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• Marketing: In Candarave, we contributed to organiz- ing and providing the equipment for a meat marketing association of farmers who receive training and tech- nical assistance from SPCC technical experts. Man- agement so far has proven successful and the farm- ers own a refrigerated truck and two fully equipped facilities, one in Toquepala and another in Cuajone. In Torata, construction of a Stockpiling Center is under way. In Higuerani, a channel was created for directly marketing guinea pigs from farms to the Toquepala soup kitchens. 

• Basic infrastructure: Colocaya river in Ilabaya was canalized and levees built along its banks. Oconchay in Ilabaya and Nuevo Camilaca in Candarave were connected to the power grid. In the Huaytire alpaca breeding area, sleeping enclosures, breeding modules for mating and fenced fields will provide advanced pasture management. 

• Capacity building: Torata started a pilot project for capacity building in schools and production organi- zations. 

• Large projects: A pre-feasibility study of the water flow in the Callazas river in Candarave will deter- mine a likely dam construction, while a sediments 

study was completed in the Sama river in Yarascay, in Tacna, to determine the feasibility of building a reservoir. 

• Other activities: In Candarave and Torata we fostered the organization of agricultural fairs. 

The Social Responsibility program achieved highly satisfactory results in 2004, thanks to our technicians sharing the neighboring communities’ daily activities. This allowed for leveraging their strengths, setting pri- ority needs, identifying and mitigating deficiencies, and generally contributing to improved living standards. Our company was therefore able to efficiently manage its relations with the environment around it. 

## RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 

SPCC reported 2004 net earnings of $596.8 million or diluted earnings of $7.46 per share, compared to net earnings of $119.2 million or diluted earnings of $1.49 per share in 2003, and $60.6 million or diluted earnings of $0.76 per share in 2002. 

The improvement in the Company´ s results for 2004 is due mainly to a production increase of mined copper and 

molybdenum, and a significant hike in the price of copper and molybdenum. 

Price of copper during 2004 in the London Metal Ex- change (LME) and the New York Commodity Exchange (COMEX) was of 130 and 129 cents per pound of copper respectively, compared to 81 cents in 2003. 

The recent surge in the price of molybdenum has had a significant effect on the Company´s traditional calcula- tion of cash cost and comparisons between periods. Ac- cordingly, the Company is presenting cash costs with and without the inclusion of all revenues from byproducts. When calculating operating cash, SPCC excludes cost depreciation, amortization and depletion, exploration, workers´ participation provisions and items of a non- recurring nature. 

“Net sales of Southern Peru were $1,715.9 million in 2004, the highest sales in the past five years.” 

The Company´s operating cash cost, as defined, for the three years ended December 31, is as follows: 

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Net Sales:  Net sales in 2004 were $1,715.9 million, compared with $798.4 million in 2003 and $664.6 million in 2002. Sales increased in 2004 by $917.5 million, a 114.9% increase over the previous year, mainly due to higher copper and molybdenum sales and higher sales of the Company´ s byproduct metals, molybdenum and silver. 

Prices : Sales prices for the Company´s metals are established principally by reference to prices quoted in the London Metal Exchange (LME), the New York Commodity Exchange (COMEX) or published in Platt´s Metals Week, for dealer oxide aver- age prices for molybdenum. 

Cathodes dispatch at the SWEW Plant in Toquepala 

