SOUTHERN PERU COPPER CORPORATION 16. • Marketing: In Candarave, we contributed to organiz- ing and providing the equipment for a meat marketing  association of farmers who receive training and tech- nical assistance from SPCC technical experts. Man- agement so far has proven successful and the farm- ers own a refrigerated truck and two fully equipped  facilities, one in Toquepala and another in Cuajone. In  Torata, construction of a Stockpiling Center is under  way. In Higuerani, a channel was created for directly  marketing guinea pigs from farms to the Toquepala  soup kitchens.  • Basic infrastructure: Colocaya river in Ilabaya was  canalized and levees built along its banks. Oconchay  in Ilabaya and Nuevo Camilaca in Candarave were  connected to the power grid. In the Huaytire alpaca  breeding area, sleeping enclosures, breeding modules  for mating and fenced fields will provide advanced  pasture management.  • Capacity building: Torata started a pilot project for  capacity building in schools and production organi- zations.  • Large projects: A pre-feasibility study of the water  flow in the Callazas river in Candarave will deter- mine a likely dam construction, while a sediments  • Other activities: In Candarave and Torata we fostered  the organization of agricultural fairs.  study was completed in the Sama river in Yarascay,  in Tacna, to determine the feasibility of building a  reservoir.  molybdenum, and a significant hike in the price of copper  and molybdenum. Price of copper during 2004 in the London Metal Ex- change (LME) and the New York Commodity Exchange  (COMEX) was of 130 and 129 cents per pound of copper  respectively, compared to 81 cents in 2003. The recent surge in the price of molybdenum has had a  significant effect on the Company´s traditional calcula- tion of cash cost and comparisons between periods. Ac- cordingly, the Company is presenting cash costs with and  without the inclusion of all revenues from byproducts.  When calculating operating cash, SPCC excludes cost  depreciation, amortization and depletion, exploration,  workers´ participation provisions and items of a non- recurring nature. The Social Responsibility program achieved highly  satisfactory results in 2004, thanks to our technicians  sharing the neighboring communities’ daily activities.  This allowed for leveraging their strengths, setting pri- ority needs, identifying and mitigating deficiencies, and  generally contributing to improved living standards. Our  company was therefore able to efficiently manage its  relations with the environment around it.  SPCC reported 2004 net earnings of $596.8 million or  diluted earnings of $7.46 per share, compared to net  earnings of $119.2 million or diluted earnings of $1.49  per share in 2003, and $60.6 million or diluted earnings  of $0.76 per share in 2002. The improvement in the Company´ s results for 2004 is  due mainly to a production increase of mined copper and  RESULTS OF OPERATIONS FOR THE  YEARS ENDED DECEMBER 31,  2004, 2003 AND 2002 “Net sales of Southern  Peru were $1,715.9 million in  2004, the highest sales in the past  five years.” Cathodes dispatch at the SWEW Plant in Toquepala The Company´s operating cash cost, as defined, for the three years ended December 31, is as follows: 2004  2003  2002  (in cents per pound)  Cash cost per pound of copper produced  4.5  39.9  45.6 Cash cost per pound of copper produced (without  byproduct revenue)  68.3  58.1  57.8 SOUTHERN PERU COPPER CORPORATION 17. Net Sales:  Net sales in 2004 were $1,715.9 million, compared with $798.4 million in 2003 and $664.6 million in 2002.  Sales increased in 2004 by $917.5 million, a 114.9% increase over the previous year, mainly due to higher copper and  molybdenum sales and higher sales of the Company´ s byproduct metals, molybdenum and silver. Prices : Sales prices for the Company´s metals are established principally by reference to prices quoted in the London Metal  Exchange (LME), the New York Commodity Exchange (COMEX) or published in Platt´s Metals Week, for dealer oxide aver- age prices for molybdenum.