CAP S.A. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT JUNE 30, 2002 AND 2001

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1 CAP S.A. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT JUNE 30, 2002 AND Inscription in the Securities Register a) CAP S.A. (the Company) is inscribed in the Securities Register of the Superintendency of Securities and Insurance (No.0131) and subject to the regulatory authority of that Superintendency. b) The following subsidiaries are also inscribed in the Securities Register and are regulated by the Superintendency of Securities and Insurance: Compañía Siderúrgica Huachipato S.A. Tax No Inscription No Compañía Minera del Pacífico S.A. Tax No Inscription No Accounting principles applied a) Accounting period.- These consolidated financial statements relate to the period between January 1 and June 30, 2002 and b) Bases for the preparation.- The consolidated financial statements are prepared in accordance with generally accepted accounting principles as published by the Chilean Institute of Accountants and the instructions of the Superintendency of Securities and Insurance. Where the two differ, the instructions of the latter prevail. c) Presentation and currency of the financial statements.- The financial statements of the Company and most of the subsidiaries in Chile are prepared in US dollars. The financial statements of foreign subsidiaries are translated into US dollars in accordance with accounting principles generally accepted in Chile. The financial statements of the other subsidiaries in Chile are prepared in local currency and translated into US dollars at the closing exchange rate. The financial statements are shown in thousands of US dollars and are compared to the same period of the year before, and the corresponding reclassifications are made as necessary. d) Consolidation.- The consolidated financial statements include the assets, liabilities, results and cash flows of the Company and its subsidiaries. The amounts and effects of significant transactions between consolidated subsidiaries have been eliminated, and the participation of minority investors has also been recorded in the Minority Interest accounts in liabilities and the results. Companies included in the consolidation: PERCENTAGE HOLDING TAX NO. NAME OF COMPANY DIRECT INDIRECT TOTAL TOTAL Compañía Siderúrgica Huachipato S.A Compañía Minera del Pacífico S.A Compañía Distribuidora de Petróleos del Pacífico Ltda Manganesos Atacama S.A Abastecimientos CAP S.A Foreign Pacific Ores & Trading N.V Foreign Pacific Ores & Trading B.V Foriegn P.O.R.T. Investments Ltd. N.V Foreign P.O.R.T. Finance Ltd. N.V Sociedad de Ingeniería y Movimiento de Tierra del Pacífico Ltda

2 2 e) Currency translation.- At the close of the financial statements, assets and liabilities in currencies other than the US dollar and those expressed in other monetary units have been translated at the following rates: Conversion Rate Closing exchange rate (peso/dollar) Value of Unidad de Fomento (pesos) 16, , Exchange differences are charge/credited to income. f) Time deposits.- Time deposits include principal plus accrued interest g) Inventories The main inventories are valued at absorption cost, as follows: Steel products, at the lower of production cost of the last base quarter and net realization value. Finished products and minerals, at average production or acquisition cost. Raw materials, supplies in warehouse and other inventories, at average acquisition cost. Materials in transit, at cost. The cost of inventories does not exceed their net realization value. The provision for excess supplies refers mainly to surplus materials. h) Estimation of bad debts. The policy of the Company and its subsidiaries is to make provision for all accounts subject to judicial collection and to make specific and global provisions for outstanding accounts that represent some risk of non payment. The specific debtors mentioned in Circular 458 of the Superintendency of Securities and Insurance (in cessation of payments or bankruptcy) are for insignificant amounts and are fully provided for. There are no accounts receivable from related companies that imply any risk of non payment. I) Fixed assets Fixed assets are shown at cost or technical appraisal value, as appropriate, and include interest costs incurred during construction periods and major renovations and improvements. Maintenance and repair costs are charged to income. j) Depreciation of fixed assets Fixed assets are depreciated on the straight-line method over the estimated useful lives of the assets. In the subsidiaries Compañía Siderúrgica Huachipato S.A. and Compañía Minera del Pacífico S.A., depreciation is adjusted as a function of production (between 70% and 120% of lineal depreciation). k) Leased assets Assets acquired under financial leases by subsidiaries are shown as acquisitions of fixed assets, recording the sum of lease installments as a liability and interest on an accrued basis. Such assets do not legally belong to the subsidiaries, so they cannot freely dispose of them until the purchase option is exercised. l) Investments in related companies Investments in non-consolidated Chilean related companies are shown at their equity value. m) Goodwill. Goodwill is determined as the difference between the investment cost and the proportional equity value at the time of purchase of an associate company according to its balance sheet at that time. n) Bonds issued. The Company has issued bonds: a) In US dollars which are shown at the original value plus accrued interest at each periodend. Payments are made in pesos at the Observed exchange rate on the date of payment. b) In Unidades de Fomento which are restated at the value of the UF at the close of the period plus accrued to that date. The Company has capitalized bond issue and placement costs, showing them as deferred expenses in Other assets, short or long term. These are being amortized over the term of the bonds. In the event of a full or partial redemption of the US dollar issue, the proportional part of the capitalized expenses will be charged to income for that year. The bonds issued in Unidades de Fomento do not carry any early redemption option.

3 3 o) Income tax and deferred taxes. The Company and its Chilean subsidiaries book income tax on the basis of net taxable income in accordance with the Income Tax Law. The foreign subsidiaries do so in accordance with the regulations in the respective countries. The Company and most of its subsidiaries show deferred taxes for timing differences, tax losses and other events creating differences between the financial and tax treatment of assets and liabilities, in accordance with the provisions of Technical Bulletins Nos.60, 69 and 71 of the Chilean Institute of Accountants. p) Severance indemnities Provisions are made for severance indemnities that are covered by current work contracts mainly using the present value method of the accrued cost of the benefit, using a discount rate of 8% and considering an average permanence in the company of between 9 and 17 years. q) Vacations. The cost of personnel vacations is charged to income for the year in which the right accrues. r) Sales. Sales correspond to products and services delivered and provided at the date of closing of the financial statements. s) Derivative contracts. The Company has carried out currency and/or interest rate swap contracts relating to certain long-term loans, transforming them from other foreign currencies into US dollars or changing the previously-agreed interest rates. These contracts are recorded in accordance with Technical Bulletin No.57 of the Chilean Institute of Accountants. t) Computer software. The Company and its subsidiaries only acquire operating systems and their accessories, which are charged to income. Management and control programs have been developed internally or with specialized external assistance; the less significant management programs are charged to income and the production programs are capitalized and amortized over six years. u) Research and development costs Research and development costs that do not include mine development and exploration work, are charged to income. There have been no significant costs of this kind over the last five years. v) Exploration costs Expenses incurred in exploring for minerals or mines are charged to income. w) Mining claims - Disbursements in mining claims and mining companies which are not being exploited, are charged to income. x) Statement of cash flow Cash and cash equivalents includes cash and bank balances and time deposits not exceeding 90 days term. The net cash flow from operating activities represents the net cash or cash equivalents disbursed during the period resulting from operations affecting the results of the Company and its subsidiaries. 3.- Accounting changes There have been no accounting changes during the period January/June The accounting principles and criteria described in Note 2 have been uniformly applied during the periods ended June 30, 2002 and 2001.

4 4 4.- Short and Long-Term Debtors The detail of these at June 30, 2002 and 2001 is as follows. CURRENT Up to 90 days 90 days to 1 year Sub Total Total Current (net) LONG TERM Trade 36,346 54,046 3,858 6,196 40,204 38,825 58, debtors Est.bad debts 1, Notes 3,135 1,075 1,410 1,315 4,545 4,545 2, receivable Est.bad debts Sundry 4,126 3,804 4,202 4,445 8,328 8,326 8,247 7,112 9,434 debtors Est.bad debts Total long-term debtors 7,233 9,562 Of the total short-term debtors at June 30, 2002, 93% represent Chilean debtors and 7% foreign debtors, compared to 77.35% and 22.65% respectively the same period of the year before. Long-term debtors at June 30, 2002 split 98.20% into Chilean and 1.80% foreign (90.14% and 9.86% respectively in 2001). 5.- Balances and Transactions with Related Companies The balances of short and long-term receivable and payables, and transactions, with unconsolidated related companies are shown in the following three tables: Notes and Accounts Receivable Short Term Long Term Tax No. Company ThUS$ ThUS$ ThUS$ ThUS$ Cía. Minera Carmen de Andacollo ,915 11, Cía. Minera Huasco S.A ,210 13, Sabimet S.A Cintac S.A. 2,103 3, Invercap S.A Centroacero S.A. 4,477 3, Propal S.A. 16,478 4, Cía. Minera La Jaula Notes and Accounts Payable Total 24,021 12,487 26,125 24,845 Short Term Long Term Tax No. Company ThUS$ ThUS$ ThUS$ ThUS$ Cía. Minera Huasco S.A. 7,367 15, Cía. Minera La Jaula Cintac S.A Sociedad Naviera Ultragas Ltda Sabimet S.A Total 7,597 15, The long-term accounts receivable from Compañía Minera Carmen de Andacollo and Compañía Minera Huasco S.A. accrue interest at Libor plus a spread. Short-term accounts receivable and payable relate to business transactions and are payable within the terms established for each.

5 5 Principal transactions with related unconsolidated companies: Company Tax No. Relationship Transaction Amount Effect on results (charge)/credit Amount Effect on results (charge)/credit ThUS$ ThUS$ ThUS$ ThUS$ Cía. Minera Carmen de Andacollo Associate Interest Cía. Minera Huasco S.A Associate Transport services ,048-1,048 Purchase of preconcentrates 17, ,730 0 Interest Sales of materials & services 5,291 5,291 5,632 5,632 Sales of minerals 51,482 51,482 49,442 49,442 Purchases of pellets 10, ,772 0 Cía. Minera La Jaula Associate Services Invercap S.A Associate Services Propal S.A Associate Equipment rentals 7,401 7,401 9,456 9,456 Purchases of services 9,467-9,467 12,695-12,695 Cintac S.A Subsidiary Sales of steel of products Invercap 7,733 7,733 14,116 14,116 Purchases of Sabimet S.A Associate of Invercap Centroacero S.A Associate of Invercap Sociedad Naviera Ultragas Ltda Directors & Executives in Sales of services common products Sales of steel products Purchases of products Sales of steel products 5,743 5,743 5,573 5,573 Purchases of products Services received 2,762-2,762 2,961-2,961 Directors remuneration: The following shows the remuneration of directors during the periods ended June 30, 2002 and 2001: ThUS$ ThUS$ Attendance at meetings Representation expenses Directors Committee fees 6 2 Total

6 6 6.- Inventories The detail of these is as follows: ThUS$ ThUS$ Finished steel products 23,287 20,973 Semi-finished & products being processed 23,957 37,540 Primary products & others 2,694 2,817 Steel byproducts 12,673 10,692 Sub Total 62,611 72,022 Finished pellets 7, Pellet chips 2, Mine pre-concentrates 523 2,504 Fines & lumps 1,520 3,631 Other minerals being processed 3,246 2,573 Sub Total 15,079 10,520 Imported carbon 6,748 6,754 Zinc-alum alloy, silicon Iron ore 3,136 8,792 Lime, limestone & other raw materials 10,229 13,477 Raw materials in transit 3,295 2,776 Sub Total 24,114 32,756 Materials in warehouse 22,293 36,067 Spares & supplies 10, Equipment & materials for sale 732 1,632 Provision for surplus materials (less) (618) (629) Materials in transit 2,998 5,913 Sub Total 35,675 43,549 Total 137, , Deferred taxes and income tax General Information at June 30, 2002 and 2001 a) Net taxable income and provision for income tax ThUS$ ThUS$ Net taxable income 15,805 15,269 Tax loss 28,921 45,718 Provision for income tax 2,562 2,321 Provision for income tax foreign subsidiaries 19 28

7 7 b) Taxed earnings The Company and its subsidiaries showed the following consolidated balances of retained taxed profits, accumulated tax losses and tax credits for shareholders: ThUS$ ThUS$ Taxed earnings with credit 29,119 35,886 Taxed earnings without credit 3, Exempt income 8 9 Accumulated tax losses 0 6,089 Tax credits for shareholders 4,356 6,333 c) Net income tax recoverable Net taxes recoverable correspond to the taxation of the Company and its subsidiaries, as follows: ThUS$ ThUS$ Income tax before applying accumulated tax losses (2,562) (2,323) Clause 21 tax on disallowed expenses (40) (41) Benefit of tax losses 4,127 2,952 Net credit to income for taxes 1, Balance previous year 3,010 1,431 Monthly tax prepayments 694 1,571 Tax credits for training expenses & others Net income tax recoverable 5,306 3,839 At June 30, 2002 and 2001, net income tax recoverable is shown in Current assets for ThUS$ 7,207 (net of ThUS$ 43 of VAT) and ThUS$ 4,685 (net of ThUS$ 10 of VAT) respectively, and income tax in Current liabilities for ThUS$ 1,901 and ThUS$ 846 respectively. d) Deferred taxes Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Short Term Long Term Short Term Long Term Short Term Long Term Short Term Long Term ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Provision for doubtful accounts Unearned income Provision for vacations Amortization intangible assets Leased assets , Manufacturing expenses - - 4, ,839 - Depreciation fixed assets , ,815 Severance indemniities , ,651 Provision for long-service awards Sundry provisions Accumulated tax losses , Unrealized gain on sale of assets Provision for materials obsolescence Deferred expenses Provision for retirement pensions Provision for work accidents Interest & commissions , ,087 Pellets feed heaping Romeral plant repair costs Prepaid expenses Sub total 1, ,567 77,370 3, ,034 67,668 Complementary accounts net of amortization ,386 2, ,065 63,720 Total 1, ,483 8, ,969 3,948

8 8 As instructed in Superintendency of Securities and Insurance Circular 1560 of September 20, 2001, deferred taxes are shown net in the balance sheet, as follows: ITEM ThUS$ ThUS$ Assets for current deferred tax 1, Liabilities for current deferred tax (4,483) (3,969) Total net current assets (liabilities) (3,416) (3,490) Assets for long-term deferred tax Liabilities for long-term deferred tax (8,984) (3,948) Total net long-term assets (liabilities) (8,862) (3,877) e) Income tax account ITEM ThUS$ ThUS$ Current tax charge (provision for tax) (2,602) (2,364) Effect on assets or liabilities of deferred taxes for the year (3,104) (2,625) Tax benefit of tax losses 4,127 2,952 Effect of amortization of complementary deferred asset and liability accounts (1,653) (1,624) Total (3,232) (3,661) 8.- Fixed assets Fixed assets comprise mainly land, buildings, infrastructure works, machinery and equipment in the mines, pellets plant, ore shipment ports, steel mill and wharves. The details are as follows: Cost Technical appraisal Total Total Assets Cost Accumulated depreciation Value Accumulated depreciation Net fixed assets Net fixed assets ThUS$ Tus$ ThUS$ ThUS$ ThUS$ ThUS$ Land 3, ,823 3,881 Improvements to land & roads 32,710 (27,353) 1,655 (2,021) 4,991 5,302 Buildings 282,686 (202,582) 9,532 (14,751) 74,885 79,922 Infrastructure works 46,054 (33,457) 18,827 (18,626) 12,798 11,269 Machinery & equipment 1,254,340 (746,065) 51,649 (57,420) 502, ,735 Transport & handling 69,896 (54,691) 4,285 (4,800) 14,690 16,066 equipment Leased fixed assets 8,447 (4,452) 0 0 3,995 4,817 Other assets 11,399 (2,914) 0 0 8,485 7,925 Works in progress 45, ,590 30,191 Total 1,754,271 (1,071,514) 86,622 (97,618) 671, ,108 Depreciation amounts to ThUS$ 23,747 at June 30, 2002 and ThUS$ 23,419 at June 30, 2001, and includes ThUS$ 165 and ThUS$ 253 respectively of depreciation of the technical appraisal. In 1988, the principal subsidiaries Compañía Siderúrgica Huachipato S.A. (C.S.H.) and Compañía Minera del Pacifico S.A. (C.M.P.) adopted the provisions of Circular 829 of the Superintendency of Securities and Insurance to revalue their fixed assets. As a result, C.S.H. increased the value of its fixed assets while C.M.P. reduced its assets, compared to their book values at December 31, The detail of Leased assets at June 30, 2002 is as follows: ThUS$ a) In Compañía Siderúrgica Huachipato S.A.: Cooper type C8 air compressor 172 b) In Compañía Minera del Pacífico S.A.: Pellets plant magnetic batteries Mining equipment Light equipment Total 8.447

9 9.- Investments in related companies The detail of unconsolidated related companies at June 30, 2002 and 2001 is as follows: a) At June 30, 2002: 9 Tax No. Company Country of origin Investment control currency N of shares Percentage holding Equity of company Result for the year Accrued results Equity value Unearned income Book value of investment Cía. Minera Huasco S.A. ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Chile US dollar 1,050,000 50, ,405 3,474 1,884 21,203 (4,711) 16, Cía. Minera La Jaula Chile US dollar 10,500 50, , , , Cía. Minera Carmen de Andacollo Chile US dollar 4,185 27, Novacero S.A. Chile US dollar 102,864,932 44, ,690 (1,077) (476) 12, , Cintac S.A. Chile US dollar 38,696,886 11, ,794 (1,146) (126) 4, , Inst. Chileno del Acero S.A. Chile US dollar 5,000 5, Propal S.A. Chile US dollar ,0000 4, ,220 (809) 1,411 Total 45,620 (5,520) 40,100 b) At June 30, 2001: Tax No. Company Country of origin Investment control currency N of shares Percentage holding Equity of company Result for the year Accrued results Equito value Unearned income Book value of investment Cía. Minera Huasco S.A. Tus$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Chile US dollar 1,050,000 50, ,233 1,851 1,072 18,111 (5,004) 13, Cía. Minera La Jaula Chile US dollar 10,500 50, , , , Cía. Minera Carmen de Andacollo Chile US dollar 4,185 27, (7,123) (1,923) Novacero S.A. Chile US dollar 71,950,191 30, , , , Cintac S.A. Chile US dollar 38,696,886 11, ,470 2, , , Inst. Chileno del Acero S.A. Chile US dollar 5,000 5, Propal S.A. Chile US dollar ,0000 5, ,454 (845) 1,609 Total 48,425 (5,849) 42,576 UNREALIZED INCOME a) The subsidiary Compañía Minera del Pacífico S.A. (CMP) generated unrealized income in Compañía Minera Huasco S.A. (CMH) corresponding to a difference in the valuation o f mining claims contributed by CMP on the constitution of the associate company Compañía Minera La Jaula in These claims were sold to CMH in The transfer to income is being made in equal quarterly installments over the estimated life of the exploitation of Los Colorados mine, i.e. until June The amount realized during the period January-June 2002 is ThUS$ 147. b) The subsidiary Compañía Siderúrgica Huachipato S.A. sold to Propal S.A. in 1999 fixed assets amounting to ThUS$ 1,800 and showed at the time unrealized income in line with its holding of ThUS$ 882. The transfer to income of the realization of that gain is being made in line with the depreciation of those assets. The amount made in the period January-June 2002 and 2001 respectively is ThUS$ 18 and ThUS$ 19. INVESTMENTS ABROAD a) Earnings on investments abroad that are potentially remittable to the Company and its subsidiaries at the end of each year are as follows: ThUS$ ThUS$ P.O.R.T. Investments Limited N.V. 2,004 1,986 Pacific Ores and Trading N.V. 1,071 1,019 The Company has contracted no debt to cover these investments during the periods of both years.

10 10 b) Technical Bulletin No.64 of the Chilean Institute of Accountants establishes that the translation rate for the financial statements of Argentine companies should be the exchange rate at the date of closing (US$1 = 3.8 Argentine pesos at June 30, 2002). This led CAP S.A. to show a loss of ThUS$ 1,835 in its financial statements for the 2002 period. At June 30, 2002, CAP S.A. produced this loss from its direct % shareholding in Cintac S.A. plus an indirect holding of % through Novacero S.A., making a total holding of %. At the same time, Cintac S.A. has a 99.99% shareholding in the Argentine subsidiary Tubos Argentinos S.A., which in turn holds 99.99% of Coselava S.A.. As a result of the regulatory changes in Argentina, which among other things ended the prevailing exchange regime, and the general economic situation in that country and its later evolution, the indirect Argentine associate companies could be affected by the recoverability of some of their assets and operations. These financial statements include no adjustments that might result from the outcome of these uncertainties. At June 30, 2002, the Company s investments in the Chilean associate companies which, in turn, have investments in Argentine subsidiaries, represent 1.76% of its total consolidated assets. ADDITIONAL INFORMATION a) The value of the investment in Compañía Minera Carmen de Andacollo is calculated after deducting from its equity the reserve for future capitalizations. This reserve consists of a nonmonetary contribution by Enami which contractually is intended to be converted into new shares in the proportion necessary to maintain its percentage holding. At June 30, 2002 and 2001, the subsidiary Compañía Minera del Pacífico S.A. has discontinued the application of the proportional equity value method with respect to its holding in Compañía Minera Carmen de Andacollo because of this company s negative equity position. At June 30, 2002, the subsidiary Compañía Minera del Pacífico S.A. has made no provision for the proportional participation in the negative equity of its associate Compañía Minera Carmen de Andacollo as it is not expected that this situation will result in any loss for it. At June 30, 2001, Compañía Minera del Pacífico S.A. recorded its proportional participation in the negative equity of Compañía Minera Carmen de Andacollo, amounting to ThUS$ 3,751; this is shown in Others under Long-term liabilities. b) An extraordinary shareholders meeting of Sociedad Contractual Minera Compañía Minera La Jaula in November 2001 approved a reduction in capital by MUS$ 10,000, thus reducing the investment by the subsidiary Compañía Minera del Pacífico S.A. by MUS$5,000. During December 2001, this Company paid to Compania Minera del Pacifico S.A. ThUS$ 4,665 of the agreed reduction. c) The shares in related companies, with the exception of Cintac S.A., are not quoted on stock exchanges. d) On January 15, 2002, Invercap S.A. completed the transfer to CAP S.A. of 30,914,741 shares in Novacero S.A. for a total of ThUS$ 5,062, generating goodwill of ThUS$ 1,140. Novacero S.A. indirectly holds 50.93% of he shares of Cintac S.A.. e) The reduced percentage holding in Instituto Chileno del Acero S.A. results from the Company not participating in capital increases made in the period

11 Goodwill The detail of goodwill at June 30, 2002 and 2001 is as follows: TAX NO. COMPANY Amount amortized in the period Balance of goodwill Amount amortized in the period Balance of goodwill ThUS$ ThUS$ ThUS$ ThUS$ Cintac S.A Novacero S.A , Total 200 1, Other assets The detail of other long-term assets at June 30, 2002 and 2001 is as follows: ThUS$ ThUS$ Rights in installations Inventories saleable in over one year 37,485 36,955 Provision for materials obsolescence (less) (1,741) (2,189) Actuarial adjustments to deferred severance indemnities Fixed assets for sale 1, Bond issue and placement expenses 4,465 1,441 Unaccrued portion of credit insurance premium 798 1,276 Unaccrued portion of long-term loan financing costs 1,017 1,995 Unaccrued portion of special collective agreement bonus 1, Others Total 45,491 40,646

12 Bank and financial institution borrowings, short term Short-term bank and financial institution borrowings at June 30, 2002 and 2001 are as follows: CURRENCY OR INDEXATION UNIT TAX NO. Bank US Dollars Yen Other foreign curencies Unidades de Fomento Non-indexed pesos TOTAL Short term ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUSS$ ThUS$ ThUS$ ThUS$ Banco de Chile 3,038 4, Banco de Crédito e Inversiones 14,188 10, Scotiabank Sud Americano 3,039 3, K Banco Santiago 7,508 10, Foreign ANZ Banking Group Ltd Foreign The Bank of Tokyo-Mitsubishi Panamá 2, TOTAL 30,303 27, Total principal due 29,996 27, Average interest rate 3.84% 5.99% Long term short-term portion Foreign M.H. Panamá S.A. 2,617 2, Foreign Banque Paribas 6,641 4, Foreign Chase Manhattan Bank 2,927 2, Foreign The Bank of Tokyo-Mitsubishi Ltd. 6,474 6, Foreign Dresdner Bank Luxembourg S.A. 2,251 2, Foreign U.B.S. A.G. 0 49, Foreign Santander Investment Bank 18,357 31, Foreign Westdeutsche Landesbank Girozentrale 30, BBVA Banco BHIF 16,712 16, Banco de Crédito e Inversiones 4, CorpBanca 12,185 6, Banco de Chile 6,769 4, Banco del Estado de Chile 25, Citibank N.A. 13,337 1, Foreign Dresdner Bank Lateinamerika A.G. 4, Foreign ANZ Banking Group Ltd 14, TOTAL 166, , Total principal due 163, , Average interest rate 3.83% 6.29%

13 Long-term bank and financial institution borrowings Long-term borrowings from banks and financial institutions a June 30, 2002 and 2001 are as follows. Years to maturity Tax No. Bank of Financial Institution Currency 1 to 2 years 2 to 3 years 3 to 5 years 5 to 10 years Over 10 years Total long term Average interest rate Total long term ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ % ThUS$ Foreign M.H. Panamá S.A. US dollars 2,593 2,593 1, ,482 Libor % 9,075 Foreign Banque Paribas US dollars 4,037 4, ,074 Fixed 7.90% 14,130 Foreign Chase Manhattan Bank US dollars 2,918 2, ,837 Libor % 8,755 Foreign The Bank of Tokyo-Mitsubishi Ltd US dollars 6,207 6,207 3, ,518 Libor % 21,726 Foreign Dresdner Bank Luxembourg S.A. US dollars 2,176 2,176 1, ,441 Libor % 7,617 Foreign ANZ Banking Group Ltd US dollars 13,833 6, ,750 Libor + 2% 0 Foreign U.B.S. A.G. US dollars ,250 Foreign Santander Investment Bank US dollars 17,750 8, ,625 Libor + 2% 44, BBVA Banco BHIF US dollars Libor + 2% 16, Banco de Chile US dollars 6,500 3, ,750 Libor + cost fds 16, Banco del Estado de Chile US dollars ,000 Foreign Dresdner Bank Lateinamerika AG US dollars Libor % 10,000 Foreign Westdeutsche Landesbank US dollars ,000 Girozentrale Citibank N.A. US dollars 3,333 1, ,000 Libor % 18, CorpBanca US dollars 12,167 6, ,250 Libor % 30,417 Total 71,514 44,724 5, , ,595 Percentage in foreign currency (%) Percentage in local currency (%) 0.00

14 14 Amendment Agreement: The Company and Santander Investment Bank Ltd., as agent for a syndicate of banks, signed an amendment agreement in 1999 to change the terms of syndicated loans outstanding with Santander Investment Bank Ltd (maturing on ) and UBS AG (maturing on ), whereby the participating banks agreed to extend the final maturity to September 5 and November 25 respectively of the year Under the terms of that agreement, the following contracts were signed: On September 5, 2001, loans of MUS$ 53,250 made to CAP S.A. by a syndicate of banks led by Santander Investment Bank Limited were extended to be payable in equal semi- installments from March 5, 2002 until September 5, On November 26, 2001, a principal amount of MUS$ 41,500 of the loan made by the syndicate originally led by UBS AG was extended to be payable in semi- installments from May 25, 2002 to November 25, ANZ Banking Group Limited is the new agent bank for the extension period Bonds issued The following bond issues have been registered in the Securities Register of the Superintendency of Securities and Insurance: Registration number Series Nominal amount outstanding Indexation unit Interest rate Final maturity Payments Par value Placement in Chile or elsewhere Interest Principal 30/06/ /06/2001 Current portion of long-term bonds 219 A-1 13,333 US$ Libor + 1.5% Semi- Semi- 13,780 14,265 Chile 219 A-2 3,333 US$ Libor + 1.5% Semi- Semi- 3,445 3,566 Chile 263 C-1 0 U.F. 6.0% Semi- 1,922 0 Chile 263 C-2 0 U.F. 6.0% Semi Chile Total short-term portion ThUS$ 19,438 17,831 Long-term bonds 219 A-1 40,000 US$ Libor + 1.5% Semi- Semi- 33,334 46,667 Chile 219 A-1 10,000 US$ Libor + 1.5% Semi- Semi- 8,333 11,666 Chile 263 C-1 3,300,000 U.F. 6.0% Semi- Semi- 78,442 0 Chile 263 C-2 500,000 U.F. 6.0% Semi- Semi- 11,885 0 Chile Total long term ThUS$ 131,994 58,333

15 Characteristics: Amount of the issues: N 219 (Series A-1) US$ 80,000,000 N 219 (Series A-2) US$ 20,000,000 N 263 (Series C-1) U,F, 3,300,000 N 263 (Series C-2) U,F, 500, Individual amount of bond N 219 (Series A-1) US$ 100,000 each N 219 (Series A-2) US$ 20,000 each N 263 (Series C-1) U,F, 10,000 each N 263 (Series C-2) U,F, 1,000 each Issue date: N 219 (Series A-1 & A-2) October 1, 1999 N 263 (Series C-1 & C-2) August 1, 2001 Term: N 219 (Series A-1 & A-2) 6 years N 263 (Series C-1 & C-2) 5 years Final maturity: N 219 (Series A-1 & A-2) October 1, 2005 N 263 (Series C-1 & C-2) August 1, 2006 Indexation unit: N 219 (Series A-1 & A-2) US dollar. Principal and interest is payable in pesos. N 263 (Series C-1 & C-2) Unidad de Fomento. Payments of principal: N 219 (Series A-1 & A-2) Semi- from April 1, N 263 (Series C-1 & C-2) Semi- from February 1, Interest rate: N 219 (Series A-1 & A-2) Libor at 180 days plus 1.5% p.a. in arrears, calculated on the basis of a 360-day year. N 263 (Series C-1 & C-2) 6.0% p.a. in arrears calculated on the basis of a 360-day year. Early redemptions: N 219 (Series A-1 & A-2) Fully or partially as from October 1, 2001 on any payment date of interest and principal. N 263 (Series C-1 & C-2) This issue does not contemplate early redemption options Provisions and write-offs a) Short-term provisions: Short-term provisions comprise: ThUS$ ThUS$ Shown in current liabilities: Related to personnel: Severance indemnities 3,473 4,131 Vacations 4,248 4,722 Long-service awards 4,118 4,821 Others 1,480 1,832 Other sundry provisions 2,217 2,792 Total 15,536 18,298

16 16 b) Long-term provisions : Long-term provisions comprise: 2,002 2,001 ThUS$ ThUS$ Severance indemnities 22,839 27,175 Vacations 833 1,093 Other personnel provisions 1,852 2,148 Others Total 25,962 31,008 c) Provisions deducted from the respective asset accounts: 2,002 2,001 ThUS$ ThUS$ For short and long-term doubtful accounts For trade accounts receivable 1,379 1,263 For inventories 2,359 2,818 Other current assets The managements of the Company and the subsidiaries believe that the provisions made reasonably cover the risks of non-payment of accounts receivable. d) Write-offs: There were no significant write-offs during the period January-June 2002 and Severance indemnities The long-term provision for severance indemnities showed the following movement: ThUS$ ThUS$ Balance at January Provision for the period charged (credited) to income Payments & transfers to short term (5.946) (3.888) Balances at June

17 Minority interest The minority interest corresponds to the proportion of equity in subsidiaries belonging to persons other than the parent. These subsidiaries are: Liability Result Liability Result ThUS$ ThUS$ ThUS$ ThUS$ Manganesos Atacama S.A. 67 (2) Cía. Siderúrgica Huachipato S.A Cía. Minera del Pacífico S.A Total 69 (2) Changes to shareholders equity The equity accounts showed the following movement: Paid capital Participation in reserves of subsidiaries Accumulated earnings Interim dividends Result for the period ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ January June 2001 Balances at January 1, ,444 1,778 84,866 2,031 Distribution previous year s results 2,031 (2,031) Final dividends (1,015) Net equity changes in subsidiaries (1,610) Result for the period (4,415) Interim dividends Balances at June 30, , ,882 0 (4,415) January June 2002 Balances at January 1, ,444 (587) 83,509 (11,139) Distribution previous year s results (11,139) 11,139 Final dividends Net equity changes in subsidiaries (864) Result for the period (2,688) Interim dividends Balances at June 30, ,444 (1,451) 72,370 0 (2,688) Number of shares Series N of subscribed shares N of paid shares N of shares with voting rights Sole 149,448, ,448, ,448,112 Capital Series Subscribed capital ThUS$ Paid capital ThUS$ Sole 379, ,444 Other reserves: These refer exclusively to the account Participation in reserves of subsidiaries and arise from equity changes in subsidiary companies and their associated companies which keep their books in Chilean pesos.

18 18 Distribution of earnings Under current legislation, at least 30% of the net income for the year should be distributed in cash dividends unless agreed otherwise by all shareholders at a shareholders meeting. The board and shareholders meetings have agreed the distribution of the following dividends during 2001: Dividend Earnings of Date agreed Payment date ThUS$ year N 69 Interim Accumulated ,605 N 70 Final Accumulated ,015 N 71 Interim Accumulated ,373 The dividend policy agreed by the shareholders is to distribute 50% of net income as dividends and retain the balance as reserves Other non-operating income and expenses These consist of the following at June 30, 2002 and 2001: Other non-operating income: ThUS$ ThUS$ Services provided 1, Net gain on sale of fixed assets Net gain on sale of other assets Reversal of provisions & adjustments 44 1,290 Net gain from indexation 3 0 Net gain from other exchange differences 0 0 Other minor ítems Total 2,964 2,046 Other non-operating expenses: Services paid Net loss for exchange differences minino licencies Process engineering, project research & development 1,092 1,651 Adjustment of provisions Extraordinary depreciation 70 0 Other minor ítems Total 2,782 2, Exchange differences There were the following exchanges differences at June 30, 2002 and 2001: Currency Amount ThUS$ ThUS$ Current assets Pesos (2,787) (7,365) Current assets Yen 0 (233) Other assets Pesos (414) (800) Total (charges) credits (3,201) (8,398) Current liabilities Pesos 2,201 3,972 Current liabilities Yen Current liabilities Others (12) (7) Long-term liabilities Pesos 5,801 2,834 Total (charges) credits 7,990 7,344 Gain (loss) on exchange differences 4,789 (1,054)

19 Share and bond issue and placement costs Bond issue costs showed the following movement during each period: Other Assets Other Assets Current Long Term Current Long Term ThUS$ ThUS$ ThUS$ ThUS$ Opening balance 1,568 5, ,663 Increases in period for new bond issues Amortization (784) - - (222) - - Transfer from long to short term 784 (784) 222 (222) Balance at June 30 1,568 4, ,441 These amounts are shown in Other current assets and Other long-term assets Statement of cash flow The net positive cash flow from operating activities represents the net cash and cash equivalents received during the period resulting from operations affecting the results of CAP S.A. and subsidiaries Contingencies and restrictions Contingencies and commitments consist of: a. Direct commitments: ThUS$ ThUS$ Short term: Mineral sale commitments 109, ,597 Purchase orders placed 37,962 15,828 Inventories on consignment 1,698 1,923 Deferred customs duties Other Long term: Mineral sale commitments 28, ,850 Deferred customs duties 380 1,054 The mineral sale commitments relate to contracts with domestic and foreign customers, valued at sales prices prevailing at the end of each period. These contracts are agreed on FOB or CIF terms and are negotiated ly. Their average term is three years and there are no fines for default as the contracts provide options regarding the volumes shipped each year. In Compañía Minera del Pacífico S.A., deferred customs duties are not recorded as liabilities as it is expected to benefit from export incentives that would exempt it from paying these duties. Compañía Siderúrgica Huachipato S.A. is jointly and severally liable for long-term loans received by CAP S.A., which amounted to ThUS$ 228,267 at June 30, Compañía Minera del Pacífico S.A. is jointly and severally liable for loans made to CAP S.A. by ANZ Banking Group Ltd., Santander Investment Bank Limited, Banco del Estado de Chile and Westdeutsche Landesbank Girozentralle, London Branch, which at June 30, 2002 amount to ThUS$ 135,363. Compañía Siderúrgica Huachipato S.A. and Compañía Minera del Pacífico S.A. are joint and several guarantors for a local US dollar bond issue made by CAP S.A. for MUS$ 100,000 and a Unidad de Fometo denominated issue of UF 3,800,000. The total amount of these bonds outstanding at June 30, 2002, including accrued interest, amounts to MUS$ 151,432. Compañía Minera del Pacífico S.A. granted its guarantee for up to 30% of the liabilities under a loan to its associate Compañía Minera Carmen de Andacollo from Canada Tungsten (Cayman) Inc.. The amount outstanding under the loan at June 30, 2002 is ThUS$ 3,600.

20 Association agreement: 20 As part of the association agreement between Compañía Minera del Pacífico S.A. and MC Inversiones Ltda., described below, Compañía Minera del Pacífico S.A buys from Compañía Minera Huasco S.A. all its iron-ore concentrates and sells it its pellets production. Compañía Minera del Pacífico S.A. (C.M.P.) and MC Inversiones Ltda., a subsidiary of Mitsubishi Corporation, have a joint project for expanding the Los Colorados mine to produce iron preconcentrates, convert the pre-concentrates into pellets and commercialize the pellets. At the start of the project, C.M.P. sold to MC Inversiones Ltda. 50% of its absolute rights to the mining claims and water rights of the Los Colorados mine. Both companies later contributed their rights to S.C.M. Compañía Minera La Jaula. During 2000, S.C.M.Compañía Minera La Jaula sold its mining rights to Compañía Minera Huasco S.A.. C.M.P. also holds 50% of Compañía Minera Huasco S.A., a closely-held corporation formed to exploit the above mining claims. Neither of the parties may, within a period of ten years maturing in 2008, assign, transfer, mortgage, charge, pledge or dispose of in any other way its shares in the two above-mentioned companies without the prior consent of the other party. The project was financed by a credit of MUS$ 71,700 from the Mitsubishi Corporation group through MV Cayman Limited. The amount of the credit including accrued interest at June 30, 2002 is ThUS$ 48,460. As project sponsors, C.M.P. and MC Inversiones Limitada have committed to guarantee the obligations of Compañía Minera Huasco S.A. with MV Cayman Limited for a total of up to ThUS$ 17,448. Each sponsor is contingently liable for 50% of the commitments and their potential materialization will be by subordinated loans. Once twenty years have passed from July 1, 1998, and C.M.P. has fully depreciated its pellets plant, Compañía Minera Huasco S.A. shall have the option to acquire that plant. b. Contingencies for lawsuits pending that might result in losses for the Company. At June 30, 2002, Compañía Siderúrgica Huachipato S.A. recorded a provision of ThUS$ 87 for a lawsuit contingency pending, under file No before the Concepción Appeals Court. c. Management restrictions and financial covenants. The loan agreements signed by the Company with ANZ Banking Group Ltd., Santander Investment Bank Limited, Banco de Chile, Citibank N.A., the bank syndicate led by Corpbanca and the BBV Banco BHIF-led bank syndicate, require compliance with certain obligations, mainly referring to the provision of periodic consolidated financial information, the maintenance to date of liabilities to third parties, obtaining the prior consent of the banks for disposing of or selling all or a substantial part of its assets and giving charges over them. These agreements also require compliance, on the basis of the consolidated financial statements, of financial covenants, mainly interest cover, liquidity, minimum equity and debtequity ratio. The Company also has to meet long-term debt ratios under other loan agreements. CAP S.A. has certain obligations, limitations and prohibitions with respect to bond issues, mainly referring to the provision of consolidated financial information, maintaining debt and interest coverage levels and meeting certain financial ratios. The Company must also maintain its assets free of all pledges, mortgages or other encumbrances for an amount of no less than 50% of its total liabilities Guarantees received from other parties At June 30, 2002, insurance cover contracted and guarantees and collateral received from other parties consist of the following: a) The Company and its subsidiaries have insurance cover over their fixed assets and other business risks amounting to approximately ThUS$1,047,400, whose maximum amount payable is approximately ThUS$ 200,000 for each claim. These policies expire on July 31, b) Guarantees and collateral received from other parties are as follows: ThUS$ ThUS$ Securities in guarantee for sales 9,202 10,549 Mortgages & pledges for personnel loans 9,178 10,794 Securities & documents received from suppliers & contractors to guarantee performance & advances 3,334 4,061 Current contracts & others Total 21,917 25,494

21 Currencies Assets and liabilities by currencies at June 30, 2002 and 2001 are as follows: Currency ThUS$ ThUS$ Current assets Cash & banks Pesos 2,605 6,387 Cash & banks US dollars 4,069 1,301 Time deposits US dollars 2,144 37,777 Marketable securities Pesos 0 0 Marketable securities US dollars 0 0 Trade accounts receivable Pesos 35,540 44,559 Trade accounts receivable US dollars 3,285 14,258 Notes receivable Pesos 4,545 2,390 Sundry debtors U.F Sundry debtors Pesos 5,340 5,602 Sundry debtors US dollars 2,550 2,288 Notes & accounts receivable from related companies Pesos 7,041 7,948 Notes & accounts receivable from related companies US dollars 16,980 4,701 Recoverable taxes Pesos Recoverable taxes US dollars 7,084 4,325 Inventories Pesos 53,642 86,405 Inventories US dollars 83,838 72,442 Prepaid expenses Pesos 3,624 1,483 Prepaid expenses US dollars 1,276 2,607 Deferred taxes Pesos 0 0 Deferred taxes US dollars 0 0 Other current assets Pesos Other current assets US dollars 3,842 8,426 Fixed assets Land & plantations Pesos Land & plantations US dollars 2,807 2,807 Buildings & infrastructure Pesos 4,231 4,505 Buildings & infrastructure US dollars 357, ,618 Machinery & equipment Pesos 1,992 2,214 Machinery & equipment US dollars 1,322,244 1,319,866 Other fixed assets Pesos Other fixed assets US dollars 65,290 48,238 Incremental value technical appraisal Pesos Incremental value technical appraisal US dollars 86,108 90,880 Accumulated depreciation Pesos (4,594) (4,677) Accumulated depreciation US dollars (1,164,538) (1,144,316) Other assets Investment in related companies Pesos 2 2 Investment in related companies US dollars 40,097 42,574 Investment in other companies US dollars Goodwill US dollars 1, Long-term debtors U.F. 4,304 5,155 Long-term debtors Pesos 2,633 3,298 Long-term debtors US dollars 296 1,109 Notes & accounts receivable from related companies Pesos 0 0 Notes & accounts receivable from related companies US dollars 26,125 24,845 Long-term deferred taxes Pesos 0 0 Long-term deferred taxes US dollars 0 0 Intangible assets US dollars Amortization intangible assets US dollars (51) (24) Other long-term assets Pesos 7,724 10,378 Other long-term assets US dollars 37,767 30,268 Total Assets Pesos 125, ,971 US dollars 900, ,851 U.F. 4,740 5,512

22 22 Currencies Current Liabilities Up to 90 days 90 days to 1 year Currency Amount Average interest rate Amount Average interest rate Amount Average interest rate Amount Average interest rate ThUS$ % ThUS$ % ThUS$ % ThUS$ % Borrowings from banks & financial institutions short term US dollars 30, , Borrowings from banks & financial institutions current maturities of long US dollars 75, , , , term Bonds payable U.F. 2, Bonds payable US dollars , , Current maturities of long-term liabilities US dollars , Dividends payable Pesos Accounts payable Pesos 21, , Accounts payable US dollars 9, , Notes payable US dollars 8, , , , Sundry creditors U.F Sundry creditors Pesos Sundry creditors US dollars , Notes payable to related companies Pesos 3, Notes payable to related companies US dollars 4, , , Provisions Pesos 3, , , ,088 0 Provisions US dollars 1, , Withholdings Pesos 2, , Income tax Pesos Income tax US dollars Unearned income Pesos Unearned income US dollars Deferred taxes Pesos Deferred taxes US dollars , ,967 0 Total current liabilities US dollars 130,129 48, , ,241 U.F. 2, Pesos 33,566 30,652 11,187 11,028