            --
Accounts payable and accrued expenses ............        (6,246)            --
Deferred workers' participation ..................        (3,425)        (5,196)
Accrued liabilities ..............................        (3,503)            --
Other ............................................          (139)          (160)
                                                     -----------    -----------
                                                          55,927         29,774
                                                     -----------    -----------
Net deferred tax liability .......................   $    43,094    $    61,671
                                                     ===========    ===========

Current deferred tax asset .......................   $     8,141    $        --
Less:
   Current deferred tax liabilities ..............            --            389
   Non-current deferred tax liabilities ..........        51,235         61,282
                                                     -----------    -----------
Net deferred tax liability .......................   $    43,094    $    61,671
                                                     ===========    ===========

6.    ACCOUNTS RECEIVABLE

                                                            At December 31,
                                                     --------------------------
                                                         2006          2005
                                                     -----------   -----------
Value added tax credit ...........................   $    25,923   $    16,530
Employee receivables .............................           502         1,784
Other ............................................         3,076         1,724
                                                     -----------   -----------
                                                     -----------   -----------
                                                     $    29,501   $    20,038
                                                     ===========   ===========

7.       INVENTORIES

                                                            At December 31,
                                                     --------------------------
                                                         2006          2005
                                                     -----------   -----------
In-process .......................................   $    12,258   $    14,924
Precious metals ..................................        15,651         1,407
Materials and supplies ...........................        57,109        51,627
                                                     -----------   -----------
                                                     $    85,018   $    67,958
                                                     ===========   ===========

                                      F-63


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

8.    STOCKPILES AND ORE ON LEACH PADS

                                                            At December 31,
                                                     --------------------------
                                                         2006          2005
                                                     -----------   -----------
Current:
   Stockpiles ....................................   $     5,097   $        --
   Ore on leach pads .............................        77,099        65,875
                                                     -----------   -----------
                                                     $    82,196   $    65,875
                                                     ===========   ===========
Long-term:
   Stockpiles ....................................   $        --   $     5,744
   Ore on leach pads .............................       175,317       123,445
                                                     -----------   -----------
                                                     $   175,317   $   129,189
                                                     ===========   ===========

9.    OTHER CURRENT ASSETS

                                                            At December 31,
                                                     -------------------------
                                                         2006          2005
                                                     -----------   -----------
Claims for tax refunds ...........................   $     2,821   $     6,876
Prepayments to supplies and contractors ..........         2,001         7,364
Restricted cash ..................................         2,014         1,978
Prepaid expenses and other .......................         6,346         5,748
                                                     -----------   -----------
                                                     $    13,182   $    21,966
                                                     ===========   ===========

1

10.   PROPERTY, PLANT AND MINE DEVELOPMENT

<TABLE>
<CAPTION>
                                           At December 31, 2006                       At December 31, 2005
                                  ----------------------------------------   ---------------------------------------
                                                 Accumulated                                Accumulated
                                                Depreciation                               Depreciation
                                                Depletion and    Net Book                  Depletion and    Net Book
                                     Cost       Amortization       Value        Cost       Amortization      Value
                                  ----------    -------------    ---------   ----------    -------------    --------
<S>                               <C>           <C>              <C>         <C>           <C>              <C>
Land ..........................       27,358               --       27,358       22,233               --      22,233
Buildings and
   equipment ..................    1,513,164         (986,335)     526,829    1,430,284         (845,977)    584,307
Mine development ..............      324,912         (120,144)     204,768      290,785         (106,667)    184,118
Mineral interests .............       45,680           (4,894)      40,786       34,160           (3,907)     30,253
Asset retirement cost .........      115,447          (60,957)      54,490       94,705          (49,052)     45,653
Construction-in-progress ......      191,126               --      191,126       76,699               --      76,699
                                  ----------    -------------    ---------   ----------    -------------    --------
                                   2,217,687       (1,172,330)   1,045,357    1,948,866       (1,005,603)    943,263
                                  ==========    =============    =========   ==========    =============    ========

Leased assets
 included above in
 property, plant
 and mine
 development ..................        4,672           (4,672)          --       30,193          (27,680)      2,513
                                  ==========    =============    =========   ==========    =============    ========
</TABLE>


                                      F-64


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

<TABLE>
<CAPTION>
                                                                          Estimated Useful Lives of    Years
                                                                          -------------------------   --------
<S>                                                                       <C>                         <C>
Buildings and equipment ...............................................   Buildings                   12 to 25
                                                                          Leach pads                      5
                                                                          Equipment                       7
                                                                          All remaining assets            5
Mine development ......................................................   UOP.based on grams mined    8 to 21
Mineral interests .....................................................   UOP.for producing property     12
Asset retirement cost .................................................   Related asset               5 to 15
Leased assets included above in property,
   plant and mine development .........................................                                   5
</TABLE>


<TABLE>
<CAPTION>
                                 At December 31, 2006                At December 31, 2005
                          ----------------------------------   ----------------------------------
  .....................    Gross                       Net      Gross                       Net
  .....................   Carrying   Accumulated      Book     Carrying   Accumulated      Book
  .....................    Value     Amortization     Value     Value     Amortization     Value
                          --------   ------------    -------   --------   ------------    -------
<S>                       <C>        <C>             <C>       <C>        <C>             <C>

Mineral interests:
Production stage ......   $  8,551   $     (4,535)   $ 4,016   $  8,432   $     (3,548)   $ 4,884
Development stage .....     20,298           (174)    20,124     20,297           (174)    20,123
Exploration stage .....     16,831           (185)    16,646      5,431           (185)     5,246
                          --------   ------------    -------   --------   ------------    -------
Total .................   $ 45,680   $     (4,894)   $40,786   $ 34,160   $     (3,907)   $30,253
                          ========   ============    =======   ========   ============    =======
</TABLE>


In October 2006, at the termination of the leasing agreements with Newmont Peru
Limited, the Company executed the related purchase option for $2.6 million. The
equipment purchased under the option will be depreciated over 3 years.

11.      DEBT

                                                            At December 31,
                                                        ----------------------
                                                           2006         2005
                                                        ---------    ---------
Credit facility .....................................   $ 100,000    $      --
Bonds
    Floating rate ...................................      42,000           --
    Fixed rate ......................................      58,000           --
Newmont Peru SRL ....................................          --        2,850
Other ...............................................          --          310
                                                        ---------    ---------
                                                          200,000        3,160
Less current portion ................................     (10,345)      (3,160)
                                                        ---------    ---------
                                                        $ 189,655    $      --
                                                        =========    =========


Scheduled minimum debt repayments are $10,345 in 2007, $13,793 in 2008, $13,793
in 2009, $21,793 in 2010, $29,793 in 2011, and $110,483 thereafter.


                                      F-65



                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

Credit Facility

During  2006,  the Company  entered into an  uncollateralized  $100 million bank
financing with a syndicate of Peruvian commercial banks. Quarterly repayments of
$3.4  million will begin in May 2007 with final  maturity  May 2014.  Borrowings
under the facility bear interest at a rate of LIBOR plus 1.875%.

Bonds

During 2006, the Company issued $100 million of bonds into the Peruvian  capital
markets  under a $200  million  bond  program.  The issuance is comprised of $42
million of floating interest rate bonds bearing interest at a rate of LIBOR plus
1.4375% and $58 million of fixed rate bonds bearing an annual  interest of 7.0%.
Quarterly  repayments  of $4 million will begin in July 2010 for six years.  The
bonds are uncollateralized.

Newmont Peru SRL

In October  2001,  the Company  entered into an agreement  with Newmont Peru SRL
(100%  indirectly  owned  subsidiary  of  Newmont)  for the lease of haulage and
drilling  equipment,  with a  purchase  option  for all or  part  of the  leased
equipment.  The lease  expired  in  October  2006 and the  purchase  option  was
exercised for $2.6 million.

Compliance with Covenants

The financing  agreements oblige the Company to comply with financial  covenants
related to the debt coverage ratios,  the Company's  ability to incur additional
indebtedness and  distributions of earnings to the partners.  As of December 31,
2006 the Company was in compliance with these covenants.

12.      DUE TO/FROM RELATED PARTIES

The Company has the following receivables and liabilities to related parties:

                                                 At December 31,
                                               -----------------
                                                 2006      2005
                                               -------   -------
Due from related parties
Newmont Peru SRL ...........................   $   114   $   357
Empresa Minera Inti Raymi SA ...............         7         8
                                               -------   -------
                                               $   121   $   365
                                               =======   =======
Due to related parties
S.M.R.L. Chaupiloma Dos de Cajamarca .......   $ 8,802   $15,247

Buenaventura Ingenieros S.A ................       593        77

Consorcio Energetico Huancavelica S.A ......       323       323

Newmont Peru SRL ...........................     2,285     4,049

Newmont SF Chile ...........................        14        11

Newmont Mining Corporation of Canada Limited        32        36

Newmont Technologies Limited ...............       228       514

Newmont USA ................................       914       618
                                               -------   -------
                                               $13,191   $20,875
                                               =======   =======

Management,  exploration, mine development,  engineering and employment services
are provided pursuant to contracts with affiliated companies.  The corresponding
charges  totaled $40 million,  $45.7 million and $36.1 million in 2006, 2005 and
2004, respectively.

As described  in Note 1, the Company  pays  Chaupiloma a 3% royalty on quarterly
production  sold  at  current  market  prices,   after  deducting  refinery  and
transportation  costs. Royalty expense totaled $48.5 million,  $45.6 million and
$37.9  million in 2006,  2005 and 2004,  respectively  and is  included in Costs
applicable to sales.

                                      F-66



                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


13.      WORKERS' PARTICIPATION

In  accordance  with  Peruvian  legislation,  the Company  maintains an employee
profit  sharing  plan equal to 8% of annual  taxable  income.  Distributions  to
employees  under the plan are based 50% on the number of days that each employee
worked during the preceding year and 50% on proportionate annual salary levels.

In 2006, 2005 and 2004, the current portion of workers' profit sharing  amounted
to $76.0 million, $68.8 million and $53.9,  respectively,  which was included in
Costs applicable to sales.

Peruvian law limits  payments of annual profit  sharing per employee to eighteen
months  salary  but  continues  to base  total  profit  sharing on 8% of taxable
income,   notwithstanding   the  per   employee   limitation.   Supreme   Decree
N(degree)009-98-TR,  published  on August 6, 1998,  provides  that the excess of
total profit sharing for the year over aggregate  profit sharing  payable to all
employees be paid to the Fondo Nacional de  Capacitacion  Laboral y de Promocion
del Empleo - FONDOEMPLEO.  Law 28464  published in January 2005,  which modified
art.3 of Law Decree 892,  provides  that the excess of total profit  sharing for
the year over aggregate  profit  sharing  payable to all employees be applied to
training of employees and  construction  of public  facilities.  Supreme  Decree
N(degree)  002-2005-TR,  published in May 6, 2005,  establishes a limit of 2,200
UIT (inflation  measurement unit,  equivalent to $2.3 million as of December 31,
2006) in the contributions to FONDOEMPLEO indicating that the difference goes to
the Regional Government.

The Company made payments to  FONDOEMPLEO  and Regional  Government in 2006 of $
2.3  million  and $17.5  million,  respectively,  in 2005 made  payments of $2.2
million  and $12.8  million,  respectively,  and in 2004 made  payments of $13.2
million to FONDOEMPLEO..

In 1998, the Peruvian  Government  issued additional  regulations  regarding the
calculation of the workers  participation,  which limited to 18 monthly salaries
the total amount each  employee is entitled to.  However,  there is a difference
between  the Law and its  regulations.  The law  establishes  that the 18 months
limit should be based upon 18 times the  remuneration  earned by the employee in
December of the respective year.  However the regulation  established an average
approach for the  calculation,  by means of which, the total of the compensation
earned by the employee  during the year  divided by the number of months  worked
provides  the  monthly  salary  cap on which  the limit of 18  salaries  is then
calculated (including any bonus paid).

The Company  followed the criteria  established  by the Law in  determining  the
amount to be paid to its  employees  since 1998.  As of December 31,  2006,  the
Company recorded a charge of $14.9 million,  included in Other expense,  net, to
cover any payment derived from the different criteria  established to make these
payments by both the law and the regulation.

14.      OTHER CURRENT LIABILITIES

                                          At December 31,
                                         -----------------
                                           2006     2005
                                         -------   -------
Operating costs ......................   $34,224   $14,073
Negotiated payment (Note3) ...........    21,839        --
Capital projects .....................    21,265    18,971
Payroll and other benefits ...........     4,773     4,279
Reclamation and remediation (Note 15)      4,724     5,623
Interest payable .....................     2,101        96
Taxes other than income tax ..........     1,917     3,994
Withholding income tax ...............     1,888     1,335
Deferred income tax liability (Note 5)        --       389
                                         -------   -------
                                         $92,731   $48,760
                                         =======   =======

                                      F-67


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


Operating costs

As of December 31, 2006, operating costs accruals included the following: i) the
estimated  cost for the  repair of La  Quinua  leach  pad of $9.9  million,  ii)
construction of the road Otuzco-Combayo of $1.2 million as part of the agreement
signed with the community,  iii)  indemnification of the communities involved in
the damage by fire of treatment  water pipes  occurred in the canals of Encajon,
Collotan,  and  Ouishuar  of $4.0  million,  and iv)  $9.5  million  related  to
contractors working on operating activities.

15.      RECLAMATION AND REMEDIATION (ASSET RETIREMENT OBLIGATIONS)

The Company's mining and exploration  activities are subject to various laws and
regulations  governing  the  protection  of  the  environment.  These  laws  and
regulations   are   continually   changing  and  are  generally   becoming  more
restrictive.  The Company  conducts its  operations  so as to protect the public
health and  environment  and believes its operations are in compliance  with all
applicable laws and regulations in all material respects.  The Company has made,
and  expects to make in the  future,  expenditures  to comply with such laws and
regulations,  but  cannot  predict  the  amount  of  such  future  expenditures.
Estimated future reclamation costs are based principally on legal and regulatory
requirements.

The  liability  corresponds  primarily  to  activities  to be  performed  in the
reclamation  and  remediation  of  mining  activities  once the gold  extraction
process has been finished.  Theses  activities  include  reclamation of the mine
sites, operating water treatment plants, revegetation and earth works.

The following is a  reconciliation  of the total  liability for  reclamation and
remediation:

Balance December 31, 2004 ......................   $ 107,031
   Additions, change in estimates and other, net      11,196
   Liabilities settled .........................      (6,721)
   Accretion expense ...........................       7,059
                                                   ---------
Balance December 31, 2005 ......................     118,565
   Additions, change in estimates and other, net      22,482
   Liabilities settled .........................      (8,133)
   Accretion expense ...........................       7,918
                                                   ---------
Balance December 31, 2006 ......................   $ 140,832
                                                   =========

The current portion of Reclamation  and remediation  liabilities of $4.7 million
and $5.6  million at December 31, 2006 and 2005,  respectively,  are included in
Other current liabilities.

Increases in the asset  retirement  obligation in 2006 and 2005 relate primarily
to the expanded mining  operations and new facilities at Yanacocha and La Quinua
and the related projected remediation and reclamation costs for this expansion.

16.      PARTNERS' EQUITY

Partners' Contributions

Partners'  contributions represent 714,960,104 common partnership interests with
a par value of one Peruvian  Nuevo sol each,  fully  subscribed  and paid.  Such
partnership interest includes 402,880,019 that are owned by foreign investors.

On December 31, 2001, the partners approved the capitalization of $206.5 million
(equivalent   to   S/.710,360,000)   from   restricted   earnings  to  partners'
contributions related to the 1998 and 1999 Reinvestment Programs (Note 5).


                                      F-68


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


Under current  Peruvian  regulations,  there is no  restriction on remittance of
dividends or repatriation of foreign investment, except as discussed in sections
below.

The legal structure of the Company is that of a Limited  Liability  Partnership.
The main  characteristics  of such  structure  are:  (i) the number of  partners
cannot exceed 20, (ii) the capital is represented by partnership interests,  and
(iii) there is no obligation to create a legal reserve.

Restricted Earnings

As explained in Note 5, $189.6  million of earnings were  restricted as a result
of the application of the 2001 to 2004 Reinvestment Program.

Retained Earnings

Effective  January 1, 2003,  distribution  of earnings for  partners  other than
legal entities domiciled in Peru are subject to a withholding tax of 4.1%.

17.      SUPPLEMENTAL CASH FLOW INFORMATION

Net cash provided from operations included the following cash payments:

                                                Years Ended December 31,
                                            -------------------------------
                                              2006       2005        2004
                                            --------   --------   ---------
Income taxes paid .......................   $277,993   $234,667   $232,018
Interest paid net of capitalized interest   $  9,873   $    891   $  1,598

18.      MAJOR CUSTOMERS AND EXPORT SALES

The Company is not  economically  dependent on a limited number of customers for
the sale of its  product  because  gold can be sold  through  various  commodity
market traders  worldwide.  In 2006,  sales to one customer  accounted for $1.29
billion  which  represents  81% of total  annual  sales.  In 2005,  sales to one
customer  accounted  for $1.47  billion  which  represented  99% of total annual
sales.  In 2004,  sales to two  customers  accounted  for $860 million and 349.4
million which  represented  97% of total annual sales.  All gold sales were made
outside of Peru.

19.      COMMITMENTS AND CONTINGENCIES

Tax contingencies

As is  customary,  the tax  returns of the  Company are subject to review by the
various Peruvian taxing authorities. At present, the income tax authorities have
reviewed the  Company's  tax filings up to year 2003.  In  connection  with this
review, the tax authorities have identified  certain  adjustments with which the
Company  and its  advisors  do not agree.  In the third  quarter of 2006 and the
fourth   quarter  of  2004,   payments  of  $7.6  million  and  $11.5   million,
respectively, were made to the tax authorities principally to avoid the accruing
of interest and  penalties on the proposed  adjustments  that are related to the
timing of the deductions.  Other matters in dispute also relate to the timing of
certain income tax deductions. The Company has accrued a liability for financial
reporting  purposes in an amount that  represents  the  Company's  best judgment
concerning  the amount that is required to be included in its income tax expense
as a result of the  current  tax  review.  In the  opinion  of  management,  the
resolution of the income tax controversy  will not have a material impact on the
financial condition or liquidity of the Company.

Peruvian Mining Royalty

During the second quarter of 2004, the government of Peru enacted legislation to
establish a sliding scale mining royalty of up to 3% based on the volume of mine
production.  The royalty is  calculated  on revenue  from sales of product  less
certain refining and transportation  expenses. While the Peruvian royalty became
effective during the second quarter of 2004, it does not apply to those projects
that had stabilization  agreements prior to the adoption of the royalty law. The
Company's current production is derived from projects that were stabilized prior
to  the  enactment  of  the  royalty   legislation.   Future   production   from
non-stabilized projects could be burdened by this royalty.

                                      F-69


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

Reinvestment program

As of June 30, 2004,  the Company  completed  all of its  investments  under the
Reinvestment  Program  from  2001  to  2004.  As of  December  31,  2006,  after
completing the MEM's audit the Company received their resolution of approval.

Unitization of Properties

In December 2000, as a result of the  unitization  plan carried out by partners,
the Company  signed  several  asset  transfer and mining lease  agreements  with
related entities. The main conditions are:

o     The Company must pay to Chaupiloma, S.M. Coshuro R.L. and Buenaventura, 3%
      of the  quarterly  net  sales  proceeds  of  mineral  extracted  from  the
      transferred and leased  concessions.  These properties are currently under
      exploration, except for a lime concession.

o     The  Company  must pay to Los  Tapados  S.A.  3% on  quarterly  net  sales
      proceeds of mineral extracted from the transferred and leased  concessions
      of Los Tapados S.A. The transferred and leased  concessions of Los Tapados
      S.A. are also subject to a previously  existing  royalty on the  minerals.
      The properties are currently not being exploited by the Company.

Legal Proceedings

Choropampa (mercury spill)

In June 2000, a transport  contractor of the Company spilled  approximately  151
kilograms  of  elemental  mercury near the town of  Choropampa,  Peru,  which is
located 53 miles (85 kilometers)  southwest of the mine.  Elemental mercury is a
by-product  of  gold  mining.  After  the  spill,  a  comprehensive  health  and
environmental remediation program was undertaken by the Company. In August 2000,
the Company  under  protest paid a fine of  S/.1,740,000  Peruvian  Nuevos Soles
(approximately  $0.5  million) to the  Peruvian  Government  (MEM).  The Company
entered into settlement  agreements with a number of individuals impacted by the
incident.  In  addition,  it has  entered  into  agreements  with  three  of the
communities  impacted by this  incident to provide a variety of public  works as
compensation for the disruption and  inconvenience  caused by the incident.  The
Company,  related companies and other defendants were named in a lawsuit by over
1,100  Peruvian  citizens and the  Provincial  Municipality  of Cajamarca in the
Denver District Court of the State of Colorado.  This action seeks  compensatory
and punitive damages based on claims associated with the mercury spill incident.
In February 2005, the Company  responded to the complaint in the Denver District
Court of the State of Colorado. The parties in these cases have agreed to submit
these matters to binding arbitration.

In May 2002,  additional  lawsuits related to the Choropampa incident were filed
against the Company in two of the local  courts of Cajamarca in Peru by over 900
Peruvian  citizens.  Such  lawsuits  seek the  payment  of  $229.4  million  and
S/.1,245,000  Peruvian  Nuevos Soles.  As of December 31, 2006,  the Company has
entered into settlement  agreements with approximately 40% of the plaintiffs for
amounts  considerably  lower than  those  initially  claimed in their  lawsuits,
significantly reducing the contingency that these lawsuits created.

In addition,  more than half of the remaining plaintiffs in these Peruvian cases
had  previously  entered into  settlement  agreements  with the Company prior to
filing their  lawsuits.  The Company has filed motions to dismiss based on these
previous  settlements and has obtained positive  judgments by the Civil Court of
the Cajamarca Superior Court. The Plaintiffs have appealed many of these rulings
to Peru's Supreme Court where they remain pending.

                                      F-70


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


As of December  31, 2006,  the Company has spent  approximately  $27.7  million,
which has been offset by approximately $12.8 million of insurance  proceeds,  on
public works, remediation efforts, personal compensation and compensation to the
communities  as well as  fines,  attorneys'  fees and  other  related  costs and
expenditures.  The Company cannot predict the amount of additional  expenditures
related to this matter or the result of any of these lawsuits.

Conga

The  Company  is  involved  in a dispute  with the  Provincial  Municipality  of
Celendin  regarding  the  authority  of that  governmental  body to regulate the
development  of the Conga ore deposit.  In 2004,  the  Municipality  of Celendin
enacted an ordinance declaring the area around Conga to be a mining-free reserve
and naturally  protected  area.  As in the Cerro  Quilish case (see below),  the
Company has challenged  this ordinance on the grounds that,  under Peruvian law,
local  governments  lack the authority to create such areas,  denying the rights
granted by the Company's mining concessions. Based on the precedents established
by the  Constitutional  Tribunal,  the Company  believes that a similar  finding
protecting the Company's rights will be made.

Hacienda Los Negritos

On October 21, 2002, the Company was sued by Grimaldina Malpica Rojas,  seeking:
(i) the repossession of the "Los Negritos" property, which is currently held and
utilized by the Company, and (ii) a payment for damages of up to $65 million.

The Company has  opposed  the  lawsuit  and all its terms,  requesting  that her
registration  of the  property in the Public  Registry of  Cajamarca be declared
void. The legal proceeding is currently pending  resolution in Cajamarca's court
of first instance.  The Company  believes that the plaintiff's  claim is without
merit.

Banos del Inca

On September  11, 2006 the  Municipality  of Banos del Inca issued a declaration
designating an area that includes the Carachugo  Expansion and San Jose Projects
as reserved and protected areas. Based on previous  experience and actions taken
by the  Constitutional  Tribunal (Peru Court of Last instance for Constitutional
issues) in respect of Cerro Quilish in which it was ruled that such  declaration
did not affect the Company's mining rights,  the Company believes that Banos del
Inca's  declaration,  should not impact the  Company's  legal  rights to exploit
these concessions.

Other contingencies - Cerro Quilish

The  Company was  involved  in a dispute  with the  Provincial  Municipality  of
Cajamarca  regarding  the  authority of that  governmental  body to regulate the
development  of the Cerro  Quilish ore deposit.  Cerro Quilish is located in the
same  watershed  in which the City of  Cajamarca  is located.  The  Municipality
enacted an ordinance  declaring  Cerro Quilish and its watershed to be a reserve
and naturally  protected  area.  The Company  challenged  this  ordinance on the
grounds that,  under  Peruvian law, local  governments  lack authority to create
such areas.  The Peruvian  Constitutional  Tribunal heard the case in early 2003
and ruled on April 7, 2003.  The ruling  established  that the Company's  rights
were not  impacted  by the  ordinance;  that the Company  would  complete a full
environmental impact study prior to initiating any development at Cerro Quilish;
and, adopt mitigation  measures necessary to protect the quality and quantity of
the water supply of the City of Cajamarca.  In July 2004, the Company received a
drilling  permit  and  commenced  exploration  activities  on the Cerro  Quilish
deposit.  During September 2004, individuals from the Cajamarca region conducted
a sustained  blockade of the road  between  the City of  Cajamarca  and the mine
site,  in protest of these  exploration  activities.  The Company  suspended all
drilling activities at Cerro Quilish and the blockade was resolved.  In November
2004, in recognition of the  communities'  concerns,  the Company  requested and
received the revocation of its Cerro Quilish  drilling  permit.  In this regard,
the Company has been working on re-establishing  its "social license to operate"
with the purpose of improving its relationship with the community of Cajamarca.


                                      F-71


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


20.   SUMMARY OF SIGNIFICANT  DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED
      BY THE COMPANY AND PERUVIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES


The  Company's  financial  statements  have been  prepared  in  accordance  with
accounting principles generally accepted in the United States (U.S. GAAP), which
differ in certain respects from principles  generally accepted in Peru (Peruvian
GAAP).  Such differences  involve certain methods of measuring the amounts shown
in the financial statements,  as well as additional  disclosures  required.  The
effects of these  measurement  differences  are reflected in the  reconciliation
below and principally relate to items discussed in the following paragraphs:

i) Fixed assets

There are certain differences in the accounting treatment and related disclosure
of fixed assets under U.S. GAAP as compared to Peruvian GAAP. These  differences
include the types of costs capitalized and depreciation and amortization periods
and are summarized as follows:

(a)   Under U.S. GAAP,  certain project  supervision  costs and contractor costs
      associated  with the acquisition of assets are capitalized and depreciated
      using  the  straight-line  method  over  the  life of the  project.  Under
      Peruvian GAAP,  project  supervision  costs are  capitalized as intangible
      assets and amortized in one year and contractor  cost  associated with the
      acquisition of fixed assets are expensed as incurred.

(b)   Under U.S. GAAP mine development  costs are capitalized as tangible assets
      and amortized using the units-of-production method. For Peruvian GAAP mine
      development  costs are  capitalized as intangibles and amortized using the
      units-of-production method.

(c)   The Company in 2006 changed its  depreciation  policy under  Peruvian GAAP
      related to its leach pads from the UOP method based on grams of gold mined
      to the  straight  line method  based on an  estimated  useful life of five
      years. The effect of this accounting change amounting to $27.9 million was
      affected to retained earnings under Peruvian GAAP

ii) Deferred income tax

In accordance  with U.S. GAAP,  under SFAS 109,  "Accounting  for Income Taxes",
which  designates the asset and liability  method as the  accounting  method for
taxes,  the  Company  recognizes  certain  temporary   differences  between  the
financial  reporting  basis of the  Company's  liabilities  and  assets  and the
related tax basis.  Under Peruvian GAAP,  income tax is determined in accordance
with applicable  legal  regulations and assets and/or  liabilities for temporary
differences relating to income taxes are recognized. In the case of the Company,
the income tax items included in the  reconciliation  provided below  originated
substantially by the Peruvian GAAP reconciliation items.

iii) Deferred workers' participation

Under U.S.  GAAP, the Company  recognizes a liability for temporary  differences
between book and tax income relating to workers profit sharing,  similar to that
recognized  relating to income taxes which is classified as a component of costs
applicable to sales.

Under Peruvian GAAP, workers share in the profits of Yanacocha corresponds to 8%
of taxable income.  Assets and/or liabilities for temporary differences relating
to profit sharing are recognized;  therefore,  the profit sharing items included
in the  reconciliation  below is originated  substantially  by the Peruvian GAAP
reconciliation items.

iv) Revenue recognition

Under U.S. GAAP, the Company  recognizes  revenue when the price is determinable
and upon  delivery and transfer of title of gold to the  customer.  In addition,
revenues  from  silver  sales are  credited  to costs  applicable  to sales as a
by-product credit.  Under Peruvian GAAP, revenue,  including gold and silver, is
recognized,  net of transportation and refining costs, when dore is delivered to
the shipper.

                                      F-72


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


v) Other

Other  consist of other  differences  between US GAAP and Peruvian GAAP that are
considered insignificant to be quantified individually.

Reconciliation  between Net Income and Partners'  Equity  determined  under U.S.
GAAP and Peruvian GAAP


The following is a summary of the  adjustments to net income for the years ended
December 31, 2006, 2005 and 2004 and to partners' equity as of December 31, 2006
and 2005 which would be required if Peruvian  GAAP had been  applied  instead of
U.S. GAAP in the financial statements:

<TABLE>
<CAPTION>
                                                            Year ended December 31,
                                                    -----------------------------------
                                                      2006          2005         2004
                                                    ---------    ---------    ---------
<S>                                                 <C>          <C>          <C>
Restatement of financial statements
prepared under U.S. GAAP:
Net income, U.S. GAAP                               $ 525,448    $ 525,474    $ 390,304
                                                    ---------    ---------    ---------

Items increasing (decreasing) reported net
income:
i)  Different depreciation rates and fixed assets
    charged to expenses                                23,394       37,956       62,098
ii) Deferred income tax                                (6,953)     (24,697)     (13,527)
iii)Deferred workers' participation                    (6,254)      (4,697)      (3,219)
iv) Revenue recognition                                30,647        1,485       (8,980)
v)  Other                                               1,377          (45)       1,299
                                                    ---------    ---------    ---------
Net adjustment                                         42,211       10,002       37,671
                                                    ---------    ---------    ---------
Net income, Peruvian GAAP                           $ 567,659    $ 535,476    $ 427,975
                                                    =========    =========    =========
</TABLE>

                                                           At December 31,
                                                    --------------------------
                                                       2006            2005
                                                    -----------    -----------

Partners' equity, U.S. GAAP                         $ 1,196,409    $ 1,156,648
                                                    -----------    -----------
Items increasing (decreasing) reported
   partners' equity:
i)  Capitalization of depreciation charges
    in inventories                                      (35,886)       (26,816)
ii) Different depreciation rates and fixed assets
     charged to expenses                                 10,374        (50,000)
iii)Debt issuance costs                                      --           (409)
iv) Deferred income tax                                  (1,618)         5,335
v)  Deferred workers' participation                      (1,544)         4,710
vi) Revenue recognition                                  33,663          3,016
vii)Other                                                  (837)        (1,805)
                                                    -----------    -----------
Net adjustment                                            4,152        (65,969)
                                                    -----------    -----------

Partners' equity, Peruvian GAAP                     $ 1,200,561    $ 1,090,679
                                                    ===========    ===========


                                      F-73


                             MINERA YANACOCHA S.R.L.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


In connection  with the  differences  between U.S. GAAP and Peruvian GAAP in the
classification of certain line items in the balance sheets and the statements of
income,  the following  significant  captions  would have been  presented  under
Peruvian GAAP:

                                                            At December 31,
                                                        -----------------------
                                                           2006        2005
                                                        ----------   ----------

Balance sheets
Current assets                                          $  599,052   $  458,322
Total assets                                            $1,823,480   $1,473,255
Total liabilities                                       $  622,919   $  382,576

                                                   Year ended December 31,
                                           ------------------------------------
                                              2006         2005        2004
                                           ----------   ----------   ----------

Statements of income
Revenue                                    $1,615,530   $1,524,518   $1,265,321
Income before workers' participation and
income tax                                 $  893,027   $  852,316   $  659,662



                                      F-74


PRICEWATERHOUSECOOPERS                          Dongo-Soria Gaveglio y Asociados
                                                Sociedad Civil
                                                Firma Miembro de
                                                PricewaterhouseCoopers


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

February 9, 2007

To the Shareholders
Sociedad Minera Cerro Verde S.A.A.

In our opinion, the accompanying balance sheets and the related income
statements, statements of changes in shareholders' equity and cash flows
statements, present fairly, in all material respects, the financial position of
Sociedad Minera Cerro Verde S.A.A. at December 31, 2006 and 2005, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2006 in conformity with accounting principles
generally accepted in Peru. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements 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 of financial statements
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis of our opinion.

Accounting principles generally accepted in Peru vary in certain significant
respects from accounting principles generally accepted in the United States of
America. The application of the latter would have affected the determination of
net income and of cash flows from operating activities for the three years in
the period ended December 31, 2006 and the determination of shareholders' equity
and financial position at December 31, 2006 and 2005 to the extent summarized in
Note 24 to the financial statements.

/S/ DONGO-SORIA GAVEGLIO Y ASOCIADOS
------------------------------------

Countersigned by:

/S/ LUIS W. MONTERO
-------------------

Luis W. Montero
Peruvian Public Accountant
Registration No.17729

                                      F-75`