MMG Las Bambas Cut-Off Grade Report - Eng

MMG LAS BAMBAS
Open Pit Cut-Off Grade Report

September 9th, 2015
Document No & Title: 150909_MMG Las Bambas Cut-Off Grade Report_eng.docx

Prepared By: Carlos Gutierrez Print Date: Version No: 00
Reviewed By: Luis Ticona Rating: Issue Date: 15/09/09
12 MONTHS
Approved By: Luis Rivera Review Frequency: Page No: 1 of 35
UNCONTROLLED COPY. Printed document may not be current issue.
TABLE OF CONTENTS
1 SITE AND CORPORATE APPROVALS 4
2 EXECUTIVE SUMMARY 5
3 INTRODUCTION 8
4 OPERATIONAL DETAILS AND SITE CONSTRAINTS 9
5 DETAILED PRESENTATION OF ASSUMPTIONS AND COSTS 10

5.1 METAL PRICES AND EXCHANGE RATES 10
5.2 OPEN PIT OPERATING COSTS 10
5.2.1 Assumptions Used on Operating Costs 10
5.2.2 Basis of Cost Estimation 10
5.2.3 Major Cost Drivers 11
5.2.4 Open Pit Mining Operating Costs 12
5.2.5 Ore Differential Cost 13
5.2.6 Ore Rehandling Costs. 13
5.2.7 Processing Operating Costs 13
5.2.8 Sustaining Capital Costs 14
5.2.9 Selling Costs 15
5.2.10 General and Administrative Costs 15
5.2.11 Fixed and Variable Cost Allocations 16
5.2.12 Cost comparison versus previous estimates 16
6 METALLURGICAL RECOVERY MODEL 18
7 OPEN PIT CUT-OFF GRADE CALCULATIONS 20

7.1 PIT LIMIT ANALYSIS 20
7.2 OPEN PIT BREAK-EVEN CUT-OFF GRADE, BCOGINPIT 21
7.3 OPEN PIT MINERAL RESOURCE CUT-OFF GRADE, RCOGINPIT 23
7.4 OPEN PIT MILL CUT-OFF GRADE, MCOGINPIT 24
7.5 OPEN PIT ALL IN CUT-OFF GRADE, TCOGINPIT 26
7.6 OTHER SITE CUT-OFF GRADES 27
7.6.1 OPEN PIT STOCKPILE CUT-OFF GRADE, SCOGINPIT 27
7.7 OPEN PIT HISTORICAL CUT-OFF GRADES 28
8 CUT-OFF STRATEGIES 29
9 NSR CALCULATION 31
10 CONCLUSIONS AND RECOMMENDATIONS 34
LIST OF TABLES
Table 1 Cut-Off Grades 2015 Summary 5
Table 2 Cut-Off Grades 2010 Summary 5
Table 3 Metal Prices and Exchange Rates 10
Table 4 Comparison of the Cost Estimation Method 11
Table 5 Major Cost Drivers - Mining 11
Table 6 Major Cost Drivers – Processing 12
Table 7 Composition of Mining Operating Costs 12
MMG | 150909_MMG Las Bambas Cut-Off Grade Report_eng.docx Page 2 of 35
Table 8 Ore Differential Costs 13
Table 9 Ore Rehandling Costs 13
Table 10 Composition of Processing Operating Costs 14
Tabla 11 Sustaining Capital Costs 14
Table 12 Selling Costs 15
Table 13 General and Administrative Costs 15
Table 14 Fixed & Variable Cost Allocations 16
Table 15 Recovery Model for Copper at Ferrobamba 18
Table 16 Recovery Model for Copper at Chalcobamba 18
Table 17 Recovery Model for Copper at Chalcobamba 18
Table 18 Recoveries by GMU for Ferrobamba 18
Table 19 Recoveries by GMU for Chalcobamba 18
Table 20 Recoveries by GMU for Chalcobamba 18
Table 21 Recoveries by GMU for Sulfobamba 19
Table 22 Concentrate grades by GMU for Ferrobamba 19
Table 23 Concentrate grades by GMU for Chalcobamba 19
Table 24 Concentrate grades by GMU for Chalcobamba 19
Table 25 Concentrate grades by GMU for Sulfobamba 19
Table 26 Criteria for Pit Limit Analysis 21
Table 27 BCOGinpit Calculation for Ferrobamba 22
Table 28 BCOGinpit Calculation for Chalcobamba 22
Table 29 BCOGinpit Calculation for Sulfobamba 22
Table 30 RCOGinpit Calculation for Ferrobamba 23
Table 31 RCOGinpit Calculation for Chalcobamba 23
Table 32 RCOGinpit Calculation for Sulfobamba 24
Table 33 MCOGinpit Calculation for Ferrobamba 25
Table 34 MCOGinpit Calculation for Chalcobamba 25
Table 35 MCOGinpit Calculation for Sulfobamba 25
Table 36 TCOGinpit Calculation for Ferrobamba 26
Table 37 TCOGinpit Calculation for Chalcobamba 26
Table 38 TCOGinpit Calculation for Sulfobamba 27
Table 39 SCOGinpit Calculation for Las Bambas Complex 27
Table 40 Historical Cut-Off Grades for Ferrobamba 28
Table 41 Historical Cut-Off Grades for Chalcobamba 28
Table 42 Historical Cut-Off Grades for Sulfobamba 28
Table 43 Selling Cost of Metals 31
Table 44 Reference Block for the NSR Calculation 32
Table 45 NSR Calculation 32
LIST OF FIGURES
Figure 1 Ferrobamba Tonnage–Grade Curve 29
Figure 2 Chalcobamba Tonnage–Grade Curve 30
Figure 3 Sulfobamba Tonnage–Grade Curve 30
APPENDICES
Appendix 1 DOCUMENTS AND ADDITIONAL INFORMATION 35

1 SITE AND CORPORATE APPROVALS
This Cut-Off Report (The Report) was prepared, developed and supervised by the personnel who are signing
lines below. The information was compiled and validated entirely by Las Bambas personnel; this includes:
metal prices projection and exchange rates, operating costs, metallurgical recoveries, etc. The work
developed and published in this report was prepared in accordance with JORC Code 2012 and Corporate
guidance for 2015 Cut-Off calculation and reporting.
Prepared by Title Signature Date
Carlos Gutierrez Mine Planning

Superintendent
Las Bambas
Alvaro Ossio VP Commercial

Las Bambas
Concentrator Plant
Juliano Villanueva Manager
Las Bambas
We, the undersigned, have contributed to the determination and validation of Las Bambas Cut-Off estimates
and strategies presented in this report. Having reviewed this report, we conclude that the information
summarised herein is suitable and reasonable for use in estimating Ore Reserves and Mineral Resource that
will be publicly disclosed.
Reviewed by Title Signature Date
Luis Ticona Technical Services Director

Las Bambas
Nan Wang
Group Manager Mining
Technical Services – MMG
As Competent Person, as defined under JORC Code, I have read and reviewed this Las Bambas Cut-Off
Report and find that the Cut-Off estimate and strategy presented herein are suitable and reasonable for use
in determining Ore Reserves and Mineral Resources that will be publicly disclosed.
Competent Person Title Signature Date
Luis Rivera VP Operations

Las Bambas
Gustavo Gomes General Manager

President
Las Bambas

2 EXECUTIVE SUMMARY
An essential element in the Ore Reserves and Mineral Resources estimation process is the Cut-Off Grade
calculation. This calculation is based on the correct allocation of operating costs, sustaining capital costs and
valid recovery models.
The purpose of this report is to present the supporting information to the cut-off grade calculations, and the
methodology used to determine the cut-off grades to be used in the Ore Reserves and Mineral Resources
estimation, as well as the Life of Asset Planning (LoA Planning) that will be performed during 2015.
Table 1 summarizes the Cut-Off Grades that must be applied in Las Bambas during the Ore Reserves and
Mineral Resources estimation exercise for 2015 as well as the LoA Planning.
Table 2 Cut-Off Grades 2015 Summary

Ferrobamba by GMU Chalcobamba by GMU Sulfobamba By GMU
COG
Units
Component
FSSL FSSM FPSL FPSM FBRE TOTAL CSSL CSSM CSML CSMM CPSL CPSM CBRE TOTAL SSKR SPOR SBRE TOTAL
CuE 0.16% 0.18% 0.16% 0.19% 0.20% 0.16% 0.18% 0.22% 0.18% 0.21% 0.18% 0.22% 0.24% 0.19% 0.22% 0.23% 0.43% 0.23%
BCOGinpit %
CuE 0.13% 0.15% 0.13% 0.15% 0.16% 0.14% 0.15% 0.18% 0.15% 0.17% 0.15% 0.18% 0.20% 0.15% 0.18% 0.18% 0.35% 0.18%
RCOGinpit %
CuE 0.10% 0.11% 0.10% 0.11% 0.12% 0.10% 0.12% 0.14% 0.12% 0.14% 0.12% 0.14% 0.16% 0.12% 0.15% 0.15% 0.29% 0.15%
MCOGinpit %
CuE 0.27% 0.27% 0.27% 0.27% 0.27% 0.27% 0.29% 0.29% 0.29% 0.29% 0.29% 0.29% 0.29% 0.29% 0.29% 0.29% 0.29% 0.29%
SCOGinpit %
CuE 0.21% 0.24% 0.21% 0.25% 0.26% 0.22% 0.22% 0.26% 0.21% 0.25% 0.21% 0.26% 0.29% 0.23% 0.25% 0.25% 0.47% 0.25%
TCOGinpit %
NSR BCOinpit US$/t 7.64 7.64 7.64 7.64 7.64 7.64 8.29 8.29 8.29 8.29 8.29 8.29 8.29 8.29 9.07 9.07 9.07 9.07
NSR RCOinpit US$/t 7.64 7.64 7.64 7.64 7.64 7.64 8.29 8.29 8.29 8.29 8.29 8.29 8.29 8.29 9.07 9.07 9.07 9.07
NSR MCOinpit US$/t 4.71 4.71 4.71 4.71 4.71 4.71 5.34 5.34 5.34 5.34 5.34 5.34 5.34 5.34 6.13 6.13 6.13 6.13
NSR SCOinpit US$/t 9.31 9.31 9.31 9.31 9.31 9.31 9.48 9.48 9.48 9.48 9.48 9.48 9.48 9.48 9.45 9.45 9.45 9.45
NSR TCOinpit US$/t 10.13 10.13 10.13 10.13 10.13 10.13 9.86 9.86 9.86 9.86 9.86 9.86 9.86 9.86 9.99 9.99 9.99 9.99
Table 3 Cut-Off Grades 2010 Summary

Ferrobamba by GMU Chalcobamba by GMU Sulfobamba by GMU
COG
Units
Component
FSSL FSSM FPSL FPSM FBRE TOTAL CSSL CSSM CSML CSMM CPSL CPSM CBRE TOTAL SSKR SPOR SBRE TOTAL
COG CuE
Marginal % 0.16% 0.17% 0.17% 0.22% 0.20% 0.17% 0.18% 0.22% 0.18% 0.22% 0.18% 0.23% 0.23% 0.19% 0.19% 0.19% 0.25% 0.19%
CuE
COG Stocks % 0.20% 0.21% 0.21% 0.27% 0.24% 0.21% 0.21% 0.26% 0.21% 0.26% 0.21% 0.27% 0.27% 0.22% 0.20% 0.20% 0.27% 0.20%
COG CuE
Breakeven % 0.21% 0.23% 0.22% 0.29% 0.26% 0.22% 0.22% 0.27% 0.21% 0.27% 0.22% 0.28% 0.28% 0.23% 0.21% 0.21% 0.27% 0.21%
NSR
Marginal US$/t 5.96 5.96 5.96 5.96 5.96 5.96 6.38 6.38 6.38 6.38 6.38 6.38 6.38 6.38 6.95 6.95 6.95 6.95
NSR Stocks US$/t 7.36 7.36 7.36 7.36 7.36 7.36 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39
NSR
Breakeven US$/t 7.92 7.92 7.92 7.92 7.92 7.92 7.66 7.66 7.66 7.66 7.66 7.66 7.66 7.66 7.57 7.57 7.57 7.57

Equations:
BCOGinpit = (PC + DC + GA)/(REC*(MP - SC)*Factor)
RCOGinpit = (PC + DC + GA)/(REC*(MP - SC)*Factor)
MCOGinpit = (PC + DC + GA)/(REC*(MP - SC)*Factor)
SCOGinpit = (PC + RC + GA)/(REC*(MP - SC)*Factor)
TCOGinpit = (PC + TMC + GA)/(REC*(MP - SC)*Factor)
Where:
BCOGinpit = Open Pit Break Even Cut Off Grade
RCOGinpit = Open Pit Mineral Resource Cut Off Grade. The assumptions for metal prices is more generous than BCOG inpit.
MCOGinpit = Open Pit Mill Cut Off Grade
SCOGinpit = Open Pit Stockpile Cut Off Grade
TCOGinpit = Open Pit All In Cut Off Grade
NSR BCOinpit = Open Pit Break Even Cut Off based on NSR
NSR RCOinpit = Open Pit Resource Cut Off based on NSR
NSR MCOinpit = Open Pit Mill Cut Off based on NSR
NSR MCOinpit = Open Pit Stockpile Cut Off based on NSR
NSR TCOinpit = Open Pit All In Cut Off based on NSR
CuERS V = Equivalent Copper Grade in Reserve
CuERS C = Equivalent Copper Grade in Resource
PC = Processing Cost, includes all process sustaining capital
DC = Differential Costs associated with mining material as ore instead of waste, includes portion of Mining sustaining capital
TMC = Total Mining Cost, includes all mining sustaining capital
RC= Rehandling Cost, includes a portion of mining sustaining capital.
GA = General & Administrative Cost
REC = Planned recovery of metal near COG grade
MP = Selling Price of Metal
Factor = 2204.62
SC = Selling Cost
SCCu = Selling Cost Cu
SCMo= Selling Cost Mo
SCAg= Selling Cost Ag
SCAu =Selling Cost Au
Table 1 summarizes the calculation for 2015 following the corporate guidance from the Group Technical
Services MMG.
Table 2 summarizes the calculation developed on September 2010 as part of the Feasibility Study update;
this calculation has been used in subsequent years and formed the basis for the 2013 Ore Reserves and
Mineral Resources estimation process.
Table 2 shows Las Bambas applied only three cut-off grades originally: 1) Marginal Cut-Off grade (MCOG) –
to determine the ore material able to cover processing costs, processing sustaining capital, an incremental
cost of mining a tonne of material as ore instead of waste, and G&A costs; 2) Breakeven Cut-Off Grade
(BCOG) – formulated in the same way as the MCOG but adding mining costs and mining sustaining capital
costs, and; 3) Cut-Off Grade for broken Stocks (SCOG) – with the purpose of constraining the mineral
inventory that should be stockpiled in accord to the operational strategy adopted (maximize NPV) and taking
into account the rehandling costs and processing costs, including processing sustaining capital costs. The
calculations show that each ore type processed was assigned a specific cut-off, mainly because each ore type
has its own processing recovery. However, Las Bambas has been applying a single cut-off grade of 0.20%Cu
(total Copper contained) for all ore types and in all three open pits. This strategy had been intentionally
targeted to not exceed the nominal tailings dam capacity while processing mostly higher-grade ore. In 2015,
estimates for each ore type will be constrained by respective cut-off grades during the Ore Reserves and
Mineral Resources estimation process, as well as the development of mining plans.
Following MMG guidelines, the 2015 Cut-Off grade nomenclature has been changed. As such, Las Bambas
will refer to break-even (cut-off) grade, denoting that at the moment of mining this grade material, the
revenues obtained will just cover for the costs to producing it.

As Las Bambas has more than one payable metal, there are two options for expressing the Cut-Off: 1) a cut-
off grade based on ‘copper equivalent’ (CuEq.) or; 2) a cut-off based on Net Smelter Return (NSR); the latter
would be more applicable when taking into account additional downstream costs (TCs & RCs = treatment
costs, refinery, port payments and additional deductions for all metals present in the concentrate). These
costs vary according the product recovered. However, Las Bambas does not have a metallurgical recovery
model applied to each mining block that varies depending on its solubility rate and its metal grade. The
current practice assumes a fixed recovery value for each mineral type, regardless of its metal content, with
the same logic also applied to concentrate grades.
Furthermore, the contribution of copper to the total value of a tonne of ore is approximately 96%, with the
other 4% coming collectively from Molybdenum, Gold and Silver. This is the reason why Las Bambas decided
to express cut-off grades based on CuEq. Nevertheless, noting the importance of understanding and
demonstrating the full impact of costs incurred across the whole production chain, Las Bambas generated
NSR calculations and has applied it in the block model in order to assign a reference value to each block.
This NSR cut-off value is equal to all site-based costs and other costs considered, as per MMG guidelines
being applied.
To estimate Ore Reserves, Las Bambas will use the BCOGinpit, which is equivalent to the Marginal COG of
2010, but with different considerations pertaining to operating costs included. Unlike previous years where
the Mineral Resource was also reported using a cut-off grade of 0.20% Cu, in the 2015 Mineral Resource Las
Bambas will use a distinct cut-off grade depending on the ore type; this cut-off grade will be the RCOGinpit.
Of note, the slight reduction observed in almost all 2015 cut-off grades when compared to 2010 is mainly
explained by the increase in selling price for Copper. Although operating costs have seen an increase in the
2015 calculations, the negative effect of such upward move in OPEX was mainly offset by the higher copper
price. Las Bambas will undertake further work to fully assess the impact of the 2015 cost and price update to
Ore Reserves, Mineral Resources and overall value (NPV) of the project, since it is possible that an increase in
the Ore Reserves may arise from these changes, but without an equivalent impact to the NPV.
This is due to the NPV being more dependent upon how and when an Ore Reserve is extracted and
processed, rather than the amount of material in the Ore Reserve itself (i.e. typical trade-offs between
maximum NPV and maximum reserve / mine life).
Las Bambas cut-off grade strategy during in 2015 will be defined and implemented in accord to MMG
Corporate guidelines. As a result, it will be necessary to evaluate a number of scenarios in the pursuit for the
optimal Ore Reserve and maximum NPV.
The inputs for the cut-off grade calculations will be explained in the following sections of this Report.

3 INTRODUCTION
The Cut-Off grade is perhaps the most important value driver of a mining project or operation that aims at
optimising Ore Reserves’ extraction to maximise cash flow and NPV. The Integrated Business Planning, Ore
Reserve/Mineral Resources estimation and LoA Planning, require annual review and determination of cut-off
grades (and/or NSR cut-off values) that are based on valid cost information and Corporate-approved
economic assumptions to ascertain consistency between long-term business goals, operational strategies
and medium to short term production plans.
Las Bambas will be an operation constrained by processing capacity (51.1Mtpa) and it is assumed this
restriction will be maintained throughout the life of the mine. However, additional scenarios in which
processing capacity reaches up to 70Mtpa have been preliminary investigated. These assessments need to
be refined including detailed Opex and Capex estimations to allow for robust financial modelling and
adequate determination of its viability. The decision to increase current throughput (processing capacity) will
also need to be aligned with MMG investment strategy.
The application of Cut-Off grades for Ore Reserves and Mineral Resources estimation, and mine planning
process will aim at maximising the profitability of the operation. It is anticipated that in the early life of the
mine, the cut-off grades will rise so that the mill feed will be higher-grade ore, which are expected to have
better recoveries than those from medium and / or low-grade ore. In order to achieve a strategy to
maximise profitability and return on capital, there will be a balanced approach to flexibility in raising cut-offs
during these years and imposing limits to such changes, given that elevating the cut-off grade beyond
optimum position can lead to loss of value through mining and processing. To prevent this risk during cut-off
grade optimisation, Las Bambas will take into account the mining sequence and processing throughput and
recovery.
Given the strategy above, raising the cut-off grades early in the LOM will definitely lead Las Bambas into
generating run-of-mine (ROM) stockpiles of medium and low-grade ores, as it is also the intention not to
reduce life of mine by leaving low-grade ore out of final pit limit. The ore from these ROM stockpiles will
have to be rehandled in the last years of life of mine (ideally) or in the years when it will not be possible to
supply the mill exclusively with in-pit material.
In a hypothetical scenario where during a period the mill capacity is not fully utilised with ore above the
BCOGinpit cut-off sourced straight from mine, and having spare mining capacity and no ore available in ROM
stockpiles, Las Bambas could apply the MCOGinpit cut-off to identify additional ore from the mine that allows
topping up off the mill capacity (i.e. ‘next best ore’ approach to maximise asset utilisation). This is more likely
to occur in the later years of mine life, as in early years it is highly unlikely that BCOGinpit material would be in
shortage. Moreover, employing this approach when there are BCOG inpit and SCOGinpit materials would affect
profitability (i.e. feeding the mill with low-grade ore and displacing higher grade material).
The topography of Las Bambas open pits and principally that of Ferrobamba, poses a challenge to designing
locations for low-grade ROM stockpiles, which will be required to hold material for 15 to 20 years. The more
adequate areas are often far from the primary crusher, increasing rehandling costs, therefore reducing
profitability or making it not viable. Conversely, an alternative approach would leave these low-grade
materials outside the final pit limits until metal prices become more favourable and can be included in the
Ore Reserve. At present, Las Bambas has successfully included these low-grade materials in Ore Reserves
and in life-of-mine schedules.
In summary, this report identifies and deliberates on elements that are essential for estimating Ore Reserves
and Mineral Resources, consequently impacting on operational strategy for Las Bambas LoA and the MMG
Integrated Business Plan as a whole.

4 OPERATIONAL DETAILS AND SITE CONSTRAINTS
Las Bambas will be a conventional open pit, ‘truck and shovel’ operation consisting of three open pits
included in the 2013 Mineral Resources and Ore Reserve (MROR) statement. The three open pits, named
Ferrobamba (FB), Chalcobamba (CB) and Sulfobamba (SB) respectively are located about 10 km away from
each other. The FB open pit will be the first in operation, with start-up in 2015 and first ore processed in Q1 /
2016, having the primary crusher immediately outside the open pit final design. The haulage distance for
hauling ore is much shorter than that for hauling the waste toward the waste dump; these differences in the
distances to crusher and the waste dump generate differential costs which are charged to processing costs
and therefore are considered when evaluating the destination of a material block.
Between Chalcobamba and Sulfobamba open pits it is planned to install a primary crusher that will allow ore
supply to the Mill Plant from these two open pits. Chalcobamba open pit is scheduled to start in 2020 and
Sulfobamba in 2023. The configuration of these two open pits means the ore will be hauled from the pits to a
point to 3 Km from Chalcobamba and to 7 Km from Sulfobamba. The high cost of mining an ore tonne for
these open pits is a reflection of this configuration. The hauling cost for waste tonnes for these pits is less
than for ore tonnes due to the planned waste dumps to be located close to the pits.
In general, the mineral will be reduced to acceptable size by the primary crushers explained above, then they
will be sent to the Mill through overland conveyors where they will be processed to obtain Copper and
Molybdenum concentrates. Tails will be deposited in the tailings dam located downstream near the Mill
Plant. The copper concentrate contains gold and silver and will be transported 710Km to Matarani port.
Copper concentrate will be transported by truck a distance of 380Km and then by train 330 Km to Matarani
Port. Molybdenum concentrate will be transported by truck from Las Bambas up to Matarani Port. Due to this
transportation configuration, the selling costs of payable metals have increased compared to 2010, when a
pipeline was considered for the transportation.
Processing capacity at Las Bambas is the limiting factor in the production of payable metal. While the mining
rate ranges from 300Ktpd up to 450Ktpd over the life of the mine, the Mill throughput is 140Ktpd or 51.1Mt
per year. The LoM plan includes 23 years of production plus 1 year of Pre-Stripping. Inferred Mineral
Resource is included in the plan, which represent 14% of all ore processable. The average copper grade sent
to the Mill is approximately 0.7%, at an average copper recovery of 82%. During the life of the mine,
stockpiles of low, medium and high-grade ore will be used for a strategic execution of LoM plan. As a result
of higher cut-off grades in the early stage of LoM to maximize the NPV, the stockpiled ore will be rehandled
in the last stage of LoM. For the ore stockpiled, the cut-off grade calculations considered an average
metallurgical recovery of 63% (10% loss by weathering, 0.04%Cu loss by minimum tailings grade influenced
by the degree of liberation and 0.04%Cu loss by CuSAc which is not recovered by flotation process). In the
2010 calculation it was considered that the stockpiled ore to be rehandled would have the same metallurgical
recovery as that produced directly by the mine and immediately processed.
The smallest selective mining unit (SMU) has been established as 10 x 10 x 15m. There is still no recovery and
dilution studies in the mining process. Neither have there been studies to determine the presence of
deleterious metals affecting the NSR and/or cut-off grades.
Las Bambas is using metallurgical recoveries for the copper based on recovery models provided by the
Metallurgy Group at Las Bambas and Geoff Senior. These models still need to be refined with more
information from drilling and metallurgical tests. For other metals las Bambas is using flat recoveries for all
ore types provided by the Metallurgy Group at Las Bambas.
The operating costs used in the cut-off grade calculations come from projections made in 2015v3.7 LoM
Plan; but will only be considered from 2016 onwards, because 2015 will be almost all Pre-Stripping.

5 DETAILED PRESENTATION OF ASSUMPTIONS AND COSTS
This section details the inputs for the cut-off grade calculations for Las Bambas Operations. These are mainly
related to the assumptions on the metal prices, operating costs and metallurgical recoveries. Presented are;
the current estimation and the Feasibility Study values (September 2010), which are the ones used in the Ore
Reserves and Mineral Resources estimation exercises as well as LoM plans.
5.1 METAL PRICES AND EXCHANGE RATES

The metal prices and exchange rates to be used in the cut-off grade calculations have been provided by the
Corporate Group Technical Services (MMG) in a memorandum dated January 20, 2015 entitled: 2015 CUT-
OFF GRADE CALCULATION & REPORTING.
The metal prices and exchange rates used for Las Bambas are presented in Table 3.
Table 4 Metal Prices and Exchange Rates

Units 2015 2010* Comments
ORE RESERVES
Metal Commodity Prices
Copper US$/lb 2.95 2.20
Molybdenum US$/lb 11.10 18.00
Silver US$/oz 21.10 8.50
Gold US$/oz 1010.00 700.00
Update as per 2015 Cut-
Exchange Rates Off Grade Calculation &
Peruvian Sole USD/PEN 2.90 Reporting Memo from
MINERAL RESOURCES Karen Stoffels, Richard
Butcher dated 20th
Metal Commodity Prices
January 2015.
Copper US$/lb 3.50 2.20
Molybdenum US$/lb 15.00 18.00
Silver US$/oz 25.50 8.50
Gold US$/oz 1212.00 700.00
Exchange Rates
Peruvian Sole USD/PEN 2.90
* Feasibility Study Update (September, 2010)
5.2 OPEN PIT OPERATING COSTS

5.2.1 Assumptions Used on Operating Costs
This section details all the aspects related to costs used for the cut-off grade calculations.
5.2.2 Basis of Cost Estimation

The unit costs used for the cut-off grade calculations are based on the LOM2015 projections (Financial Model
LOM2015 v3.7) but are only considered from 2016 onwards because 2015 will be almost all Pre-Stripping. Las
Bambas considers that these costs are representative of the best estimate of future costs for the operation.
The allocations have been coordinated with Finance and other Groups involved in these calculations.
Cost projections made in the financial model LOM2015 v3.7 are detailed month by month for the first three
years and then annually from 2018 onwards.
Table 4 summarizes the various sources of cost estimates available to produce the best estimate of operating
costs for the cut-off calculation.

Table 5 Comparison of the Cost Estimation Method
Feasibility
Cost LOM 2015
Units Study –
Component V3.7
MinePlan V8K
Mining Cost (US$/t mined)  
Processing Cost (US$/t processed)  
G&A Cost (US$/t processed)  
Other (US$/t rehandled)  
5.2.3 Major Cost Drivers

In addition to the metal commodity prices, there is a series of commodities which act as major cost drivers in
the determination of the mining and processing costs that are inputted into the cut-off grade calculations.
Major cost driver commodity prices are presented in Table 5 for Mining and Processing respectively, along
with information regarding consumption rates and influence of each cost driver on the respective unitary
operating cost. As Las Bambas has no operational history, expenditures and commodity prices have been
developed through the coordination of the Finance, Mine Operations, Plant and Logistics Groups.
Tables 5 and 6 summarize the major Cost Drivers for the mining and processing operating costs respectively.
Table 6 Major Cost Drivers - Mining

Cost Driver Units 2015
Mining
Electricity US$/kWh 0.09
Consumption Rate kWh/yr 80,107
Contribution to Mining Cost US$/t 0.05
Diesel US$/l 1.04
Consumption Rate l/t 0.52
(1)
Tires
930E Truck US$/unit 46,739
Consumption Rate
930E Truck hr life 4,500
Contribution to Mining Cost
930E Truck (2) US$/t 0.13
Drill Bits US$/unit 4,550
Consumption Rate m life 2,700
Explosives
Ammonium Nitrate US$/t 661
Emulsion US$/t 627
Consumption Rate Kg/t 0.26
(3)
(1)
The contribution to the mining cost of diesel consumption is considerable because of the number of trucks that will be traveling
during the LoM, addition to the long route to the Huancarane waste dump in Ferrobamba. Hydraulic Shovels also contribute to this
consumption.
(2)
Consumption of truck tires has been considered to occur every 4,500 hours, considering this life plus the hauling routes that will have
Las Bambas, the influence on the mining cost results in 0.13 US $/t mined.
(3)
The explosives also influence the mining cost because the amount of material to be mined (2.8B tons mined through the LOM).

Table 7 Major Cost Drivers – Processing
Cost Driver Units 2015
Process
Reagents
Regrind Isa Mill - Ceramic Media US$/kg 6.30
Frother US$/Kg 4.10
Collector Nro. 1 US$/Kg 5.30
Collector Nro. 2 US$/Kg 9.12
Lime US$/Kg 0.22
Consumption Rate
Regrind Isa Mill - Ceramic Media Kg/KW-hr 0.01
Frother Kg/t 0.04
Collector Nro. 1 Kg/t 0.04
Collector Nro. 2 Kg/t 0.02
Lime Kg/t 0.40
Contribution to Process Cost (1) US$/t 0.70
SAG & Ball Mill Materials
SAG Mill charge US$/Kg 1.29
Ball Mill Ball Charge US$/Kg 1.07
Consumption Rate
SAG Mill charge Kg/t 0.40
Ball Mill Ball Charge Kg/t 0.50
Contribution to Process Cost US$/t 0.59
Electricity US$/kWh 0.09
Consumption Rate KWh/yr 1,155,209,551
Contribution to Process Cost (2) US$/t 1.96
(1)
The people that prepared this report had no access to the detail on the total expenditure amount of each reagent in order to
determine the influence of each one in the processing cost, however, is noteworthy that the largest contribution to the processing cost
comes from the lime consumption.
(2)
The energy consumption of Mill Plant at Las Bambas contributes 1.96 US$/t to the processing cost.
5.2.4 Open Pit Mining Operating Costs

Unit mining costs used to calculate the cut-off grades are based on the projections from LOM2015 (Financial
Model LOM2015 v3.7) but were only considered for 2016 onwards, because 2015 will be almost all Pre-
Stripping. Las Bambas believes that these costs are representative of the best estimate of future costs of the
operation; the allocations have been coordinated with Finance and other Groups involved in these
calculations.
Table 7 details how the Mining Operating Cost is composed.
Table 8 Composition of Mining Operating Costs

Cost Component Units 2015 2010*
Mining Cost (1)
Drilling US$/t mined 0.08 0.07
Blasting US$/t mined 0.18 0.14
Loading US$/t mined 0.17 0.13
Hauling US$/t mined 0.74 0.66
Auxiliary Equipment US$/t mined 0.17 0.14
Technical Services US$/t mined 0.09 0.05
Mine Administration US$/t mined 0.31 0.14
SubTotal US$/t mined 1.73 1.34
(1)
Mining cost do not includes costs associated with maintenance of stockpiles, loading and hauling during the ore rehandling from
these stockpiles; these costs are considered as ore rehandling costs which will add to processing costs in the cu-off grade calculations.
*
Feasibility Study Update (September, 2010).

5.2.5 Ore Differential Cost
In the formulas for calculating the cut-off grades, the difference between the cost of mining a tonne of
material as ore instead of waste is included as an differential cost. This cost can be positive or negative. In the
case of Ferrobamba, the difference is negative because the cost of hauling to the waste dump is higher than
to haul to the crusher. This differential cost is charged to processing cost and is therefore considered when
evaluating the destination of a material block. In Chalcobamba and Sulfobamba, the differential cost is
positive because the distances to the crusher located between the two open pits is greater than the distances
to both waste dumps.
Table 9 Ore Differential Costs

FERROBAMBA CHALCOBAMBA SULFOBAMBA
Cost Component Units
2015 2010* 2015 2010* 2015 2010*
Differential Costs
Ore Differential Cost US$/t processed -0.48 -0.50 0.16 -0.08 0.94 0.49
SubTotal US$/t processed -0.48 -0.50 0.16 -0.08 0.94 0.49
5.2.6 Ore Rehandling Costs.

These costs consist primarily of loading, hauling and other ancillary costs that occur during the rehandling of
ore from stockpiles.
Table 9 details the ore rehandling costs used in the cut-off grade calculations.
Table 10 Ore Rehandling Costs

Rehandling Costs
Ore Rehandling (1) US$/t processed 1.21 0.90
SubTotal US$/t processed 1.21 0.90

(1)
It is necessary to mention that the stockpiles of low-grade ore at Ferrobamba have been considered to be located in an area within
the Huancarane waste dump, the hauling distance for rehandling this ore from the Stock to Crusher is about 5 Km, the high rehandling
cost is a reflection of this configuration at Ferrobamba. In 2010 the stockpiles were planned to be located near the crusher, but this is
not feasible due to the pending derivation of Fuerabamba River.
5.2.7 Processing Operating Costs

Unit Processing costs used to calculate the cut-off grades are based on the projections from LOM2015
(Financial Model LOM2015 v3.7) but were only considered for 2016 onwards, because 2015 will be almost all
Pre-Stripping. Las Bambas believes that these costs are representative of the best estimate of future costs of
the operation; the allocations have been coordinated with Finance and other Groups involved in these
calculations.
Table 10 details the Processing costs used in the cut-off grade calculations.

Table 11 Composition of Processing Operating Costs
Processing Cost (1)
Primary Crusher US$/t processed 0.12 0.07
Conveying US$/t processed 0.50 0.46
Milling (SAG & Ball Mills) US$/t processed 3.11 2.72
Milling (Pebbles) US$/t processed 0.10 0.06
Flotation & Regrind US$/t processed 1.12 0.73
Thickening US$/t processed 0.06 0.05
Lime Plant & Other Reagents US$/t processed 0.05 0.04
Tailing Thickening US$/t processed 0.14 0.04
Fresh Water US$/t processed 0.14 0.11
Reclaim Water US$/t processed 0.17 0.13
Pipeline (2) US$/t processed 0.24
Moly Plant US$/t processed 0.25 0.10
Filter Plant US$/t processed 0.16 0.24
(1)
All costs that make up the processing operating cost have increased respect to the Feasibility Study, except item Filter Plant. Preparers
of Report found no details on how these costs were estimated at those dates. The items that highlight the increase are: Primary crusher,
Milling, Tailing Thickening and Moly Plant.
(2)
Feasibility Study was considered transport the concentrate from Las Bambas through a Pipeline to the Port, now it is considered to use
trucks a certain distance and then by train to the Matarani Port.
*
5.2.8 Sustaining Capital Costs

Table 11 shows sustaining capital costs for both Mining and Processing used in calculating cut-off grades;
the inclusion or exclusion of these costs in the calculation has been done following the guidelines of
Corporate (MMG) according the objective of each capital expenditure in the operation. Any expenditure
required to maintain capacities and avoid social, environmental, health and legal risks have been included.
Expenses related to process improvement, mine development, exploration outside the area of interest to
define current mineral resources, organic growth or expansions, have been excluded from the calculations.
Tabla 12 Sustaining Capital Costs

Mining Cost (1)
Sustaining Capital Cost
Heavy equipment replacing US$/t mined 0.09
Mine Access Road US$/t mined 0.01
Mine Infrastructure US$/t mined 0.04
Facilities Improvement (2) US$/t mined 0.00
Other US$/t mined 0.07
SubTotal US$/t mined 0.22 0.09
(3)
Processing Cost
Grinding & Flotation US$/t processed 0.02
Moly & Filter plant and loadout US$/t processed 0.02
Tailings disposal and water recovery US$/t processed 0.49
Plant infrastructure US$/t processed 0.02
(1) (3)
Capital costs in 2015 were not included, because these are already being spent, considering it as sunk costs and therefore excluded
from the cut-off grade calculations.
(2)
No expense in this category was included because the costs that are related to process improvements are non-recurring and when
they occur are as a project to improve the operation; these costs are not necessary to maintain the capacities, so they are excluded from
cut-off grade calculations.
*
Feasibility Study Update (September, 2010)

5.2.9 Selling Costs
Table 12 details the costs used to calculate unit selling costs for Copper, Molybdenum, gold and silver. These
final values were used to calculate the cut-off grades and NSR for Las Bambas operations.
Table 13 Selling Costs

Selling Costs
Cu Transportation (1) US$/wmt 102.60 23.78
Cu Port Fees US$/wmt 18.83 21.76
Cu Ocean Freigth Cost US$/wmt 41.00 53.00
Cu Insurance Cost (2) US$/dmt 1.25 0.87
(3)
Cu Umpire, Surveying, Asseying US$/dmt 0.50 0.50
Cu Smelter Charge US$/dmt 113.00 65.00
Mo Transportation (4) US$/wmt 102.60 38.83
Mo Port Fees US$/wmt 0.00 22.82
Mo Ocean Freigth Cost US$/wmt 150.00 53.00
Mo Insurance Cost (5) US$/dmt 6.12 9.92
Mo Roaster Charge US$/lb 1.60 1.50
(1) (4)
The copper concentrate will be transported to the Matarani port 710Km, for copper was considered to be hauled by truck a distance
of 380km and then be transported by train 330 km to the Matarani port; in the case of molybdenum, it was considered entirely to be
transported by trucks from Bambas to the Matarani port, due to this transport system, these costs have increased compared to 2010,
when it was considered to transport through pipeline.
(2) (3) (5)
These costs have been included in the cut-off grade calculations even though they have not been considered in the Financial
Model LOM2015 v3.7 these costs are a percentage of the concentrate value.
5.2.10 General and Administrative Costs

Table 13 shows how the G&A costs build-up. The costs have been classified so that fixed costs that have not
been considered in the mining and processing operating costs are included here. The behaviour of these
expenses generally does not vary with production or pit size, rather are accounted for a period of time
(usually a year).
It is necessary to asses from now on if there would be any changes in the corporate expenses of Las Bambas
if the tonnage drops drastically or in the hypothetical scenario that considers the suspension of the project. If
there are changes, these costs should be excluded from cut-off grade calculations.
Table 14 General and Administrative Costs

G&A Costs
Presidence & VPOs (1) US$/t processed 0.20 0.10
Corporate Affairs (2) US$/t processed 0.08
Administration, Marketing & Logistics US$/t processed 0.14 0.24
Finance US$/t processed 0.05 0.03
Community Relations (3) US$/t processed 0.34 0.05
Human Resources US$/t processed 0.10 0.05
Legal US$/t processed 0.04 0.04
Enviromental (4) US$/t processed 0.15
Infrastructure Management total US$/t processed 0.03
Safety & Health US$/t processed 0.11
Security US$/t processed 0.15 0.05
IT (5) US$/t processed 0.06
Insurance (BI & PD) US$/t processed 0.19 0.06
(1) (2)
These costs are charged entirely to Las Bambas, since that MMG has no more projects or operating mines in Peru so that you can
distribute it among them. Report preparers had no detail on what corporate cost MMG would not stop if Las Bambas would be
paralyzed, if these costs exist, it should be excluded from the cut-off grade calculations.

(3)
Given the social demands to which has been under pressure Las Bambas, these costs are significantly higher in the G&A costs.
(4)
The environmental care at Las Bambas has to meet national and international standards, due to this, these costs are now considered
unlike the feasibility study when they were excluded.
(5)
The IT costs are now separated unlike the feasibility study when they were included in the category: Administration, Marketing &
Logistics.
*
5.2.11 Fixed and Variable Cost Allocations

The fixed and variable proportions of various cost components are shown in Table 14. The separation of fixed
and variable costs has been considered when calculating MCOGinpit cut-offs.
Table 15 Fixed & Variable Cost Allocations
Variable Fix
Cost Component
% %
Mining Cost 72.64 27.36
Differential Cost 100.00 0.00
Processing Cost 88.76 11.24
Selling Costs 100.00 0.00
G&A Cost 0.00 100.00
5.2.12 Cost Comparison versus Previous Estimates

A comparison between the current COG values (2015) and those from September 2010 (Feasibility Study) and
the Due Diligence model (DD LB) is presented in Table 15. There are certain differences compared to the DD
model estimates and Las Bambas is working to reduce costs. 2015 G&A cost were estimated according to
the support areas organizational structure and the needs for the normal development of the business. There
is the possibility to reduce the Community Relations costs - a scenario was run according to the future
commitment and the unit cost for the Community Relations area could decrease to aproximately US$0.20/ t
milled.
Table 16 Cost Comparisons

Cost Breakdown compared with M&A
Cost Component Units 2015 2010* DD LB Comments
Mining Cost
Drilling US$/t mined 0.08 0.07
Blasting US$/t mined 0.18 0.14
Loading US$/t mined 0.17 0.13
Hauling US$/t mined 0.74 0.66
Auxiliary Equipment US$/t mined 0.17 0.14
Technical Services US$/t mined 0.09 0.05
Mine Administration US$/t mined 0.31 0.14
SubTotal US$/t mined 1.73 1.34 1.64 Mine Cost / Total Material Mined (without Re-handling) (*1)
Heavy equipment replacing US$/t mined 0.09 0.29
Mine Access Road US$/t mined 0.01
Mine Infrastructure US$/t mined 0.04 0.31
Other US$/t mined 0.07
SubTotal US$/t mined 0.22 0.09 0.60 Please see Note below (*2)
Processing Cost
Primary Crusher US$/t processed 0.12 0.07
Conveying US$/t processed 0.50 0.46
Milling (SAG & Ball Mills) US$/t processed 3.11 2.72
Milling (Pebbles) US$/t processed 0.10 0.06
Flotation & Regrind US$/t processed 1.12 0.73
Thickening US$/t processed 0.06 0.05
Lime Plant & Other Reagents US$/t processed 0.05 0.04
Tailing Thickening US$/t processed 0.14 0.04
Fresh Water US$/t processed 0.14 0.11
Reclaim Water US$/t processed 0.17 0.13
Pipeline US$/t processed 0.24
Moly Plant US$/t processed 0.25 0.10
Filter Plant US$/t processed 0.16 0.24
SubTotal US$/t processed 5.94 4.97 5.99
Grinding & Flotation US$/t processed 0.02
Moly & Filter plant and loadout US$/t processed 0.02
Tailings disposal and water recovery US$/t processed 0.49 0.67
Plant infrastructure US$/t processed 0.02 0.26
Ore Rehandling Costs
Ore Rehandling US$/t processed 1.21 0.90
G&A Costs
Presidence & VPOs US$/t processed 0.20 0.10
Corporate Affairs US$/t processed 0.08
Administration, Marketing & Logistics US$/t processed 0.14 0.24
Finance US$/t processed 0.05 0.03
Community Relations US$/t processed 0.34 0.05 Please see Note below (*3)
Human Resources US$/t processed 0.10 0.05
Legal US$/t processed 0.04 0.04
Enviromental US$/t processed 0.15
Infrastructure Management total US$/t processed 0.03
Safety & Health US$/t processed 0.11
Security US$/t processed 0.15 0.05
IT US$/t processed 0.06
Insurance (BI & PD) US$/t processed 0.19 0.06
Selling Costs
Cu Transportation US$/wmt 102.60 23.78 97.00 Based on Corporate Assumptions
Cu Port Fees US$/wmt 18.83 21.76 20.40 Based on Corporate Assumptions
Cu Ocean Freigth Cost US$/wmt 41.00 53.00 55.00 Based on Corporate Assumptions
Cu Insurance Cost US$/dmt 1.25 0.87 Not included within 2015 Financial Model or M&A
Cu Umpire, Surveying, Asseying US$/dmt 0.50 0.50 Not included within 2015 Financial Model or M&A
Cu Smelter Charge US$/dmt 113.00 65.00 100.00 Based on Corporate Assumptions
Cu Refining Charge US$/lb 11.00 10.00 Based on Corporate Assumptions
Mo Transportation US$/wmt 102.60 38.83 97.00 Based on Corporate Assumptions
Mo Ocean Freigth Cost US$/wmt 150.00 53.00 20.40 Based on Corporate Assumptions
Mo Insurance Cost US$/dmt 6.12 9.92 Not included within 2015 Financial Model or M&A
Mo Roaster Charge US$/lb 1.60 1.50 2.00 Based on Corporate Assumptions
Cost Component Units 2015 2010* DD LB Comments

(*1) Mine Unit Cost with Re-handling / Total Material Mined US$/t mined 1.81 1.71 The 2015 Mine unit cost of mine (not including re-handling)
is lower than the M&A analysed by Las Bambas team, the
parameters to be analysed would be consumables prices
and consumption ratios but the M&A is largely based on
benchmark unit costs for other similar scale operations in
the region.
(*1) Mine Unit Cost with Re-handling / Total Material Moved US$/t moved 1.70 1.70 In line 2015 Plan v M&A Scenario
(*2) M&A Mine Capex to 2037

Heavy equipment replacing US$/t mined 0.29 From the M&A Template
Mine Infrastructure US$/t mined 0.31 From the M&A Template
(*2) M&A Plant Capex to 2037

Tailings disposal and water recovery US$/t processed 0.67 From the M&A Template
Plant infrastructure US$/t processed 0.26 From the M&A Template
(*3) 2015 G&A cost was estimated according to the support areas organizational structure and the needs for the normal development of the business. There is the possibility
to reduce the Community Relations costs, an scenario was run according to the future commitment. The unit cost for CR area will decrease to US$0.20/ t milled aprox.

6 METALLURGICAL RECOVERY MODEL
Metallurgical recoveries for copper for each geometallurgical unit (GMU) used when calculating cut-off
grades comes from the recovery models provided by the Metallurgy Group at Las Bambas and Geoff Senior,
while the flat recoveries for the other metals as well as the concentrate grades were provided totally by the
Metallurgy Group at Las Bambas. These models still need to be refined with more information from drilling
and metallurgical tests.
Table 17 Recovery Model for Copper at Ferrobamba

2015 Recovery Model for Ferrobamba:
% Recov Cu=(101.03 - 0.989*CuSAc/CuT *100 )*0.95
Table 18 Recovery Model for Copper at Chalcobamba

2015 Recovery Model for Chalcobamba:
% Recov Cu=(94.9- 90*CuSAc/CuT)
Table 19 Recovery Model for Copper at Chalcobamba

2015 Recovery Model for Sulfobamba:
% Recov Cu=(91.92 - 0.829*CuSAc/CuT *100) *0.97
Table 20 Recoveries by GMU for Ferrobamba

Ferrobamba By GMU
FSSL FSSM FPSL FPSM FBRE
Component
2015 2010* 2015 2010* 2015 2010* 2015 2010* 2015 2010*
(1)
Cu Recovery 85.19% 90.00% 75.29% 85.00% 85.98% 90.00% 74.00% 66.00% 69.00% 75.00%
Mo Recovery 55.50% 58.00% 55.50% 66.00% 55.50% 80.00% 55.50% 40.00% 55.50% 60.00%
Au Recovery 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 55.00% 65.00% 65.00%
Ag Recovery 72.70% 70.00% 72.70% 65.00% 72.70% 70.00% 72.70% 65.00% 72.70% 70.00%
Table 21 Recoveries by GMU for Chalcobamba

Chalcobamba By GMU
CSSL CSSM CSML CSMM
Component
2015 2010* 2015 2010* 2015 2010* 2015 2010*
(1)
Cu Recovery 87.14% 88.00% 72.32% 72.00% 88.36% 90.00% 74.16% 72.00%
Mo Recovery 55.50% 55.00% 55.50% 40.00% 55.50% 55.00% 55.50% 40.00%
Au Recovery 56.60% 65.00% 56.60% 65.00% 56.60% 65.00% 56.60% 65.00%
Ag Recovery 54.30% 70.00% 54.30% 60.00% 54.30% 75.00% 54.30% 60.00%
Table 22 Recoveries by GMU for Chalcobamba

Chalcobamba By GMU
CPSL CPSM CBRE
Component
2015 2010* 2015 2010* 2015 2010*
(1)
Cu Recovery 87.55% 88.00% 71.94% 70.00% 64.71% 70.00%
Mo Recovery 55.50% 65.00% 55.50% 50.00% 55.50% 50.00%
Au Recovery 56.60% 65.00% 56.60% 65.00% 56.60% 65.00%
Ag Recovery 54.30% 50.00% 54.30% 40.00% 54.30% 40.00%

Table 23 Recoveries by GMU for Sulfobamba
Sulfobamba By GMU
SSKR SPOR SBRE
Component
2015 2010* 2015 2010* 2015 2010*
(1)
Cu Recovery 77.06% 90.00% 76.22% 90.00% 40.45% 70.00%
Mo Recovery 55.50% 50.00% 55.50% 50.00% 55.50% 50.00%
Au Recovery 56.60% 65.00% 56.60% 65.00% 56.60% 65.00%
Ag Recovery 54.30% 70.00% 54.30% 40.00% 54.30% 40.00%
*
(1)
Copper Recoveries for 2015 come from the recovery model of each open pit and its average value per GMU was obtained from the
MineSight pit optimization software.
Table 24 Concentrate grades by GMU for Ferrobamba

Ferrobamba By GMU
Component
2015 2010* 2015 2010* 2015 2010* 2015 2010* 2015 2010*
Cu % 42.00% 48.00% 42.00% 42.00% 42.00% 30.00% 42.00% 48.00% 42.00% 34.00%
Mo % 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%
Ag g/t 204.3 204.3 205.3 205.3 82.0 82.0 169.7 169.7 174.5 174.5
Au g/t 4.2 4.2 4.0 4.0 1.6 1.6 3.6 3.6 3.1 3.1
Table 25 Concentrate grades by GMU for Chalcobamba

Chalcobamba By GMU
CSSL CSSM CSML CSMM
Component
2015 2010* 2015 2010* 2015 2010* 2015 2010*
Cu % 29.00% 32.00% 29.00% 32.00% 29.00% 32.00% 29.00% 32.00%
Mo % 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%
Ag g/t 101.4 101.4 106.5 106.5 74.3 74.3 112.4 112.4
Au g/t 1.2 1.2 1.2 1.2 1.4 1.4 1.4 1.4
Table 26 Concentrate grades by GMU for Chalcobamba

Chalcobamba By GMU
CPSL CPSM CBRE
Component
2015 2010* 2015 2010* 2015 2010*
Cu % 29.00% 30.00% 29.00% 30.00% 29.00% 30.00%
Mo % 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%
Ag g/t 62.3 62.3 97.6 97.6 98.3 98.3
Au g/t 0.6 0.6 0.8 0.8 0.8 0.8
Table 27 Concentrate grades by GMU for Sulfobamba

Sulfobamba By GMU
SSKR SPOR SBRE
Component
2015 2010* 2015 2010* 2015 2010*
Cu % 29.00% 34.00% 29.00% 34.00% 29.00% 30.00%
Mo % 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%
Ag g/t 194.7 194.7 149.1 149.1 543.0 543.0
Au g/t 0.7 0.7 0.4 0.4 0.4 0.4

7 OPEN PIT CUT-OFF GRADE CALCULATIONS
As Las Bambas has more than one payable metal, there are two options for expressing the Cut-Off: 1) a cut-
off grade based on ‘copper equivalent’ (CuEq.) or; 2) a cut-off based on Net Smelter Return (NSR); the latter
would be more applicable when taking into account additional downstream costs (TCs & RCs = treatment
costs, refinery, port payments and additional deductions for all metals present in the concentrate). These
costs vary according the product recovered. However, Las Bambas does not have a metallurgical recovery
model applied to each mining block that varies depending on its solubility rate and its metal grade. The
current practice assumes a fixed recovery value for each mineral type, regardless of its metal content, with
the same logic also applied to concentrate grades.
Furthermore, the contribution of copper to the total value of a tonne of ore is approximately 96%, with the
other 4% coming collectively from Molybdenum, Gold and Silver. This is the reason why Las Bambas decided
to express cut-off grades based on CuEq. Nevertheless, noting the importance of understanding and
demonstrating the full impact of costs incurred across the whole production chain, Las Bambas generated
NSR calculations and has applied it in the block model in order to assign a reference value to each block.
This NSR cut-off value is equal to all site-based costs and other costs considered, as per MMG guidelines
being applied.
The formula for the equivalent copper is as follows:
CuE% = Cu% + ((MoMP-SCMo)*MoREC)/((CuMP-SCCu)*CuREC)*Mo*10-4% +((AgMP-SCAg)*16*AgREC)/((CuMP-SCCu)*CuREC)*Ag*10-4% + ((AuMP-SCAu)*16*AuREC)/((CuMP-SCCu)*CuREC)*Au*10-4%
Where:
CuE% = Equivalent Copper grade

Cu% = Copper Grade
Mo% = Molybdenum Grade
Ag% = Silver grade
Au% = Gold grade
MoMP = Molybdenum selling price
MoREC= Molybdenum metallurgical recovery
SCMo = Molybdenum selling cost
CuMP = Copper selling price
CuREC = Copper metallurgical recovery
SCCu = Copper selling cost
AgMP = Silver selling price
AgREC= Silver metallurgical recovery
SCAg = Silver selling cost
AuMP= Gold selling price
AuREC = Gold metallurgical recovery
SCAu = Gold selling cost
This formula will be applied to metal prices considered both for Ore Reserves and Mineral Resources.
All cut-off grade calculations have been generated to apply to equivalent copper grades. In the following
sections, each calculation detailed.
7.1 PIT LIMIT ANALYSIS

Las Bambas estimated Ore Reserves in 2013, which have subsequently been used to develop the LoM Plan
until the present. Projected costs for the LoM plan (LOM2015 v3.7) have given rise to operating costs that are
being utilized for the current cut-off grade calculations.

2013 Ore Reserves and Mineral Resources statements for the Las Bambas Complex were restricted to each
operational final pit design; the design was based on a final pit Shell of each open pit obtained from
MineSight optimization software and pit limit analysis. Las Bambas Pit limits were based on the criteria shown
in Table 26.
Table 28 Criteria for Pit Limit Analysis
Criteria Units FERROBAMBA CHALCOBAMBA SULFOBAMBA
Year of Pit Limit Creation Year 2013 2013 2013

Commodity Price of Pit Limit US$/lb Cu 2.20 1.58 1.58
Mining Cost (Includes SC) US$/t 1.13 1.15 0.97
Processing Cost (Includes SC) US$/t 5.84 5.84 5.84
G&A Cost US$/t 0.62 0.62 0.62
Selling Cost US$/lb Cu 0.36 0.36 0.36
Metallurgical Recovery % Cu 87.80 84.10 89.90
Mining Loss % 0.00 0.00 0.00
Mining Dilution % 0.00 0.00 0.00
7.2 OPEN PIT BREAK-EVEN CUT-OFF GRADE, BCOGINPIT

Las Bambas calculated this cut-off grade for all ore types to define the correct destination of a block of
material between the waste dump and Mill Plant. Any material within the final Pit limit that can pay the
processing cost (includes sustaining capital), the G&A and selling costs, will be categorized as ore and sent to
the Mill plant for processing. Blocks within the final pit that they cannot pay these costs will be categorized as
waste and sent to waste dump. This Break-even Cut-Off Grade does not consider the mining cost because
once the block has been identified as part of the final Pit, the mining cost must be incurred and its
destination for this block will be either the Mill plant or the waste dump., Therefore, the mining cost can be
excluded from the cut-off equation, assuming that hauling cost for ore and waste is the same from the exit
point of final open pit; any positive or negative difference in the ore hauling cost compared to the waste
hauling cost is reflected in the ore differential cost.
At Ferrobamba, the crusher is immediately adjacent to the exit point of the final pit. The haulage distance for
ore is much shorter than that haulage route for waste to the waste dump. These differences in the haulage
distances to crusher and the waste dump generate differential costs which are charged to the processing cost
and are therefore considered when evaluating the destination of a material block.
A primary crusher is planned to be installed between the Chalcobamba and Sulfobamba pits that provides
ore to Mill plant. Due to this configuration, the ore will be hauled from these pits to a point 3 km from
Chalcobamba and 7 km from Sulfobamba. The cost of hauling waste for these pits is lower than for ore
because the waste dumps are planned to be located near these pits.
The formula for calculating the BCOGinpit is as follows:
BCOGinpit = (PC + DC + GA)/(REC*(MP - SC)*Factor)
The following tables show the methodology and the values used for the BCOG inpit calculation for each
mineral type pit by pit.

Table 29 BCOGinpit Calculation for Ferrobamba
FERROBAMBA
Component Description Units
Total Processing Operating Costs
PC US$/t processed
Includes Process Sustaining Capital 6.49 6.49 6.49 6.49 6.49
Differential Costs associated with
mining material as ore instead of
DC US$/t processed
waste. Includes portion of Mining -0.48 -0.48 -0.48 -0.48 -0.48
sustaining capital
GA General & Administrative US$/t processed 1.63 1.63 1.63 1.63 1.63
Planned recovery of metal near COG
REC %
grade 85.19 75.29 85.98 74.00 69.00
MP Selling Price of Metal US$/lb 2.95 2.95 2.95 2.95 2.95
Selling Costs
SC Smelter, Refinery and Transportation US$/lb 0.43 0.43 0.43 0.43 0.43
Costs
Factor Unit Conversion Factors Used: lb/t processed 2204.62 2204.62 2204.62 2204.62 2204.62
NSR BCOinpit US$/t processed 7.64 7.64 7.64 7.64 7.64
BCOGinpit CuE % 0.16 0.18 0.16 0.19 0.20
Table 30 BCOGinpit Calculation for Chalcobamba

CHALCOBAMBA
CSSL CSSM CSML CSMM CPSL CPSM CBRE
PC US$/t processed
Includes Process Sustaining Capital 6.49 6.49 6.49 6.49 6.49 6.49 6.49
DC US$/t processed
waste. Includes portion of Mining 0.16 0.16 0.16 0.16 0.16 0.16 0.16
sustaining capital
GA General & Administrative US$/t processed 1.63 1.63 1.63 1.63 1.63 1.63 1.63
REC %
grade 87.14 72.32 88.36 74.16 87.55 91.94 64.71
MP Selling Price of Metal US$/lb 2.95 2.95 2.95 2.95 2.95 2.95 2.95
Selling Costs
SC Smelter, Refinery and Transportation US$/lb 0.57 0.57 0.57 0.57 0.57 0.57 0.57
Costs
Factor Unit Conversion Factors Used: lb/t processed 2204.62 2204.62 2204.62 2204.62 2204.62 2204.62 2204.62
NSR BCOinpit US$/t processed 8.29 8.29 8.29 8.29 8.29 8.29 8.29
BCOGinpit CuE % 0.18 0.22 0.18 0.21 0.18 0.22 0.24
Table 31 BCOGinpit Calculation for Sulfobamba

SULFOBAMBA
SSKR SPOR SBRE
PC US$/t processed
Includes Process Sustaining Capital 6.49 6.49 6.49
DC US$/t processed
waste. Includes portion of Mining 0.94 0.94 0.94
sustaining capital
GA General & Administrative US$/t processed 1.63 1.63 1.63
REC %
grade 77.06 76.22 40.45
MP Selling Price of Metal US$/lb 2.95 2.95 2.95
Selling Costs
SC Smelter, Refinery and Transportation US$/lb 0.57 0.57 0.57
Costs
Factor Unit Conversion Factors Used: lb/t processed 2204.62 2204.62 2204.62

SULFOBAMBA
SSKR SPOR SBRE
NSR BCOinpit US$/t processed 9.07 9.07 9.07
BCOGinpit CuE % 0.22 0.23 0.43
These calculations of BCOGinpit will be applied to each mineral type for each open pit when determining the
Ore Reserves.
7.3 OPEN PIT MINERAL RESOURCE CUT-OFF GRADE, RCOGINPIT

This Cut-Off grade calculation is identical to BCOGinpit calculation, with the only difference that metal prices
are more generous than those used to calculate BCOGinpit. The overall aim is to obtain an amount of material
that has potential to be mined economically.
The following tables show the methodology and the values used for the RCOGinpit calculation for each mineral
type pit by pit.
The formula for calculating the RCOGinpit is as follows:
RCOGinpit = (PC + DC + GA)/(REC*(MP - SC)*Factor)
Table 32 RCOGinpit Calculation for Ferrobamba

FERROBAMBA
PC US$/t processed
Includes Process Sustaining Capital 6.49 6.49 6.49 6.49 6.49
DC US$/t processed
waste. Includes portion of Mining -0.48 -0.48 -0.48 -0.48 -0.48
sustaining capital
GA General & Administrative US$/t processed 1.63 1.63 1.63 1.63 1.63
REC %
grade 85.19 75.29 85.98 74.00 69.00
Selling Costs
Costs
NSR RCOinpit US$/t processed 7.64 7.64 7.64 7.64 7.64
RCOGinpit CuE % 0.13 0.15 0.13 0.15 0.16
Table 33 RCOGinpit Calculation for Chalcobamba

CHALCOBAMBA

PC US$/t processed
Includes Process Sustaining Capital 6.49 6.49 6.49 6.49 6.49 6.49 6.49
DC US$/t processed
waste. Includes portion of Mining 0.16 0.16 0.16 0.16 0.16 0.16 0.16
sustaining capital
GA General & Administrative US$/t processed 1.63 1.63 1.63 1.63 1.63 1.63 1.63
Planned recovery of metal near
REC %
COG grade 87.14 72.32 88.36 74.16 87.55 71.94 64.71
Selling Costs
SC Smelter, Refinery and US$/lb
Transportation Costs 0.57 0.57 0.57 0.57 0.57 0.57 0.57
CHALCOBAMBA
NSR RCOinpit US$/t processed 8.29 8.29 8.29 8.29 8.29 8.29 8.29
RCOGinpit CuE % 0.15 0.18 0.15 0.17 0.15 0.18 0.20
Table 34 RCOGinpit Calculation for Sulfobamba

SULFOBAMBA
SSKR SPOR SBRE
PC US$/t processed
DC US$/t processed
waste. Includes portion of Mining 0.94 0.94 0.94
sustaining capital
REC %
grade 77.06 76.22 40.45
Selling Costs
Costs
NSR RCOinpit US$/t processed 9.07 9.07 9.07
RCOGinpit CuE % 0.18 0.18 0.35
These RCOGinpit calculations will be applied to each mineral type for all open pits when determining Mineral
Resources.
7.4 OPEN PIT MILL CUT-OFF GRADE, MCOGINPIT

The formula for calculating the MCOGinpit is as follows:
MCOGinpit = (PC + DC + GA)/(REC*(MP - SC)*Factor)
The costs used for this Cut-Off Grade are only the variable processing costs, the differential costs by hauling,
variable G&A and sales. Sustaining capital costs are not required for this calculation.
The applicability of this cut-off could occur in the hypothetical scenario where in a period the Mill capacity is
not filled with ore above the BCOGinpit cut-off from the mine exclusively, having excess mining capacity and
also if there were no ore in stockpiles. The MCOGinpit cut-off could be applied in order to find ore from mine
that allows Mill capacity to be filled. This is probably more likely to apply in the last years of mine life,
because in the early years is unlikely that do not exist BCOGinpit material and to apply it when there are
BCOGinpit and SCOGinpit materials could lower profitability by sending low-grade ore to Mill plant.
The following tables show the methodology and the values used for the MCOGinpit calculation for each

Table 35 MCOGinpit Calculation for Ferrobamba
FERROBAMBA
PC Variable Processing Costs US$/t processed

5.27 5.27 5.27 5.27 5.27
DC mining material as ore instead of US$/t processed -0.56 -0.56 -0.56 -0.56 -0.56
waste.
GA Variable General & Administrative US$/t processed 0.00 0.00 0.00 0.00 0.00
REC %
grade 85.19 75.29 85.98 74.00 69.00
Selling Costs
Costs
NSR MCOinpit US$/t processed 4.71 4.71 4.71 4.71 4.71
MCOGinpit CuE % 0.10 0.11 0.10 0.11 0.12
Table 36 MCOGinpit Calculation for Chalcobamba

CHALCOBAMBA

5.27 5.27 5.27 5.27 5.27 5.27 5.27
DC mining material as ore instead of US$/t processed 0.07 0.07 0.07 0.07 0.07 0.07 0.07
waste.
GA Variable General & Administrative US$/t processed 0.00 0.00 0.00 0.00 0.00 0.00 0.00
REC %
COG grade 87.14 72.32 88.36 74.16 87.55 71.94 64.71
Selling Costs
SC Smelter, Refinery and US$/lb 0.57 0.57 0.57 0.57 0.57 0.57 0.57
Transportation Costs
NSR MCOinpit US$/t processed 5.34 5.34 5.34 5.34 5.34 5.34 5.34
MCOGinpit CuE % 0.12 0.14 0.12 0.14 0.12 0.14 0.16
Table 37 MCOGinpit Calculation for Sulfobamba

SULFOBAMBA
SSKR SPOR SBRE

5.27 5.27 5.27
DC mining material as ore instead of US$/t processed 0.86 0.86 0.86
waste.
GA Variable General & Administrative US$/t processed 0.00 0.00 0.00
REC %
grade 77.06 76.22 40.45
Selling Costs
Costs
NSR MCOinpit US$/t processed 6.13 6.13 6.13
MCOGinpit CuE % 0.15 0.15 0.29

7.5 OPEN PIT ALL IN CUT-OFF GRADE, TCOGINPIT
The formula for calculating the TCOGinpit is as follows.
TCOGinpit = (PC + TMC + GA)/(REC*(MP - SC)*Factor)
The costs used for this Cut-off Grade calculation are all operating costs including fixed, variable and mining
and processing sustaining capital, G&A and selling costs.
The following tables show the methodology and the values used for the TCOGinpit calculation for each mineral
type pit by pit.
Table 38 TCOGinpit Calculation for Ferrobamba

FERROBAMBA
Total Mining Operating Cost (Includes
TMC US$/t mined
Sustaining Capita) 2.01 2.01 2.01 2.01 2.01
Total Processing Operating Cost
PC US$/t processed
(Includes Sustaining Capital) 6.49 6.49 6.49 6.49 6.49
GA General & Administrative Cost US$/t processed 1.63 1.63 1.63 1.63 1.63
REC %
grade 85.19 75.29 85.98 74.00 69.00
Selling Costs
Costs
NSR TCOinpit US$/t processed 10.13 10.13 10.13 10.13 10.13
TCOGinpit CuE % 0.21 0.24 0.21 0.25 0.26
Table 39 TCOGinpit Calculation for Chalcobamba

CHALCOBAMBA
Total Mining Operating Cost

TMC US$/t mined
(Includes Sustaining Capita) 1.73 1.73 1.73 1.73 1.73 1.73 1.73
PC US$/t processed
(Includes Sustaining Capital) 6.49 6.49 6.49 6.49 6.49 6.49 6.49
GA General & Administrative Cost US$/t processed 1.63 1.63 1.63 1.63 1.63 1.63 1.63
REC %
COG grade 87.14 72.32 88.36 74.16 87.55 71.94 64.71
Selling Costs
SC Smelter, Refinery and US$/lb 0.57 0.57 0.57 0.57 0.57 0.57 0.57
Transportation Costs
NSR TCOinpit US$/t processed 9.86 9.86 9.86 9.86 9.86 9.86 9.86
TCOGinpit CuE % 0.22 0.26 0.21 0.25 0.21 0.26 0.29

Table 40 TCOGinpit Calculation for Sulfobamba
SULFOBAMBA
SSKR SPOR SBRE
Total Mining Operating Cost (Includes
TMC US$/t mined
Sustaining Capita) 1.86 1.86 1.86
PC US$/t processed
(Includes Sustaining Capital) 6.49 6.49 6.49
GA General & Administrative Cost US$/t processed 1.63 1.63 1.63
REC %
grade 77.06 76.22 40.45
Selling Costs
Costs
NSR TCOinpit US$/t processed 9.99 9.99 9.99
TCOGinpit CuE % 0.25 0.25 0.47
7.6 OTHER SITE CUT-OFF GRADES

7.6.1 OPEN PIT STOCKPILE CUT-OFF GRADE, SCOGINPIT
Additional to the Cut-Off Grades calculated and presented in the previous sections, Las Bambas also
calculated the cut-off grades for the ore that will go to the stockpiles for an efficient execution of the LoM
Plan, which will be rehandled during the last years of LoM or any period when it is not feasible to supply Mill
Plant with ore exclusively from the open pits.
Establish a cut-off grade for these materials come up because when rehandling in order to process them
finally, there are costs associated with this activity have to be covered by such materials. In addition, there is a
possibility that after many years being exposed to the environment, metallurgical recovery is not the same as
if they were mined and processed immediately, as a result of physical and chemical changes. All these factors
have been considered when assessing what mineral types could be stockpiled to maximize the NPV.
The formula for calculating the SCOGinpit is as follows:
SCOGinpit = (PC + RC + GA)/(REC*(MP - SC)*Factor)
The following tables show the methodology and the values used for the SCOGinpit calculation for each
Table 41 SCOGinpit Calculation for Las Bambas Complex

LAS BAMBAS COMPLEX
FERROBAMABA CHALCOBAMBA SULFOBAMBA
PC US$/t processed
RC Rehandling Cost US$/t processed

1.19 1.36 1.33
REC %
grade 63.25 63.25 63.25
Selling Costs
Costs
NSR SCOinpit US$/t processed 9.31 9.48 9.45
SCOGinpit CuE % 0.27 0.29 0.29

7.7 OPEN PIT HISTORICAL CUT-OFF GRADES
Historically, Las Bambas was only applying three cut-off grades:
 Marginal Cut-Off grade (Marginal COG) - to determinate the mineral able to pay processing costs,
processing sustaining capital, an incremental cost for mining a tonne of material as ore instead of
waste, and G&A costs;
 Break-even Cut-Off Grade (Break-even COG) - was formulated in the same way that the Marginal
CoG, with the addition of the mining cost plus the mining sustaining capital cost;
 CoG for Stocks (Stocks COG) - whose purpose was to restrict what ore should be stockpiled
strategically to maximize the NPV, taking into account the ore rehandling cost and the processing
cost including processing sustaining capital.
The following tables show that each type of ore processed had a different cut-off, mainly because each ore
type will have its own recovery. However, Las Bambas has been applying a unique cut-off grade of 0.20% Cu
for all ore types and all open pits. This strategy had been intentionally applied to not exceed the tailings dam
capacity by processing mostly high-grade ore. With 2015 estimates, each mineral type will be affected by its
own cut-off grade during the Ore Reserves and Mineral Resources estimation process, as well as the
development of mining plans.
Table 42 Historical Cut-Off Grades for Ferrobamba

FERROBAMBA - 2010
COG Component Units
FSSL FSSM FPSL FPSM FBRE TOTAL
COG Marginal CuE% 0.16 0.17 0.17 0.22 0.20 0.17
COG Stocks CuE% 0.20 0.21 0.21 0.27 0.24 0.21
COG BreakEeven CuE%

0.21 0.23 0.22 0.29 0.26 0.22
NSR Marginal US$/t processed 5.96 5.96 5.96 5.96 5.96 5.96
NSR Stocks US$/t processed 7.36 7.36 7.36 7.36 7.36 7.36
NSR BreakEven US$/t processed 7.92 7.92 7.92 7.92 7.92 7.92
Table 43 Historical Cut-Off Grades for Chalcobamba

COG CHALCOBAMBA -2010
Units
Component CSSL CSSM CSML CSMM CPSL CPSM CBRE TOTAL
COG Marginal CuE% 0.18 0.22 0.18 0.22 0.18 0.23 0.23 0.19
COG Stocks CuE% 0.21 0.26 0.21 0.26 0.21 0.27 0.27 0.22
COG BreakEven CuE% 0.22 0.27 0.21 0.27 0.22 0.28 0.28 0.23
NSR Marginal US$/t processed 6.38 6.38 6.38 6.38 6.38 6.38 6.38 6.38
NSR Stocks US$/t processed 7.39 7.39 7.39 7.39 7.39 7.39 7.39 7.39
NSR BreakEven US$/t processed 7.66 7.66 7.66 7.66 7.66 7.66 7.66 7.66
Table 44 Historical Cut-Off Grades for Sulfobamba

COG SULFOBAMBA - 2010
Units
Component SSKR SPOR SBRE TOTAL
COG Marginal CuE% 0.19 0.19 0.25 0.19
COG Stocks CuE% 0.20 0.20 0.27 0.20
COG BreaKeven CuE% 0.21 0.21 0.27 0.21
NSR Marginal US$/t processed 6.95 6.95 6.95 6.95
NSR Stocks US$/t processed 7.39 7.39 7.39 7.39
NSR Breakeven US$/t processed 7.57 7.57 7.57 7.57

8 CUT-OFF STRATEGIES
The usefulness of having cut-off grades for Las Bambas is to apply them in the Ore Reserves and Mineral
Resources estimation process, as well as the LoM and short-term plans; for Ore Reserves and Mineral
Resources the BCOGinpit and RCOGinpit will be applied respectively. For the efficient execution of the LoM Plan,
higher cut-offs than the BCOGinpit will be handled as cut-over grades. This will lead to stockpiled ore between
the cut-over grades and BCOGinpit, which will be rehandled by the end of life of mine. However, in order to
allocate these minerals to a stockpile, they have to pay the rehandling cost, and a possible loss of recovery
due to chemical changes that may have occurred due to oxidation when being exposed to weathering. These
rehandling costs, and potential loss in recovery, lead to formulation of a cut-off grade (SCOGinpit) for
controlling what minerals would go to this destination without losing profit compared to processing them
immediately. Considering this, and in order not to lose Ore Reserves, the ore between the BCOGinpit and the
SCOGinpit will have to go directly from mine to Mill plant to be processed, even in the first years of life of
mine, since that for this ore, is more profitable send it directly to Mill for its processing than send it to a
stockpile for later processing. During the execution of LoM plan Las Bambas will take into account all these
considerations, seeking to maximize the NPV by stockpiling the ore that is capable of being rehandled. The
MineSight scheduling software with which Las Bambas is working is able to do this task.
These strategies will allow Las Bambas to maximize its NPV without losing years of life, because the low-
grade ore stockpiled will be rehandled during the last years of LoM, the cut-off grades calculated will be used
as necessary and at the appropriate time.
Figure 1 Ferrobamba Tonnage–Grade Curve
Ferrobamba Tonnage - Grade

1,000,000 2.00
900,000 1.80
800,000 1.60
700,000 1.40
600,000 1.20
Tonnage (Kt)
500,000 1.00
400,000 0.80
300,000 0.60
200,000 0.40
100,000 0.20
0 0.00
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95
Tonnage 857,4 847,3 803,4 736,2 656,7 584,3 515,4 455,2 397,9 349,1 309,8 278,3 252,3 230,1 211,4 195,4 182,4 171,2 161,5 152,6
Grade 0.59 0.60 0.63 0.68 0.74 0.80 0.87 0.94 1.02 1.11 1.19 1.26 1.33 1.40 1.47 1.53 1.58 1.63 1.68 1.72
Figure 1 shows the tonnage of mineral for different cut-off grades of the most important open pit that will be
soon operated in the Las Bambas Complex; from it can be seen the sensitivity of the Ore Reserve to the cut-
off grades, a reduction in the cut-off of 0.20 to 0.15% Cu would add about 70Mt of low-grade ore.

Figure 2 Chalcobamba Tonnage–Grade Curve
Chalcobamba Tonnage - Grade

400,000 1.80
350,000 1.60
1.40
300,000
1.20
250,000
Tonnage (Kt)
1.00
200,000
0.80
150,000
0.60
100,000
0.40
50,000 0.20
0 0.00
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95
Tonnage 368,6 340,6 302,0 265,2 234,2 207,3 183,2 161,9 144,9 127,6 113,2 99,43 86,93 77,67 69,72 63,21 56,91 51,84 47,46 43,44
Grade 0.46 0.49 0.55 0.61 0.66 0.72 0.78 0.84 0.89 0.95 1.02 1.08 1.16 1.22 1.28 1.34 1.40 1.46 1.52 1.57
Figure 3 Sulfobamba Tonnage–Grade Curve
Sulfobamba Tonnage - Grade

120,000 2.00
1.80
100,000
1.60
1.40
80,000
1.20
Tonnage (Kt)
60,000 1.00
0.80
40,000
0.60
0.40
20,000
0.20
0 0.00
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95
Tonnage 106,6 88,14 79,24 69,15 59,98 51,84 46,27 41,92 37,94 35,18 33,42 31,30 29,62 27,65 26,05 24,54 23,61 21,25 19,68 18,84
Grade 0.52 0.63 0.69 0.77 0.86 0.96 1.04 1.12 1.19 1.26 1.30 1.35 1.39 1.45 1.49 1.54 1.57 1.65 1.72 1.75
Figures 2 and 3 show the tonnage of mineral for different cut-off grades of Chalcobamba and Sulfobamba
open pits respectively, both pits are sensitive to add ore between a cut-off of 0.20 and 0.15% Cu, with
Chalcobamba the more sensitive of the two.

9 NSR CALCULATION
To calculate the NSR, Las Bambas considered all information related to selling costs of copper and
molybdenum concentrate. This includes, concentrate losses, transportation costs, port payments, freight
costs, smelter and refinery charges, deductions for each metal in the concentrates, payable factors, etc.
Table 44 shows all costs associated with the sale of concentrates, which have been used to calculate the NSR.
Table 45 Selling Cost of Metals

2015
Cost Component (1)
Units 2010*
Transportation US$/wmt 103 24
Port Fees US$/wmt 19 22
Ocean Freigth Cost US$/wmt 41 53
Concentrate Humidity % 9.50% 8.00%
Insurance Cost US$/dmt 1.37 0.87
Umpire, Surveying, Asseying US$/dmt 0.5 0.5
Concentrate Losses % 0.10% 0.30%
As Penalty Charge US$/dmt 0 0
Smelter Charge US$/dmt 113 65
Total Smelting Cost US$/dmt 293 173
Minimum Cu Deduction % 1.00% 1.00%
Minimum Ag Deduction g/t 30 30
Cu Selling
Minimum Au Deduction g/t 2 0.2
Cu Payable Factor % 96.50% 96.50%
Ag Payable Factor % 90.00% 77.00%
Au Payable Factor % 90.00% 82.80%
Cu Refining Charge US$/lb 0.012 0.065
Ag Refining Charge US$/oz 0.35 0.35
Au Refining Charge US$/oz 4.5 5
Concentrate Grade Cu % 42.00% 35.90%
Cu Refining Cost US$/lb 0.11 0.14
Ag Selling Cost US$/oz 2.43 2.23
Au Selling Cost US$/oz 105 125
Cu Conc. Selling Cost US$/lb 0.43 0.36
Transportation US$/wmt 103 39
Port Fees US$/wmt 0 23
Ocean Freigth Cost US$/wmt 150 53
Concentrate Grade Mo % 50% 50%
Concentrate Humidity % 5.00% 3.00%
Mo Selling Insurance Cost US$/dmt 6.12 9.92
Concentrate Losses % 0.00% 0.30%
Minimum Mo Deduction % 0.00% 0.00%
Mo Payable Factor % 97.00% 98.00%
Mo Roaster Charge US$/lb 1.6 1.5
Mo Conc. Selling Cost US$/lb 2.13 1.95
*
(1)
Costs for FPSL GMU
Taking a reference block from the block model of Ferrobamba open pit, the NSR was calculated for that
block, which has Cu, Mo, Au and Ag grades, in addition to GMU and recovery model for the copper and the
flat recoveries for the other metals, the metallurgical recoveries and grades that would have each metal in the
concentrates were considered. The following table shows the details of the selected block on which the NSR
calculations were performed.

Table 46 Reference Block for the NSR Calculation
Ferrobamba Reference Block Size
x (Whittle) Unit 62 20
y (Whittle) Unit 118 20
z (Whittle) Unit 52 15
Bench Level 3870
UGM (1) Unit 3
TOPO % 100
Cu % 0.717
CuS ppm 150.57
SG Unit 2.63
Mo ppm 92.2
Au g/t 0.03
Ag g/t 2.07
Tonnes t 15,780
(1)
FPSL
Table 47 NSR Calculation
Cu Concentrate Mo Concentrate
NSR Component
Tonnes Cu Units Au Units Ag Units Tonnes Mo Units
Mill Feed 15,780 0.717 % 0.03 g/t 2.07 g/t 15,780 92.2 ppm
Metal Contained 113 t 473 g 32,665 g 1.45 t
Mill Recovery 94.01 % 65.00 % 72.70 % 55.50 %

Metal in Concentrate 106.4 t 308 g 23,747 g 0.81 t
Concentrate Grade 42.00 % 1.22 g/t. conc 93.77 g/t. conc 50.00 %
Concentrate 253.24 1.61
Concentration Ratio 62 9,771
Metal per tonne of concentrate 0.42 t 1.22 g 93.77 g 0.50 t

Metal Loosed 0.000 t 0.001 g 0.094 g 0 t
Metal per tonne of Concentrate
Lossed 0.42 t 1.21 g 93.68 g 0.50 t
Minimum Deduction 0.01 % 2.00 g 30.00 g 0.00 %
Payable Factor 96.50 % 0.00 % 68.01 % 97.00 %
Payable Metal 0.4 t 0.0 g 63.7 g 0.5 t
Metal Price 2.95 US$/lb 1010.00 US$/oz 21.10 US$/oz 11.10 US$/lb
Value of Metal 2,633 US$/t. conc 0 US$/t. conc 43 US$/t. conc 11,869 US$/t. conc
Deduction and Charges

Transportation 112 US$/t. conc 108 US$/t. conc
Port Fees 21 US$/t. conc 0 US$/t. conc
Ocean Freigth Cost 45 US$/t. conc 158 US$/t. conc
Insurance Cost 1 US$/t. conc 6 US$/t. conc
Umpire, Surveying, Asseying 1 US$/t. conc US$/t. conc
Smelter Charge 113 US$/t. conc US$/t. conc
Total Treatment Charges 293 US$/t. conc 271 US$/t. conc
Refining Charges 0.01 US$/lb 4.5 US$/oz 0.35 US$/oz 1.6 US$/lb
11 US$/t. conc 0.00 US$/t. conc 0.72 US$/t. conc 1,711 US$/t. conc
Total Deductions 304 US$/t. conc 0.00 US$/t. conc 0.72 US$/t. conc 1,982 US$/t. conc
Value After Deductions and Refining 2,330 US$/t. conc 0.0 US$/t. conc 42.5 US$/t. conc 9,886 US$/t. conc
Concentration Ratio 62 62 62 9,771

US$ / t. US$ / t. US$ / t.
Value per tonne of Ore 37.39 Ore 0.00 Ore 0.68 Ore 1.01 US$ / t. Ore
Grade of Ore 0.72 % 0.03 g/t 2.07 g/t 92.20 ppm
NSR Factor 52.14 US$/% 0.00 US$/g 0.33 US$/g 0.01 US$/ppm

(1)
Net Smelter Return (NSR) = 39.08 US$/t. Ore
NSR = 52.14 * Cu + 0.01 * Mo + 0.00 * Au + 0.33 * Ag

(1)
This NSR value is the result for the reference block shown in the table 44, a change in this reference block, which may change grades
also; will change the NSR values.
If the NSR BCOinpit = 7.64 US $/t processed is applied to this block, the destination for this block will
be the Mill plant for its respective processing.
With this value of NSR, the total block value is calculated. Taking into account the mining costs incurred for
extracting this block, the result is shown below:
(2)
Profit per tonne = 31.44 US$/t
Mining Cost = 1.63 US$/t
Value per tonne = 29.81 US$/t
Value per Block = 470,353 US$
(2)
This value is obtained by subtracting to NSR, the processing cost (includes sustaining capex), G&A and ore differential costs.

10 CONCLUSIONS AND RECOMMENDATIONS
- The validity of the cut-off grades is based mainly on the quality of inputs to the calculations. If the
inputs are imprecise or are not the best estimate of future costs or recoveries, Las Bambas could be
running the risk of sending waste to the Mill plant or ore to waste dumps.
- Costs for calculating cut-off grades are perhaps the most important inputs. Therefore it is necessary
that cost modelling is adequate. Conventional cost modelling usually involves excessive averaging and
unclear allocation of costs to tonnes produced as well as the distinction between fixed and variable
costs.
- It is recommended to undertake a study at Las Bambas into the use the activity-based costing (ABC
Costing) as this technique involves a more responsible and detailed cost modelling that reflects more
accurately the cause-effect relationship between activity costs and the cost drivers they are attributed
to. The objective would be to identify what percentage of the costs that have been considered variable
up to now, really are, otherwise they would be considered fixed and therefore should be charged to
the bottleneck (Processing capacity).
- The costs used for the cut-off grades calculations in Las Bambas operations come from a cash flow
model that does not distinguish expenditures for each open pit, thereby potentially undervaluing or
overvaluing either one.
- The recovery model for copper and the Feasibility Study recoveries considered in the cut-off grade
calculations are approximate only. As a result, Las Bambas needs to develop a metallurgical recovery
model applicable to each block in the block model, taking into account the GMU, solubility rate, metal
grades and other metallurgical variables. The information from recent drilling at the Ferrobamba zone
and the metallurgical test at Sulfobamba could be used for this aim. It is also necessary to develop a
recovery model for low-grade ore, which will be stockpiled in the stockpiles for 15 to 20 years.

APPENDIX 1 DOCUMENTS AND ADDITIONAL INFORMATION
Excel file: 150909_2015 LB CoG Calculation.xlsx
Pdf file: 2015 LB CoG Signatures.pdf

MMG Las Bambas Cut-Off Grade Report - Eng

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MMG LAS BAMBAS

Open Pit Cut-Off Grade Report

Document No & Title: 150909_MMG Las Bambas Cut-Off Grade Report_eng.docx

4 OPERATIONAL DETAILS AND SITE CONSTRAINTS 9

5 DETAILED PRESENTATION OF ASSUMPTIONS AND COSTS 10

6 METALLURGICAL RECOVERY MODEL 18

7 OPEN PIT CUT-OFF GRADE CALCULATIONS 20

10 CONCLUSIONS AND RECOMMENDATIONS 34

MMG | 150909_MMG Las Bambas Cut-Off Grade Report_eng.docx Page 3 of 35

Prepared by Title Signature Date

Carlos Gutierrez Mine Planning

Alvaro Ossio VP Commercial

Reviewed by Title Signature Date

Luis Ticona Technical Services Director

Competent Person Title Signature Date

Luis Rivera VP Operations

Gustavo Gomes General Manager

MMG | 150909_MMG Las Bambas Cut-Off Grade Report_eng.docx Page 4 of 35

Table 2 Cut-Off Grades 2015 Summary

Table 3 Cut-Off Grades 2010 Summary

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BCOGinpit = (PC + DC + GA)/(REC*(MP - SC)*Factor)

RCOGinpit = (PC + DC + GA)/(REC*(MP - SC)*Factor)

MCOGinpit = (PC + DC + GA)/(REC*(MP - SC)*Factor)

SCOGinpit = (PC + RC + GA)/(REC*(MP - SC)*Factor)

TCOGinpit = (PC + TMC + GA)/(REC*(MP - SC)*Factor)

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5.1 METAL PRICES AND EXCHANGE RATES

Table 4 Metal Prices and Exchange Rates

5.2 OPEN PIT OPERATING COSTS

5.2.2 Basis of Cost Estimation

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5.2.3 Major Cost Drivers

Table 6 Major Cost Drivers - Mining

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5.2.4 Open Pit Mining Operating Costs

Table 7 details how the Mining Operating Cost is composed.

Table 8 Composition of Mining Operating Costs

MMG | 150909_MMG Las Bambas Cut-Off Grade Report_eng.docx Page 12 of 35

Table 9 Ore Differential Costs

5.2.6 Ore Rehandling Costs.

Table 10 Ore Rehandling Costs

* Feasibility Study Update (September, 2010)

5.2.7 Processing Operating Costs

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5.2.8 Sustaining Capital Costs

Tabla 12 Sustaining Capital Costs

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Table 13 Selling Costs

5.2.10 General and Administrative Costs

Table 14 General and Administrative Costs

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5.2.11 Fixed and Variable Cost Allocations

Table 15 Fixed & Variable Cost Allocations

5.2.12 Cost Comparison versus Previous Estimates

Table 16 Cost Comparisons

MMG | 150909_MMG Las Bambas Cut-Off Grade Report_eng.docx Page 16 of 35

* Feasibility Study Update (September, 2010)

Cost Component Units 2015 2010* DD LB Comments

(*2) M&A Mine Capex to 2037

BCOGinpit = (PC + DC + GA)/(REC(MP - SC)Factor)

RCOGinpit = (PC + DC + GA)/(REC(MP - SC)Factor)

MCOGinpit = (PC + DC + GA)/(REC(MP - SC)Factor)

SCOGinpit = (PC + RC + GA)/(REC(MP - SC)Factor)

TCOGinpit = (PC + TMC + GA)/(REC(MP - SC)Factor)

CuE% = Cu% + ((MoMP-SCMo)MoREC)/((CuMP-SCCu)CuREC)Mo10-4% +((AgMP-SCAg)16AgREC)/((CuMP-SCCu)CuREC)Ag10-4% + ((AuMP-SCAu)16AuREC)/((CuMP-SCCu)CuREC)Au10-4%

BCOGinpit = (PC + DC + GA)/(REC(MP - SC)Factor)

RCOGinpit = (PC + DC + GA)/(REC(MP - SC)Factor)

MCOGinpit = (PC + DC + GA)/(REC(MP - SC)Factor)

TCOGinpit = (PC + TMC + GA)/(REC(MP - SC)Factor)

SCOGinpit = (PC + RC + GA)/(REC(MP - SC)Factor)