EQUITY RESEARCH | Update November 21th, 2012

Alberto Arispe Edder Castro Mining Industry Fair Value

USD 37.00
Head of Research Analyst
(511) 630 7500 (511) 630 7529
Sociedad Minera Cerro
aarispe@kallpasab.com ecastro@kallpasab.com Neutral
Verde S.A.A.
Cerro Verde (LSE: CVERDEC1) Kallpa SAB updates Sociedad Minera Cerro Verde S.A.A.’s (Cerro
Verde) valuation recommending to maintain its shares within a
Equity's Fair Value (USD million) 12,951 benchmark portfolio for the Peruvian market. Our USD 37.00 fair
Share's Fair Value (USD) 37.00 value per CVERDEC1 share is 6.8% below its USD 39.70 market
Previous Fair Value (Aug-11) 45.90 price as of closing of November 20th 2012.
Recommendation Neutral
Market Capitalization (USD million) 13,897 We value Cerro Verde using a Discounted Cash Flow to the Firm
Share's Market Value (USD) 39.70 methodology. For the valuation, we consider its single mining unit and
Shares Outstanding (million) 350.06 its expansion project, which is meant to increase the processing
Potential Upside -6.8% capacity from 120,000 to 360,000 metric tons per day (TPD).
Range 52 weeks 35 - 43
YTD change 11.1% Investment thesis: Neutral
ADTV - L12M (USD 000) 661.9
Trading LSE i. Exposure to copper

Source: Bloomberg, Kallpa SAB Cerro Verde is basically a copper producer. In 2011, 92% of its
ADTV: Average daily traded volume sales corresponded to copper concentrates and copper cathodes.
L12M: Last Twelve Months In the same year, the company ranked second in the Peruvian
Ranking of Copper Producers with a 25% stake.

Financial Ratios 2011 2012e 2013e During 2012, the red metal’s price suffered a fall due to lower
P/E 12.89 16.35 12.84 global demand. However, in accordance with estimations by
P / BV 5.19 4.25 3.36 International Copper Study Group (ICSG), there will be a deficit of
P / EBITDA 8.46 10.34 8.24
400,000 MT in the global supply of refined copper that will not be
(CA - Inventory) / CL 5.03 6.93 9.57
covered until 2014. Therefore, we expect copper price to remain
EPS 3.08 2.43 3.09
above USD/Lb 3.40 along 2012 – 2017.
ROE 50.4% 28.6% 29.2%
ROA 39.3% 24.3% 25.6% ii. High profitability compared to its peers

Source: SMV, Kallpa SAB Cerro Verde is one of most profitable mining in the world. Below is
Note: CA and CL are Current Assets and Current Liabilities, respectively. a comparison of its financial margins:

Table N° 1: Financial margins' evolution

Chart N° 1: CVERDEC1 vs. Copper Spot Operating Margin Net Margin EBITDA Margin

USD USD/TM Cerro Verde 62% 43% 65%

CVERDEC1 Copper Spot
60 11,000 Xstrata PLC 25% 17% 34%
10,000 Anglo American PLC 43% 20% 39%
50 9,000 Southern Copper Corp 55% 34% 57%
8,000 Antofagasta PLC 51% 20% 58%
40
7,000

30 6,000 Source: Bloomberg, Cerro Verde

5,000
20 4,000 Despite the fact that these margins have had a decreasing
Nov-12
Nov-11
Jan-11

Jan-12
May-11

Jul-11

May-12
Mar-11

Jul-12
Mar-12
Sep-11

Sep-12

tendency during the last 4 years, this hasn’t affected the

company’s competiveness. Cerro Verde’s ROE and ROA for the
Source: Bloomberg
last 12 months were 28.4% and 24.0%, respectively. With these
indicators, it exceeded the industry’s average ROE and ROA that
were 19.9% and 13.1%, respectively.
Mining industry | Sociedad Minera Cerro Verde S.A.A.

Chart N° 2: Cerro Verde's Cash Cost performance iii. Increasing cash cost
Credit (silver y molybdenum)

Cash Cost*
The company’s cash cost has increased in the last 3 years. This
USD/Lb MM USD
as a consequence of the reduction of produced copper pounds
1.40 Cash Cost without credit 250
from 695 million in 2008 to 647 million in 2011. However, this
1.25 200 happened in a scenario where silver and molybdenum sales
1.10
150 (credit to determine the operation’s cash cost) have been
0.95 increasing since 2009, mitigating the cash cost increase (See
100
0.80 Chart 2).
0.65 50
iv. Social risk
0.50 0
2008 2009 2010 2011
The company does not have a conflict record with communities in
(*) Cash Cost = (Operating costs - credits for other metals' sales) / Lbs - copper
production
Arequipa. This is due to a mutual development policy with the
Source: Cerro Verde, Kallpa SAB communities of the zone. Up to date, the company has built for the
communities:

a) Bamputañe Dam, concluded in December 2009.

Chart N° 3: Copper companies - L12M ROE
b) A water treatment plant in Alto Cayma, concluded in July
40% 2012.
30%
The company’s commitment in order to achieve the community’s
development reduces the probability of emerging social conflicts
20%
that may affect current operations and/or the expansion project.
10%
However, it is important to remark that the company has been
0% penalized by Ministerio de Ambiente (Ministry of Environment),
through Organismo de Evaluacion y Fiscalizacion Ambiental –
Southern

McMoRan

Xstrata

Anglo American

Teck
Antofagasta
Cerro Verde

Freeport-
Copper

OEFA (Organization for Environmental Evaluation and Inspection),

twice. The fines’ amount reached PEN 248,000 due to
carelessness in its productive process that contaminated the
ground and air of surrounding communities.
Source: Bloomberg, Kallpa SAB

v. Support from Freeport – McMoran

Chart N° 4: Cerro Verde's shareholders Cerro Verde’s main shareholder is Freeport McMoran, which is the
world’s main molybdenum producer and one of the world’s main
Cyprus Climax Metals
Company copper producers. It also produces gold in a lower extent.
(Freeport - McMoRan's
53.6%
subsidiary) It has presence in South America, North America, Africa and
Indonesia, which demonstrates that it has achieved an important
SMM Cerro Verde
geographically diversification that supports the continuity of its
Netherlands B.V. operations.
(Sumitomo Metal Mining's
21.0%
subsidiary)
As of closing of 2011, the company had calculated proved and
probable copper reserves equivalent to 136,700 million copper
Compañía de Minas pounds and 3,420 million molybdenum pounds. Of the total
Buenaventura S.A.A. 19.6%
reserves of Freeport, Cerro Verde represents 22% and 20% of
copper and molybdenum reserves, respectively.

Minority Shareholders 5.8%

Source: Cerro Verde

www.kallpasab.com Update 2
Mining industry | Sociedad Minera Cerro Verde S.A.A.

Company’s description
Sociedad Minera Cerro Verde S.A.A. is based in Peru and its shares list in the Lima Stock Exchange (LSE:
CVERDEC1) since November 2000.

Cerro Verde's mining unit is basically a copper and molybdenum open pit mine. The productive process starts with the
exploration & exploitation of its mining deposits, up to the flotation, leaching, concentration, smelting and refining of
the mineral for its subsequent sale. The company is one of the country’s main copper producers.

Picture N° 1: Cerro Verde open pit mine

Source: Cerro Verde

The shareholding is composed by the following: Freeport – McMoran Copper & Gold (53.6%), SMM Cerro Verde
Netherlands B.V. (Compañia Minera Sumitomo Metal’s subsidiary) with 21%, Compañia de Minas Buenaventura
S.A.A. (19.6%) and the remaining 5.8% is distributed among minority shareholders.

Given the size of the operations of its main shareholder, we consider that it is important to locate Cerro Verde within
Freeport – McMoran’s structure:
Chart N° 5: Cerro Verde within the structure of Freeport McMoRan Copper & Gold

Freeport Mc-
MoRan

Mining Units

North America South America Africa

Morenci Cerro Verde Tenke -

(85%) - Arizona (53.56%) - Peru (100%) Congo
Bagdad - El Albra Fungurume -
(100%) Arizona (51%) - Chile (100%) Congo
Safford - Candelaria
(100%) Arizona (80%) - Chile
Sierrita - Ojos del Salado
(100%) Arizona (80%) - Chile
Miami -
(100%) Arizona
Chino -
(100%) N. Mexico
Tyrone -
(100%) N. Mexico
Henderson -
(100%) Colorado
Source: Freeport McMoRan

www.kallpasab.com Update 3
Mining industry | Sociedad Minera Cerro Verde S.A.A.

Operating Unit

i) Cerro Cero Mining Unit – 76.7% of the fair value

Chart N° 6: Cerro Verde's location in Peru

Cerro Verde's mine is located 30 km from the city of
Arequipa at 2,770 meters above sea level. Its proved and
probable reserves are 30,200 million copper pounds and
710 million molybdenum pounds, in accordance to
Zafranal
information as of 2011. In addition, given its current installed
Cerro Verde San José capacity, it is estimated a 90 years life of mine (LOM).
Tía María Minas de Cobre Chapi
Sociedad Minera Cerro Verde operates the mining units
Cerro Verde 1, 2 and 3. These three units constitute the
Leyenda copper production unit, named Cerro Cero. Currently, it
Minas
Proyecto/Explor.
processes 120,000 TPD and the copper annual production
reaches 600 million pounds.
Source: Kallpa SAB

ii) Cerro Verde’s expansion project – 23.3% of the fair value

The expansion project aims to increase the annual production in 600 million copper pounds and 15 million
molybdenum pounds. With it, copper production will double in 2016. The investment related to this project totals
USD 4,400 million, an amount that had been reviewed twice due to higher infrastructure costs and wage
expenses. These resources will be used to build a concentrating plant and a leaching platform, additional to the
existing ones.

In December 2011, the company submitted the EIA (Environmental Impact Assessment) to the Peruvian
government for its review and approval. To date, the Peruvian government has not yet declared in regard of this
matter.
Favorable points to the company

a) Construction of Bamputañe Dam

In accordance with the agreement that Cerro Verde signed with Empresa de Generacion Electrica de Arequipa
S.A. (EGASA), Cerro Verde built Bamputañe Dam in the district of Santa Lucia (Puno). In return, the company
will have power at a fixed tariff until 2015. From an economic point of view, this gives Cerro Verde cost stability
and decreases its sensitivity to inflation costs . In addition, it strengthens its relationships with the community
and decreases the probability of social conflicts.

b) Drinking water and wastewater treatment plants

Cerro Verde signed an agreement with a committee formed by civilians and by Arequipa’s authorities so that the
company totally finances the construction of a drinking water treatment plant and the partially construction of a
wastewater treatment plant. The first of these commitments has been fulfilled. In this way, the company aims to
ensure water resources that are needed for its operations even after its expansion project’s development.

c) Tax stability

Cerro Verde is neither subject to the special mining tax nor subject to royalty payments because the comapny
signed a stability contract (active until December 2013). However, the current government created a special
mining tax directed to the companies that hold a tax stability contract. Given this, it is subject to the payment of
this special tax which fluctuates between 4% and 13% of the period’s operating income.

d) Sales stability

The company is committed to sell to Sumitomo Metal Mining Co. Ltd. 50% of its copper concentrate production
and 20% to Freeport McMoran Corp. Having assured 70% of its sales, the company focuses its efforts to
increase its production and to improve its operating efficiency.

www.kallpasab.com Update 4
Mining industry | Sociedad Minera Cerro Verde S.A.A.

Valuation
We value Cerro Verde using a Discounted Cash Flow to the Firm methodology @ 10.1%. Since we maintained the
company’s current equity structure (no debt), the cost of capital becomes the proper discount rate for the valuation. It
should be noted that the valuation’s analysis period covers 2012 to 2017 and that model incorporates results as of
closing of Q3 2012. From 2018, we assume a perpetual cash flow to the firm, without growth.

Cerro Verde, like every mining company, has a limited amount of reserves (90 years LOM at current production levels
and 30 years LOM post expansion project, considering proved & probable reserves). However, we assume a
perpetual flow since we believe that Cerro Verde will aim to expand its reserves inside and outside its current mining
unit.

The assumptions’ main changes regarding the previous update published in August 2011 are the following:
a) Decrease in copper prices.
b) Higher CAPEX for Cerro Verde’s expansion project.
c) - The expansion project will operate at 100% in 2016.
d) Increase in cash cost and addition of a 2% annual inflation

The valuation’s main assumptions are the following:

i) Production

Cerro Verde’s main target is copper production. It should be noted that the company produces silver and
molybdenun concentrates in a lower extent. Its production is basically divided into copper concentrates and
copper cathodes, which represented 92% of 2011’s sales. Our copper production estimations for 2012 – 2015
and after the expansion project reaches 100% of its production capacity, are the following:

Chart N° 7: Copper production's components Table N° 2: Copper production's estimated composition after
Million ……………………the expansion project.
120% Lb
Production in Cerro Verde operating mining unit
694 662 667 647 605 605 605 605
100% (Million Lb.) 2016e 2017e 2018e
28% 27% 26% 24% 24% 24% 24% Copper concentrates 460 460 460
31%
80%
Copper cathodes 145 145 145
60% Sub - Total 605 605 605

40% 74% 76% 76% 76% 76%

69% 73% 74%
Processing plant's expansion - Cerro Verde
20% (Million Lb.) 2016e 2017e 2018e
Copper concentrates 431 431 431
0%
Copper cathodes 169 169 169
2008 2009 2010 2011 2012e 2013e 2014e 2015e
Sub - Total 600 600 600
Copper concentrades Copper cathodes TOTAL 1,205 1,205 1,205

Source: Cerro Verde, Kallpa SAB Source: Cerro Verde, Kallpa SAB

ii) Copper price

As it was previously mentioned, one of the main adjustments within our model is copper price’s performance. In
accordance with International Copper Study Group (ICSG), in 2012 the deficit for refined copper worldwide will
reach 426 thousand MT (2.1% of this year’s global demand). However, global production of refined copper is
expected to grow 6.0% in 2013 generating a 458 thousand TM surplus; in this way, pressures over copper price
are expected to decrease. In addition, the base metal price is currently responding to the uncertainty over the
debt crisis in Europe, to fears in USA in regard with the elimination of tax exemptions and the reduction of public
expenditure (Fiscal Cliff), and to China’s economic slowdown.

www.kallpasab.com Update 5
Mining industry | Sociedad Minera Cerro Verde S.A.A.

Given this, and in line with Bloomberg’s consensus, we expect copper price variation for 2013 to be zero or
negative. As long as new mining units and expansions in processing plants worldwide progressively cover the
supply’s deficit, copper price will decrease and this is reflected in our model.Below is our estimated price vector:

Table N° 3: Copper estimated price - USD/Lb.

2012 2013e 2014e 2015e
Price for copper concentrate 3.7 3.7 3.5 3.4
Source: Bloomberg, Kallpa SAB

On the other hand, copper future price’s performance is essential to calculate the company’s revenue. We
estimate that towards 2015, Cerro Verde’s copper revenue will represent approximately 93% of total sales. This
information is presented below:

Chart N° 8: Sales Breakdown by product Chart N° 9: Estimated annual variation in copper price*
100% 12%
6% 8% 7% 7% 7%
10%
26% 22% 26% 26%
27% 8%
75%
6%
4%
50% 2%

71% 0%
68% 65% 67% 67%
25% -2%
-4%
-6%
0%
-8%
2011 2012e 2013e 2014e 2015e
2012e 2013e 2014e 2015e
Copper concentrades Copper cathodes Others*
(*) Others correspond to silver and molybdenum concentrates which are produced in a lower
(*) We assume the same variation for copper concentrates and copper cathodes.
extent.
Source: Cerro Verde, Kallpa SAB
Source: Cerro Verde, Kallpa SAB

iii) Operating costs

Cerro Verde is characterized for maintaining a stable cost structure. In the last 4 years, its operating costs as a
percentage of sales have been maintained between 30% and 33%, reflecting that the mining industry’s inflation
has been controlled by the company. However, as of closing of 9M 2012, the operating costs represented 36.5%
of total sales due to the increase in services rendered by third parties. In other words, inflation cost has affected
the company’s result for this year.

On the other hand, due to the decrease in produced copper pounds, Cerro Verde’s cash cost , after credit for
silver and molybdenum concentrate sales, has increased from USD/Lb 0.77 in 2010 to USD/Lb 0.95 in 2011. In
addition, due to the increase in operating costs during this year and to maintain the annual copper production in
approximately 600,000 pounds, we anticipate that the cash cost will fluctuate around USD/Lb 1.05 – 1.15. In
addition, we have considered a 2% inflation cost in the operating costs for the next years, since we expect that
this effect will continue in the future.

iv) Operating expenses

Operating expenses have remained stable in regard with Cerro Verde’s sales, fluctuating between 3.3% and
3.4% of total sales. We have maintained the same performance for forecasted operating expenses along the
analysis period.

www.kallpasab.com Update 6
Mining industry | Sociedad Minera Cerro Verde S.A.A.

v) CAPEX

We have considered two kinds of CAPEX in our valuation: a) Maintenance CAPEX and b) Expansion CAPEX.

a) Maintenance CAPEX.- Considering that the company grows in an organic way, we have considered in
our model a maintenance CAPEX equivalent to 16.2% of copper production over the base of historic
information of the last 3 years (the ratio is defined as CAPEX in USD million / million of produced copper
pounds). In this way, the annual maintenance CAPEX will reach USD 98 million during the analysis
period.

b) Expansion CAPEX.- We consider the expansion project’s implementation in Cerro Verde’s mining unit.
This project includes a USD 4,400 million total investment (our previous estimation considered a USD
3,600 million investment) up to 2015. In this way, the company aims to double its copper production
(approximately 1,200 million copper pounds per year) and to increase its molybdenum production towards
2016.

The total forecasted CAPEX totals USD 4,792 million towards 2015, as it is shown below:

Chart N° 10: CAPEX's composition

USD MM Maintenance CAPEX Expansion CAPEX
1,800
1,600
1,400
1,200
1,000
800 1,500 1,500

600 1,000
400
400
200
122 195 98 98 98 98
0
2010 2011 2012e 2013e 2014e 2015e

Source: Kallpa SAB

vi) Expansion project’s financing

We believe that Cerro Verde will finance its processing plant’s expansion with available cash and with the cash
flows that will be generated along the analysis period. However, given that the company’s resources will be
redirected to finance the project, we expect a decrease in the dividend payout ratio. Although we have not
considered in our model that the company will finance its expansion project with debt, it is possible that this
happens in a non – significant way in order to maintain its equity’s structure in the long – term (no debt).

Chart N° 11: Dividend Payout Ratio

50%
45%

40%
30%
30%

20% 20% 20%

20%

10%

0%
2011 2012e 2013e 2014e 2015e

Source: Kallpa SAB

www.kallpasab.com Update 7
Mining industry | Sociedad Minera Cerro Verde S.A.A.

vii) Discount rate

Chart N° 12: Discount rate's calculation

COK
10.12%

Rf Beta Risk premium Country risk

3.30% 0.74 6.50% 2.00%

Source: Kallpa SAB

www.kallpasab.com Update 8
Mining industry | Sociedad Minera Cerro Verde S.A.A.

Scenario analysis
In the following analysis, we sensitize our fair value to changes in the assumptions, in accordance to the following
scenarios:

i) Base scenario - FV: US$ 37.00

In the base scenario we consider the implementation of the expansion of Cerro Verde’s processing plant,
starting up operations at 100% in 2016, which will double copper production. The model considers that the
mining unit’s expansion will be financed with its own resources (cash and cash equivalents plus generated cash
flows). In addition, long – term copper price is USD/Lb 3.02. Therefore, we obtain a USD 37.00 fair value per
share.

ii) Pessimistic scenario – FV: USD 23.50

Under this pessimist scenario, we assume a 20% fall in the copper price vector during 2013 – 2018, which
negatively affects long – term price. This happens under a weakening scenario in the American economy (non –
favorable decision in regard with the Fiscal Cliff), and in China (GDP decrease due to the European debt crisis),
which are the main consumers of the red metal. Therefore, our fair value per share decreases to USD 23.50.

iii) Optimistic scenario – FV: USD 50.50

Under the optimist scenario we assume a 20% increase in the copper price vector during 2013 – 2018, which
affects positively the long – term price. This assumption emerges at a possible recovery in the global economy
and in the demand of the base metal. Therefore, we obtain a USD 50.50 fair value per share.

Chart N° 13: Scenario Analysis

60

+ 13.5
50
50.5

40 - 13.5

37.0
30

20 23.5

10

-
Pessimistic Scenario Discount of 20% - Copper Base Scenario Premium of 20% - Optimistic Scenario
Price Copper Price

Source: Kallpa SAB

iv) Scenario without the expansion project – FV: USD 28.37

On the other hand, it is important to calculate the fair value in the event that the expansion project is cancelled.
This is an unlikely scenario given the good relationships that Cerro Verde holds with the inhabitants and the
authorities in the department of Arequipa. However, in the mining industry, the social risk is always a fact to
consider. Therefore, our fair value without the expansion project is USD 28.37 per share.

www.kallpasab.com Update 9
Mining industry | Sociedad Minera Cerro Verde S.A.A.

Income Statement
INCOME STATEMENT (USD 000) 2008* 2009 2010 2011 2012e 2013e** 2014e**
Sales 1,835,911 1,757,510 2,368,988 2,520,050 2,168,037 2,524,609 2,369,332
Cost of sales -685,090 -528,047 -645,959 -824,700 -806,748 -874,374 -1,034,907
Gross Income 1,150,821 1,229,463 1,723,029 1,695,350 1,361,289 1,650,236 1,334,425
Gross margin 62.7% 70.0% 72.7% 67.3% 62.8% 65.4% 56.3%
Operating expenses -137,642 -108,999 -167,195 -136,070 -108,819 -133,402 -130,179
Sales expenses -78,190 -67,877 -76,638 -83,612 -72,905 -83,444 -78,312
Other operating expenses -59,452 -41,122 -90,557 -52,458 -35,914 -49,958 -51,867
Operating Income 1,013,179 1,120,464 1,555,834 1,559,280 1,252,470 1,516,834 1,204,247
Operating margin 55.2% 63.8% 65.7% 61.9% 57.8% 60.1% 50.8%
Net interest income 10,059 1,665 1,829 2,837 -2,418 2,294 3,251
Interest income 20,278 1,665 1,930 3,002 2,109 2,459 3,406
Interest expenses -10,219 0 -101 -165 -4,527 -165 -155
Earnings before taxes 1,023,238 1,122,129 1,557,663 1,562,117 1,250,053 1,519,128 1,207,498
Taxes -304,805 -413,601 -483,270 -483,718 -400,017 -509,143 -450,662
Net Income 718,433 708,528 1,074,393 1,078,399 850,036 1,009,985 756,836
Net margin 39.1% 40.3% 45.4% 42.8% 39.2% 40.0% 31.9%

Depreciation & Amortization 80,746 75,778 87,686 84,061 92,185 169,034 317,072
EBITDA 1,093,925 1,196,242 1,643,520 1,643,341 1,344,656 1,685,867 1,521,319
EBITDA Margin 59.6% 68.1% 69.4% 65.2% 62.0% 66.8% 64.2%
(*) The earnings distributed to employees has been included in the cost of sales in order to standardize the financial statement's presentation.
(**) In 2013 and 2014, USD 1,500 million will be invested per year for the expansion project, generating an increase in depreacition expenses.

Analysis of multiples
Market Cap. P/E Trailing EV/EBIDTA EV/EBITDA
Company Country P/E 2012 P/BV ROE ROA
(USD million) 12M Trailing 12M 2012
Cerro Verde PERU 13,897 16.73 16.35 9.24 8.83 4.21 28.8% 24.0%
Freeport-McMoRan USA 36,321 12.11 11.88 5.96 5.78 2.12 18.1% 8.9%
Xstrata PLC Switzerland 29,625 9.61 12.75 5.17 6.20 1.03 10.7% 6.3%
Southern Copper Corp USA 29,535 13.81 13.72 7.92 8.05 4.49 36.3% 20.6%
Anglo American PLC UK 23,561 9.69 12.29 5.21 4.36 0.93 8.7% 4.7%
Teck Resources Ltd Canada 18,851 9.95 13.42 5.15 5.59 1.05 7.4% 3.8%
Antofagasta PLC UK 12,363 16.59 14.70 5.04 5.88 3.04 19.4% 10.2%
First Quantum Minerals Canada 10,393 11.70 20.32 10.07 10.34 2.03 38.0% 28.0%
Inmet Mining Corp Canada 3,718 10.63 10.11 4.89 5.66 1.02 10.1% 7.3%
Average 19,807 12.31 13.95 6.52 6.74 2.21 19.7% 12.6%
Source: Bloomberg
EV: Market capitalization + preferred equity + total debt - cash and cash equivalents

Chart N° 14: EV/EBITDA vs P/E - Peer Companies Chart N° 15: ROE vs ROA - Peer Companies
EV/EBITDA Mkt. Cap. P/BV Mkt. Cap.
10
50%
Southern Copper
Cerro Verde Southern Copper
8 40%
Freeport Xstrata
McMoRan Cerro Verde
30% Freeport
6 McMoRan

Teck 20%
Xstrata
4
Anglo American
10%
Anglo American

Teck
2 0%
11 12 13 14 15 16 17 18 0% 5% 10% 15% 20% 25% 30%
P/E P/E

www.kallpasab.com Update 10
Mining industry | Sociedad Minera Cerro Verde S.A.A.

Appendix – Disclaimer

Analyst certification

The analyst that prepared this report hereby certifies that: i) the opinions and views expressed in this valuation report, in regard with
the issuer and with the company’s overview, reflected his/her personal opinion and ii) No part of his/her salary compensation was, is
or will be related directly or indirectly to the recommendations expressed in this report.

The economic compensation of the analyst that prepared this report is based in several factors, including but not limited to Kallpa
Securities SAB’s profitability and the profits generated by its different areas, including investment banking. In addition, the analyst
does not receive any kind of economic compensation from the companies he/she covers.

This valuation report was prepared by Kallpa Securities SAB’s employees that maintain the position of Analyst. Persons involved in
the elaboration of this report are authorized to maintain shares.

Share prices in this report are based on market prices as of closing of the day prior to the publication of this report, unless it is strictly
stated.

General statement

This document is for informative purposes only. Under no circumstances it should be used / be considered as an offer of sale or an
application of purchase of shares or any other securities mentioned in this document. The information herein has been obtained from
sources which are believed to be reliable, but Kallpa Securities SAB does not guarantee the trustfulness or accuracy of the content
of this report, or the future market values of shares or other securities mentioned in this document. The views and opinions
expressed in this document constitute our opinion at the time of this report and are subject to change without any notice. Kallpa
Securities SAB does not guarantee analysis updates before any change in the circumstances of the market. The products referred in
this document may not be available for purchase in some countries.

Kallpa Securities SAB has reasonably designed policies to prevent or to control the exchange of non-public information used by
areas such Research and Investment, Capital Markets, among others.

Definition of qualification ranges

Kallpa Securities SAB has 5 qualification ranges: Overweight +, Overweight, Neutral, Underweight and Underweight - . The analyst
will assign the coverage one of these ranges.

Underweight- < - 30% > + 30% Overweight+

Underweight -15% to -30% +15% to +30% Overweight
Neutral -15% to 0% +15% to 0% Neutral

The range assigned to each company covered by the analyst in these reports is based on the analysis/monitoring Kallpa Securities
SAB has been developing for the company. In some cases, the analyst can express his/her short-term points of view to traders,
vendors and some Kallpa Securities SAB’s clients but this point of view may differ in time by market volatility and other factors.

The fair value calculated by Kallpa SAB is based in one or more valuation methodologies commonly used by financial analysts,
including but not limited to discounted cash flows, In Situ valuations or any other applicable methodology. It should be noted that the
publication of a fair value does not imply any guarantee that the value will be achieved.

www.kallpasab.com Update 11
Mining industry | Sociedad Minera Cerro Verde S.A.A.

KALLPA SECURITIES SOCIEDAD AGENTE DE BOLSA

MANAGEMENT

Alberto Arispe
CEO
(511) 630 7500
aarispe@kallpasab.com

TRADING

Enrique Hernández Eduardo Fernandini Javier Frisancho Jorge Rodríguez

Manager Head Trader Trader Trader
(51 1) 630 7515 (51 1) 630 7516 (51 1) 630 7517 (51 1) 630 7518
ehernandez@kallpasab.com efernandini@kallpasab.com jfrisancho@kallpasab.com jrodriguez@kallpasab.com

CORPORATE FINANCE

Ricardo Carrión
Manager
(51 1) 630 7500
rcarrion@kallpasab.com

EQUITY RESEARCH

Marco Contreras Edder Castro Humberto León Fátima Ramírez

Analyst Analyst Analyst Assistant
(51 1) 630 7528 (51 1) 630 7529 (51 1) 630 7527 (51 1) 630 7500
mcontreras@kallpasab.com ecastro@kallpasab.com hleon@kallpasab.com framirez@kallpasab.com

OPERATIONS

Elizabeth Cueva Alan Noa Mariano Bazán Armando Trujillo

Manager Analyst - Securities Analyst - Treasury IT
(51 1) 630 7521 (51 1) 630 7523 (51 1) 630 7522 (51 1) 630 7500
ecueva@kallpasab.com anoa@kallpasab.com mbazan@kallpasab.com atrujillo@kallpasab.com

MIRAFLORES OFFICE

Jose Antonio Avendaño Daniel Berger Victor Hugo Rossel

Representative Representative Representative
(51 1) 652 6452 (51 1) 652 6453 (51 1) 652 6400
javendano@kallpasab.com dberger@kallpasab.com vrossel@kallpasab.com

CHACARILLA OFFICE

Hernando Pastor Gerardo del Águila Jonathan del Águila

Representative Representative Representative
(51 1) 626 8700 (51 1) 626 8700 (51 1) 626 8700
hpastor@kallpasab.com gdelaguila@kallpasab.com jdelaguila@kallpasab.com

EL POLO OFFICE

Ana María Castro Gissella Gárate

Representative Investment Advisor
(51 1) 630 7532 (51 1) 630 7533
amcastro@kallpasab.com ggarate@kallpasab.com

AREQUIPA OFFICE

Jesús Molina
Representative
(51 54) 272 937
jmolina@kallpasab.com

www.kallpasab.com Update 12