THE MINING INVESTOR - minem.gob.pe · the mining investor Mining concession applications shall...

PERU : MINING GUIDES 2006PERU : MINING GUIDES 2006

THE MINING INVESTORTHE MINING INVESTOR



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THE MINING INVESTOR

PERU : MINING GUIDES 2006

http://www.minem.gob.pe

PERU MINING COUNTRY





THE MINING INVESTOR

MINISTRY OF ENERGY AND MINES GENERAL MINING BUREAU

MINING GUIDES 2006

PERU MINING COUNTRY

PERU :





GLOSSARYGLOSSARY OF TERMS AND ACRONYMSAG : issued by the Ministry of AgricultureCONATA : Consejo Nacional de Tasaciones / National Council of Property ValuationDGAA : Dirección General de Asuntos Ambientales / General Bureau of Environmental AffairsDGAAM : Dirección General de Asuntos Ambientales Mineros / General Bureau of Mining Environmental

AffairsDGE : Dirección General de Electricidad / General Bureau of ElectricityDGM : Dirección General de Minería / General Mining BureauDIGESA : Dirección General de Salud Ambiental / General Bureau of Environmental HealthDM : Despacho Ministerial / Minister's OfficeDRA : Dirección Regional Agraria / Regional Agriculture BureauDREM : Dirección Regional de Energía y Minas / Regional Energy and Mining BureauEA : Environmental AssessmentEF : issued by the Ministry of Economy and FinanceEIS : Environmental Impact StudyEM : issued by the Ministry of Energy and MinesFIA : Firm of Independent SupervisorsHa : HectaresIGV : Impuesto General a las Ventas / Value Added TaxINACC : Instituto Nacional de Concesiones y Catastro Minero / National Institute of Concessions and Mining

CadastreINDECOPI : Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual /

National Institute for the Defense of Free Competition and Intellectual PropertyINGEMMET : Instituto Geológico Minero y Metalúrgico / Geological, Mining and Metallurgical InstituteINRENA : Instituto Nacional de Recursos Naturales / National Institute of Natural ResourcesIPM : Impuesto a la Promoción Municipal / Municipal Development Tax ISC : Impuesto Selectivo al consumo / Excise TaxKm : Kilometer m : MetersMEF : Ministerio de Economía y Finanzas / Ministry of Economy and FinanceMEM : Ministerio de Energía y Minas / Ministry of Energy and MinesMINEM : Ministerio de Energía y Minas / Ministry of Energy and MinesMM : MillionMT : Metric TonsN° : NumberOCM : Oficina de Concesiones Mineras / Office of Mining ConcessionsOGA : Oficina General de Administración / General Administration Office OIT : Organización Internacional del Trabajo / International Labor OrganizationONRP : Oficina Nacional de Registros Públicos / National Office of Public RegistrationPAMA : Programa de Adecuación y Manejo Ambiental / Environmental Adjustment and Management

ProgramPCM : Presidencia del Consejo de Ministros / Presidency of the Council of MinistersPDM : Promoción y Desarrollo Minero / Mining Promotion and DevelopmentProInversión : Agencia de Promoción de la Inversión / Investment Promotion AgencyRUC : Registro Único del Contribuyente / Consolidated Registry of TaxpayersSA : Sociedad Anónima / CorporationSAA : Sociedad Anónima Abierta / Open CorporationSAC : Sociedad Anónima Cerrada / Closed CorporationSMRL : Sociedad Minera de Responsabilidad Limitada / Limited Liability Mining CompanySRL : Sociedad de Responsabilidad Limitada / Limited liability corporationSS : Sworn StatementSUNARP : Superintendencia Nacional de Registros Públicos / National Superintendence of Public

RegistrationSUNAT : Superintendencia Nacional de Administración Tributaria / National Superintendence of Tax

AdministrationTR : issued by the Ministry of Labor (Ministerio de Trabajo)TUO : Texto Único Ordenado / Consolidated Amended TextTUPA : Texto Único de Procedimientos Administrativos / Consolidated Text of Administrative ProceduresUIT : Unidad Impositiva Tributaria / Tax UnitUS$ : US DollarsUTM : Universal Transverse MercatorVMM : Vice Ministro de Minas / Vice-Minister of Mines





INDEX5

15

21

25

31

35

39

43

47

51

55

57

61

65

67

71

77

1. MINING CONCESSIONS

2. ENVIRONMENTAL PERMITS

3. PROCESSING CONCESSIONS

4. MINING RIGHTS OF WAY

5. GENERAL SERVICE CONCESSIONS

6. MINING TRANSPORT CONCESSIONS

7. FINAL ELECTRIC CONCESSIONS

8. TEMPORARY ELECTRIC CONCESSIONS

9. MUNICIPAL AUTHORIZATION AND TAXES

10. SAFETY, HEALTH AND SANITARY AUTHORIZATION

11. USE OF WATER FOR NON-AGRICULTURE PURPOSES

12. INCORPORATION OF COMPANIES

13. COLLECTIVE LABOR RELATIONS

14. STABILITY AGREEMENTS

15. TAX REFUND FOR EXPLORATION ACTIVITIES

16. LEGISLATION ON DOMESTIC AND FOREIGN INVESTMENT

ANNEXES

INDEX OF PROCEDURES





4

INTRODUCTIONINTRODUCTION

Peru is a country with high natural resources potential, being mining one of the sectors with strong possibilities of development, therefore, promoting both national and international investment in mining and creating the means to contribute to an easy access of investments is one of the priority State Policies.

The mining industry has become and continues to be one of the mainstays of Peruvian economy concentrating a number of activities and processes where different areas of professional knowledge and fields converge.

Based on this perspective, we offer both national and international potential investors this Manual, which has been designed to provide them with a basic orientation and updated information on issues related to the mining industry development.

General Mining Bureau





I. DEFINITION

II. PROCEDURE

The mining concession grants its holder the right to exploit and explore all mineral resources that may be found in the subsoil of the concession area.

Mining concessions shall be granted in extensions ranging from 100 to 1000 hectares in grids or groups of adjacent grids that are contiguous to each other at least by one side, except for concessions on the maritime domain, for which grids from 100 to 10,000 hectares may be granted.

Concessions are irrevocable provided that the concessionaire fulfills the obligations set forth by the General Mining Act to maintain the concession effectiveness.

Legal Basis:

- Article 9 to Article 11, Article 117 of the Consolidated Amended Text (Texto Único Ordenado - TUO) of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.

1. MINING CONCESSION APPLICATION

The mining concession application is a request for mining concession filed under Decree Law Nº 708 “Law for the Promotion of Mining Investment” and Supreme Decree Nº 014-92-EM “Consolidated Amended Text of the General Mining Act.”

The mining concession application shall include the juridical person's and legal representative's registration data, as appropriate. Likewise, a sworn statement with the mining concession applicant's advanced commitment shall be submitted.

The mining concession application shall attach the payment receipts for the Effectiveness Fee corresponding to the first year equivalent to US$ 3.00 per requested hectare, and the Payment Receipt for the Administrative Fee equivalent to 10% of the effective Tax Unit (Unidad Impositiva Tributaria UIT).

Mining concession applications shall be received at the National Institute of Concessions and Mining Cadastre (Instituto Nacional de Concesiones y Catastro Minero INACC) on a first-come-first-serve basis.

Upon reception of the mining concession application, the front desk officers at INACC's Office of Mining Concessions (Oficina de Concesiones Mineras-OCM) shall issue the corresponding code in the Book of Mining Concession Applications in order to determine priority in the submission of applications. This priority shall be applicable even when the reading of the application, or the review of the attached documents show incompliance with any of the requirements set forth in the General Mining Act as regulated.

Deficient mining concession applications may be amended within 10 business days of notification of the omission.

Mining concession applications failing to attach receipt of payment for the effectiveness fee and/or the administrative fee; not including information on the UTM coordinates of the requested area; or lacking an opinion or having an unfavorable opinion regarding the mining concession application issued by the Provincial and District Municipality, shall be rejected by the Office of Mining Concessions of INAAC.

Mining Concessions in Urban Areas: Mining Concessions within Urban Areas shall only be granted if there is a Special Law authorizing the granting of mining concession rights in such areas.

MINING CONCESSIONS

MINING CONCESSIONS

5





Mining concession applications shall request extensions from 10 to 100 hectares, in rectangles of 500 meters long by 200 meters wide, identifying its vortexes in UTM coordinates, under the grid-based system.

If a mining concession application completely overlaps with an Urban Area zone, it shall be deemed inadmissible. In case of partial overlapping, the requested area shall be automatically reduced or fractioned, as appropriate, to cover only the area where no overlapping exists, unless the mining concession application has been made for the minimum extension of 10 hectares, in which case it shall be deemed inadmissible.

INNAC shall officially communicate the Province Municipality when, based on the information available, it is evidenced that the area subject to mining concession application may likely be in a urban area, even though there is no municipal ordinance defining it as such. To that effect, INACC shall not grant the title before 60 business days since the official communication as sent by post to the municipality.

Mining Concessions in Areas of Urban Expansion: For areas of urban expansion, the title to the concession shall be granted subject to the prior agreement of the relevant Provincial Municipality. If the provincial municipality does not issue a pronouncement within 60 calendar days of the request for pronouncement by the General Mining Concessions Bureau, the Municipality pronouncement shall be deemed unfavorable. Requests for mining concessions in areas of urban expansion, shall attach the mining concession application's Technical Information.

Mining concession applications shall request extensions from 10 to 100 hectares, in rectangles of 500 meters long by 200 meters wide, identifying its vortexes in UTM coordinates under the grid-based system.

If an overlapping is noted, an official communication shall be sent to the Provincial Municipality, accompanied by the Technical Information submitted, requesting a pronouncement within 60 calendar days.

If the answer is favorable, the Ministry of Energy and Mines shall be notified, requesting a Ministry Resolution authorizing the granting of the title to the mining concession. Upon receipt of the Ministry Resolution, the mining concession application shall continue its process.

If the answer is unfavorable, based on strictly technical criteria and/or in the protection of natural areas or archeological sites, the mining concession application shall be rejected, if completely located over an area of urban expansion, being this considered as an area not subject to mining concession application.

If the overlapping is partial, the requested area shall be reduced or fractioned, as appropriate, to cover only the area where no overlapping exists.

Mining Concessions in Border Zones: According to article 126 of the 1979 Constitution and article 13 of Legislative Decree 757, to exercise property or possession rights over mines, land, forests, water, fuel or sources of energy by foreign investors, either directly or indirectly, in the areas included within fifty kilometers of the country borderland, such foreign investors shall previously obtain the corresponding authorization, which shall be granted by Supreme Resolution countersigned by the Minister who at the time presides the Cabinet of Ministers and the Minister of the corresponding sector. Such authorization shall have the favorable opinion of the Joint Chiefs of Staff based on the considerations above.

The Supreme Resolution to which the previous paragraph refers shall set forth conditions or limitations for the exercising of the corresponding property or possession rights, which may only be restricted due to reasons of national security.

Reasons of national security shall mean those required to secure independence, sovereignty and territory integrity of the Republic of Peru, as well as internal order, as provided in article 275 of the 1979 Constitution.

In order to obtain the required previous authorization, foreign investors or companies in which they have an interest shall submit an application to the Ministry of Energy and Mines. Such application shall contain the information provided in the Annex.

6

MINING CONCESSIONS





Once the investment is made, it shall be registered with PROINVERSIÓN in free convertible currency, as appropriate.

The acquisition of the goods referred to in article 32 of Supreme Decree Nº 162-92-EF or the transfer of property or possession over such goods by foreign investors to other foreign investors, who lack the corresponding previous authorization, shall be sanctioned removing the investor's acquired right in the benefit of the State, according to article 71 of the 1993 Constitution.

When the transfer of goods to which the previous paragraph refers is made to Peruvian investors, it shall only be required to advise the Ministry of Energy and Mines

Legal Basis:

- Article 14, Article 39, Article 118º and Article 119 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.

- Article 12 to Article 14, Article 17 of the Regulations on Mining Procedures as approved by Supreme Decree Nº 018-92-EM.

- Article 1 of Legislative Decree Nº 913 substituting Article 39 and Article 57 of the Consolidated Amended Text of the General Mining Act.

- Ninth Final Provision of Legislative Decree Nº 708 Law for Investments Promotion in the Mining Sector.- Article 32 to 34 of Supreme Decree Nº 162-92-EF.

2. NOTIFICATION TO THE INTERESTED PARTY OF NOTICE FOR PUBLICATION

If the mining concession application meets the requirements set forth in the Regulations on Mining Procedures (Article 17º of Supreme Decree Nº 018-92-EM), The Head of the General Bureau of Mining Concessions of INACC shall notify the interested party, within 7 business days following the mining concession application submission, of the publication of court notices, attaching the notices to be published, and if necessary, to be posted.

Simultaneously to the notification to the mining concession applicant, the Head of the General Bureau of Mining Concessions of INACC shall notify about the new mining concession application to the holders of other mining concession applications or previously granted mining concessions, whose areas are located in part of the grid or group of grids included in the mining concession application.

Legal Basis:

- Article 122 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.

- Article 20 of the Regulations on Mining Procedures as approved by Supreme Decree Nº 018-92-EM.

3. PUBLICATION

All mining concession applications shall be published only once in the "El Peruano" Official Gazette and in the newspaper in charge of the publication of court notices in the capital city of the province where the requested area is located. In the latter case, if no such newspaper exists, notices shall be posted for 7 business days in the INACC's main office or decentralized offices, as appropriate.

Applications for mining concessions located in the Department of Lima, shall be published only in the "El Peruano" Official Gazette.

Notices shall be published within 30 business days upon notice notification.

Within 60 calendar days upon publication, the interested party shall deliver the entire pages evidencing the publication of the notices to INACC's General Bureau of Mining Concessions.

7

MINING CONCESSIONS





Legal Basis:

- Article 122, Article 123 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.

- Article 19, Article 20 of the Regulations on Mining Procedures as approved by Supreme Decree Nº 018-92-EM.

4. TECHNICAL AND LEGAL OPINION

Within 30 business days upon reception of the publication of notices, if no objection has been filed, INACC's General Bureau of Mining Concessions shall issue the legal and technical opinion.

Legal Basis:

- Article 123º of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.

- Article 21º of the Regulations on Mining Procedures as approved by Supreme Decree Nº 018-92-EM.

5. TITLE TO THE MINING CONCESSION

The file shall be submitted to the Institutional Head of INACC for the issuance of the corresponding Resolution within 5 business days upon issuance of the opinions, under the responsibility of the Head of INACC's General Bureau of Mining Concessions.

With the favorable technical and legal opinions, the Institutional Head of INACC shall grant the title to the mining concession not before 30 calendar days after the last publication.

The Resolution issued by the Institutional Head of INACC shall be notified to the mining concession applicant and other parties interested in the respective procedure.

Through the concession title, the State recognizes the right of the concessionaire to perform with exclusivity and within a clearly delimited surface, the activities inherent to the concession, as well as the rights set forth in the Consolidated Amended Text of the General Mining Act, notwithstanding its obligations.

Within the first half of every month, INACC shall publish in the "El Peruano" Official Gazette the list of the mining concessions for which titles were granted during the immediately previous month.

Legal Basis:

- Article 124, Article 127 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.

- Article 21, Article 24 of the Regulations on Mining Procedures as approved by Supreme Decree Nº 018-92-EM.

6. REGISTRATION OF TITLE TO THE CONCESSION

Once the resolution granting the title to the mining concession is final and unappealable, it shall be registered upon request of the interested party, in the Registry of Mining Rights of the National Superintendence of Public Registration (Superintendencia Nacional de Registros Publicos - SUNARP).

Legal Basis:

- Article 108, Article 126 of the General Mining Law approved by Supreme Decree Nº 014-92-EM.

8

MINING CONCESSIONS





PROCEDURE TO OBTAIN GENERAL MINING CONCESSIONS

Omission?

Notification

No

Publication

OCM - INACCReception of notices

Title to the Concession is granted

Publication of Approved

Concessions

Up to 30 business days



5 business days

15 first business days of every month

10 days

30 business days from the last publication

- Effectiveness Fee Payment Receipt: US$ 3.00 per Ha.- Administrative Fee Payment Receipt for 10% UIT

Yes

7 días útiles

Registration withSUNARP

File application with

OCM - INACC

Legal & Technical Opinion

9

UIT: S/.3,300 as from January 1, 2005

MINING CONCESSIONS





The process continues

PROCEDURE TO OBTAIN MINING CONCESSIONS

1. In Urban Areas

2. In Areas of Urban Expansion

-Extensions of 10 to 100 Ha.-Rectangles of 500 x 200 m.-Technical Information

Opinion by the Municipality

YES

Official communication to the Municipality -Technical information

-Communication requesting pronouncement in no more than 60 days

Official Communication to MINEM

Area not subject to application

NO

Up to 60 days

If no answer is given in 60 days it shall be deemed approved

- Extensions of 10 to 100 Ha.- Rectangles of 500 x 200 m.

Total overlapping?Inadmissible yes

The area is reduced or fractioned

Opinion by theMunicipality

NO

yes

Up to 60 days

If no answer is given in 60 days it shall be deemed approved

Title to the concession


OCM - INACC

no


OCM - INACC

Overlappingis noted

Submission of Ministry Resolution

10

MINING CONCESSIONS





PROCEDURE TO OBTAIN MINING CONCESSIONS IN BORDER ZONES

3. In Border Zones (50 km. from the Borderline)

- Extensions of less or more than 100 Ha.- Closed polygons- Technical Information

Peruvian Holder?

no

Supreme Resolution

authorizing it?

Obtain Supreme Resolution

no

Application approved?

si

yes

noInadmissible Application

The processcontinues

si

- If it has been so determined or if 6 months have elapsed since the application filing

11


OCM - INACC

MINING CONCESSIONS





APPLICATION OF AUTHORIZATION TO ACQUIRE OWNERSHIP OR POSSESSION OF GOODS BY FOREIGNERS IN BORDER AREAS

A) DIRECT PARTICIPATION

I. IDENTIFICATION OF THE INVESTOR:1. Natural person:

1.1 Name: ......................................................1.2 Nationality: .....................................................1.3 Address: ................................................. (in the country of origin)1.4 Telephone: .......................... Fax: .......................1.5 Investor's legal representative: (in Peru)- Name: ....................................................- Address: ...............................................- Telephone: .................................................

2. Juridical person:2.1 Name: ......................................................2.2 Nationality: ...................................................2.3 Type of company: .................................................2.4 Date of company incorporation: ..........................2.5 Address: ...................................................................

(in the country of origin)2.6 Telephone: .......................... Fax: .......................2.7 Investor's legal representative: (in Peru)- Name: ....................................................- Address: ...............................................- Telephone: .................................................

II. INFORMATION ABOUT THE GOODS SUBJECT MATTER OF ACQUISITION:1. Type of goods: ............................2. Right being acquired over the goods: ...........................3. New investment total amount: US$................................4. Purpose of investment:

4.1 Economic sector: ........................................4.2 Brief description of the project: ......................................................................................................................................................................................................................................................................................................................................4.3 Investment recipient company: (when appropriate)- Name: ...........................- Address: .......................................- Telephone: .......................... Fax: ........................- Current number of permanent workers of the company: ....................................

5. Specified period to make the investment (when the goods are acquired in installments): .................

B) INDIRECT PARTICIPATION

I. IDENTIFICATION OF THE COMPANY THAT INCLUDES FOREIGN INVESTORS:

1. Name: ......................................................2. Type of company: .................................................

12

MINING CONCESSIONS





3. Address: .....................................4. Telephone: .......................... Fax: ........................5. Legal representative:

- Name: ...................................................- Address: ...............................................- Telephone: .................................................

6. Current number of permanent workers of the company: .............................................7. Current amount of capital and reserves: .........................................8. Current amount and face value of the shares: .........................................9. Percentage share of foreign investment in the capital of the company: ...............................

II. IDENTIFICATION OF THE FOREIGN INVESTORS:

1. 1. Natural person:1.1 Name: ......................................................1.2 Nationality: .....................................................1.3 Address: .................................................(in the country of origin)1.4 Telephone: .......................... Fax: .......................1.5 Percentage share of foreign investment in the capital of the company: .....................1.6 Investor's legal representative: (in Peru)- Name: ....................................................- Address: ..............................................- Telephone: .................................................

2. Juridical person:2.1 Name: ......................................................2.2 Nationality: ...................................................2.3 Type of company: .................................................2.4 Date of company incorporation: ..........................2.5 Address: ..................................................................

(in the country of origin)2.6 Telephone: .......................... Fax: .......................2.7 Percentage share of foreign investment in the capital of the company: .................. 2.8 Investor's legal representative: (in Peru)- Name: ....................................................- Address: ...............................................- Telephone: .................................................

III. INFORMATION ABOUT THE GOODS SUBJECT MATTER OF ACQUISITION:

1. Type of goods: ............................2. Right being acquired over the goods: ...........................3. Total of the new investment: US$................................4. Purpose of investment:

4.1 Economic sector: ........................................4.2 Brief description of the project: ..............…..........................................................................…..........................................................................…............................................................................…..........................................................................…..

5. Specified period to make the investment (when the goods are acquired in installments): …….....

13

MINING CONCESSIONS





14





ENVIRONMENTAL PERMITS

ENVIRONMENTAL PERMITS FOR THE IMPLEMENTATION OF MINING PROJECTS

I. DEFINITION

II. PROCEDURE

The holder of the mining-metallurgical concession (including the assignee) is responsible for the emission, discharge and disposal to the environment of waste produced by the mining exploration and exploitation activities in the area of concession. Likewise, he shall prevent that maximum permissible levels are exceeded for those elements or substances that in high concentrations or prolonged permanence may adversely affect the environment and people's health.

Legal Basis:

- Regulations on Environmental Protection as approved by Supreme Decree Nº 016-93-EM.- Article 1, Article 5, Article 7 paragraph 2 of the Environmental Regulations on Mining Exploration Activities

as approved by Supreme Decree Nº 038-98-EM

1. ENVIRONMENTAL IMPACT STUDY

Applicants to a mining and/or processing concession as well as those increasing their operations' production are required to submit an Environmental Impact Study (EIS) for the project to the General Bureau for Mining Environmental Issues of the Ministry of Energy and Mines.

The institutions authorized to perform EIS for mining activities are listed in the corresponding Registry of the General Bureau for Mining Environmental Issues of the Ministry of Energy and Mines (http://www.minem.gob.pe/ambientales/publicaciones/).

Environmental Impact Studies for Mining Exploration Projects:

a) Category A Exploration Projects: Include mining exploration activities causing slight or no alteration to the surface, such as geological and geophysical surveys, topographic surveys and the collection of small amounts of surface rock and ore samples using instruments or tools that can be transported by hand or over the surface without causing major alteration to the land other than the one caused by the regular use by people who is not involved in the exploration process.

No exploration activities under this category require any permits.

b) Category B Exploration Projects: Less than 20 drilling platforms (Sworn statement required).

Requirements:

1. Application in due form and administrative fee payment (40% UIT).2. Sworn Statement in two copies:

- For the General Bureau for Environmental Issues- For public consultation

3. Proof of delivery of a copy of the sworn statement to the Regional Bureau of Energy and Mines corresponding to the area of the project.

4. Proof of delivery of one printed and one electronic copy of the environmental assessment, submitted to the District Municipality that is closest to the project.

The General Bureau for Mining Environmental Issues shall have 20 calendar days to review the file and issue its first pronouncement.

15





The Head of such Bureau is the authority responsible for the final decision, which shall be issued in the form of a Bureau Resolution (Resolución Directoral).

c) Category C Exploration Projects: More than 20 drilling platforms, in areas larger than 10 hectares and/or with more than 50m long tunnels (Environmental Assessment required).

Requirements:

1. Application in due form and administrative fee payment.2. Two copies (printed and electronic) of the Environmental Assessment:

- For the General Bureau of Environmental Issues- For public consultation under the citizen participation process.

3. Proof of delivery of one printed and one electronic copy of the Environmental Assessment submitted to the Regional Bureau of Energy and Mines of the area of the project.

4. Proof of delivery of one printed and one electronic copy of the Environmental Assessment submitted to the District Municipality that is closest to the project.

The General Bureau of Mining Environmental Issues shall have 40 calendar days to review the file.

The Head of such Bureau is the authority responsible for the final decision, which shall be issued in the form of a Bureau Resolution

Environmental Impact Study for Mining Exploitation and Processing projects:

Requirements:

1. Application in due form and administrative fee payment.2. Two printed and two electronic copies of the EIS and five copies of the executive summary:

- For the General Bureau of Environmental Issues- For public consultation under the citizen participation process.

3. Proof of delivery of one printed and one electronic copy of the study submitted to the National Institute of Natural Resources (Instituto Nacional de Recursos Naturales INRENA).

4. Proof of delivery of two printed and two electronic copies of the EIS submitted to the Regional Bureau of Energy and Mines that is closest to the area of the project and twenty five copies of the corresponding executive summary.

5. Proof of delivery of two printed and two electronic copies of the EIS and one copy of the corresponding executive summary to the District Municipality that is the closest to the project.

6. Citizens participation is part of the assessment procedure in the process of approval of the EIS, namely by making the EIS available to the public through local, regional and national public hearings and workshops as appropriate.

The General Bureau of Environmental Issues shall have 120 calendar days to review the file.

The Head of such Bureau is the authority responsible for the final decision, which shall be issued in the form of a Bureau Resolution

Legal Basis:

- Article 7, paragraph 3 of the Regulations on Environmental Protection as approved by Supreme Decree Nº 016-93-EM.

- Article 4 to Article 6 of the Environmental Regulations for Mining Exploration Activities as approved by Supreme Decree Nº 038-98-EM.

- Supreme Decree Nº 053-99-EM: Provisions to standardize the administrative procedures with the General Bureau of Environmental Affairs (Dirección General de Asuntos Ambientales - DGAA).

- Ministry Resolution Nº 596-2002-EM/DM Regulations on Citizen Consultation and Participation in the Procedure of Approval and Environmental Studies in the Sector of Energy and Mines.

16






2. MINISTRY OF ENERGY AND MINES

The Ministry of Energy and Mines is the authority having jurisdiction on environmental issues in the mining-

metallurgical sector.

Legal Basis:

- Article 4 of the Regulations on Environmental Protection as approved by Supreme Decree Nº 016-93-

EM.

- Ministry Resolution Nº 292-97-EM/VMM Model Contract on Environmental Administrative Stability for

Mining and Metallurgical Concessions.

3. SIGNING OF THE ENVIRONMENTAL ADMINISTRATIVE STABILITY CONTRACT

Based on the EIS and the Environmental Adjustment and Management Program (Programa de Adecuación y

Manejo Ambiental - PAMA), the holders of the mining concession may sign an Environmental

Administrative Stability Contract with the Ministry of Energy and Mines, which shall set forth:

- Term for the environmental adjustment

- Sampling frequency and sampling points

- Maximum permissible levels at the signing of the contract that are not subject to change during the term

of the contract.

It shall be an adhesion contract which model is approved by Ministry Resolution Nº 292-97-EM/VMM.

Compliance with the contract shall be verified by the General Mining Bureau every six months.

Legal Basis:

- Article 18 of the Regulations on Environmental Protection as approved by Supreme Decree Nº 016-93-

EM.

- Ministry Resolution Nº 292-97-EM/VMM Model Contract on Environmental Administrative Stability for

Mining and Metallurgical Concessions.

4. ENVIRONMENTAL QUALITY STANDARDS

- Any processing concession shall have adequate facilities for liquid waste treatment. Additionally, if

technically and economically feasible, waste water resulting from such treatment, as well as the water

contained in solutions, pulps and emulsions shall be reused.

- Any processing operation shall have a waste and spill collection and drainage system.

- In case the water to be used in the processing plant comes from water bodies containing contaminating

substances that are above the maximum permissible levels, a log shall be kept of periodical sampling

and analysis performed before and after use.

- In case the water used comes from wells, the natural refilling of the system and the aquifer control shall

be favored.

- Sewage from camps and sanitary services of the mining facilities shall be treated before they are

discharged, in the volume corresponding to the holder of the mining concession.

- In case that tailings and/or slag are disposed into the ground, they shall preferably be dumped in yards

preferably located close to the processing plant to allow water recycling, thus preventing or minimizing

the discharge of effluents discharge off the stockpile area.

- When the tailings and/or slag stockpiles are abandoned, works or installations required to ensure their

stability shall be implemented, especially those regarding the permanence and operational condition of

the elements for watercourse diversion and surface stockpile treatment to avoid erosion.

17






Legal Basis:

- Article 31 to Article 36, Article 39 of the Regulations on Environmental Protection as approved by

Supreme Decree Nº 016-93-EM.

18






PROCEDURE TO OBTAIN ENVIRONMENTAL PERMITS FOR MINING EXPLORATION PROJECTS

1. Category B Exploration Projects (less than 20 drilling platforms)

2. Category C Exploration Projects (more than 20 drilling platforms)

220 calendar days to the first pronouncement.

Approval

- Application in due form- Processing fee payment 5% UIT- Sworn Statement in two copies- Proof of delivery to DREM- Proof of delivery to District Municipality

Permit - Bureau Resolution

Assessment

Sworn Statement to DGAAM

40 calendar days

Approval

- Application in due form- Processing fee payment 40% UIT Two copies of the EA- Proof of delivery to the DREM- Proof of delivery to the District Municipality


Assessment

Submit EA to DGAAM

19

UIT: s/. 3,300 as of January 1, 2005






PROCEDURE TO OBTAIN ENVIRONMENTAL PERMITS FOR MINING EXPLOITATION AND PROCESSING

- Application in due form- Processing fee payment 20% UIT- Two copies of the EIS- Proof of delivery to INRENA, DREM and Municipality.

Submit EIS to DGAAM

Assessment

Hearings and workshops

Objections

Report with commitment


No

Correct objections Yes

20

UIT: s/. 3,300 as of January 1, 2005






PROCESSING CONCESSIONS


I. DEFINITION

II. PROCEDURE

The processing concession grants its holder the right to extract or concentrate the valuable part of broken ore aggregates and/or to melt, purify or refine metals using a number of physical, chemical and/or physicochemical processes.

Legal Basis:

- Article 17 and Article 18 of the Consolidated Amended Text (Texto Único Ordenado - TUO) of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.

1. APPLICATION

The applicant for a processing concession shall file an application in original and copy to the General Mining Bureau (Dirección General de Minería DGM) meeting the requirements provided by the General Mining Act as regulated.

Likewise, the applicant shall enclose the payment receipts for the Effectiveness Fee corresponding to the first year and for the Administrative Fee equivalent to 20% of the Tax Unit (Unidad Impositiva Tributaria UIT).

The interested party shall pay for the Effectiveness Fee an amount computed according to the following scale:

RANGO TAX UNIT Up to 350 MT/day 0.0014 UITOver 350 and up to 1000 MT/day 1.00 UITOver 1000 and up to 5000 MT/day 1.5 UITPer each 5000 MT/day in excess 2.0 UIT

MT/day refers to treatment installed capacity. In case of expansions, the payment enclosed to the application shall only be on the increased capacity.

The application shall also include the technical information provided by the General Mining Act as regulated.

Legal Basis:

- Article 46 of the Consolidated Amended Text of the General Mining Law as approved by Supreme Decree Nº 014-92-EM.

- Article 35 of the Regulations on Mining Procedures as approved by Supreme Decree Nº018-92-EM.- Article 2º, prior commitment is established as requirement for the development of mining activities, as

supplemented and approved by Supreme Decree N° 042-2003-EM.

2. NOTIFICATION TO THE INTERESTED PARTY OF NOTICE FOR PUBLICATION

If the application meets the requirements above, the General Mining Bureau shall notify the interested party to pick up the corresponding notices for publication.

The interested party shall pick up such notices no later than 15 business days following the date of notification.

21





Legal Basis:

- Article 36 of the Regulation of Mining Procedures as approved by Supreme Decree Nº018-92-EM.

3. PUBLICATION

Notices are published only once in "El Peruano" Official Gazette and in the newspaper in charge of the publication of court notices in the capital city of the province where the concession is located. In the latter case, if no such newspaper exists, notices shall be posted during 7 business days in the Office of Mining Concessions of the National Institute of Concessions and Mining Cadastre (Instituto Nacional de Concesiones y Catastro Minero INACC).

Notices shall be published within 30 days upon being received.

Within 30 business days upon publication, the interested party shall deliver the entire pages evidencing the publication of the notices to the General Mining Bureau.

Legal Basis:

- Article 3º of the Regulations on Mining Procedures as approved by Supreme Decree Nº018-92-EM.

4. ASSESSMENT AND RESOLUTION

Upon delivery of the notices, if no objection has been filed, the General Mining Bureau shall assess the application to see if it meets construction, security, housing, health, mining well-being and environmental impact regulations. The term for the General Mining Bureau to issue its Resolution is 30 business days.

Legal Basis:

- Article 37 of the Regulations on Mining Procedures as approved by Supreme Decree Nº018-92-EM.

5. AUTHORIZATION OF CONSTRUCTION

The Resolution issued by the General Mining Bureau authorizes the plant construction under the assessed and approved terms, allowing the interested party to request the rights of way and expropriations that may be necessary.

Legal Basis:


6. INSPECTION OF VERIFICATION

Upon completion of the plant construction and installation, the interested party shall give notice to the General Mining Bureau so they proceed to order an inspection in order to verify compliance with the original project in terms of security, mining health and environmental impact. Such notice shall include the corresponding authorization for industrial waste discharge conferred by the General Bureau of Environmental Health (Dirección General de Salud Ambiental DIGESA).

The inspection shall be carried out no later than 60 calendar days counted as from the date it was requested.

If the inspection is favorable, the General Mining Bureau shall grant the title of the profit concession; otherwise, the titleholder shall repair the objections appearing in the inspection report.

22






Legal Basis:


7. TITLE TO PROCESSING CONCESSION

The Resolution issued by the General Mining Bureau granting the Title to Processing Concession authorizes the plant operation as well as the use of the requested water and the industrial and residential liquid discharge system.

Legal Basis:


8. REGISTRATION

The Resolution issued by the General Mining Bureau shall be registered with the National Institute of Concessions and Mining Cadastre for its incorporation into the National Mining Cadastre; also, the holder of the processing concession shall register the title with the National Superintendence of Public Registration (Superintendencia Nacional de Registros Publicos - SUNARP).

Legal Basis:


23






PROCEDURES TO OBTAIN PROCESSING CONCESSIONS

- Effectiveness Fee Payment- Administrative Fee Payment- Technical Information

File applicationwith DGM

Assessment and issue of notices for publication

Notification

Delivery of notices to the holder

Publication of notices

Reception of the publications by DGM

Technical objections

Answerobjections

Yes

7 days

15 days

30 days

Authorization to construct the plant

No

Notice of the construction completion

Inspection Application

Objections underinspection

Title to the concession and authorization

to operate

Registration with SUNARP

Answer objections

Yes

No

30 business days

52 business days

24

60 calendar days






MINING RIGHTS OF WAY


I. INTRODUCTION

II. PROCEDURE

Concession holders may request authorization from the mining authority to be granted mining rights of way over land owned by third parties that are necessary for the rational use of the concession.

The right of way shall be granted subject to a previous fair compensation, as appropriate.

Legal Basis:

- Article 37, paragraph 3 and 4 of the of the Consolidated Amended Text (Texto Único Ordenado - TUO) of the General Mining Act as approved by Supreme Decree N° 014-92-EM.

1. DIRECT NEGOTIATION

The use of the lands necessary to develop mining concession requires a previous agreement between the holder of the mining concession that requests the right of way and the owner of the surface property, as a step precedent to the granting of the legal mining right of way.

The phase of direct negotiation between the parties starts with a notary's letter, in which the applicant of the right of way proposes a direct negotiation to the property owner.

Legal Basis:

- Article 1 of Supreme Decree N° 014-2003-AG, amending various articles of the Regulations to Article 7 of Law N° 26505, on the procedures to be granted legal mining rights of way as approved by Supreme Decree N° 017-96-AG.

2. CONCILIATION

In the event that both parties fail to reach an agreement within a maximum term of thirty (30) business days, the applicant of the right of way shall advise the General Mining Bureau (Dirección General de Minería DGM) about the exhaustion of the direct negotiation phase, attaching the acknowledgment of receipt of the notary's letter by the property owner.

By virtue of this, the General Mining Bureau shall call both parties and invite them to start a conciliation process with the participation of a jointly appointed Conciliation Center, in a period not longer than 10 business days. Should the parties fail to reach an agreement, the General Mining Bureau shall request to the Regional Agriculture Bureau (Dirección Regional Agraria DRA) of the jurisdiction, a list of three candidates, from which a Conciliation Center shall be selected to seek an agreement between the parties regarding the right of way, within a maximum term of 30 business days.

The Conciliation shall be conducted as set forth in the Conciliation Law as regulated; the expenses shall be charged to the party applying for the rights of way, through the General Mining Bureau.

Previously to the call for conciliation, the General Mining Bureau shall advise the surface land owner about the mining legislation and the legislation on legal mining rights of way, as well as about the land owners' own rights.

Legal Basis:

- Article 1 of Supreme Decree N° 014-2003-AG, amending various articles of the Regulations to Article 7 of Law N° 26505, on the procedures to be granted legal mining rights of way as approved by Supreme Decree N° 017-96-AG. 25





3. EXPERT'S REPORT

At the same time a call for conciliation is made, the General Mining Bureau shall appoint a mining expert from the official list who shall issue an opinion about the need and the extent of the rights of way necessary for the proposed mining activity, and shall request the National Council of Property Valuation (Consejo Nacional de Tasaciones - CONATA) to appoint a professional expert on agricultural issues, who shall appraise the value of the area in demand, preparing as well, a duly supported technical report analyzing whether the right of way is possible without impairing the property right, that is, without damaging the remaining servient tenement, turning it useless or substantially affected for the purposes for which it was being used or was going to be used.

The maximum term allowed for both assessments shall be 15 business days, after which, the reports shall be sent to the Conciliation Center and to the General Mining Bureau to serve as reference or basis for their corresponding procedures.

Legal Basis:


4. COMPLETION OF THE CONCILIATION PHASE

The agreement reached by the parties or the absence of agreement shall be certified by the Conciliation Center and notified to the General Mining Bureau.

If the conciliation phase is completed without an agreement between the parties, a request to the General Mining Bureau may be made to start the administrative procedure to be granted a legal right of way, attaching the first notary's letter, and incorporating the relevant expert's reports to the file.

Legal Basis:


5. APPLICATION

The application to be granted a right of way shall be submitted to the General Mining Bureau, including the names and domiciles of the involved parties, a narrative report and the drawings of the requested rights of ways with as many copies as owners are involved, which shall include:

- Nature and duration of the right of way - Technical and economic rationale for the proposed right of way.- Description and value of the affected property and assessment of the resulting loss of profit and

detriment.

Likewise, the application shall be accompanied by a document proving that the applicant submitted a previous agreement proposal to the property owner, and all the additional documents the concessionaire may deem necessary.

Legal Basis:

- Article 130 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree N° 014-92-EM.

26






6. APPEARANCE

The Head of the General Mining Office shall call the parties to appear on the fifteenth day after notification, explicitly warning them that the process will continue in case of non appearance by the property owner. In such act, the real property owner shall prove its right.

In case of disagreement, or if the warning is executed, the Head of the General Mining Bureau shall appoint an expert, and order a visual inspection of the place. The interested parties and the expert shall be called to appear for the sight inspection.

Legal Basis:


7. VISUAL INSPECTION

The visual inspection shall take place within sixty days of the date of appearance, in order to prove the need of the requested right.

Legal Basis:


8. EXPERT'S REPORT

Once the inspection is completed, the expert shall issue a report within thirty days, and submit it together with the file to the General Mining Bureau.

The report shall necessarily give an opinion about the compensation for the corresponding damages

Legal Basis:

- Articles 130 and 131 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree N° 014-92-EM.

9. TECHNICAL OPINION

The Head of the General Mining Bureau and the Head of the General Bureau for Agriculture Development of the Ministry of Agriculture, within 30 business days upon reception of the expert's report, shall issue, each, their technical opinions about the compliance with the procedure established by the General Mining Act as regulated, expressly determining if the right of way is possible without impairing the property right, taking into account the expert's reports, unless in their opinion, the expert's reports contain irregularities or defects, in which case, the General Mining Bureau shall order the correction of such deficiencies, having the experts 15 business days to submit the required information to such Bureau.

Legal Basis:


10. SUPREME RESOLUTION

Should the right of way be possible, without impairing the property right; the Head of the General Mining Bureau shall prepare a draft Supreme Resolution setting the compensation, together with the draft public instrument that grants the right of way. All these documents shall be submitted to the relevant authorities

27






within 30 business days for the issuance of a Supreme Resolution granting the right of way; such Resolution shall be countersigned by the Minister of Energy and Mines and the Minister of Agriculture.

The Supreme Resolution granting a right of way may only be challenged in court regarding the amount of the set compensation..

Legal Basis:


11. DEPOSIT

Upon issuance of Supreme Resolution, the applicant shall deposit in an account to the name of the General Mining Bureau at the Nation's Bank (Banco de la Nacion), the compensation amount, within a maximum of 10 business days upon notification of compensation by the Resolution; otherwise the application shall be regarded as abandoned.

Legal Basis:


12. SIGNING OF THE PUBLIC INSTRUMENT

Once the compensation payment has been deposited, the General Mining Bureau shall order the signing of the public instrument within 10 business days of notification to the parties.

The delivery of the compensation to the property owner shall be made once he/she signs the public instrument.

If after 10 business days, the owner has not signed yet the public instrument; it shall be signed by default by the Head of the General Mining Bureau, who shall instruct the Nation's Bank to deliver the deposited amount to the owner.

Legal Basis:


13. DENIAL OF APPLICATION

If it is determined that the right of way impairs the property right, according to the technical opinion of the General Mining Bureau or according to the General Bureau for Agriculture Promotion (Dirección General de Promoción Agraria) of the Ministry of Agriculture, the application submitted by the mining concessionaire shall be denied by means of a Ministry Resolution issued by the Ministry of Energy and Mines.

In case the owner of the land subject to the application is unknown; the call for appearance shall be published three times in the "El Peruano" official gazette, and in a local newspaper or in a newspaper of the place nearest to the area where the land is located; there shall be an eight days window in-between the publications. The call for appearance shall also be published posted on a sign to be fixed in the property.

The appearance shall take place after the sixty-day term counted as from the day after the last publication has elapsed, with or without attendance of the owner, continuing with the process, as appropriate.

28






If the alleged owner does not prove its property right on the servient tenement; the applicant shall deposit the compensation amount in an account at a local office of the Nation's Bank, to be delivered to the person who provides irrefutable proof of his/her property right on the tenement, after which, the Head of the General Mining Bureau shall sign the public instrument establishing the right of way.

As long as the right of way is not approved, the works for which it was requested shall not be started.

If the Mining Authority demonstrates that the property subject to expropriation is used for purposes other than those specifically requested, this shall be transferred free of cost to the State assets, for which the General Mining Bureau shall issue the respective resolution, to be registered with the National Office of Public Registration (Oficina Nacional de los Registros Públicos) and with the National Institute of Concessions and Mining Cadastre (Instituto Nacional de Concesiones y Catastro Minero INACC).

Legal Basis:


29






PROCEDURE TO OBTAIN MINING RIGHTS OF WAY

Signature of agreement between the parties

From the applicant of the mining right to the tenement owner.

Applicants informs

DGM

Agreement?

NO

Parties are called to a Conciliation

Center

30-day term

Conciliation 1

10 day-term

Conciliation 2Agreement?

NO30 day-term

On the need and extent of the right of way

Expert's report to DGM and conciliation

centers

Designation of a mining expert

by DGM

Request to CONATAexpert on agriculture

issues

In CC of the place designated

In CC of the place designated by DGM from the list of the DRA. The CC shall inform DGM in case of agreement or not

Request to DGM

Appearance?

Notification calling the parties for appearance

on the 15th day

Designation of Expert

Sight Inspection

NO

Within 60 days

Expert's report

Within 60 days

30days

Deposit and Public Instrument

Notary Letter for Direct

Negotiation

YES

NO

15-day term

YES

YES

Agreement by call for appearance

YES

Agreement by conciliation

Technical OpinionSupreme

Resolution

30






GENERAL SERVICE CONCESSIONS


I. DEFINITION

II. PROCEDURE

General Services involve every mining activity providing support services, such as ventilation, drainage, hoisting or extraction to two or more concessions of different concessionaires.

The General Service Concession grants its holder the right to provide support services to two or more mining concessions.

Legal Basis:

- Article 19, Article 20, Article 22 and Article 23 of the Consolidated Amended Text (Texto Unico Ordenado TUO) of the General Mining Law as approved by Supreme Decree Nº 014-92-EM.

1. APPLICATION

The application shall be filed with General Mining Bureau (Dirección General de Minería DGM) in as many copies as beneficiaries will result from this concession including the information provided by the General Mining Law as regulated.

The interested party shall enclose to the payment receipt for the Effectiveness Fee corresponding to the first year, which is equivalent to 0.003% of the Tax Unit (Unidad Impositiva Tributaria - UIT) per lineal meter of projected services, and the payment receipt for the Processing Fee, which is equivalent to 15% of the Tax Unit.

Legal Basis:

- Article 47 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree N º 014-92-EM.


2. NOTIFICATION

No later than 10 business days upon filing the application, the General Mining Bureau shall notify to the holders of the mining concessions in favor of which the general services are requested calling them for a Concessionaires' Meeting, which shall take place no later than 15 business days upon notice, in first call, and no later than 30 business days upon notice, in second call.

Legal Basis:


3. APPROVAL AND EXECUTION

The Meeting shall be chaired by the Head of the General Mining Bureau and shall adopt resolutions regarding the construction and work execution.

To decide on the work execution, the attendance and the favorable vote of at least the two thirds of the mining concessionaires of the zone of influence shall be necessary, considering one vote per granted hectare. Any other resolutions shall be taken by simple majority.

31





Legal Basis:


4. PREVIOUS INSPECTION AND TITLE TO GENERAL SERVICE CONCESSION

Upon approval of the work execution by the Meeting, an inspection of verification shall be conducted in a term of 90 days. If the report is favorable, the General Mining Bureau shall grant the title to the concession and the authorization to operate.

Legal Basis:


5. REGISTRATION

The Resolution shall be registered with the National Institute of Concessions and Mining Cadastre (Instituto Nacional de Concesiones y Catastro Minero - INACC) for its incorporation into the National Mining Cadastre; also the holder of the general services shall register the title with the National Superintendence of Public Registration (Superintendencia Nacional de Registros Publicos - SUNARP).

Legal Basis:

- Article 129 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree Nº 014-92-EM,

- Article 41 of the Regulation of Mining Procedures as approved by Supreme Decree Nº018-92-EM.

32






PROCEDURE TO OBTAIN GENERAL SERVICE CONCESSION

- Administrative Fee Payment receipt- Effectiveness Fee Payment receipt

Call for Meeting

Up to 10 days

Up to 15 days in 1st call

Concessionaires' Meeting

Favorable vote of the two thirds of the mining concessionaires of the zone of influence


to operate

Up to 90 days

Up to 30 days in 2nd call

Registration with SUNARP

File applicationwith DGM

Approval of the work

Inspection

33






34





MINING TRANSPORT CONCESSIONS


I. DEFINITION

II. PROCEDURE

Mining Transport is any system used for the continuous mass transport of ore, using non-conventional methods. The systems to be used can be: conveyor belts, pipelines and cableways.

The Mining Transport Concession grants its holder the right to install and operate a system of continuous mass transport of ore between one or more mining centers and a port, or processing plant, or refinery in one or more sections of these routes.

Legal Basis:

- Article 22, Article 23 of the Consolidated Amended Text (Texto Único Ordenado - TUO) of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.

1. APPLICATION

The application shall be submitted to the General Mining Bureau (Dirección General de Minería DGM) with as many copies as concessionaires will be benefited with the Mining Transport Concession . All the requirements set forth by the General Mining Act as regulated, shall be attached to the application.

The interested party shall attach the payment receipts for the Effectiveness Fee corresponding to the first year, equivalent to 0.003% of the Tax Unit (Unidad Impositiva Tributaria UIT), and for the Administrative Fee equivalent to 15% of the Tax Unit.

Legal Basis:

- Article 47 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.


2. NOTIFICATION

Within 10 business days upon submission of the application, the General Mining Bureau shall call the mining concession holders, in the benefit of which the mining transport concession is requested, to a Concessionaires' Meeting that shall be held on first call not later than 15 business days upon notification or, in second call not later than 30 business days.

Legal Basis:


3. APPROVAL AND EXECUTION

The Meeting shall be chaired by the Head of the General Mining Bureau, in order to adopt the resolutions related to the work execution and use of services.

To decide about the work execution, the attendance and favorable vote of at least two-thirds of the mining concessionaires of the zone of influence shall be necessary, computing one vote per granted hectare. The other agreements shall be approved by simple majority. Likewise, it is necessary to have an approved Environmental Impact Study (EIS).

35





Legal Basis:


4. PREVIOUS INSPECTION AND TITLE TO THE MINING TRANSPORT CONCESSION

Upon approval of the work execution by the Concessionaires' Meeting, a verification inspection shall be conducted within a 90 days period. With a favorable inspection report, the General Mining Bureau shall grant the title to concession and authorization to operate.

Legal Basis:


5. REGISTRATION

The Resolution shall be recorded with the National Institute of Concessions and Mining Cadastre (Instituto Nacional de Concesiones y Catastro Minero - INACC) for its incorporation into the National Mining Cadastre; also, the holder of the mining transport concession shall file the title with the National Superintendence of Public Registration (Superintendencia Nacional de Registros Publicos - SUNARP).

Legal Basis:

- Article 129 of the Consolidated Amended Text of the General Mining Act as approved by Supreme Decree Nº 014-92-EM,

- Article 41 of the Regulation of Mining Procedures as approved by Supreme Decree Mining Procedures Regulation approved by Supreme Decree Nº 018-92-EM.

36






PROCEDURE TO OBTAIN MINING TRANSPORT CONCESSION

- Administrative Fee Payment receipt- Effectiveness Fee Payment receipt

Call for Meeting

Up to 10 days

Up to 15 days in 1st call

Junta de Concesionarios

Favorable vote of the two thirds of the mining concessionaires of the zone ofinfluence

Up to 90 days

Up to 30 days in 2nd call

Registration withSUNARP

File application with DGM

Approval of the work

Inspection


to operate

37






38





FINAL ELECTRIC CONCESSIONS

I. DEFINITION

II. PROCEDURE

The Final Electric Concession entitles to use public goods and to be granted rights of way for the construction and operation of power plants and related works; substations and transmission lines; as well as distribution networks and substations for Public Electricity Supply.

The concession shall be granted for an unlimited period of time.

Legal Basis:

- Article 22, Article 24 of the Electrical Concessions Act as approved by Decree Law Nº 25844.- Article 7 of the Electrical Concession Act's Regulations as approved by Supreme Decree Nº009-93-EM and

amended by Supreme Decree Nº 022-97-EM.

1. APPLICATION

The application shall be submitted to the General Bureau of Electricity (Dirección General de Electricidad - DGE) of the Ministry of Energy and Mines, fulfilling the requirements provided in Article 25 of the Electrical Concessions Act. Besides, the application shall include the applicant's registered address and attach the amount to be paid as a guarantee equivalent to 1% of the project budget with an upper limit of 500 Tax Units (Unidades Impositivas Tributarias - UIT). In case of final hydraulic power generation concession, the amount to be paid as a guarantee shall be equivalent to 1% of the project budget, with an upper limit of 50 Tax Units.

The guarantee shall remain effective until the concession contract has been signed.

The guarantee shall be granted by means of a letter of guaranty issued by a financial entity or insurance company operating in the country.

Legal Basis:

- Article 25 of the Electrical Concessions Act as approved by Decree Law Nº 25844 and amended by Law Nº 27435.

- Article 37 and Article 55, Article 57 of the Electrical Concessions Act's Regulations as approved by Supreme Decree Nº 009-93-EM and amended by Supreme Decree Nº 038-2001-EM and Supreme Decree Nº 022-97-EM..

2. ASSESSMENT

The application shall be assessed by the General Bureau of Electricity, which shall issue its report within 5 calendar days upon filing the application. If the assessment determines the need to provide more information or finds some deficiencies and/or omissions, the Bureau shall notify the applicant to correct all these deficiencies within 7 calendar days, recording this fact in the relevant book.

If the applicant fails to comply with all the requirements of the Bureau in the specified term, or if the information submitted is insufficient or does not meet the demands of the Bureau, this shall deny the application. Denial shall be communicated to the interested party and recorded in the corresponding book. In this case, the Bureau shall enforce the guarantee provided by the applicant.

Legal Basis:

- Article 38 to Article 40 of the Electrical Concessions Act's Regulations as approved by Supreme Decree Nº 009-93-EM and amended by Supreme Decree N º 022-97-EM.

39






3. NOTIFICATION AND REGISTRATION

If the application is accepted, the interested party shall be notified. Acceptance shall be recorded in the corresponding book, ordering its publication, within 3 calendar days.

Legal Basis:

- Article 41 of the Electrical Concessions Act's Regulations as approved by Supreme Decree Nº 009-93-EM and amended by Supreme Decree Nº 022-97-EM.

4. PUBLICATION

The application shall be published for 2 consecutive days, in the "El Peruano" official gazette and in one of the leading newspapers in the area where the concession is located. Publication expenses shall be borne by the applicant

Legal Basis:

- Article 25º of the Electrical Concessions Act as approved by Decree Law N º 25844, amended by Law Nº 27435.

5. GRANTING OF THE CONCESSION

The Final Concession shall be granted by Supreme Resolution countersigned by the Minister of Energy and Mines, in a term not longer than 90 calendar days from its submission, approving the corresponding Concession Contract and appointing the official who shall represent the State in signing the contract.

This Resolution shall be notified to the applicant within 5 calendar days of its issuance and shall only enter into force if the applicant accepts it in writing within 10 days of notification.

Legal Basis:

- Article 25, Article 28 of the Electrical Concessions Act as approved by Decree Law N º 25844 and amended by Law Nº 27435.


6. PUBLICATION OF THE SUPREME RESOLUTION

The Ministry of Energy and Mines shall publish the Resolution granting the concession only once in the "El Peruano" official gazette within 5 calendar days of the date of acceptance. Publication expenses shall be borne by the interested party.

Legal Basis:


7. CONTRACT EXECUTION

The concession shall become legally binding upon written acceptance by the applicant of the issued Supreme Resolution and execution of the corresponding contract.

Legal Basis:

- Article 29 of the Electrical Concessions Act as approved by Decree Law Nº 25844, amended by Law Nº 27435.

40







8. PUBLIC INSTRUMENT

Once the contract has been signed, it shall be registered as a public instrument within a maximum term of 60 calendar days of the date of reception of the Supreme Resolution transcription.

The concession holder shall bear the expenses derived from the Registered Public Instrument, and shall be forced to provide the Ministry with a certified copy of the registered public instrument.

The Supreme Resolution text shall be inserted into the corresponding Public Instrument to be registered.

Final concessions shall be registered in the Registry of Concessions for Public Service Operation (Registro de Concesiones para la Explotación de Servicios Públicos), of the Public Registry (Registros Públicos).

Legal Basis:

- Article 29 of the Electrical Concessions Act as approved by Decree Law Nº 25844, amended by Law Nº27435.

- Article 7, Article 56 of the Electrical Concessions Act's Regulations as approved by Supreme Decree Nº 009-93-EM and amended by Supreme Decree Nº 022-97-EM and Supreme Decree Nº 038-2001-EM.

9. REQUEST FOR PARTIAL RELEASE OF GUARANTEES

The concessionaire shall be able to request the partial release of the guarantee granted based on the work progress, every time a 25% of the budget is executed. For the release of guarantees, the work progress shall be verified and approved by the General Bureau of Electricity.

Legal Basis:

- Article 7, Article 57 of the Electrical Concessions Act's Regulations as approved by Supreme Decree Nº009-93-EM and amended by Supreme Decree Nº 022-97-EM.

41






PROCEDURE TO OBTAIN A FINAL ELECTRIC CONCESSION

- With the requirements provided by Law

Assessment

5 días

Up to 7 days to correct

YES

Notification and Registration

No

Publication

3 days

Granted by means of Supreme Resolution

90-day term

Notification to applicant

5 days

Acceptance of Contract

10 days

Publication of Supreme Resolution

Up to 60 days

5 days

Contract execution

Public Instrument

File application with DGE

Request of Partial Release of Guarantees

42






TEMPORARY ELECTRIC CONCESSIONS

I. DEFINITION

II. PROCEDURE

The Temporary Electric Concession entitles to use public goods and to be granted rights of way for the conduction of studies on power plants, substations and lines of transmission.

The maximum term for which a Temporary Concession may be granted is 2 years, renewable only once upon request of the applicant and for the same period, only in case of force majeure.

Legal Basis:

- Article 22, Article 23 of the Electric Concessions Act as approved by Decree Law Nº25844.- Article 32 of the Electric Concessions Act's Regulations as approved by Supreme Decree Nº009-93-EM and

amended by Supreme Decree N º 004-96-EM.

1. APPLICATION

Temporary Electric Concession applications shall be filed with the General Bureau of Electricity (Dirección General de Electricidad - DGE) meeting the requirements provided in Article 30 of the Electrical Concessions Act's Regulations.

Likewise, together with the application, the applicant shall provide a guarantee equivalent to 10% of the study budget with an upper limit of 250 Tax Units (Unidades Impositivas Tributarias - UIT).

In the case of studies on hydraulic power plants, the amount to be paid as guarantee shall be equivalent to 1% of the study budget with an upper limit of 25 UIT.

Legal Basis:

- Article 25 of the Electric Concessions Act as approved by Decree Law N º 25844 and amended by Law Nº 27435.

- Article 29, Article 30 of the Electric Concessions Act's Regulations as approved by Supreme Decree Nº 009-93-EM and amended by Supreme Decree N º 038-2001-EM.

2. VERIFICATION OF REQUIREMENTS

Upon filing the application, a verification process shall be conducted within a maximum of 5 calendar days in order to determine whether the application contains the data and meets the requirements set forth in Article 30 of the Regulations.

Legal Basis:

- Article 30, Article 31 of the Electric Concessions Act's Regulations as approved by Supreme Decree Nº009-93-EM and amended by Supreme Decree Nº 038-2001-EM.

3. ACCEPTANCE AND PUBLICATION

Upon verification that the application meets the requirements, the General Bureau of Electricity shall accept it and cause it to be immediately published in the "El Peruano" official gazette for 2 consecutive calendar days. Publication expenses shall be borne by the interested party.

43






Legal Basis:

- Article 31 of the of the Electric Concessions Act's Regulations as approved by Supreme Decree Nº 009-93-EM.

4. ASSESSMENT

The Temporary Concession application shall be assessed by the General Bureau of Electricity, in order to determine its feasibility; the result of the application assessment shall be issued through Ministry Resolution.

To issue an opinion, the General Bureau of Electricity shall request additional information and/or clarification of the information submitted, having the applicant 10 calendar days upon notification to comply with these requirements .

Legal Basis:

- Article 33 of the Electric Concessions Act's Regulations as approved by Supreme Decree Nº 009-93-EM.

5. GRANTING OF THE CONCESSION

The temporary concession shall be approved and granted by means of a Ministry Resolution, in a maximum term of 30 calendar days from the date the application was filed.

Legal Basis:

- Article 23 of the Electric Concessions Act as approved by Decree Law Nº 25844.- Article 33 of the Electric Concessions Act's Regulations as approved by Supreme Decree Nº 009-93-EM.

6. PUBLICATION

The Ministry Resolution granting the Temporary Concession shall be published only once "El Peruano" official gazette, the expenses being borne by the interested party.

Legal Basis:

- Article 36 of the Electric Concessions Act's Implementing Regulations as approved by Supreme Decree Nº 009-93-EM and amended by Supreme Decree Nº 022-97-EM.

44






PROCEDURE TO OBTAIN A TEMPORARY ELECTRIC CONCESSION

- With the requirements provided by Law

Verification of Requirements

5 days

Acceptance and Publication

No

Assessment no

10 days for additional information

Concession is granted by means of Ministry

Resolution

Up to 30 days

Publication

File application with DGE

CorrectionsYes

Yes

Correction of deficiencies

45






46





MUNICIPAL AUTHORIZATION AND TAXES

I. AUTORIZACION MUNICIPAL

II. REQUIREMENTS

III.MUNICIPAL TAXES

Mining Companies usually have offices in the cities for the development of their administrative and logistic activities; in which case Municipalities require that natural and juridical persons obtain the Municipal License to Operate.

Concessions and mining operation areas in urban areas and in areas of urban expansion shall not be subject to municipal license.

Taxpayers shall submit to the Municipality of their jurisdiction a simple annual sworn statement of permanence in the business for which authorization has been given to the establishment.

The fee for the license to open the establishment is paid only once and cannot be higher than one Tax Unit (Unidad Impositiva Tributaria -UIT), in force at the time of making the payment.

As a requirement for the granting of the License to Operate, Municipalities shall require the Certificate issued by the Peruvian Brigade of Volunteer Firemen certifying that the establishment meets the Safety regulations to prevent fire and loss.

Legal Basis:

- Article 1 of Legislative Decree Nº 720.- Article 1 of Law Nº 27180 amending Legislative Decree Nº 776 Municipal Taxation Law.

To obtain the Municipal Authorization to Operate:

- Certificate of approved Zoning and Compatibility of Use (procedure shall take 7 business days),- Certificate of Basic Inspection of the National Institute of Civil Defense (Instituto Nacional de Defensa Civil

INDECI) - Application, sworn statement (form) and

- Fee payment receipt cancelled.

The procedure shall take 30 business days, at the end of which, the Municipality shall grant the Municipal License to Operate.

Legal Basis:

- Article 161, paragraph 4.4 of the Organic Law of Municipalities as approved by Law Nº 27972.

Municipal taxes levying real property belonging to the holder of the mining concession shall be applicable only to those located in urban areas. Constructions and buildings raised on the mining, processing, general services, and mining transport concessions shall be levied with municipal taxes, only if they are in urban areas. The concessions are not subject to municipal taxes.

Legal Basis:

- Article 76 of the Consolidated Amended Text of the General Mining Act, as approved by Supreme Decree Nº 014 - 92-EM.

47






- Second Final Provision of Legislative Decree Nº 868 clarifying Article 76º of the Consolidated Amended Text of the General Mining Act

- Article 9 of Supreme Decree Nº 024-93-EM Regulation of Title IX of the General Mining Act regarding the guarantees and measures to promote investment in the mining activity.

- Article 34 of Law Nº 24030 establishing standards related to Public Sector financing.

The Real-Estate Tax is a municipal tax in favor of the Local Government. It levies the value of urban and rural real property.

Real property can be land, including the land reclaimed from the sea, rivers and other water mirrors, as well as buildings and fixed and permanent facilities that are an integral part of such property and that cannot be separated without altering, damaging or destroying the building.

The collection, administration and enforcement of the tax concerns the District Municipality where the property is located.

The tax base for the tax assessment is the total property value of the taxpayer's real properties located in each district jurisdiction.

In order to assess the total property value, the land tariff and the building official unit values in force as of December 31 of the previous year, as well as, the tables of depreciation according to age and condition, issued by the National Rating Council, shall be applied.

The tax is calculated applying the cumulative-progressive scale to the tax base:

Self-assessment AliquotUp to 15 UIT 0.2%From over 15 UIT to 60 UIT 0.6%Up to 60 UIT 1.0%

Municipalities have the power to establish a minimum amount to be paid for the tax, equivalent to 0.6% of the UIT in force as of January 1 of the year to which the tax corresponds.

Real property belonging to the following shall not be subject to the tax:

a) The Central Government, the Regions and the Municipalities, except for real properties which had been granted concession pursuant to the Supreme Decree Nº 059-96-PCM.

b) Foreign Governmentsc) Properties which do not produce income and are used to fulfill specific purposes, such as:

- Charity properties, hospitals and cultural heritage- Religious entities- Peruvian Brigade of Volunteer Firemen - Rural and native communities of the Highlands and the Rain Forest (Sierra & Selva) except for the

extensions assigned to third parties for their economic operation - Universities and schools, as stipulated in the Constitution.- Properties included in mining concessions

Legal Basis:

- Article 8 to Article 10, Article 17 of the Municipal Taxation Law, as approved by Legislative Decree Nº 776.- Article 1 of the Law Nº 27305 that modify Articles 8, 9, 14 and 17 of Chapter I Title II of Supreme Decree Nº

776, regarding real estate tax

IV.REAL-ESTATE TAX

48






PROCEDURE TO OBTAIN MUNICIPAL AUTHORIZATION TO OPERATE

Various documents

Certificate of Zoning and Compatibility of Use

- Application- Fee payment receipt cancelled- Narrative report- Layout

- Application- Sworn statement - Fee payment receipt cancelled - Certificate of basic inspection by INDECI - Copy of the rental agreement (if you are not the owner)

Various documents

Municipal License Application

Request of Zoning and

Compatibility of Use

License to Operate

7 days

30 days

49






50





SAFETY, HEALTH AND SANITARY AUTHORIZATION


I. DEFINITION

II. DUTIES OF HOLDERS AND WORKERS

III.ESTABLECIMIENTO DE PROGRAMAS DE SEGURIDAD E HIGIENE MINERA

Mining Safety and Health involves all legal, technical and social regulations aimed at protecting human life, promoting safety and health, and preventing any accidents and incidents that are related to the mining activity.

Both the officials of the General Mining Bureau (Dirección General de Minería DGM) and the authorized supervisors are entitled to inspect the totality of the works and facilities making part of the mining operations, for which the holder of the mining concession shall give them the required facilities.

The corrective actions and objections resulting from the inspections shall be recorded in the Book of Mining Safety and Health to be kept by the holder of the mining concession.

The cost of the Mining Safety and Health inspections shall be borne by the holder of the mining concession.

Legal Basis:

- Article 1, Article 2, Article 7, Article 13, Article 14, Article 19 of the Regulations on Mining Safety and Health as approved by Supreme Decree Nº 046-2001-EM.

Mining concessions shall not be able to start, resume or cease operations without giving previous notice to the mining authority.

The holder of the mining concession shall provide free access to the officials of the Ministry of Energy and Mines and/or to the persons authorized by the General Mining Bureau, provided that their visit is strictly made as part of an assignment on duty, giving them all the information they may require for that purpose

Furthermore, they shall report to the General Mining Bureau about any fatal accident or emergency situation no later than 24 hours from occurrence, and submit a detailed investigation report no later than 10 calendar days from occurrence of such event.

Workers shall take every action aiming at preventing or staving off any accident, and immediately report any such events to its immediate boss or to the employer's representative. Likewise, workers shall make proper use of all safety guards, devices, implements and other means provided under the Regulations on Mining Safety and Health for their own protection or for the protection of others.

Legal Basis:

- Article 24 to Article 32, Articles 39 to 44 of the Regulations on Mining Safety and Health as approved by Supreme Decree Nº 046-2001-EM.

Every economic administrative unit, mining concession, processing concession, general services concession, and mining transport concession employing 50 workers or more, regardless of their inclusion in the payroll, shall establish its Annual Mining Safety and Health Program.

Those employing less than 50 workers may get organized among them with the purpose of establishing a common service and structuring programs that include all of the workers involved.

51





The Head of the Mining Safety and Health Program shall be the official responsible for organizing, managing, executing and controlling compliance with standards, procedures, practices and internal regulations as well as with the Regulations of Mining Safety and Health in coordination with the top executives of each area of the workplace.

Legal Basis:

- Article 51, Article 54, Article 57 of the Regulations on Mining Safety and Hygiene as approved by Supreme Decree Nº 046-2001-EM.

- Amendment of the Article 55º and Article 56º of Supreme Decree 046-2001-EM as approved by Supreme Decree Nº 018-2003-EM.

Every holder of the mining activity shall form a Mining Safety and Health Committee for each workplace under the requirements provided in the Regulations of Mining Safety and Health.

Legal Basis:

- Article 213 of the Consolidated Amended Text (Texto Único Ordenado TUO) of the General Mining Act as approved by Supreme Decree Nº 014-92-EM.

- Article 52, Article 53 of the Regulations on Mining Safety and Health as approved by Supreme Decree Nº 046-2001-EM.

Every mining company shall obtain Sanitary Authorization from the General Bureau of Environmental Health (Dirección General de Salud Ambiental DIGESA). The sanitary authorization procedure requirements are:

1. Industrial wastewater discharge record form (01 form per discharge)

2. Narrative report and simple copy of the drawings of the discharge device signed by a certified professional assuming responsibility for it.

3. Description of the wastewater for discharge, supported with laboratory analysis.

4. Description and Hydrobiological Study of the receiving body, supported with laboratory analysis.

5. Hydrobiological study (historical record of the receiving body, as appropriate)

6. Environmental Study of the impact caused in the receiving body, when appropriate, by the discharge of the previous treatment system, approved by the competent sector and signed by the responsible persons.

Legal Basis:

- Chapter VIII of the Law of Organizations and Functions of the Ministry of Health (Ley de Organización y Funciones del Ministerio de Salud) as approved by Legislative Decree Nº 584.

IV.MINING SAFETY AND HEALTH COMMITTEE

V. SANITARY AUTHORIZATION

52






INSPECTION OF FATAL ACCIDENTS

Report to DGM & DREM

Up to 24 hours

10-day term DGM appoints FIA for inspection

Notice of inspection to the company

Inspection by FIA

Report assessment

10-day term

Detailed written report to DGM & DREM

Submittal of FIA's report to DGM

Report approval and Resolution of Penalty by DGM

30 days

Occurrence of fatal accident/

emergency situation

53






54





USE OF WATER FOR NON-AGRICULTURE PURPOSES

USE OF WATER FOR NON-AGRICULTURE PURPOSES

I. DEFINITION

II. RATE FOR SUPERFICIAL USE WITH NON-AGRARIAN PURPOSES

All water users shall pay for it, namely the rate and given quota in order to achieve the rational and efficient use of this resource. The corresponding payment receipts only acknowledge compliance with the referred obligation, but grant no right over the land in which the water is used

The rate is divided in two groups: "Rate charged for water used for agriculture purposes" and "Rate charged for water used for non-agriculture purposes." The latter group includes: industrial, mining, energy, population, aquaculture and other uses.

Legal Basis:

- Article 1, Article 2, Article 3 of the Regulations on Rates and Quotas for Water Use as approved by Supreme Decree Nº 003-90-AG.

The rate for the use of surface water for non-agriculture purposes is made up by: “General Bureau Revenues” and “Water Tax” (Canon del Agua)

Three rate value categories are established for the use of surface water for non-agriculture purposes: mining, industrial and population, namely minimum, medium and maximum in Peruvian Nuevos Soles (S/.) per cubic meter. These categories are related to the existing hydraulic availability in the area of each Irrigation District.

3USO Rate Categories in S/. per mMINIMUM MEDIUM MAXIMUM

Industrial 0.02262 0.02683 0.03098Minero 0.01488 0.01908 0.02323Poblacional 0.00207 0.00628 0.01043

Legal Basis:

- Article 51, Article 52, Article 53, Article 56, Article 57, Article 58 and Article 60 of the Regulations on Rates and Quotas for Water Use as approved by Supreme Decree Nº 055-2002-AG.

- Article 3 of Supreme Decree Nº 055-2002-AG Rates charged for surface water used for non agriculture purposes by category, corresponding to years 2001, 2002 and 2003.

- Article 107 of the Law for Electric Concessions as approved by Decree Law 25844. - Article 213, Article 214, Article 215 of the Electric Concessions Act's regulations as approved by Supreme

Decree Nº 009-93-EM.

55





56





INCORPORATION OF COMPANIES

I. CREATION OF THE MINING COMPANY

II. REGISTRATION WITH THE NATIONAL INSTITUTE OF CONCESSIONS AND MINING CADASTRE (Instituto Nacional de Concesiones y Catastro Minero - INACC)

Most mining investment related activities can be performed per natural and/or judicial persons (i.e. individuals and/or companies), national or foreign. Every Company shall adopt one of the forms of incorporation provided by Law Nº 26887 General Companies Act.

The most usual forms of company incorporation include:

- CORPORATION (SOCIEDAD ANÓNIMA- SA): a juridical person whose capital is represented by and is made up by contributions made by the shareholders, who are not personally liable for corporate debts.

Furthermore, the General Companies Act foresees two special forms of Corporation:Closed Corporation (SOCIEDAD ANÓNIMA CERRADA-SAC, which shares are not listed in the stock exchange) and Open Corporation (SOCIEDAD ANÓNIMA ABIERTA-SAA, which shares are listed in the stock exchange).

- LIMITED LIABILITY COMPANY (SOCIEDAD DE RESPONSABILIDAD LIMITADA-SRL): a juridical person whose capital is divided into cumulative and indivisible equity interest holdings, which cannot be incorporated into securities or be called shares. It cannot have more than 20 members, who are not personally liable for corporate obligations.

- BRANCH (SUCURSAL): Companies, whether domiciled or not in the country, may establish branches in Peru, which shall be registered in the Registry of Juridical Persons of the Registration Office of the place of operation.

- PARTNERSHIP ASSOCIATION CONTRACTS (CONTRATOS ASOCIATIVOS): Partnership association Contracts create and regulate interest and integration in given businesses or companies for the common benefit of the parties. This type of contract does not create a juridical person. It shall be in writing and is not subject to registration in the Registry of Juridical Persons. There are 3 forms of partnership association contracts: the Contract of Silent Partnership (ASOCIACIÓN EN PARTICIPACIÓN), Consortium (CONSORCIO) and Joint Venture (JOINT VENTURE).

Legal Basis:

- Section VII of the Preliminary Title, Article 7 of the Consolidated Amended Tex (Texto Único Ordenado TUO) of the General Mining Act as approved by Supreme Decree N º 014-92-EM.

- Article 51, Article 234 to 248, Article 249 to 262, Article 396 to the Article 406, Article 438 to 448 of the General Companies Act, Law Nº 26887.

Mining companies shall be ruled by the General Companies Act and by the Consolidated Amended Text of the General Mining Act, and shall be registered with INACC.

The mining companies may also be optionally registered in the Registry of Juridical Persons of the corresponding National Office of Public Registration (Oficina Nacional de Registros Públicos ONRP). The name of companies registered only by INACC shall necessarily refer to the mining activity.

When these companies have as their main purpose activities other than mining activities they shall be necessarily registered in the Registry of Juridical Persons of the corresponding National Office of Public Registration.

57






Branches of companies incorporated abroad that get established in the country to develop mining activities shall comply with the provisions set forth for them in the General Companies Act and in the Consolidated Amended Text of the General Mining Act.

Legal Basis:

- Article 184 and Article 185 of the Consolidated Amended Text of the General Mining Act, as approved by Supreme Decree Nº 014-92-EM.

- Article 21º of the General Companies Act, Law Nº 26887

The Taxpayer Identification Number (Registro Único del Contribuyente - RUC) is a code that identifies the taxpayer. Registration is gratuitous by submitting the Application for Registration and Tax Encumbrance (Solicitud de Inscripción y Afectación de Tributos - form 2119) and a Statement of Legal Representatives (Declaración de Representantes Legales - form 2054). In case the activity is performed in more than one establishment it shall also be required to submit the Declaration of Additional Establishments (Declaración de establecimientos Anexos - form 2046). All of the forms are distributed at no cost.

Granting the taxpayer identification number is a process that may be carried out at the Intendancy or Zonal Office of the National Superintendence of Tax Administration (Superintendencia Nacional de Administración Tributaria - SUNAT) or at authorized Registration Centers corresponding to the taxpayer registered address.

Legal Basis:

- Superintendence Resolution Nº 091-2000/SUNAT, Superintendence Resolution Nº 079-2001/ SUNAT.

III.TAXPAYER IDENTIFICATION NUMBER

58






PROCEDURE FOR THE INCORPORATION OF COMPANIES

Notarized Public Instrument

Registry of Juridical Persons with ONRP

- Optional, according to the main business of the company. If the company is registered only with INACC its name shall include or make reference to the mining activity

Step legally required for Companies operation -

SUNAT (RUC)

Municipal License ProInversión Registration of Foreign Investment

Draft Articles of Incorporation

(attorneys)

Initial capital

Registration with INACC

59






60





COLLECTIVE LABOR RELATIONS


I. COLLECTIVE LABOR RELATIONS

II. COLLECTIVE BARGAINING

1. DIRECT BARGAINING

2. CONCILIATION / MEDIATION

The State recognizes the workers' right to form unions, without previous authorization, for the study, development, protection and defense of their rights and interests and for the improvement of the social, economic and moral conditions of the union members.

For unions to be formed and to continue existing, they shall affiliate at least 20 workers in the case of corporation labor unions; or at least 50 workers in case of other type of unions, such as, activity, guild or other occupation unions.

The registration of a labor union provides official trade union status for the purposes provided by law, as well as the possibility to be considered part of domestic and international organizations

Legal Basis:

- Article 2, Article 14, Article 17, and Article 18 of the Consolidated Amended Text (Texto Único Ordenado - TUO) of the Labor Collective Relations Act as approved by Supreme Decree Nº 010-2003-TR.

- ILO Convention Nº 87 on the Freedom of Association and Protection of the Right to Organize.- ILO Convention Nº 98 on the Right to Organize and Collective Bargaining.

The Collective Labor Relations Convention is an agreement aimed at regulating the wages, labor and productivity conditions and other aspects concerning the relations between workers and employers. This agreement is entered into, on one hand, by one or several labor unions, or in absence of these, by representatives of the interested workers explicitly elected and authorized for this purpose; and on the other hand, by an employer, a group of employers or several organizations of employers.

The collective bargaining evolves through four stages:

The collective bargaining starts with the submission of a list of petitions that must contain a draft collective convention. The bargaining shall take place within the terms and opportunities agreed upon by both parties, during or after working hours, and shall begin within 10 calendar days upon submission of the list of petitions.

Legal Basis:

- Article 51 to Article 53, Article 57, Article 58 of the Consolidated Amended Text of the Labor Collective Relations Act as approved by Supreme Decree Nº 010-2003-TR.

The parties may request the beginning of the conciliation procedure. The conciliation shall be in charge of a specialized and qualified technical team from the Ministry of Labor and Employment Promotion, having the parties the possibility to select independent experts for the conciliation, in which case, they shall send a copy of the conciliation records to the Labor Authority.

The conciliation procedure shall be flexible and simple. If both parties so agree, the conciliator may act as mediator, and to that effect, whenever he/she may deem appropriate, he/she shall present one or more solution proposals that the parties may accept or refuse.

61





Legal Basis:

- Article 58, Article 59, Article 61 to Article 63 of the Consolidated Amended Text of the Labor Collective Relations Act as approved by Supreme Decree Nº 010-2003-TR.

Arbitration may start at the end of the conciliation stage and/or during the workers' strike.

Arbitration may be conducted by one single arbitrator, an ad hoc board, a representative institution, the Labor Authority itself, or any other modality that both parties may specifically agree, which shall be recorded in the arbitration agreement records.

In no case whatsoever, shall the following act as arbitrators: attorneys, advisers, representatives, proxies, or in general, any person who may be related to the parties or may have a direct or indirect interest in the result of the bargaining process.

Legal Basis:

- Article 63, Article 64 of the Consolidated Amended Text of the Labor Collective Relations Act as approved by Supreme Decree Nº 010-2003-TR.

The arbitration award shall not establish a solution different to the final proposal submitted by the parties, nor combine parts of both proposals in a single award.

The arbitration award shall take the whole final proposal of one of the parties. However, since this is an arbitration based on the rules of equity, the arbitrator may attenuate extreme positions.

The arbitration award, regardless of the modality of the arbitration body, shall be final and binding for both parties. The award may be challenged before the Supreme Court - Division of Labor, due to nullity or determination of lesser rights than those provided in the law in favor of the workers.

Legal Basis:

- Article 65, Article 66, Article 70 of the Consolidated Amended Text of the Labor Collective Relations Act as approved by Supreme Decree Nº 010-2003-TR.

3. ARBITRATION

4. ARBITRATION AWARD

62






COLLECTIVE BARGAINING

List of Petitions

Date of extinction of Current

Convention

Up to 10 days

Hasta 10 días

Conciliation NO

ArbitrationStrike

NO

NO

Resolution by the Ministry

of Labor

Establishment of the Arbitration Board

ChallengeProcedure

NO

YES

YESMediation

Arbitration

Arbitration Process Award

NO

Negotiation

Participation of the Ministry of

Labor

SOLUTION

63


YES

YES





64





STABILITY AGREEMENTS

In order to promote private investment in the mining activity, the Peruvian State grants the holders of mining concessions the right to enter into tax stability contracts, for Ten (10) and Fifteen (15) years.

STABILITY AGREEMENT 10 years 15 years

I. BENEFICIARIES

1

x

2

x

II. LEGAL BASIS

Supreme Decree N° 014-92-EM Consolidated Amended Text (Texto Unico Ordenado-TUO) of the General Mining Act Art° 78° y 79° Art° 82° y 83°

Supreme Decree N° 024-93-EM (Art° 18 y 23 ) Regulations of the General Mining Act x x

Supreme Decree N° 04-94-EM; Law N° 27343; Law N° 27651 and Law N° 27798. x x

III. REQUIREMENTS

1 Application in due form x x

2 Name and address of the applicant; if a foreigner include country of origin x x

x x

- x x

3x x

4

- Technical and Economic Feasibility Study Art° 82 and 83 of the General Mining Act's Consolidated Amended Text

US$ 2 MM

New operations: US$ 20 MM

Operations in course: US$ 50 MM

5 The Feasibility Study shall include the following information:

x

6 Comprobante por derecho de tramite según TUPA 15% UIT 15% UIT

65


a) A list of all of the works to be executed, including details in the following areas:- Mines. Exploration, development, preparation and exploitation program- Concentration plant (treatment) or alternative systems and related facilities. Tailings

disposal- Transport system- Energy supply (location, power source capacity, transmission, distribution)- Water supply- Support services- Housing and related facilities - Smelting plant- Refining plant- Port.- Temporary works- Expansion or improvement of facilities or existing works, own or belonging to others, that

are usable for the contract purpose- Safety and environmental measures

b) Acquisition of the machinery and equipment to be used in the project.c) Term, execution schedule and investment amount broken down in engineering and inspection

expenses, working capital, overhead expenses applicable to the project, financial expenses during the construction period

d) Mineral reservese) Minimum expected productionf) Sales projection and prices of the end products that will be obtained, as well as production direct

cost, indirect cost, interests of loans, amortization of intangibles, depreciation and other deductions allowed by law

g) Profitability of the project

The holders of mining concessions, which start operations or increase the production capacity by 100%; over 350 MT/day up to 5,000 MT/day, shall enjoy tax stability, which shall be guaranteed by a Contract entered with the State.

The holders of mining concessions, which have mining or expansion projects, with an initial capacity not lower than 5,000 TM/day, regarding one or more Administrative Economic Units (Unidades Económicas Administrativas UEA), shall enjoy tax stability, which shall be guaranteed by a contract

- Juridical person: Attach certified copy of the public instrument evidencing registration of articles of incorporation and power of attorney granting sufficient powers to the legal representative.

- Branches of foreign companies: Attach certified copy of the public instrument evidencing registration and power of attorney granted to the legal representative.

Name of the mining rights subject matter of application including: location, hectares, registration in the public registry and resolution of UEA registration.

- Investment program including terms of execution Art 78 and 79 of the General Mining Act's Consolidated Amended Text





PROCEDURE FOR THE APPROVAL OF THE INVESTMENT PROGRAMWITH TERMS OF EXECUTION

(STABILITY AGREEMENT FOR 10 YEARS)

Duration of Procedure at DGM: 45 calendar days

APPLICATION FILED WITH DGM

EVALUATION, QUALIFICATION &

DRAFT DGM RESOLUTION

DGMPDM

PROGRAM APPROVAL THROUGH DGM RESOLUTION

CONTRACT EXECUTION VMM - MEM

RECORDED WITH SUNAT

07 calendar days

90 calendar days

PROCEDURE FOR THE APPROVAL OF TECHNICAL AND ECONOMIC FEASIBILITY STUDY (STABILITY AGREEMENT FOR 15 YEARS)

APPLICATION FILED WITH DGM

EVALUATION, QUALIFICATION &


DGMPDM

APPROVAL OF TECHNICAL AND ECONOMIC FEASIBILITY STUDY THROUGH DGM RESOLUTION

CONTRACT EXECUTION MINISTER - MEM

RECORDED WITH SUNAT

07 calendar days

90 calendardays


66






I. BENEFICIARIES:

II. REQUIREMENTS TO APPLY FOR BENEFITS:

EXECUTION OF THE EXPLORATION INVESTMENT PROGRAM

I. BENEFICIARIES

The approval of the Exploration Investment Program entitling to get refund for sales taxes (19% of grass sales) benefits mining concession holders, which not having begun productive operations, carry out activities for the exploration of mineral resources in the country and enter into an Exploration Investment Contract with the State.

The State guarantees the mining concession holder the stability of this refund regime, so that any changes produced in such regime during the term of the respective Exploration Investment Contract shall not be applicable. The Law which approved this benefit shall in force until February 8, 2007.

Refund includes the IGV and the IPM taxes corresponding to all goods acquired or imported, services rendered or used, and construction contracts directly used in the execution of activities involving the exploration of mineral reserves in the country. Refund can be requested monthly as from the month after the date of its recording in the Registry of Sales.

Legal Basis:

- Law N° 27623, Value Added Tax and Local Promotion Tax Return to Mining Concession owners during exploration stage, as amended by Law N° 27662.

- Supreme Decree N° 082-2002-EF, Regulation on Value Added Tax and Local Promotion Tax Return to Mining Concession owners during exploration stage

- Supreme Decree N° 038-98-EM, Environmental Regulation for the Mining Exploration Activities- Supreme Decree N° 150-2002-EF, List of goods and services which purchase will give right to the definitive

refund of Value Added Tax and Local Promotion Tax to mining concession owners during exploration stage - Ministry Resolution N° 530-2002-EM/DM. Contract model for the Investment in Exploration Contract

signing, mentioned in Article 1° of Law N° 27623.

a) Request of Contract Execution in due form filed with the General Mining Bureaub) Investment Program for an amount not less than US$ 500,000.00 (five hundred thousand and 00/100 US

dollars).c) Narrative report of the Investment Programd) Monthly budget and execution schedule in detaile) Copy of the powers of attorney duly registered in the respective registration offices, accrediting the capacity

of the representative of the mining concession holder to enter the contract. f) Additional information allowing a better appreciation of the program (List of mining rights granted to the

holder, etc).g) Administrative fee payment receipt according to the Consolidated Text of Administrative Procedures: 15%

UIT. h) The application shall include only the mining concessions in which exploration investments will be executed

(accrediting title)

Once the investment is executed, the beneficiaries shall support the actual execution of the Investment Program by submitting to the General Mining Bureau of the Ministry of Energy and Mines a sworn statement

67

TAX REFUND FOR EXPLORATION ACTIVITIES






countersigned by an Audit Firm, in which the investments and/or acquisitions should be specified. The sworn statement shall be accompanied with a supporting technical report made by such firm.

The General Mining Bureau shall verify if the Beneficiary fulfilled the Investment Program execution and issue a Certificate of execution of the investment program in a maximum term of ninety (90) days.

Legal Basis:

- Law Nº 27623, Value Added Tax and Local Promotion Tax Return to Mining Concession owners during exploration stage, as amended by Law N° 27662.

- Supreme Decree Nº 082-2002-EF, Regulation on Value Added Tax and Local Promotion Tax Return to Mining Concession owners during exploration stage.

- Law Nº 27474, Auditing Law of Mining Activities.- Supreme Decree Nº 049-2001-EM, Auditing Regulation of Mining Activities.- Supreme Decree Nº 018-2003-EM, amending the Regulations on Mining Safety and Health, Auditing of

Mining Activities and various titles of Consolidated Amended Text (Texto Único Ordenado - TUO) of the General Mining Act.

The approval of the Exploration Investment Program Execution entitling to IGV tax refund, shall meet the following requirements:

a) Application in due form.b) Submission of the Sworn Statement countersigned by an Audit Firm, supporting the execution of the

Investment Program together with a technical report.c) Administrative fee payment receipt according to the Consolidated Text of Administrative Procedures: 15%

UIT.

II. REQUIREMENTS TO OBTAIN THE APPROVAL OF THE EXPLORATION INVESTMENT PROGRAM:

68






APPLICATION FILED WITH

DGM


PROCEDURE FOR THE APPROVAL OF THE PROGRAM OF INVESTMENT IN EXPLORATION ENTITLING

FOR SALES TAX REFUND

69

EVALUATION, AND QUALIFICATION. DGM

PDM

MEF CONFORMITY OF LIST OF GOODS

& SERVICES

30 calendardays

7 business days

MEM DGM, APPROVAL OF THE LIST OF GOODS AND SERVICES

MINISTRY RESOLUTION

PROGRAM APPROVAL THROUGH DGM RESOLUTION

CONTRACT EXECUTION AT DGM






PROCEDURE FOR THE APPROVAL OF THE EXECUTION OF THE PROGRAM OF INVESTMENT IN EXPLORATION (IGV TAX REFUND)


70

SWORN STATEMENT SUBMITTED TO DGM

- EVALUATION- APPOINTMENT OF FIA

DGM PDM

VERIFICATION OFEXECUTION OF INVESTMENT

PROGRAMBY FIA

FIA REPORT SUBMITTED TO DGM

EVALUATION OF SS & FIA REPORT


APPROVAL OF SS BY DGM

RECORDING WITH SUNAT

07 calendardays

15 calendardays

CONTRACTS OF EXPLORATION





LEGISLATION ON DOMESTIC AND FOREIGN INVESTMENT

I. PROMOTION OF DOMESTIC AND FOREIGN INVESTMENT

II. INVESTORS RIGHTS

The Peruvian State promotes domestic and foreign private investment furnishing guarantees, freedom and rights in favor of both investors and their investments in every sector of the economic activity.

Domestic and foreign investors do not need any previous authorization to make their investments in Peru.

ALLOWED TYPES OF FOREIGN INVESTMENT:

- Contributions coming from foreign natural or juridical persons, channeled through the Peruvian Financial System, to the capital of a new or an already existing company, in any of the forms of incorporation provided in the General Companies Act, in freely convertible currency or in physical or tangible assets, such as industrial plants, new and reconditioned machines, new and reconditioned equipment, pieces and parts, raw materials and intermediate products.

- Investments in local currency coming from resources that are allowed to be remitted abroad.- Conversion into Shares of private obligations with a foreign creditor.- Reinvestments made according with the legislation in force.- Investments in goods physically located in the Peruvian territory.- Intangibles technological contributions, such as brand, industrial models, technical assistance and know-

how, proprietary or not, that can have the form of physical goods, technical documents and instructions.- Investments used to acquire securities, and financial papers and documents quoted in the stock market or

bank certificates of deposit in local and foreign currency. - Resources used in silent partnership contracts or alike, which give the foreign investor a form of participation

in the production capacity of a company.- Any other form that contributes to develop the country.

Legal Basis:

- Article 1, Article 5 of Legislative Decree Nº 662, Regime of legal stability for foreign investment.- Article 1 of Legislative Decree Nº 757, Framework agreement for the growth of private investment.- Article 1 of Legislative Decree Nº 674, Law for the Promotion of private investment of State companies, as

amended by Article 1 of Decree Law Nº 26120.

a. Right to receive a non-discriminatory treatment in relation to domestic investors.b. They may enter into juridical, tax, administrative and exchange rate Stability Agreements with the State.c. foreign investors' intellectual and industrial property rights are subject to the same conditions applied to

domestic investors.d. Foreign investors enjoy the right to free trade and industry and free exports and imports.e. They may transfer abroad the total of their capital, including the proceed resulting from the sale of shares,

interest holdings or rights, the reduction of capital and the partial or full liquidation of companies.f. They may transfer abroad their total dividends or net profits resulting from their investment, after having paid

the corresponding taxes. g. They may participate in the acquisition of shares, interest holdings or property rights of domestic investors.h. They have the right to use the more favorable exchange rate available in the market for the exchange

operation of interest. i. Unlimited access to internal credit, under the same conditions as domestic investors.j. Every investor shall be entitled to contract, inside and outside the country, insurance policies covering their

investments against commercial and no commercial risks.

71






Legal Basis:

- Article 7, Article 8 of Legislative Decree Nº 662, Regime of legal stability for foreign investment.- Article 1 of Supreme Decree Nº 27-2002-PCM merging COPRI, CONITE and PROMPERU's Management of

Economic Promotion in the executive bureau FOPRI, which has changed its name to Agencia de Promoción de la Inversión PROINVERSION.

- Article 46 of Legislative Decree Nº 757 Framework agreement for the growth of private investment.

PROINVERSION (http://www.proinversión.gob.pe) is the agency in charge of designing and conducting the process of private investment promotion. It coordinates foreign investment promotion and centralizes foreign investments promotion actions of the different public entities. Once investment is made, it is the automatically registered with PROINVERSION, giving it all the rights recognized by Law to foreign investment.

Legal Basis:

- Article 3, Article 19 of Legislative Decree Nº 662, Regime of legal stability for foreign investment.- Article 1 of Supreme Decree Nº 27-2002-PCM merging COPRI, CONITE and PROMPERU's Management of

Economic Promotion in the executive bureau FOPRI, which has changed its name to Agencia de Promoción de la Inversión PROINVERSION.

The National Institute for the Defense of Free Competition and Intellectual Property (Instituto Nacional de Defensa de la Competencia y de la Protección de la propiedad Intelectual - INDECOPI) is the agency in charge of protecting intellectual property rights in all of its forms, and operate as an intellectual property registration office.

The contracts of technology use, patents, brands and other elements of foreign industrial property, as well as technical assistance, basic and detailed engineering, management and franchise are freely negotiated between the parties and later registered with INDECOPI.

The forms and applications to register Inventions and New Technology are posted on-line at: www.indecopi.gob.pe/formatos_y_solicitudes/oin/asp

Legal Basis:

- Law Nº 25868 Law of Organization and Functions of INDECOPI. - Resolution Nº 291 of the Andean Community. - Article 56 and Article 57 of Legislative Decree Nº 807, Law on faculties, standards and organization of

INDECOPI.

Peruvian law establishes free-import of all type of goods and the elimination of any kind of governmental authorization.

Import of goods is subject to the following taxes:

- Customs duty (DERECHOS ARANCELARIOS): Variable- Value-added tax (IMPUESTO GENERAL A LAS VENTAS IGV): 19% - Excise tax (IMPUESTO SELECTIVO AL CONSUMO): variable

Exports are not affected by taxes (taxes are not applied to exports).

III.PRIVATE INVESTMENT PROMOTION AGENCY - PROINVERSION

IV.TRANSFER OF TECHNOLOGY

V. INTERNATIONAL TRADE REGULATIONS

72






Legal Basis:

- Consolidated Amended Text (Texto Único Ordenado TUO) of the Value Added Tax and Excise Tax, Supreme Decree Nº 055-9-EF.

1. LABOR CONTRACTS

Labor legislation regulates different forms to personnel contracting, including term contracts and contracts subject to modality. Thus we have: Temporary Contracts, Accidental Contracts and Contracts of Work or Service.

It is also possible to: contract personnel for an unlimited-term, to engage young labor as trainees; or under pre-professional practices or apprenticeship contracts, through companies offering human resources and workers' cooperatives, or a work contract under the regime for the export of non-traditional products.

2. FOREING WORKERS CONTRACT

Domestic and foreign companies may contract foreign personnel making up to 20% of the total number of workers. The remunerations paid to such foreign personnel may not exceed 30% of the company total payroll.

Foreign personnel labor contracts should be signed in writing and for a fix-term, no more than 3 years, which may can be successively renewed for similar periods; such contracts shall also include the commitment to train domestic personnel in the same occupation.

Employers may request the exoneration of the limiting percentages in case of specialized professional or technical staff, as well as in case of the management staff of a new company activity or in case of company transformation.

3. EMPLOYEES' PROFIT SHARING

This profit sharing is made by the company's distribution of a percentage of annual income before taxes. The workers and employees of a mining company shall have the right to get 8% of profits. This amount is a tax deductible expense for the assessment of the third-class income.

Legal Basis:

- Consolidated Amended Text of the Law on Labor Productivity and Competitiveness Supreme Decree Nº 003-97-TR.

- Supreme Decree Nº 001-96-TR, Regulations of Decree Law Nº 728. - Article 2 of the Law on Profit Sharing, Legislative Decree Nº 677.- Article 4, Article 5, Article 6 of the Law on Contracting Foreign Workers as approved by Legislative

Decree Nº 689.- Article 7, Article 8, Article 11, Article 18 of the Law on Contracting Foreign Workers as approved by

Supreme Decree Nº 014-92-TR and amended by Supreme Decree Nº 023-2001-TR.

4. TAX REGIME

The Tax Regime includes, among other: Income Tax, Value-Added Tax, Excise Tax, Extraordinary Solidarity Tax, Financial Transactions Tax, and the customs regime.

a) Income Tax (IMPUESTO A LA RENTA),: Annual tax that levies the income obtained by taxpayers that are

residents in the country, and by taxpayers with no-residence in the country only for Peruvian source

income. In case of companies, the tax applies on any profit or benefit derived from operations with third

VI. LABOR ASPECTS

73






parties, as well as on the result of exposure to inflation computed at the closing of each economic year at

a 30% rate .

b) Value added tax (IMPUESTO GENERAL A LAS VENTAS): This tax levies the sale in the country of

movable property, services rendered or used in the country, construction contracts, the first sale of real

state property made by their constructors, and the import of goods. The applicable rate is 17%. It is

collected together with the 2% Municipal Promotion Tax, totalling 19%.

c) Excise Tax (IMPUESTO SELECTIVO AL CONSUMO): This tax levies the sale in the country by producers

and the import of goods such as cigarettes, alcoholic beverages, sodas and mineral water, luxury goods,

fuel, casino and gambling games. The tax rate is variable depending on the type of good or service.

d) Extraordinary Solidarity Tax (IMPUESTO EXTRAORDINARIO DE SOLIDARIDAD): A temporary tax that

levies the income resulting from dependent and independent work; it is to be applied until December 31,

2004. The tax aliquot is 1.7%.

e) Financial Transactions Tax (IMPUESTO A LAS TRANSACCIONES FINANCIERAS: Temporary tax that

levies with the 0.08% aliquot, bank transactions in local and foreign currency (both debit and credit

transactions). From January 1, 2005 to December 31, 2005 the applicable rate shall be 0.08%. From

January 1, 2006 to December 31, 2006, the applicable rate shall be 0.06%. This tax shall be deducible for

Income Tax purposes.

Legal Basis:

- Consolidated Amended Tax of the Income Tax Law approved by Supreme Decree Nº 054-99-EF as

amended.

- Consolidated Amended Text of the Value Added Tax and Excise Tax Law approved by Supreme Decree Nº

055-99-EF.

- Law Nº28194, Law for evasion fighting and the economy formalization.

5. CUSTOMS IMPROVEMENT REGIME

- Temporal Admission Regime: It means the suspension of rights and type of encumbrances applicable

to goods to be used in transformation processes for their subsequent export.

- Drawback: it is a customs regime that, as a consequence of the export of goods, allows to obtain the 5%

refund of the customs duties that have levied the import of goods that are then contained in the exported

goods or that have been consumed during their manufacture.

Legal Basis:

- Legislative Decree Nº 809, General Customs Act

- Supreme Decree Nº 121-96-EF Regulations of the General Customs Act.

6. INVESTMENT INCENTIVES

- Early Recovery Regime: It consists of the return of the Value Added Tax paid for the import and/or local

acquisition of capital goods by natural or juridical persons engaged, inside the country, in production of

goods and rendering of services that are to be exported or the sale of which is levied with the Value

Added Tax, when such persons had not started their commercial activities.

On the other hand, the companies that sign up agreements with the State, under the sector laws for the

development, exploration and/or exploitation of natural resources, and those entering into concessions

contracts with the State for the development of infrastructure and public services, may enjoy the 74






benefits of this regimen for imports and local acquisition of goods, services and construction contracts

required to execute the project subject matter of the contract. The qualifying companies and the

requirements and characteristics that each contact shall meet shall be approved by Supreme resolution

countersigned by the Minister of economy and Finance and the head of the corresponding Sector.

Legal Basis:

- Legislative Decree Nº 818, Beginning of productive operations of companies that sign up agreements

with the State, under the sector laws for the development, exploration and/or exploitation of natural

resources (04/ 23/96).

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76





LEGAL BASIS1. Mining Concessions

2. Environmental Permits for the Implementation of Mining Projects

3. Processing Concessions

4. Mining Rights of Way

5. General Service Concessions

6. Mining Transport Concessions

- Supreme Decree Nº 014-92-EM Consolidated Amended Text (Texto Único Ordenado - TUO) of the General Mining Act.

- Supreme Decree Nº 018-92-EM Regulations on Mining Procedures. - Legislative Decree Nº 708 Law for Investments Promotion in the Mining Sector.- Legislative Decree Nº 913 substituting Article 39 and Article 57 of the Consolidated Amended Text of the

General Mining Act.

- Supreme Decree Nº 016-93-EM Regulations on Environmental Protection.- Ministry Resolution Nº 292-97-EM/VMM Model Contract on Environmental Administrative Stability for

Mining and Metallurgical Concessions.- Supreme Decree Nº 038-98-EM Environmental Regulations on Mining Exploration Activities.- Supreme Decree Nº 053-99-EM Provisions to standardize the administrative procedures with the General

Bureau of Environmental Affairs (Dirección General de Asuntos Ambientales - DGAA).


- Supreme Decree Nº 018-92-EM Regulations on Mining Procedures. - Supreme Decree N° 042-2003-EM Prior commitment is established as requirement for the development of

mining activities.


- Supreme Decree Nº 018-92-EM Regulations on Mining Procedures. - Legislative Decree Nº 708 Law for Investments Promotion in the Mining Sector.- Law N° 26505, Law of private investment to promote the development of economic activities in the lands of

national territory and in the natives and rural communities.- Law Nº 26570, substituting Article 7º of the Law Nº 26505.- Supreme Decree N° 017-96-AG Regulations to Article 7 of Law N° 26505, on the procedures to be granted

legal mining rights of way.- Supreme Decree N° 014-2003-AG, amending various articles of the Regulations to Article 7 of Law N°

26505, on the procedures to be granted legal mining rights of way as approved by Supreme Decree N° 017-96-AG.


- Supreme Decree Nº 018-92-EM Regulations on Mining Procedures.


- Supreme Decree Nº 018-92-EM Regulations on Mining Procedures.

ANNEXES

77





7. Electric Concessions

8. Municipal Authorization and Taxes

9. Safety, Health and Sanitary Authorization

10. Use of Water for Non-Agriculture Purposes

11. Incorporation of Companies

12. Collective Labor Relations

13. Contracts of Tax Stability and of Exploration in the Mining Concessions

- Decree Law Nº 25844 The Electrical Concessions Act. - Supreme Decree Nº009-93-EM The Electrical Concession Act's Regulations, as amended by Supreme

Decree Nº 02-94-EM, Supreme Decree Nº 004-96-EM Supreme Decree Nº 022-97-EM, Supreme Decree Nº 038-2001-EM.

- Legislative Decree Nº 720. Municipalities only can require that natural and juridical persons obtain the "Municipal License to Operate", to develop economic activities.

- Legislative Decree Nº 776 Municipal Taxation Law, atended by Law Nº 27180 and Law Nº 27305.- Law Nº 27972 The Organic Law of Municipalities.

- Legislative Decree Nº 584 Law of Organizations and Functions of the Ministry of Health (Ley de Organización y Funciones del Ministerio de Salud).


- Supreme Decree Nº 046-2001-EM Regulations on Mining Safety and Health, as amended by Supreme Decree Nº 018-2003-EM.

- Decree Law N° 25844 Law for Electric Concessions.- Supreme Decree Nº 003-90-AG Regulations on Rates and Quotas for Water Use.- Supreme Decree Nº 009-93-EM Electric Concessions Act's regulations.- Supreme Decree Nº 055-2002-AG Rates charged for surface water used for non agriculture purposes by

category, corresponding to years 2001, 2002 and 2003.


- Law Nº 26887 General Companies Act. - Superintendence Resolution Nº 091-2000/SUNAT.- Superintendence Resolution Nº 079-2001/ SUNAT.

- Supreme Decree Nº 010-2003-TR Consolidated Amended Text (Texto Único Ordenado - TUO) of the Labor Collective Relations Act.

- ILO Convention Nº 87 on the Freedom of Association and Protection of the Right to Organize.- ILO Convention Nº 98 on the Right to Organize and Collective Bargaining.

- Political Constitution of Peru- Law N° 27623 Value Added Tax and Local Promotion Tax Return to Mining Concession owners during

exploration stage, as amended by Law N° 27662.- Supreme Decree Nº 082-2002-EF Regulation on Value Added Tax and Local Promotion Tax Return to Mining

Concession owners during exploration stage. - Supreme Decree Nº 038-98-EM Environmental Regulation for the Mining Exploration Activities- Supreme Decree Nº 150-2002-EF List of goods and services which purchase will give right to the definitive

refund of Value Added Tax and Local Promotion Tax to mining concession owners during exploration stage.

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ANNEXES





- Ministry Resolution Nº 530-2002-EM/DM Contract model for the Investment in Exploration Contract signing, mentioned in Article 1° of Law N° 27623.

- Law N° 27474 Auditing Law of Mining Activities.- Supreme Decree Nº 049-2001-EM Auditing Regulation of Mining Activities.- Supreme Decree N° 018-2003-EM amending the Regulations on Mining Safety and Health, Auditing of

Mining Activities and various titles of Consolidated Amended Text (Texto Único Ordenado - TUO) of the General Mining Act.

- Political Constitution of Perú - Legislative Decree Nº 662, Regime of legal stability for foreign investment., as amended by Law Nº 27342.- Legislative Decree Nº 757, Framework agreement for the growth of private investment..- Legislative Decree Nº 674, Law for the Promotion of private investment of State companies, as amended by

Article 1 of Decree Law Nº 26120. - Supreme Decree Nº 27-2002-PCM merging COPRI, CONITE and PROMPERU's Management of Economic

Promotion in the executive bureau FOPRI, which has changed its name to Agencia de Promoción de la Inversión PROINVERSION.

- Law Nº 26887 General Companies Act.- Law Nº 25868 Law of Organization and Functions of INDECOPI. - Resolution Nº 291 of the Andean Community.- Legislative Decree Nº 807, Law on faculties, standards and organization of INDECOPI.- Supreme Decree Nº 055-9-EF Consolidated Amended Text (Texto Único Ordenado TUO) of the Value Added

Tax and Excise Tax.- Supreme Decree Nº 003-97-TR Consolidated Amended Text of the Law on Labor Productivity and

Competitiveness. - Supreme Decree Nº 001-96-TR, Regulations of Decree Law Nº 728.- Legislative Decree Nº 677 Law on Profit Sharing. - Legislative Decree Nº 689 Law on Contracting Foreign Workers. - Supreme Decree Nº 014-92-TR Law on Contracting Foreign Workers as amended by Supreme Decree Nº

023-2001-TR.- Legislative Decree Nº 809, General Customs Act.- Supreme Decree Nº 121-96-EF Regulations of the General Customs Act.- Law Nº28194, Law for evasion fighting and the economy formalization.

14. Legislation on Domestic and Foreign Investment

79

ANNEXES





80





FUNCTIONS

1 To promote private investment in the energy sub-sector ensuring demand satisfaction and promoting diversification, exploitation, and a rational and efficient use of quality energy resources at competitive prices, as well as fomenting the development of hydrocarbon activities in order to revert the current trade balance.

2 To promote private investment in the mining sub-sector through a competitive legal framework, ensuring juridical stability and safeguarding environmental and safety protection, as well as promoting a rational exploitation and the introduction of the clean technologies in Small Mining.

3 To improve the image of the mining-energy activity promoting environmental awareness among companies by implementing environmental management programs and programs to promote friendly relations among the mining companies, consumers and the civil society; and favor the elimination of environmental liabilities resulting from mining-energy activities.

4. To count on a modern small efficient and decentralized State that makes it possible to fulfill its mission.

MINISTRY OF ENERGY AND MINESwww.minem.gob.pe

MINISTRY OF ENERGY AND MINES' ORGANIZATION CHART

Internal Audit

General Bureau

Office of the Chairman of the Mining Board

Office of MEM'S Public Prosecutor

General Planning, Budget, Statistics

and IT Bureau

Secretary General's Office

General Bureau of

Electricity

Vice-Ministry of

Mines

Ministry of Energy and Mines Consulting Commission

81

ANNEXES

General Bureau of Legal Advice

General Administration Bureau

Vice-Ministry of

Energy

General Bureau of

Energy

Environmental Affairs

General Bureau of

Hydrocarbons

General Bureau of

Mining Environmental

Affairs

General Mining

Bureau

General Bureau of

Social Affairs





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FUNCTIONS

According to the Regulations on Organization and Functions as approved by Supreme Decree Nº 002-2003-EM, INACC's functions include:

1 To process mining concession applications, grant mining concession titles, and resolve on applications regarding mining rights according to law.

2 To issue resolutions on mining rights extinction, failure to pay, exclusion, and condition subject to mining concession application.

3 To manage the National Mining Cadastre, the Draft Cadastre and the Cadastre of areas on which the mining activity is restricted.

4 To prepare the Mining Roll (Padrón Minero), manage and distribute the money collected from the payment of the Effectiveness Fee and Fines.

5. Express an opinion on technical, legal or other issues of its competence.

NATIONAL INSTITUTE OF CONCESSIONS AND MINING CADASTRE (Instituto Nacional de Concesiones y Catastro Minero - INACC)

www.inacc.gob.pe

INACC's ORGANIZATION CHART

General Administration

Office

General Bureau of

Mining Cadastre

83

ANNEXES

Institutional Head's Office

Internal Audit Office

Legal Advice

Office

Information Technology

Office

General Bureau

of Mining Concessions

General Bureau of Effectiveness

Fee and Development





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PROINVERSIÓNwww.proinversion.gob.pe

FUNCTIONS

1 To promote decentralized investment preferably at the regional and local level.2 To primarily promote any investment that contributes to increase employment, national competitiveness and

exports, bringing national, regional and local interests into line.3 To improve the quality and expand the coverage of public services and infrastructure through forms that

encourage the participation of investment that is not dependant on the Peruvian State. 4 To promote the development of a culture that favors investment that is not dependant on the Peruvian State as a

manner leading to growth and economic and social development.5 To develop mechanisms aimed at attracting investors and to meet their requirements. 6 To promote the country image as a favorable environment for national and foreign investment.

BOARD OF DIRECTORS

EXECUTIVE BOARD

SECRETARY GENERAL'S OFFICE

LEGAL OFFICE

PROINVERSION' ORGANIZATION CHART

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ANNEXES

PROINVERSION'S COMMITTEE ON STATE

ASSETS, PROJECTS AND COMPANIES

PROINVERSION'S COMMITTEE

ON INFRASTRUCTURE AND PUBLIC SERVICE

PROJECTS

LIQUIDATING BOARDS

ADMINISTRATION AND FINANCE OFFICE

OPERATIONSOFFICE

ORGANIZATION, METHODS

AND SYSTEMS OFFICE

BUREAU OF PRIVATE INVESTMENT PROMOTION

AND SUPPORT

BUREAUOF SOCIAL AND COMMUNITY

AFFAIRS

BUREAU FOR THE PROMOTION OF STATE-INITIATED

PRIVATE INVESTMENT





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GEOLOGICAL, MINING AND METALLURGICALINSTITUTE(Instituto Geológico Minero Metalúrgico - INGEMMET)

www.ingemmet.gob.peFUNCTIONS

1 To create, manage and permanently update the Basic Information System for Mining Investment Promotion, making it available for national and foreign investors.

2 To keep the National Geological Chart and the supplementary Basic Thematic Charts up to date.3 To make the National and Regional Inventory of Depletable Resources.4 To carry out regional mining prospecting works, for which INGEMMET may collect the information obtained from

the prospecting and exploration works performed by private concessionaires in any areas they may leave freely available.

5 To perform geological risks studies and determine their effects on the community and on the environment, contributing to prevention and mitigation and favoring people's safety, health and development.

6 To perform studies on Geomorphology and Environmental Geology at the national, regional and local scope.7 To perform glaciological and hydrogeological studies aimed at the country water resource assessment.8 To participate in geological research studies on mineral resources in the continental border, sea beds, and in the

Antarctica.9 To carry out, promote and spread geological research applying new technologies that contribute to mining

exploration investment promotion. 10 To favor the integration of the entire continent geological information, proposing geological terminology

standardization.11 To spread new mining and metallurgical technologies. 12 To create, organize and update the Geological, Mining and Metallurgical Information System of the country,

spreading information of interest for national mining development that may contribute to improve geological knowledge on the territory, using the most modern information techniques.

13 To spread and update the geological information on the national territory and its depletable resources.14 To contribute to a friendly interaction among mining investors and the rural communities in the scope of

influence of the mining operation.

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ANNEXES





MINISTRY OF ENERGY AND MINES


GENERAL MINING BUREAU

[email protected]





MMIINNIISSTTRRYY OOFF EENNEERRGGYY AANNDD MMIINNEESSAv. Las Artes Sur 260 San Borja, Lima - Perú

Phone: (511) 475-0065


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