CONSOLIDATED EARNINGS RELEASE

Transcription

1 COMPAÑIA MINERA MILPO EARNINGS RELEASE SECOND QUARTER 2017

2 This report analyzes the most important operating and financial results related to the development of Compañia Minera Milpo SAA and Subsidiaries, on the basis of accounting data included in the Individual and Consolidated Financial Statements for the Second Quarter of 2017 ("2Q17") and First Semester of 2017 ( 1S17 ), according to International Financial Reporting Standards (IFRS). CORPORATE STRATEGY SUMMARY The operational and financial results obtained during 2Q17 are based on the execution of Milpo s management strategy, which is focus on the continuous improvement of operations, the search for operational synergies through integration processes, maintenance of competitive costs and a diversified production mix of zinc, copper, lead, and byproducts, which allow to compensate the volatility of international metal prices. The most important aspects of the strategy are based on five fundamental pillars: Results + Growth I Mining Operations and Brownfields II Corporate Office III Copper Projects IV Polymetallic Projects V M&A Safety and health Environment Social Responsibility and Reputation People 1. Mining Operations and Brownfields: At Cerro Lindo Mining Unit, at the beginning of July 2017, the authorization needed to increase the plant s processing capacity to 20,000 tpd was obtained. This will make it possible to stabilize its production around this treatment capacity. Besides, the Pasco Mining Complex, which comprises El Porvenir and Atacocha units, continues with the development of the fourth and final stage of the operational integration process between these two units, which consists in the integration of the underground mines with a single lift system and the achievement of synergies at the infrastructure level. In this way, works were carried out to deepen the shaft at El Porvenir and to develop tunnels in both units. Also, at both Cerro Lindo and the Pasco Mining Complex, activities to reinforce safety standards inside the mine continued, works which among others included the reinforcement of sustainment labors in the underground mines. 2. Corporate Office: During the quarter, in relation to the Personnel Development System, the stage of discussion of the individual s performance took place at the Personnel Committees.

3 3. and 4. Copper and Polymetallic Projects: Engineering and design studies for the initial operating capacities, primarily in the Magistral, Aripuaná, and Shalipayco projects continued. 5. M&A: Milpo transferred its ownership in Minera Rayrock Ltda., owner of Ivan Mining Unit, to Minera Cielo Azul (a subsidiary of Coro Mining Corp.) at a price of approximately US$ 6.2 million. Besides, the Company continues to seek for growth opportunities aligned with its growth strategy. Finally, regarding the delisting process of Milpo s common and investment shares, on May , the Board of Directors decided not to proceed with the tender offers and therefore these voluntary delisting processes ended. This decision was made since the valuation report carried out by SUMMA Asesores Financieros, the company designated by the Securities and Exchange Supervisory Agency (SMV) to determine the minimum price at which those tender offers had to be launched, contained material errors that did not allow the Board to make a decision based in proper information. SELECTED OPERATIONAL AND FINANCIAL DATA Unit 1Q17 2Q17 2Q16 2Q17 vs. 2Q16 Fine Metal in Concentrate Production Zinc t 52,540 53,739 61,851-13% 106, ,371-17% Copper t 9,401 11,996 10,558 14% 21,397 20,902 2% Lead t 10,064 11,146 12,544-11% 21,210 25,036-15% Silver Content oz 1,632,075 1,934,967 2,138,085-10% 3,567,042 4,175,507-15% Gold Content (Pasco) oz 6,921 8,449 6,092 39% 15,370 10,418 48% Cash Cost US$/t rom % % Cash Cost Zn Eq. US$/t Zn eq 1,474 1,360 1,205 13% 1,413 1,185 19% Revenues US$ MM % % EBITDA US$ MM % % Net Profit US$ MM % % EBITDA Margin % 40% 42% 37% 41% 36% CAPEX US$ MM % % FCF US$ MM % n.a. Net Debt / EBITDA x times S17 1S17 vs. HIGHLIGHTS 1S17 Lower production in fine terms, during the semester, mainly due to the lower treated ore at El Porvenir. However, it is worth to mention that production in 2Q17 increased respect to that of 1Q17. 48% increase in gold contents, reaching about 15 thousand ounces in 1S17 mainly due to the higher gold content in Atacocha s lead production, which offset the lower production of zinc and lead at this mining unit. Revenues of US$ million and EBITDA of US$ million, higher by 22% and 39%, respectively, compared to those of due to the higher metal prices mainly of zinc and copper, which compensated the lower production in fine terms. On the other hand, revenues of US$ million and EBITDA of US$ 89.2 million in 2Q17, higher than those recorded in 1Q17, due to the higher production which allowed to offset the lower metal prices. EBITDA margin of 41% and 42% in 1S17 and 2Q17, respectively (higher than the 36% and 37% obtained in and 2Q16, respectively). Consolidated Net Income of US$ 87.2 million in 1S17, 59% higher than that obtained during, due to the higher EBITDA. Consolidated Net Income of US$ 51.0 million in 2Q17, 28% higher than that of the same period of Cash balance of US$ million at the end of June In terms of leverage, the Net Debt / EBITDA ratio remained negative at -1.20x at June 2017 (-1.43x at December 2016).

4 I. GENERAL ASPECTS MARKET CONTEXT During the semester, the upward trend of international metal prices continued due to the expectations of a solid demand of base metals from China and the still limited supply of metals. Despite this, certain volatility of metal prices was observed in 2Q17, due to a possible global stock increase and mixed economic data of China. However, by the end of June, zinc, lead and copper prices reached the maximum levels of the quarter driven by a dollar depreciation, signs of lower inventories and positive data from the Chinese economy. In the case of zinc, in 1S17 the average price reached US$/t 2,690, 50% higher than that of due to the expectation of greater investment in infrastructure in the Unites States. On the other hand, during 2Q17, after registering a high level of metal prices during 1Q17 due to the uncertainty regarding the supply, the average price decreased slightly reaching US$/t 2,598. In the case of lead, the reduction of global supply during the year associated to the lower level of inventories, generated an upward pressure in 1S17, reaching an average price of US$/t 2,222, 28% higher than that of. On the other hand, in 2Q17, the average price reduced respect to 1Q17, reaching an average price of US$/t 2,165 due to data reflecting lower automobile production in China. In the case of copper, during the 1S17, the average price increased by 22% respect to that of the same period of However, in 2Q17 the average price decreased in comparison to that of 1Q17 as a result of the rise in the interest rate by the Federal Reserve and the greater likelihood of potential increases in the future. As for precious metals, the average price of silver increased by 10% in comparison to that of, mainly due to the higher industrial consumption. In the case of gold, the average price in 2Q17 remained stable respect to that of the same period of 2016 and increased in comparison to that of the 1Q17, due to the dollar depreciation and the political uncertainty in the Unites States. METAL PRICES Metal * Unit 1Q17 2Q17 2Q16 2Q17 vs. 2Q16 1S17 1S17 vs. Zinc (US$ / t) 2,781 2,598 1,915 36% 2,690 1,796 50% Copper (US$ / t) 5,834 5,663 4,730 20% 5,748 4,699 22% Lead (US$ / t) 2,279 2,165 1,719 26% 2,222 1,731 28% Silver (US$ / oz) % % Gold (US$ / oz) 1,219 1,257 1,259 0% 1,238 1,220 1% * Average LME (London Metal Exchange) prices - Settlement price MACROECONOMIC FACTORS Exchange Rate The average exchange rate during 1S17 was S/ per US$ while in the same period of 2016, it was S/. 3.38, which represented a 3% appreciation of the Peruvian Sol (Source: BCRP). It is worth to mention that the Company maintains a low exposure to exchange rates fluctuation since its functional currency is the US$ Dollar. Additionally, much of its production costs and revenues are denominated in that currency, maintaining a proper fit of currencies in the balance sheet, income statement and cash flow. Inflation The annualized inflation during 1S17 was 2.73%, lower than that obtained in 2016 where it reached 3.34% (Source: BCRP). Oil At the end of June 2017, Brent oil price was 52.3 US$/barrel, lower than the 55.2 US$/barrel price recorded at the end of 2016 (Source: Thomson Reuters).

5 II. FINANCIAL PERFORMANCE INCOME STATEMENT US$ Million 1Q17 2Q17 2Q16 2Q17 vs. 2Q16 Revenues % % Cost of Sales (97.4) (104.8) (90.9) 15% (202.2) (181.6) 11% Depreciation (18.3) (17.7) (18.1) -2% (36.0) (36.5) -1% Gross profit % % Amortization (0.8) (0.9) (0.8) 4% (1.7) (1.6) 2% Selling Expenses (4.9) (4.4) (5.0) -12% (9.2) (10.1) -9% Administrative Expenses (5.9) (5.1) (5.8) -11% (11.0) (12.7) -13% Other Operating Results, net (7.4) (7.3) (8.7) -16% (14.7) (5.4) 170% Operational profit % % Financial Expenses, net (6.6) (4.0) (4.4) -10% (10.6) (9.7) 9% Income Tax (16.0) (15.4) (2.8) 441% (31.4) (17.9) 75% Net Profit % % 1S17 1S17 vs. EBITDA % % EBITDA Margin (%) 40% 42% 37% 41% 36% REVENUES During 2Q17, revenues were US$ million, higher than the results generated in the previous quarter due to the higher sales volume and despite the lower prices recorded in the quarter. This increase was associated to the higher production in fine terms and the decrease in the stock of lead concentrates that remained as of March 2017, after the restrictions to the transport of concentrates via the Central highway because of the heavy rains experienced in Peru in March were eliminated. In addition, it is worth to mention that during 1S17 revenues were US$ 403.9, 22% higher than those of the same period of 2016 due to higher metal prices, mainly of zinc and copper, and despite the lower volume of production due to the lower level of treated ore, mainly at El Porvenir Mining Unit. Regarding the breakdown of sales by metal during the semester, zinc represented 47% of sales, followed by copper with 26%, silver with 14%, lead with 9% and gold with 4%. As for the breakdown of sales by mining unit, Cerro Lindo represented 69% of sales, followed by El Porvenir with 18% and Atacocha with 13%. It is worth mentioning that the main customer for Milpo s zinc concentrates is Votorantim Metais Cajamarquilla S.A. As for the production of copper and lead, the main customers are Glencore, Trafigura and Louis Dreyfus. Like other transactions with related parties, the sales of zinc concentrates to the zinc refinery of Cajamarquilla are negotiated under market conditions, all of which are subject to evaluation through transfer price analysis regularly commissioned to external professionals.

6 REVENUES BREAKDOWN 1S17 EVENUES DISTRIBUTION 2016 REVENUES BY METAL REVENUES BY MINING UNIT Copper 26% Atacocha 13% Zinc 47% Gold 4% Silver 14% Lead 9% El Porvenir 18% Cerro Lindo 69% SALES BY METAL (FMT) Metal Unit 1Q17 2Q17 2Q16 2Q17 vs. 2Q16 1S17 1S17 vs. Zinc fmt 53,352 52,995 60,867-13% 106, ,901-17% Copper fmt 9,429 12,097 10,508 15% 21,526 20,768 4% Lead fmt 8,664 12,256 12,135 1% 20,920 24,751-15% Total Milpo fmt 71,446 77,348 83,509-7% 148, ,419-14% OPERATING COSTS During 1S17, the cost of sales increased by 11% compared to that of, obtaining a cash cost of US$/t 35.4, 9% superior to that obtained in. The higher cash cost was associated with the lower treated ore aforementioned, an increase in total sustainment costs in the three mining units and, in the case of Cerro Lindo, to costs overruns associated with the maintenance of roads and access routes due to the heavy rainfalls, impacts that mainly affected the cost in the first months of the year. However, in 2Q17 there was a recovery in the cash cost compared to that of 1Q17 (US$/t 35.0 vs US$/t 35.9) due to the higher treated ore in the three mining units. It is worth to mention that since the end of 2016, a new policy was implemented to reinforce the sustainment activities inside the three underground mines, through the greater use of shotcrete, bolts and meshes, in order to increase safety. These activities will continue in the following months and other actions have been implemented to offset these increases. OPERATING EXPENSES In terms of operational expenses, during the quarter a significant decrease continues to be observed at each expenditure level compared to the previous quarter, due to activities focused on their optimization. As for sales expenses, a 9% and 12% reduction was obtained compared to those of and 2Q16, respectively, mainly due to lower transport and storage costs, as well as the lower volume sold.

7 As for administrative expenses, a 13% and 11% reduction was obtained compared to those of and 2Q16, respectively, as a result of the cost optimization plan at the corporate office. Regarding Other Expenses, a reduction of 16% was obtained during the quarter, compared to those of 2Q16 due to optimization costs of Greenfield projects, prioritizing those with more maturity, and in line with the Group s growth strategy. PERFORMANCE During 1S17, an EBITDA of US$ million was obtained, 39% superior to that obtained in, due to the higher revenues as a result of the increase in metal prices. Also, during 2Q17 an EBITDA of US$ 89.2 million was obtained, superior to the results generated in 1Q17. The positive performance in 2Q17 is due to the higher volume sold which allowed to offset the lower metal prices in respect to those of 1Q17. In consolidated terms, net income of US$ 87.2 million was obtained, 59% superior to the one obtained during the same period of 2016, mainly due to the higher EBITDA. Regarding the quarter results, the increase was also significant with respect to the previous quarter and the same period of INVESTMENTS During 1S17, investments of US$ 16.7 million were realized, 62% lower than those of, which included an increase of Milpo participation in the Shalipayco zinc project for about US$ 15 million. The investments realized during the semester were mainly related to the operational integration process of Pasco, which includes the tailing dam elevation and the deepening of the shaft at El Porvenir and the replacement of the tailings pipes at Atacocha. CAPEX US$ (million) 1Q17 2Q17 2Q16 2Q17 vs. 1S17 vs. 1S17 2Q16 Expansion % % Sustaining and Others % % Total Milpo % % LIQUIDITY AND INDEBTEDNESS As of June 2017, the Company closed with a cash balance of US$ million. During 1S17, the free cash flow was negative at US$ 3.2 million, despite the higher EBITDA, and mainly due to the working capital investment associated with the increase of accounts receivable due to higher metal prices, and the payment of taxes and worker participation in 1Q17. It is worth to mention that in 2Q17 a positive free cash flow of US$ 37.6 million was generated.

8 FREE CASH FLOW BRIDGE 1S17 Thus, at the end of the quarter, the net cash level was positive and reached US$ 397 million, maintaining a solid financial position. In terms of leverage, the Net Debt/EBITDA ratio remained negative at -1.20x as of June 2017 (-1.43x at the end of December 2016 and -0.46x at the end of June 2016), and the average maturity term of the financial debt was 5.8 years, having no relevant debt maturities in the short term. On the other hand, regarding the delisting process of the common and investment shares of Milpo, which began in December 2016, it is worth to mention that on May , the Company s Board of Directors decided not to proceed with the tender offers for these shares and therefore these voluntary delisting processes ended. It is worth to mention that this decision was made since the valuation report prepared by the company designated by the Securities and Exchange Supervisory Agency (SMV) contained material errors that did not permit to make a decision based in this information. Regarding credit ratings, on April 18, 2017, Fitch Ratings affirmed Milpo s rating to BBB- with negative outlook. On the other hand, on April 24, 2017, Standard & Poor s upgraded Milpo s risk rating from BB to BB+ with negative outlook, in accordance with the rating granted to VM Holding S.A., a company for which Milpo is an important subsidiary. Also, on May 24, 2017, Standard & Poor s placed Milpo s BB+ corporate credit and issue level ratings on CreditWatch with negative implications, after taking the same action with VM Holding S.A. In both cases, the aforementioned risk rating agencies highlight the robust financial and liquidity position of Milpo which allow the Company to develop its future plans and adequately address the environment of volatile metal prices. It is worth to mention that on May 4, 2017, VMH Holding S.A. issued a 10-year international bond for US$ 700 million, at a rate of 5.375%, with Milpo as co-guarantor. LIQUIDITY AND INDEBTEDNESS POSITION US$ million June 2017 December 2016 Total Cash Financial Debt (100.0) (300.0) (500.0) (700.0) Net Debt/EBITDA (US$ million) 2Q16 3Q16 4Q16 1Q17 2Q x x x -1.18x -1.20x (0 (1

9 III. BUSINESS AND OPERATIONAL PERFORMANCE CERRO LINDO MINING UNIT PRODUCTION BY METAL AND CASH COST Metal Unit 1Q17 2Q17 2Q16 2Q17 vs. 2Q16 Fine Metal in Concentrate Production Zinc fmt 39,266 37,048 39,931-7% 76,313 83,911-9% Copper fmt 9,218 11,785 10,359 14% 21,003 20,452 3% Lead fmt 3,801 3,210 3,440-7% 7,012 7,341-4% Silver Content oz 802, , ,444-2% 1,682,363 1,715,061-2% Cash Cost US$/t rom % % Revenues US$ MM % % EBITDA US$ MM % % EBITDA Margin % 56% 53% 48% 54% 47% 1S17 1S17 vs. During 2Q17, Cerro Lindo Mining Unit increased the volume of treated ore compared to that of 1Q17, which allowed to increase the production in fine terms of copper (28%) and silver contents (10%). On the other hand, a lower volume of production in fine terms was obtained in comparison to that of, due to the lower head grades of zinc and lead in the treated ore. This effect was compensated by the increase in copper production (3%) due to the higher head grade of this metal and its higher payable value. Cash cost in 2Q17 stood at US$/t 29.5, similar to that of 1Q17, but still higher than that registered in 2Q16 due to higher costs of shotcrete support related to safety works inside the mine and overcharges caused by the intense rains occurred during the month of March. Revenues of US$ million and EBITDA of US$ million were obtained, higher by 27% and 46%, respectively, compared to those of, due to higher metal prices, mainly of zinc, which allowed to compensate the lower volume of production aforementioned. Also, EBITDA margin stood at 54% on average during 1S17. With regard to the strategic exploration activities at Cerro Lindo, during 1S17 the unit performed around 44,963 meters of diamond drilling, focused on explorations to identify new mineralized bodies, recategorization and validation of mineral resources found in 2016, and for geometallurgical studies. PASCO MINING COMPLEX EL PORVENIR MINING UNIT PRODUCTION BY METAL AND CASH COST Metal Unit 1Q17 2Q17 2Q16 2Q17 vs. 2Q16 Fine Metal in Concentrate Production Zinc fmt 9,512 12,087 16,273-26% 21,599 32,067-33% Copper fmt % % Lead fmt 2,814 3,903 4,767-18% 6,717 9,051-26% Silver Content oz 475, , ,135-13% 1,118,536 1,417,577-21% Cash Cost US$/t rom % % Revenues US$ MM % % EBITDA US$ MM % % EBITDA Margin % 29% 27% 38% 28% 34% 1S17 1S17 vs. During 2Q17, at El Porvenir Mining Unit, ore treatment levels increased by 31% respect to those of 1Q17, which allowed to increase the volume of production in fine terms of zinc, lead, copper and silver contents. It is worth to mention that during the quarter the stock of lead concentrates that remained as of March, due to the heavy rainfalls occurred during the first months of the year, was sold in April.

10 However, in comparison to the, a lower volume of production in fine terms of zinc and lead was obtained, mainly due to the lower treated ore and the lower head grades of these metals. This combination of a lower treated ore along with the costs incurred in sustainment activities, led to an increase in cash cost of 34% in respect to that of (US$/t 53.8 vs US$/t 40.2). However, during 2Q17 the increase in treated ore levels, allowed to reduce the cash cost compared to that of 1Q17 (US$/t 50.0 vs US$/t 58.7). It is worth to mention that during 1S17 revenues of US$ 73.0 million were reached, higher by 2% compared to those of due to higher metal prices, with an EBITDA of US$ 20.4 million and a margin of 28%. With regards to the strategic exploration activities at Porvenir, during 1S17 the unit performed around 35,859 meters of diamond drilling, focused on the recategorization of resources and the exploration of new mineralized bodies, mainly toward the north with the objective of defining mineralization in the integration area between El Porvenir and Atacocha. ATACOCHA MINING UNIT PRODUCTION BY METAL AND CASH COST Metal Unit 1Q17 2Q17 2Q16 During the quarter, at Atacocha Mining Unit, the stock of concentrates that remain as of March decreased, which was associated with the rains occurred in March 2017 which prevented the normal flow of the concentrate transportation. It is worth to mention that, although in 1S17 the production of fines was lower than that of, a higher value of lead was obtained due to the higher gold content in this concentrate, showing a 92% increase as a result of the greater contribution of the Glory Hole San Gerardo, which compensated the decrease in other metals. In terms of cash cost a reduction of 10% was obtained respect to that of (US$/t 42.5 vs US$/t 47.4) due to the 2Q17 vs. 2Q16 Fine Metal in Concentrate Production Zinc fmt 3,763 4,604 5,647-18% 8,367 12,393-32% Copper fmt % % Lead fmt 3,449 4,032 4,337-7% 7,481 8,645-13% Silver Content oz 354, , ,506-18% 766,144 1,042,869-27% Gold Content oz 5,107 5,968 3,625 65% 11,075 5,783 92% Cash Cost US$/t rom % % Revenues US$ MM % % EBITDA US$ MM % % EBITDA Margin % 18% 27% 23% 23% 11% 1S17 1S17 vs. higher treated ore level from Glory Hole San Gerardo and its lower exploitation costs. In this way, revenues of US$ 51.5 million and EBITDA of US$ 11.9 million during 1S17 were obtained, 16% and 143% higher, respectively, compared to those of, due to the increase in higher metal prices and the higher payable value of lead for higher gold contents. In terms of exploration activities in Atacocha, during 1S17, around 37,840 meters of diamond drilling and reverse circulation were executed with the goal of finding, reclassifying, and increasing the certainty of the mineral resources in the area of the San Gerardo Glory Hole and inside the mine, concentrated at Level 3,300.

11 IV. FINAL COMMENTS The operational and financial results obtained during the first semester of 2017 show a positive performance in all the Mining Units. In addition, major sustainment activities to increase safety standards in underground operations were executed in parallel to the operational integration process of the Pasco Units, the expansion capacity at Cerro Lindo unit and the development of operations of the Glory Hole San Gerardo in Atacocha. The Company maintains a solid liquidity and low indebtedness position that will allow the development of future projects and initiatives that will adequately address any volatility of international metal prices. San Borja, August 10, 2017

12 5 ABOUT MILPO Compañía Minera Milpo S.A.A. (Milpo) is a Peruvian mining company of regional scale dedicated to the exploration, extraction, processing and commercialization of zinc, copper and lead concentrates with contents of silver and gold, and is currently one of the main polymetallic producers in Peru. Milpo develops its operations with a clear commitment to social and environmental responsibility. Since 2010, Milpo has been part of Votorantim Metais Holding (VMH), the metals and mining division of Votorantim S.A., a strong global industrial and diversified conglomerate that has over 100 years of history and a presence in key sectors of the economy in more than 23 countries. Milpo currently maintains three underground polymetallic mining units in operation such as Cerro Lindo (Ica), El Porvenir (Pasco) and Atacocha (Pasco). It also features a portfolio of polymetallic and copper Greenfield projects with advanced exploration. For further information: Visit our website: or ri.milpo.com or us: investorrelations@milpo.com

13 2Q17 GLOBAL CONFERENCE CALL 2Q17 Results Global Conference Call will be held on Thursday, August 10, 2017 at 10 a.m. (Lima) / 11 a.m. (New York) / 4 p.m. (London). To access the call, please dial: Participants calling from USA : +1 (844) International Participants : +1 (412) Conference ID Code : Minera Milpo The Global Conference Call will be broadcast live on our Investor Relations website (ir.milpo.com). A slideshow will also be available on the same website. If for some reason you can t access the website, please use the following address: To access the replay of the 2Q17 Global Conference Call audio, please dial: Participants calling from USA : +1 (877) International Participants : +1 (412) Passcode :

14 EXHIBIT I: COMPAÑIA MINERA MILPO S.A.A. AND SUBSIDIARIES CONDENSED INTERIM STATEMENT OF INCOME For the six-month period ended June 30, US$ 000 US$ 000 (Unaudited) (Unaudited) Revenue from ordinary activities 403, ,467 Cost of sales (238,183) (218,117) Gross profit 165, ,350 Operating expenses: Selling expenses (9,229) (10,142) Administrative expenses (11,003) (12,666) Other income (expenses), net (16,306) (7,044) Operating profit 129,199 82,498 Finance income 4,681 2,119 Finance expenses (14,123) (9,565) Exchange difference, net (1,154) (2,259) Finance expenses, net (10,596) (9,705) Profit before income and mining tax 118,603 72,793 Income and mining tax expense (31,439) (17,930) Profit for the period 87,164 54,863 Profit Attributable to: Parent Company 85,857 55,523 Non-controlling interest 1,307 (660) 87,164 54,863 Basic and diluted earnings per share (in U.S. dollars)

15 EXHIBIT II: COMPAÑIA MINERA MILPO S.A.A. AND SUBSIDIARIES CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION At June 30, 2017 At December 31, 2016 At June 30, 2017 At December 31, 2016 US$ 000 US$ 000 US$ 000 US$ 000 (Unaudited) (Audited) (Unaudited) (Audited) ASSETS LIABILITIES AND EQUITY Current assets Current liabilities Cash and cash equivalents 741, ,067 Borrowings 4,085 4,351 Trade and other accounts receivables 209, ,219 Trade accounts payables 106, ,364 Derivative financial instruments 463 1,965 Derivative financial Instruments 6,133 16,031 Inventories 39,783 43,011 Income and mining taxes 8,075 17,303 Other non-financial assets 3,225 5,069 Other provisions 24,420 29,250 Total current assets 994, ,331 Other accounts payables 10,776 10,548 Deferred income 28,540 37,980 Total current liabilities 188, ,827 Non-current assets Other accounts receivables 7,944 7,944 Deferred income tax assets 26,901 27,317 NON CURRENT LIABILITIES Investments 18,018 18,018 Borrowings 341, ,180 Property, plant and equipment 373, ,505 Other provisions 95,051 95,381 Intangible assets 229, ,914 Deferred income 203, ,020 Total non-current assets 656, ,698 Total non-current liabilities 640, ,581 Total liabilities 828, ,408 NET EQUITY Capital 423, ,830 Treasury shares (15,166) (15,166) Investment shares 4,551 4,551 Legal reserve 84,766 89,393 Other capital reserves (23,975) (23,975) Other equity reserves (3,501) (8,538) Retained earnings 330, ,894 Total equity attributable to Parent Company 800, ,989 Non-controlling interests 20,939 19,632 Total equity 821, ,621 TOTAL ASSETS 1,650,790 1,618,029 TOTAL LIABILITIES AND EQUITY 1,650,790 1,618,029

16 EXHIBIT III: COMPAÑIA MINERA MILPO S.A.A. AND SUBSIDIARIES CONDENSED INTERIM STATEMENT OF CASH FLOW For the six-month period ended June 30, US$ 000 US$ 000 (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Sales form goods and services 421, ,014 Suppliers of goods and services (284,866) (221,512) Payment to and on behalf of employees (41,465) (33,506) Income tax paid (42,157) (13,316) Other taxes paid (48,088) (23,068) Tax recovery 1,182 - Other collections 2,672 1,018 Net cash generated from operating activities 8,894 65,630 CASH FLOWS FROM INVESTING ACTIVITIES Investment sale 6,218 - Purchase of property, plant and equipment (16,029) (26,989) Purchase of intagible assets (267) (17,029) Net cash used in investing activities (10,078) (44,018) CASH FLOWS FROM FINANCING ACTIVITIES Payment of borrowings (267) (5,307) Interests paid of borrowings (7,933) (8,041) Payment of dividends - (16,750) Net cash used in financing activities (8,200) (30,098) Net decrease in cash and cash equivalents (9,384) (8,486) Cash and cash equivalents of cash at the begining of the period 751, ,204 Exchange difference on cash and cash equivalents Cash and cash equivalents of cash at the final of the period 741, ,289 Non-cash transactions: Increase in property, plant and equipment from mine closure (1,398) (1,627) Transfer from property, plant and equipment to intangible assets 2,590 -