ISCAYCRUZ MINE

On Feb 13 of 2009, after the board meeting it was agreed to temporarily stop output activities at Iscaycruz Mine Unit, since Feb 26, 2009, while prospection and exploration activities were gone on over actual and new areas with mining potential, looking for increasing economic mining reserves in a further favorable scenario. According to new geologic studies by specialists in this matter and considered current production, reserves and resources were computed for Yauliyacu and Iscaycruz Mining Units, which resulted in 17 and 9 years long, respectively. An additional measure to face and stand the crisis was to implement a cost reduction program, focused on restructuring the mining operation at Yauliyacu Unit. Investment was reduced specially for development and exploration, however these measures did not affected to workers, who were transfered from Iscaycruz Mining Unit to Yauilyacu Mining Unit. Bulk production on concentrates was 23,672 DMT, 46.31% less than last year. An exhaustive maintenance at Iscaycruz was carried out, while from March to December 9,085 m of drilling were executed with positive results.

During 2009, in Iscaycruz Mine were executed 12,618 m of drilling. At Tinyag II zone were drilled 2,466 m to delimit the orebody and compute volume of reserves. Likewise, in order to know hydrogeologic features, were drilled 430 m. At Santa Este zone were drilled 4,444 m, directed to define orebodies and to know continuity and extension. Main production came from Estela and Chupa orebody, while undergound Tinyag orebody was mined on a smaller scale. Zinc grade gradually dropped on past five years due to mineralogical composition variation in head mineral, meaning greater Marmatite and Pyrrhotite occurrences than Sphalerite, this as a result of deepening to mine Limpe Centro zone and gradual increase of mineral coming from Chupa zone on blending. During temporary halt, activities were focused on maintenance of facilities over and underground, so as a diamond drilling program looking for new reserves, where the bulk of this program (45%) was executed in Limpe Centro mine, with positive results.

As of Feb13/09, the company decided to temporally suspend its mining operations in the Iscaycruz mining unit beginning on February 26, 2009 and continue with prospection and exploration activities in new areas surrounding the mine in order to increase reserves.