Informe Financiero 2010 (inglés)

Management Report

MANAGEMENT REPORT

Management report SHAREHOLDERS’ MEETING March 2, 2011 Messrs. Shareholders: We are pleased to present to your consideration the results and activities of fiscal year 2010:

I. EXTERNAL ISSUES Price of gold and precious metals in general had a positive performance along the year 2010.

Easy access to markets and the high number of financial vehicles to invest in these metals, together with increase in physical demand of gold in the world’s main markets (India and China) as well as lax monetary policies of the world’s economies, made the price of gold both positive and volatile last year.

The price of gold fell to a minimum of USD 1,061.40 USD/

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F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

troy ounce in February, and reached a maximum historic price of USD 1,423.70/ troy ounce in December; price at year’s closing was USD 1,420.78/ troy ounce, nearly 29.5 % increase on opening, at USD 1,097.10/ troy ounce.

In terms of offer, world production reached a new alltime record of 2,652.1 tons, a 2.65% increase; for third consecutive year, China consolidated itself as the world’s largest producer of gold.

From the perspective of demand, gold for jewelry saw 8% increase along the September 2009 – September 2010 period. Demand from small investors grew 25% to 243 tons, mainly due to 44% increase in storage of gold ingots.

Demand for industrial use recovered to pre-crisis levels by reaching nearly 110 tons, showing 13% increase between September 2009 and September 2010.

Expectations for gold price behavior along 2011 are quite positive: increased income levels in China and India, together with their growing savings rates, the growing fiscal concerns currently affecting different economies and the strong monetary expansion proposed by the United States to boost growth and stimulate its economy’s price levels, are some of the factors that allow optimist predictions for the price of gold along 2011.

III. HIGHLIGHTS

1. ILLEGAL MINING The impact of illegal mining on the country, namely the environmental damage inflicted, and its funding of illegal groups, is well-known to everybody. Illegal mining is also detrimental to our operation, since it affects our reserves, with subsequent negative economic results, and in many cases it brings about deterioration of zones previously recovered by us.

Even though the Government has finally decided to prosecute these illegal activities, real control remains elusive.

3. LABOR RELATIONS The collective bargaining agreement entered into by the company and its workers will expire this coming April 30. Given the good relations we have with our worker community, we expect to close a fair negotiation that will allow us to go on with our growth plans.

4. RELATIONS WITH THE AUTHORITIES As in previous years, we want to highlight the important support from the National Army, the Air Force, the Navy and the Police Department of Antioquia in the operations zone. Success in our exploration and mining efforts would be very difficult without it.

Despite the enormous effort of the authorities to keep the zone under control, safety has deteriorated in the past few months due to the presence of illegal groups seeking control of territory. Along the year, three terrorist blasts on transport towers of our electric system disrupted around 60 work days, with subsequent repair costs, operation difficulties, and estimated production loss of 350 kilos of gold.

MANAGEMENT REPORT

2010 - MINEROS S.A.

The company produced 3,054 kilograms of fine gold in 2010, equivalent to 98,205 ounces and 9.57% up on 2009; this year’s figure includes 13,735 ounces from the subterranean operation at Mina La Ye. Additionally, the company produced 1,612 kilograms of silver.

Total volume of alluvial deposits removed was 22,169,643 cubic meters, with 71,730 tons for operation at La Ye Mine.

2. INTEGRAL MANAGEMENT SYSTEM The Company intensely implements activities in order to keep its Quality, Industrial Safety, and Environment certifications, and also to frame in these disciplines all its ongoing exploration projects.

Financial Statement

II. PRODUCTION

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MANAGEMENT REPORT

5. RECONSTRUCTION OF DREDGES Upon investment of $20,594 million, dredges 3 and 11 reentered operation in March. Reconstruction of dredge 5 is scheduled for this year, which will guarantee adequate and safe equipment for long-term planning.

For some years now, our dredges have not had insurance coverage due to the inability to find it at a reasonable price; the company, therefore, provisions part of its earnings as reserves in order to protect its assets.

6. GROWTH GOALS We completed our Company’s structural organization and planning of projects in diverse fields that will allow us to accomplish the Growth Plan we have designed.

Even though they are not the only ones, we have devoted special effort and resources to exploration projects of new deposits, some of them quite promising, and we expect them to become new production centers.

Along 2010, the Company’s Mining Business Unit invested around $ 25,000 million in exploration of seven projects with gold production potential located in Antioquia, Caldas, and Tolima Provinces; it also achieved consolidation of 136,000 hectares in 95 duly registered deeds of mining rights. Additionally, and in order to venture into the international arena, the Company visited 14 exploration projects in Peru, one in Ecuador, one in Panama, and one mining operation in Mexico, of which three can turn out to be of interest, and are being evaluated for possible investment in them.

7. LA YE MINE The mine is located 3 kilometers from the Municipality of El Bagre in the jurisdiction of Zaragoza. At that location, we advanced in set-up of a processing plant with daily estimated production of 500 tons, through contract signed with firm FLSmidth. This plant should have reached its full production in the first few months of 2010, but due to design and construction flaws, it has been possible to stabilize production of only 350 tons daily. We are doing all pertinent work to reach compliance with the contract by the supplier as well as the internal work needed to reach the goal during 2011.

the corresponding license this year, given the advantages for the region from the presence of a company that develops its work respecting all regulation and complying with its social and environmental commitments beyond the dictum of law.

9. CROPS As part of its ongoing compensation program in the municipalities of Lower Cauca River, in 2005, the Company started plantation of rubber in 100 hectares purchased to this end. Additionally to meaning future income to the Company, this project has become an agro-industrial laboratory and model to be replicated in areas suitable for this crop.

Another 300 hectares purchased near the current plantation in 2010 are being planted, and their larger scale will allow larger returns.

Construction of the processing plant will start in 2011, given that the first crop is expected soon.

10. SOCIAL RESPONSIBILITY In keeping our commitment to the company’s Social Responsibility in its area of influence, and seeking the inhabitants’ well-being and the towns’ self-management abilities, we have developed a wide program spanning several fronts. The efforts of our team of experts in these areas are already bearing fruit, especially as regards to housing, health, education, and community management. The Sustainability Report attached shows our endeavors for 2010.

11. RECOGNITIONS We are proud of the honors conferred to the Company in 2010 for its environmental protection efforts: Environmental Responsibility Award 2010, granted by Fundación Siembra Colombia and the British Embassy.

VIDA Award 2010, granted by Corantioquia. Expofinca 2010 Award to the Best in Agriculture.

IV. ASSOCIATED COMPANIES 1.

8. ATACO PROJECT We keep on developing a series of actions toward completion of this project, and we expect to be granted

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PROYECTO SABALETAS S.A.S.

Through this company, we have processed the slag of the old el Zancudo mine (Titiribí, Antioquia province),

with this organization the first collective bargain agreement to replace the labor contract we had with a considerable number of workers.

Income, at $143 million, is reported as income from equity method in the balance sheet of MINEROS S.A. 4.

Accumulated material is practically depleted, and operation closing will take place this year.

2.

UNIPALMA DE LOS LLANOS S.A.

MINEROS S.A. owns 17.4% stake at this corporation. In 2010 output was 50,260 tons of fruit; net income stood at $1,116 million.

EXPLORADORA MINERA S.A.S.

This company was created on March 15 of 2010, for exploration of diverse projects that may arise in any region of the country. It currently generates 189 direct jobs. Income, at $73 million, is reported as income from equity method in the income statement of MINEROS S.A.

V. FINANCIAL ANALYSIS 3.

OPERADORA MINERA S.A.S

This corporation was created by the Company for subterranean mining operations, and it currently generates 458 jobs. Operadora Minera S.A.S.’s workers union was established as a regional branch of Sintramienergética. On January 21 of 2011, we signed

2010 - MINEROS S.A.

71,480 192 ks 3,398 ks $17,735 million $3,471 million

Financial Statement

with the following results: Metric tons ground: Equivalent gold recovered: Silver production: Total revenues: Net income:

Sales, at $228,614 million were 21% higher than last year. Production was exported in its totality, for a net sum of USD 120.7 million. Average price for gold sold was USD 1,229.21 per ounce, 28% up on previous year’s figure. In pesos per gram, 10.73% increase was due to the Colombian peso revaluation.

MANAGEMENT REPORT

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MANAGEMENT REPORT

At $88,825 million, operating income was lower than in 2009, as a result of the above-mentioned problems in set-up of la Ye Mine, which did not yield expected production, and affected production costs, raising perounce cost considerably. At $91,870 million, net income was lower than in 2009, because a very important entry was included in 2009 showing special valuation of investment in shares, in compliance with regulation by the Financial Superintendency.

FINANCIAL REVENUES At the end of the fiscal year, the company showed an investment portfolio worth $102,762 million, of which 10% corresponds to shares quoted in the Stock Exchange and investments in other corporations, 5% to investments abroad, and the remaining, to fixed-income securities in Colombia. Revenues from this activity included $13,519 million from sale of investments, ($11,865 million from the sale of Mineros Nacionales), $11,226 million of dividends, ($10,366 of Mineros Nacionales), and $4,267million from yield of fixed-income securities and foreign investments abroad.

EBITDA: $123,529 million equivalent to 54.03% of sales.

EVA: EVA accumulated for the year stands at $33,053 million, 24.62%.

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Equity: Shareholders’ equity increased 23% from $311,656 million to $380,534 million; corresponding intrinsic value per share including appreciation is $1,454.16.

During the year, the stock of Mineros saw 40.36 % depreciation vis-à-vis 33.12% drop in the IGBC. Indebtedness: Along 2010, the company kept external indebtedness levels at a minimum, using bank loans for routine treasury operations only.

- On December 28 of 2010, two contracts were signed with Leasing Bancolombia S.A., for expansion of Central Hidroeléctrica Providencia I and construction of Central Hidroeléctrica Providencia III, worth $12,000 and $58,000 (million pesos) respectively, for a duration of 144 months and an interest rate equivalent to DTF T.A., plus 3.25 points for both contracts.

Operating margin: 39% compared to 49% in 2009.

Income gross margin was 41% compared to 61% in 2009.

This variation is accounted for by the greater value of Other Revenues in 2009 resulting from the appraisal of investment in MINEROS NACIONALES S.A.

B. No other operation with companies in which Board of Directors’ members or the company’s managers have direct or indirect economic interest was carried out along the year 2010.

C. In compliance with the provisions of Law 603/2000 amending article 47 of law 222 of 1995, the following observations are to be taken into account: Decision remains pending by Antioquia’s Administrative Tribunal on the process for nullity and redress filed by the Company against DIAN Resolution of 2003 that imposed on us payment of tax on gold corresponding to production between March and December of 1998.

However, as explained in previous reports, the opinion on which DIAN grounded its request was declared null by the Administrative Supreme Court in September of 2006, giving the Company the reason to cancel this contingent liability.

As of fiscal year 2011, no payer of income tax and surtaxes shall be entitled to special deduction for investment in real productive assets, which stands as an important figure for the Company given its future investment plans.

Whoever has requested, prior to November 01 of 2010, legal stability agreements, including stabilization of this deduction, shall be able to subscribe legal stability agreements that will include this deduction. In these cases, term of legal stability for the special deduction cannot exceed three years. Mineros filed its legal stability agreement in November of 2009, but pronouncement by the corresponding committee is still pending.

D. Production planning for 2011 indicates output of 2,895 kilograms of alluvial fine gold and 861.62

E. The managers and the Board of Directors certify full compliance by the company with all rules regarding intellectual property and copyrights.

F. The Corporation’s legal representative certifies that in 2010, the Management verified the correct operation of the systems for disclosure and control of financial information established in the company, in compliance with paragraph of Article 47 of Law 964 of 2005.

2010 - MINEROS S.A.

A. Along the year 2010, the company conducted commercial operations with the following enterprises, in which some economic link exists with members of the Board of Directors or with the Company’s managers: Compañía de Seguros Colpatria: For insurance policies covering the company: $1,103 million Insurance policies with Colpatria were contracted under optimal market conditions, upon quote from other insurance companies.

Gold sales to C.I.J Gutiérrez for $32,904 million. The sale was made at market prices and conditions.

Gold sales to C.I. Fundición Escobar for $10,307 million, at market prices and conditions.

kilograms of fine gold in La Ye Mine, for a total of 3,756.62 kilograms. Based on gold price outlook, and provided a stable exchange rate, the company’s economic results will comply with our shareholders’ expectations.

Financial Statement

VI MISCELLANEOUS

G. According to verification conducted by our legal counsels, the company faces no legal processes that may jeopardize its economic stability.

This report contains, as a part of itself, the provisions of article 446 of the Code of Commerce. The books and reports mandated by Law have been made available to the honorable shareholders since convening date of this meeting.

The Board of Directors and the Management want to thank the effort and dedication of our employees and workers to achieve the results we are reporting today.

Eduardo Pacheco Cortés José Fernando Llano Escandón Santiago Vásquez Haupt Santiago Perdomo Maldonado Miguel Urrutia Montoya Alberto Mejía Hernández Álvaro Escobar Restrepo

BEATRIZ E. URIBE R. President January 26, 2010

MANAGEMENT REPORT

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INFORME

FINANCIERO 2010 - MINEROS S.A.

Statutory Auditor´s Report

S TAT U T O R Y A U D I T O R ´ S R E P O R T

Shareholders’Meeting March 2, 2011

Statutory Auditor´s Report To the shareholders of MINEROS S.A.:

is to audit said financial statements and express an opinion thereon based on my audits.

I have audited the balance sheets of MINEROS S.A. at

I obtained the information necessary to comply with

December 31, 2010 and 2009 and the corresponding

my duties and carry out my work in accordance with

statements of income, of changes in shareholders’

auditing standards generally accepted in Colombia.

equity, of changes in financial position, and of cash

Those standards require that I plan and perform the

flows for the years then ended, as well as the summary

audit to satisfy myself that the financial statements are

of the main accounting policies and other explanatory

free from significant errors.

notes.

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Management is responsible for the preparation and

An audit of financial statements includes examining,

correct presentation of the financial statements in

on a test basis, the evidence supporting the amounts

conformity with the accounting principles generally

and disclosures included in the financial statements.

accepted in Colombia. Such responsibility includes:

The audit procedures selected depend on the auditor’s

designing, implementing and maintaining an internal

professional judgment, including an evaluation of the

control system adequate for the preparation and

risk of significant errors in the financial statements. In

presentation of the financial statements, free from

evaluating the risk, the statutory auditor considers the

significant errors due to fraud or error, selecting

Company’s internal control relevant for the preparation

and applying appropriate accounting policies, and

and reasonable presentation of the financial statements,

establishing the accounting estimates that are

in order to design audit procedures appropriate to

reasonable under the circumstances. My responsibility

the circumstances. An audit also includes evaluating

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

2010 - MINEROS S.A. Financial Statement

the accounting principles used and the significant

report agrees with the basic financial statements; and

accounting estimates made by Management, as well

the Company is not in default with the contributions to

as evaluating the overall presentation of the financial

the Integral Social Security System.

statements. I consider that my audits provide a reasonable basis for the opinion which I express.

My evaluation of the internal control carried out in order to establish the scope of my audit tests did not

In my opinion, the aforementioned financial statements,

reveal that the Company had not followed adequate

taken from the accounting books, present fairly, in every

measures with respect to internal control and the

significant aspect, the financial position of MINEROS

preservation and custody of its assets and those of third

S.A. as of December 31, 2010 and 2009, the results of

parties in its possession.

its operations, the changes in its equity, the changes in its financial position, and its cash flows for the years then ended, in conformity with accounting principles generally accepted in Colombia, applied on uniform basis. Also, based on the scope of my audit, I report that the Company’s books were kept in conformity with legal requirements and accounting techniques; the transactions recorded in the accounting books and

LINA MARÍA VELÁSQUEZ ÁLVAREZ

the administrators’ acts complied with the bylaws and

Statutory Auditor

the decisions of the Shareholders’ Meeting and the

T.P. 61321-T

Board of Directors; the correspondence, the accounting

Designated by Deloitte & Touche Ltda.

vouchers and the minutes books and share register were properly kept and safeguarded; the management

February 8, 2011

S TAT U T O R Y A U D I T O R ´ S R E P O R T

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INFORME

FINANCIERO 2010 - MINEROS S.A.

Financial Statements

F I N A N C I A L S TAT E M E N T S

Asamblea General de Accionistas March 2 / 2011

Certification of financial statements

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2010 - MINEROS S.A. Financial Statement

The undersigned, Legal Representative and Chief Accounting Officer of the company, under whose responsibility the financial statements were prepared, in compliance with the bylaws hereby declare that they have previously verified the assertions therein contained, and that they have been faithfully taken from the books.

BEATRIZ E. URIBE R. President

HÉCTOR TRESPALACIOS T. Chief Accounting Professional Card No. 32758-T

In my capacity as Legal Representative of MINEROS S.A., and in compliance with Article 46 of Law 964 of 2005, I hereby certify that the general-purpose financial statements of this corporation as of December 31, 2010, and their corresponding notes, do not contain defects, inaccuracies or errors that prevent ascertaining the true financial position and operations of the company.

BEATRIZ E. URIBE R. President

F I N A N C I A L S TAT E M E N T S

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F I N A N C I A L S TAT E M E N T S

MINEROS S.A. Balance Sheets at December 31, 2010 and 2009 (Figures in thousands of Colombian pesos)

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2010 - MINEROS S.A. Financial Statement

MINEROS S.A. Balance Sheets at December 31, 2010 and 2009 (Figures in thousands of Colombian pesos)

F I N A N C I A L S TAT E M E N T S

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MINEROS S.A. INCOME STATEMENT For the years ended December 31, 2010 and 2009

F I N A N C I A L S TAT E M E N T S

(In thousands of Colombian Pesos, except net income per share)

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F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

F I N A N C I A L S TAT E M E N T S

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Financial Statement

MINEROS S.A. STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY For the years ended December 31, 2010 and 2009 (In thousands of Colombian pesos)

2010 - MINEROS S.A.

F I N A N C I A L S TAT E M E N T S

MINEROS S.A STATEMENT OF CHANGES IN FINANCIAL POSITION For the years ended December 31, 2010 and 2009 (In thousands of Colombian pesos)

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2010 - MINEROS S.A. Financial Statement

MINEROS S.A STATEMENT OF CASH FLOWS For the years ended December 31, 2010 and 2009 (In thousands of Colombian pesos)

F I N A N C I A L S TAT E M E N T S

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MINEROS S.A. FINANCIAL RATIOS (Thousands of Colombian Pesos)

F I N A N C I A L S TAT E M E N T S

December 2010

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December 2009

F I N A N C I A L S TAT E M E N T S

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Financial Statement

2010 - MINEROS S.A.

F I N A N C I A L S TAT E M E N T S

Proposition regarding earnings distribution

MINEROS S.A. SHAREHOLDERS’ MEETING MARCH 2 OF 2010

EARNINGS FOR THE YEAR 2010 AMOUNT TO

$ 91,869,936,933

IT IS PROPOSED THAT THEY BE DISTRIBUTED AS FOLLOWS:

YEAR’S NET INCOME FOR A MONTHLY DIVIDEND OF $9.00 PER SHARE DURING THE APRIL 2011-MARCH 2012 PERIOD ON 261,687,402 OUTSTANDING SHARES

$ 91,869,936,933

$ 28,262,239,416

FOR AN EXTRA DIVIDEND OF $36.00 PER SHARE PAYABLE IN JULY OF 2011.

9,420,746,472

FOR CHARITIES

1,000,000,000

RESERVE FOR PROTECTION OF ASSETS

2,400,000,000

RESERVE FOR NEW PROJECTS

EQUAL AMOUNTS

50,786,951,045

$ 91,869,936,933

$ 91,869,936,933

Dividend will be paid between the 10th and the 20th of each month. Dividend of the month will be paid to those registered in the shareholder register on the ex-dividend day of the same period, under the terms indicated in External Circular Letter No. 13 of 1998 and External Circular Letter No. 004 of 1999 of the Securities Superintendency (today, Financial Superintendency).

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Notes to the financial Statements

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

MINEROS S.A.

Notes to the financial statements At December 31 of 2010 and 2009 (Figures in thousands of Colombian pesos)

- NOTE 1 -

- NOTE 2 -

COMPANY OPERATIONS

ACCOUNTING POLICIES

Mineros de Antioquia S.A. is a private corporation

ACCOUNTING POLICIES

established on November 14, 1974 by public deed No

The financial statements of MINEROS S.A. have been

6161 of the 4th Notary Public Office of Medellin for a

prepared and presented according to accounting

term of ninety-nine (99) years. According to decision of

principles generally accepted in Colombia, for which

the Regular Shareholders’ Meeting of March 17 of 2004,

purpose the Management has to make certain

minutes No. 43, the corporate name was changed to

estimates and assumptions in order to determine

MINEROS S.A. Such decision was formalized through

the valuation of some of the individual entries in

public deed No. 1038 of April 19 of 2004 of the 17th

the financial statements and to make the required

Notary Public Office of Medellín.

disclosures. Although they may differ in their final

The Company has as its purpose the conduction of

effect, the Management considers that the estimates

any type of business, activities, endeavors, acts and

and assumptions used were adequate under the

contracts related to the mining industry in general,

circumstances and that they agree with the accounting

of either precious metals, metallic and non-metallic

principles generally accepted in Colombia. Certain

mineral substances or hydrocarbons.

accounting principles applied by the Company could

To comply with its corporate purpose, the Company’s

disagree with the accounting principles generally

operation center is located in El Bagre (Antioquia

accepted in other countries.

province) and its main administrative offices in

The main accounting policies used by the Company

Medellín.

are: MINEROS S.A

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The Company uses the accrual accounting system,

within a term of up to three calendar years, and

according to which revenues and expenditures

for which, there is a serious intention of realization.

are recorded when incurred, regardless of whether

Long-term investments are those which are

payment or collection has been in cash.

seriously intended to be held for at least three calendar years.

- Monetary unit

- Investments are classified as fixed-income and

According to legal provisions, the monetary unit used

variable-income, depending on the return they

by the Company for the Balance Sheet and Income

generate.

Statement accounts is the Colombian Peso.

- According to control, they are classified as

- Materiality

controlling and non-controlling, subject to the

The Company’s policy for disclosing accounting

provisions of the Colombian Code of Commerce.

entries in its financial statements in order to determine

- Based on the cause or reason motivating the

2010 - MINEROS S.A.

Marketable investments are those easy to realize

Financial Statement

- Accounting system

investment, they are voluntary or mandatory.

their materiality is based on the relative importance of each sub-account with respect to the account group to which it belongs.

Accordingly, Balance Sheet

- Property, plant and equipment

entries at December 31, 2010 representing 5% or more

These are recorded at cost, which includes inflation

of current assets, other assets, current liabilities, long-

adjustments from January 1 of 1992 until December

term liabilities and equity are disclosed.

31 of 2006.

Maintenance and repair expenditures that do not

- Investments

increase the useful life of respective assets are recorded

Investments are accounted at cost, which does not

as a charge in the income statement, as they are

exceed sale value. Based on External Circular Letter

incurred. Depreciation is calculated by the straight-line

11 of the Securities Superintendency (today Financial

method, based on the estimated useful life of assets,

Superintendency) of 1998, the Company classifies

using the following depreciation annual rates:

investments as follows: - Investments are classified as marketable and longterm, according to the intention of realization.

BUILDINGS AND MACHINERY CONSTRUCTIONS AND EQUIPMENT 5%

10%

ELECTRIC FURNITURE DREDGES TRANSPORTATION PLANTS AND AND EQUIPMENT NETWORKS FIXTURES 10%

10%

15%

20%

COMPUTER EQUIPMENT 20%

Given that the dredges work on a three-shift basis, the accelerated depreciation method provided for in Art. 140. of the Fiscal Law is applied.

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

- Inventories Inventories correspond to materials and consumables, dredge maintenance materials, and others; they are valued at the lowest between average cost and net sale value. Materials in transit and workshop orders under process are valued at their actual manufacturing or acquisition costs.

inventories, deferred charges, and property, plant and equipment are capitalized until the asset is in condition of being used or disposed of. From that moment on, the exchange difference is recorded against the income statement of the period. All other exchange gains and losses are recorded as financial revenue or expense.

- Deferred charges

- Taxes, liens and duties

As provided by accounting and fiscal regulations, amortization policies for deferred charges depend on their nature, as follows:

Income tax provision is determined on the basis of commercial income, adequately relating the period’s revenue to its corresponding costs and expenses, or, on the basis of presumptive income on taxable equity, in case it exceeds net taxable income.

a. Mining projects are amortized on the basis of the deposit’s estimated exploitation time, starting on the date when respective revenue starts. When exploration investments result to be fruitless, they are amortized in the same year when the project is determined to be unviable. b. Agricultural projects (rubber plantation and bio-factory) are amortized along the estimated cultivation time, upon conclusion of their nonproductive period. c. All other deferred charges are accounted at cost; amortization is carried out through the straightline method with periods ranging between one and five years.

- Exchange difference Transactions in foreign currency are recorded at the applicable exchange rate in force on the date of the transaction. Balances receivable, investments abroad, financial liabilities and accounts payable are adjusted monthly. The balances of such accounts at December 31, 2010 and 2008 were translated into Colombian Pesos at the market representative rate for the end of the month as certified by the Financial Superintendency ($1,913.98/US$ in 2010 and $2,044.23/US$ in 2009).

Exchange difference resulting from accounts payable and foreign-currency liabilities used to purchase

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- Labor liabilities Labor liabilities are accounted as provided by legal regulations and binding collective bargaining agreements.

Retirement pension liabilities payable by the Company are determined based on actuarial studies as provided by legal regulations.

Annual retirement pension provision is adjusted in a rational and systematical way. Pension payments are charged to the results of the year.

- Inflation adjustments Law 1111 of 2006 and Regulatory Decree 1536 of 2007 respectively abolished the systems for integral inflation adjustments for tax and for accounting matters, starting January 1 of 2007.

Accordingly, accounting inflation adjustments to non-monetary assets and liabilities accumulated until December 31, 2006 are part of the balance of their respective accounts for all accounting matters.

- Additional paid-in capital The excess of placed shares price over their par value is recorded in the capital surplus account, additional paid-in capital.

- For tradable fixed-income investments, the latest cost per books is recorded with a contra entry in the income statement accounts.

- Tradable variable-income investments are valued by affecting their latest cost recorded, with a contra entry in the results of the period, recognizing the revenue or expense produced depending on the increase or decline of investment, respectively.

- Long-term investments of controlled companies are accounted through the equity method.

- When the sale value of long-term investments of non-controlled companies is higher than cost, reappraisal for the period is recorded under assets and revaluation surplus under equity. When the sale value is lower than cost, the difference will affect reappraisal and revaluation surplus, without limitation upon the fact that their net balance might be of a contrary nature.

- Equity revaluation Balances at December 31, 2010 and 2009 correspond to inflation adjustments to equity accounts until December 31, 2006, minus the equity tax recorded in compliance with Law 1111 of 2006.

According to current regulations, this balance cannot be distributed as income until the Company is liquidated or capitalized.

2010 - MINEROS S.A.

These correspond to differences between commercial or cadastral appraisal and net book value of real estate property. Such reappraisals are recorded in separate assets and equity accounts as revaluation surplus, which is not distributable. Loss of value of real estate property is recorded through provision charged to the period’s expenses.

Reappraisal of investments at December 31, 2010 and 2009 was conducted as established in circular letter 011 of 1998 of the Securities Superintendency (today, Financial Superintendency) as follows:

machines and equipment were taken into account, their original value was updated translating it into United States Dollars on that date, and loss of value factors due to old age and use were later applied; also their current state was analyzed with technicians.

Both assets in depreciation process and fully depreciated assets in use were appraised, with the appreciation of the totally depreciated assets in use recorded under memorandum accounts.

Financial Statement

- Reappraisals

- Memorandum accounts Control memorandum accounts record financial information for control, contingencies, and future transactions commitments; fiscal memorandum accounts record differences between accounting values and values for fiscal matters.

- Donations The Company records donations against fiscal period results or against occasional reserves established for such purpose by the Shareholders’ Meeting.

- Net income per share In September of 2009, the Company hired commercial appraisals of property, plant and equipment which were conducted by Francisco Ochoa O. Propiedad Raíz – Avalúos TIN 70.037.897-4, a firm with main offices in the city of Medellín. Real estate property was appraised using the comparative or market method and cost or replacement method. In the case of machinery and equipment, quotes for similar

Net income per share is calculated on the weighted average number of outstanding subscribed shares during each period.

- Statement of cash flows The statement of cash flows was prepared by the indirect method.

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

31

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

- NOTE 3 ACCOUNTS RECEIVABLE At December 31, accounts receivable included:

ITEM National customers (1) Foreign customers (2) Public entities (3) Related companies (4) Loans to associates Miscellaneous accounts receivable Yields receivable (5) Other (6) TOTAL

2010

2009

$ 7,902,519 $ 6,491,617 73,808 35,535 3,745,168 4,869,039 726,444 1,385,369 546,420 540,125 290,110

390,228

3,002,916 2,320,293

928,662 2,505,992

(2) Balances owed by the following foreign customers:

2010 INTL Commodities INC – USA Argor Heraeus (Switzerland) Metalor (Switzerland) TOTAL

$ 35.535 51.035

-

22.773

-

$ 73.808

$ 35.535

$ 18.607.678 $ 17.146.567

(1) Corresponds to the debt balance paid in January of 2011 by the International Trading Company that appears below:

2010

(3) Corresponds to both balance in the Company’s favor determined in private VAT calculations whose reimbursement requests were being processed at December 31, and to the discountable taxes non subject to VAT reimbursement with pending future periods compensations, as follows:

2009 PERIOD

C.I.J Gutiérrez y Cía S.A. (facturas 658 y 660)

$7.902.519

$6.491.617

July – August September – October November – December Discountable taxes to be compensated (exploration activities) TOTAL

32

2009

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

2010

2009

1,579,902 2,067,184

$ 1,676,938 1,809,944 1,382,157

98,082

-

$ 3,745,168

$ 4,869,039

$

2010 $ 241.955 448.126 36.363 $ 726.444

2009 $ 1.384.104 1.265 $ 1.385.369

(5) Shows financial yields from fixed-income investments and premiums paid in purchase process of these securities.

(6) Corresponds to third parties’ balances at December 31 for different items related to the normal development of the Company’s business, as follows:

ITEM Advance payments to suppliers Advance payments to contractors Other advance payments TOTAL

$ 612.073 1.496.843 211.377 $ 2.320.293

2009 $ 558.313 1.842.886 104.793 $ 2.505.992

2010 - MINEROS S.A.

ITEM Balance payable by Proyecto Sabaletas S.A.S., invoice 661, 2010 management services Balance payable by Operadora Minera S.A.S., invoice 662, 2010 management services Balance payable by Exploradora Minera S.A.S., invoice 663, 2010 management services Balance payable by Proyecto Sabaletas S.A.S., working capital loans.

Amount payable by Operadora Minera S.A.S. for reimbursement of minor expenses paid by it.

TOTAL

Financial Statement

(4) Balances owed by the following related companies:

- During fiscal year: a. The Company did not deem necessary to establish provisions for doubtful accounts to protect likely loss contingency from commercial accounts receivable. b. In 2010, no accounts receivable were written off. c. There are no accounts receivable more than one year overdue.

- NOTE 4 MARKETABLE SECURITIES At December 31, marketable securities included:

ITEM Participation in trust estates with trust companies (1) Trust funds administered by brokerage firms (on demand) CDT Multibanca Colpatria CDT Leasing Bancolombia S.A. Other CDs Public bonds – local currency Private bonds – local currency Public bonds – foreign currency Treasuries – TES Funding operations (Treasuries –TES–) Shares in local corporations (2) Shares in foreign corporations (3) Other investments abroad (4) Other investments (5) Subtotal Provision for loss of value of investments in shares of local corporations Provision for loss of value of investments in shares of foreign corporations TOTAL

2010

2009

$ 1.754.338 2.001.091 6.256.139 1.000.000 23.075.023 10.500.000 18.571.270 22.862.447 9.936.187 520.726 4.244.593 2.173.275 102.895.089 (118.458) (14.518) $ 102.762.113

$ 2.500.000 1.297.824 1.500.000 500.000 6.299.000 4.000.000 4.567.265 204.423 1.000.000 160.154 56.289.854 397.971 1.299.713 46.745 80.062.949 (169.724) (32.451) $ 79.860.774

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

33

(1) Corresponds to the rights owned at December 31 in P195 Grupo Contempo Ltda. (Oficinas Oxo – Bogotá) Trust Estate in Fidubogotá S.A. Along 2010, $313,173 was received from this Trust Estate as refunded contributions.

(2) An important reduction in shares of national corporations, as compared to previous year, was due to sale of Mineros Nacionales S.A. on February 15 of 2010 (See notes 15 and 19).

At December of 31 of 2010, the Company had as marketable securities the following investments in shares of Colombian corporations:

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

ISSUER Ecopetrol S.A. Pacific Rubiales Energy Conconcreto S.A. Colinversiones S.A. * Grupo Aval S.A. Tablemac S.A. Banco Popular S.A. Cementos Argos S.A. * Isagen S.A. Fogansa S.A. * ISA S.A Corficolombiana S.A. Suramericana de Inversiones S.A. Helm Bank S.A. Banco de Bogotá S.A. Bancolombia S.A. Grupo Nacional de Chocolates S.A. Banco de Occidente S.A. TOTAL *

No. SHARE (UNITS)

Market value (BOOK VALUE)

165.200 11.910 13.153 74.637 202.061 10.000.000 95.729 99.900 384.000 175.000 60.300 15.017 30.900 658.000 7.700 17.000 37.679 5.367

$ 672.402 751.866 22.107 452.385 346.329 96.800 57.438 1.156.314 1.006.721 350.000 852.277 532.049 1.166.246 303.266 446.310 502.222 1.019.334 202.121 $ 9.936.187

Recorded at purchase price, because of their loss of value.

At December of 31 of 2009, the Company had as marketable securities the following investments in shares of Colombian corporations:

ISSUER

NUMBER OF SHARES (UNITS)

Mineros Nacionales S.A. Eternit S.A. Grupo Aval S.A. Cementos Argos S.A. ISA S.A Corficolombiana S.A. Suramericana de Inversiones S.A. Banco de Bogotá S.A. Grupo Nacional de Chocolates S.A. SUB – TOTAL Fogansa S.A. TOTAL 34

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

203.362 1.896 650.000 50.000 63.500 16.975 12.500 15.000 25.000 175.000

PURCHASE PRICE $ 15.531.859 1.878 309.199 507.274 23.270 210.838 165.477 312.544 317.238 $ 17.379.577 350.000 $ 17.729.577

MARKET VALUE

APPRECIAT. (LOSS OF VALUE)

$ 53.127.343 3.104 492.843 541.129 45.255 394.152 305.528 507.000 523.500 $ 55.939.854 180.276 $ 56.120.130

$ 37.595.484 1.226 183.644 33.855 21.985 183.314 140.051 194.456 206.262 $ 38.560.277 (169.724) $ 38.390.553

ISSUER Ecopetrol S.A. Pacific Rubiales Energy Conconcreto S.A. Tablemac S.A. Grupo Aval S.A. Banco Popular S.A. Cementos Argos .S.A ISAGEN S.A. ISA S.A. Corficolombiana S.A. Suramericana de Inversiones S.A. Helm Bank S.A. Banco de BogotĂĄ S.A. Grupo Nacional de Chocolates S.A. Banco de Occidente Mineros Nacionales S.A. Eternit S.A. TOTAL

2010 $

154.855 203.546 4.811 3.125 73.510 4.603 95.475 24.838 179.612 286.403 14.699 102.528 167.461 7.683 -

$ 1.323.149

2009 $

183.644 33.855 21.985 183.314 140.051 194.456 206.262 37.595.484 1.226

2010 - MINEROS S.A.

a. Reappraisals

Financial Statement

In compliance with the provisions of Circular Letter 11 of 1998 of the Securities Superintendency (today Financial Superintendency), the Company recorded the respective appreciation (loss of value) of variable-income investments affecting the latest investment cost recorded, increasing (decreasing) their amount, with the fiscal year’s results affected as a contra account. With respect to investments in shares of corporations owned at December 31, the following values corresponding to appreciation (loss of value) were recorded as revenues (expenses).

$ 38.560.277

b. Loss of value ISSUER Cementos Argos S.A. Fogansa S.A. Colinversiones S.A. Bancolombia S.A. TOTAL

2010 $ 8.157 87.643 20.615 2.043 $ 118.458

2009 $

169.724 -

$ 169.724

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

35

To comply with the provisions of the Financial Superintendency regarding disclosures, the following is additionally informed with regard to such investments for the year 2010:

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

ISSUER

PARTICIPATION %

Ecopetrol S.A. Pacific Rubiales Energy Corp.

Grupo Aval S.A. Conconcreto S.A. Cementos Argos S.A. Colinversiones S.A. ISA S.A. Isagen S.A. Corficolombiana S.A. Tablemac S.A. Suramericana de Inversiones S.A. Banco Popular S.A. Fogansa S.A. Helm Bank S.A. Banco de Bogotรก S.A. Bancolombia S.A. Grupo Nacional de Chocolates S.A. Banco de Occidente S.A.

ECONOMIC ACTIVITY

DIVIDENDS RECEIVED Thousands of $

0.0004% Hydrocarbons 0.0045% Hydrocarbons 0.0014% Finance 0.0046% Construction 0.0087% Cement 0.0104% Electric Power 0.0054% Energy Transmission 0.0141% Energy Generation 0.0089% Finance 0.0394% Wood 0.0067% Investments 0.0012% Finance 0.3140% Cattle 0.1162% Finance 0.0032% Finance 0.0033% Finance 0.0087% Food 0.0039% Finance

$

8.190 313 18.959 1.161 8.128 91 3.193 11.875 21.564 3.850 11.045 7.520 22.308 14.283 539

The following was disclosed at December 31 of 2009 regarding marketable securities.

ISSUER

PARTICIPATION ECONOMIC ACTIVITY %

Mineros Nacionales S.A. Grupo Aval S.A. Cementos Argos S.A. ISA S.A. Corficolombiana S.A. Suramericana de Inversiones S.A. Fogansa S.A. Banco de Bogotรก S.A. Grupo Nacional de Chocolates S.A. Eternit S.A.

36

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

94.5% 0.0047%.

0.0043.% 0.0003% 0.0106% 0.0027% 0.3140% 0.0063% 0.057% 0.0049%

Mining Finance Cement Energy Transmission Finance Investments Cattle Finance Food Construction Materials

DIVIDENDS RECEIVED (Thousands of $) $

23.288 1.947 9.462 20.349 4.056 20.850 8.629 -

At December of 2010, MINEROS S.A. had in their investment portfolio the following investments in shares of foreign corporations:

ISSUER

Merrill Lynch & Co. Inc. Petrominerales Ltd TOTAL NET

NO. SHARES

COST THOUSANDS OF $

MARKET VALUE

APPRECIATION (LOSS OF VALUE)

2.769 6.150

$ 129.624 391.102 $ 520.726

$ 115.106 391.102 $ 506.208

$ (14.518) ($ 14.518)

2010 - MINEROS S.A.

Financial Statement

(3) Shares in foreign corporations

Investments in shares abroad: a. Were purchased in Dollars in the stock exchanges of different cities of the United States, and their cost was translated into Colombian Pesos at December 31 of 2010, at the Market Representative Rate. b. Their market-price re-appraisal was based on the closing price at the corresponding stock exchange on the last business day of 2010. c. Additionally, the following information is disclosed:

ISSUER

Merrill Lynch & Co. Inc. Petrominerales Ltd.

PARTICIPATION % N.A. N.A.

ECONOMIC ACTIVITY

DIVIDENDS RECEIVED (Thousands of $)

Finance Hydrocarbons

$ 8.197 -

At December of 2009, MINEROS S.A. had in their investment portfolio the following investments in shares of foreign corporations:

ISSUER

Pacific Rubiales Energy Corp.

Merrill Lynch & Co. Inc. TOTAL

No. COST SHARES THOUSANDS of $ 8.660 2.709

$ 205.633 138.445 $ 344.078

MARKET VALUE

APPRECIATION (LOSS OF VALUE)

$ 259.526 105.994 $ 365.520

$ 53.893 (32.452) $ 21.441

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

37

(4) Other Investments abroad

These are Exchange Traded Funds –ETF– established overseas, that replicate, in general terms, an international financial asset and are traded in stock exchanges as follows:

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

FUND

NUMBER OF UNITS

Financial Sector SPDR (XLI) Market Vectors ETF TR Brazil Vanguard INTL Equity Ishares Xinhua China 25 (FXI) Ishares S& P Latin América 40 (ILF) SPDR S&P 500 ETF TR. Ishares MSCI Emerging MKT (EEM) TOTAL

5.566 667 7.207 1.714 762 6.600 16.826

PURCHASE PRICE

MARKET VALUE

APPRECIAT. (LOSS OF VALUE)

$ 153.097 $ 169.919 70.923 73.636 574.183 658.390 130.460 141.359 65.335 78.552 1.529.270 1.588.509 1.366.595 1.534.228 $ 3.889.863 $ 4.244.593

$ 16.822 2.713 84.207 10.899 13.217 59.239 167.633 $ 354.730

Cost of investment in dollars is represented at the Market Representative Rate certified by the Financial Superintendency on December 31 of 2010. Appreciation of investment in each Fund is established at fiscal month closing on the basis of the market price for the respective index.

At December 31 of 2009, Exchange Traded Funds –ETF– established overseas, that replicate, in general terms, an international financial asset and are traded in stock exchanges as follows:

FUND

NUMBER OF SHARES

PURCHASE PRICE

MARKET VALUE

APPRECIAT. (LOSS OF VALUE)

5.566 7.207 1.514 1.348 1.559 1.258

163.515 613.257 122.524 122.606 122.618 102.194

163.846 642.496 130.793 131.691 124.164 106.723

331 29.239 8.269 9.085 1.546 4.529

$ 1.246.714 $ 1.299.713

$ 52.999

Financial Sector SPDR (XLI) Vanguard INTL Equity Ishares Xinhua China 25 (FXI) Ishares S& P Latin América 40 (ILF) Ishares S& P Europa 350 (IEV) Ishares MSCI Emerging MKT (EEM) TOTAL (5) Other investments Include the following:

DETAIL Money market accounts (US$ 40,531.52) abroad.

Balance of overnight operations in Bancolombia Miami Grupo Inversiones Suramericana Commercial papers Tax refund certificates CERT TOTAL

2010

2009

$ 77.576 95.699 2.000.000

$ 35.067 -

-

11.678

$ 2.173.275

$ 46.745

The Company’s management considers that adequate investment portfolio diversification exists in order to reduce financial risk.

38

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

ASSET

2010

2009

Land Mining properties Buildings and miscellaneous constructions Machinery and equipment Electric plants and networks Furniture and fixtures

$ 1.407.388 2.655.348 12.146.210 145.587.726 48.391.053 717.095

$ 1.296.064 2.655.348 9.138.346 119.213.978 16.702.615 322.526

Transport equipment IT equipment Machinery and equipment under assembly Constructions in progress Other Subtotal Less: Accumulated depreciation Accumulated depletion TOTAL

6.636.182 959.076 4.063.565 1.391.154 852 $ 223.955.649 (102.094.295) (2.655.348) $ 119.206.006

5.390.075 941.079 45.824.393 257.202 852 $ 201.742.478 (81.922.815) (2.655.348) $ 117.164.315

2010 - MINEROS S.A.

PROPERTY, PLANT AND EQUIPMENT At December 31, this account included:

Financial Statement

- NOTE 5 -

At December 31, 2010 and 2009, no restrictions or encumbrances affect the Company’s above-mentioned assets.

Assets with their respective adjusted cost, accumulated adjusted depreciation, sale value and associated appreciation and loss of value are detailed as follows:

December 2010 ASSET

Land Mining properties Buildings and miscellaneous constructions Machinery and equipment Electric plants and networks Furniture and fixtures Transport equipment IT equipment Machinery and equipment under assembly Constructions in progress Other assets TOTAL

ADJUSTED COST

ADJUSTED DEPRECIATION AND/ OR DEPLETION

Appraisal

APPRECIATION (LOSS OF VALUE)

$ 1.407.388 2.655.348 12.146.210

$ 2.655.348 2.361.694

$ 6.134.480 N.A. 13.562.192

$ 4.727.092 3.777.676

145.587.726 48.391.053 717.095

79.559.670 14.760.720 203.919

100.070.085 39.661.531 N.A.

34.042.029 6.031.198 -

6.636.182 959.076 4.063.565

4.418.178 789.262 -

2.921.085 N.A. N.A.

703.081 -

1.391.154 852 $223.955.649

852 $ 104.749.643

N.A. N.A.

$ 49.281.076

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

39

La Ye mine entered operation in May of 2010, representing an investment of $ 65,797,257, as follows: Processing plant $30,989,074, and mine set-up $34,808,182.

December 2009 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

ASSET

Land Mining properties Buildings and miscellaneous constructions Machinery and equipment Electric plants and networks Furniture and fixtures Transport equipment IT equipment Machinery and equipment under assembly Constructions in progress Other assets TOTAL

COST

ADJUSTED DEPRECIATION AND/ OR DEPLETION

APPRAISAL

APPRECIATION (LOSS OF VALUE)

$ 1.296.064 2.655.348 9.138.346

$ 2.655.348 1.858.387

$ 5.408.128 N.A. 10.305.075

$ 4.112.064 3.025.116

119.213.978 16.702.615 322.526

64.972.280 10.800.359 153.194

73.744.497 10.766.161 N.A.

19.502.799 4.863.905 -

5.390.075 941.079 45.824.393

3.444.354 693.389 -

3.463.950 N.A. N.A.

1.518.229 -

257.202 852

852

N.A. N.A.

-

$ 201.742.478

$ 84.578.163

$ 33.022.113

- NOTE 6 LONG-TERM ACCOUNTS RECEIVABLE Balances payable by the Company’s workers from loans granted for periods longer than one year, as follows:

ITEM Housing loans Vehicle loans TOTAL

2010

2009

$ 5.482.647 101.383 $ 5.584.030

$ 5.058.987 79.103 $ 5.138.090

- NOTE 7INVENTORIES At December 31, this account included:

ITEM Materials and consumables Materials in transit Workshop orders under process Other TOTAL

40

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

2010

2009

$ 19.852.844 2.948.047 2.198.615 221.490 $ 25.220.996

$ 17.649.552 3.136.429 1.161.840 233.563 $ 22.181.384

CORPORATION

PARTICIPATION %

Sabaletas E.U. Project: Plantaciones Unipalma de los Llanos S.A. Exploradora Minera S.A.S Operadora Minera S.A.S. Club de Banqueros (right)

NO. SHARES

100% 17.74% 100% 100% N.A.

Sub-Total Promotora de Proyectos S.A. Subtotal: TOTAL

ADJUSTED COST

SALE VALUE OR PAR VALUE

337.000 $ 10.128.208

$ 10.128.208

493.214.074 20.000 20.000 N.A.

1.60%

APPRECIAT. (LOSS OF VALUE) $

6.213.743 273.657 394.671 4.500

15.684.208 273.657 394.671 N.A.

9.470.465 -

$ 17.014.779 60.302 80.091 $ 80.091 $ 17.094.870

$ 26.480.744 12.989 $ 12.989 $ 26.493.733

$ 9.470.465 (67.102) $ (67.102) $ 9.403.363

2010 - MINEROS S.A.

LONG-TERM INVESTMENTS A diciembre 31 de 2010, las inversiones permanentes se descomponían así:

Financial Statement

- NOTE 8 -

At December 31, 2009, long-term investments included:

CORPORATION

PARTICIPATION %

Proyecto Sabaletas S.A.S. Plantaciones Unipalma de los Llanos S.A. Operadora Minera S.A.S.

NO. SHARES

SALE VALUE OR PAR VALUE

APPRECIAT. (LOSS OF VALUE)

100%

337.000

$ 6.663.747

$ 6.663.747

17.74%

493.214.074

6.213.743

15.881.493

9.667.750

100%

20.000

251.297

251.297

-

$13.128.787

$ 22.796.537

$ 9.667.750

80.091

17.789

(62.302)

$ 13.208.878

$ 22.814.326

$ 9.605.448

Subtotal: Promotora de Proyectos S.A.

ADJUSTED COST

1.68%

TOTAL

60.302

$

-

As provided in Second Title, Chapter I, number 1.8 of External Circular Letter 02 of 1998 of the Securities Superintendency (today, Financial Superintendency), the following is added regarding long-term investments:

CORPORATION

Unipalma de Los Llanos S.A. Operadora Minera S.A.S. Proyecto Sabaletas S.A.S. Exploradora Minera S.A.S. Promotora de Proyectos S.A.

ECONOMIC ACTIVITY Agroindustria Minería Minería Minería Inversionista

ACCRUED INCOME 2010 (thousands of pesos) $ 650.531 143.375 3.471.365 73.657 -

ACCRUED INCOME 2009 (thousands of pesos) $ 649.063 51.296 2.583.882 -

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

41

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

The Company does not consider redemption of permanent investments within the three (3) calendar years following the closing date of the Financial Statements.

According to the provisions of Joint Circular Letter 009 of the Superintendency of Corporations and 013 of the Securities Superintendency (today Financial Superintendency), and D.R. 2649/93, investments in subordinates where the parent company owns over 50% of capital must be recorded through the equity method and their financial statements must be consolidated.

- PROYECTO SABALETAS S.A.S. Proyecto Sabaletas S.A.S. Proyecto Sabaletas S.A.S. was initially incorporated as one-person concern through private document subscribed on January 2 of 2008, filed with the Medellín Chamber of Commerce on January 15 of 2008 under No. 389. The Company was transformed into a simplified joint stock company (S.A.S.) through private document of April 2 of 2009 filed with the Medellín Chamber of Commerce on May 13 of the same year under No. 6038. Its corporate purpose is to invest, directly or through contributions to corporations of any nature, in activities of preservation, exploration, exploitation, industrialization or development in any form, of renewable and non-renewable resources.

The financial situation of the Proyecto Sabaletas S.A.S. at December 31 of 2010 and 2008 was as follows:

2010 Assets Liabilities Equity Capital stock Reserves Revaluation surplus Year’s results

42

2009

$ 12.586.627 $ 9.416.713 2.458.419 2.752.966 3.370.000 3.286.846 3.471.365

3.370.000 702.961 6.904 2.583.882

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

The value of the investment in Proyecto Sabaletas S.A.S., where the Company owns 100% of shares was recorded in the years 2010 and 2009 by the equity method, generating an increase in investment of $3,471,365 ($2,583,882 in 2009) originated in the year’s results.

- OPERADORA MINERA S.A.S. Operadora Minera S.A.S. was incorporated through private document on March 10 of 2009, filed with the Medellin Chamber of Commerce on April 2 of 2009 under No. 4129. Its corporate purpose is to carry out any licit civil or commercial act, especially activities of preservation, exploration, export, industrialization, or development in any form, of renewable and nonrenewable resources.

The financial situation of the company at December 31 was as follows:

Assets Liabilities Equity Capital stock Reserves Year’s results

2010

2009

$ 2.146.341 1.751.670

$ 968.860 717.563

200.000 51.296 143.375

200.000 51.296

The value of the investment in Operadora Minera S.A.S., where the Company owns 100% of shares was recorded in 2010 and 2009 by the equity method, generating an increase in investm

$ 481.234 207.578 200.000 73.656

The value of the investment in Exploradora Minera S.A.S., where the Company owns 100% of shares was recorded in 2010 by the equity method, generating an increase in investment of $73,656 originated in the year’s results.

- NOTE 9 OTHER ASSETS At December 31, this account included:

ASSET TYPE

2010

2009

$ 108.488

$ 75.954

42.277.150

55.838.214

2.759.607

2.464.256

22.644.402

-

$ 67.789.647

$ 58.378.424

2010 - MINEROS S.A.

Exploradora Minera S.A.S Exploradora Minera S.A.S. was incorporated through private document on March 15 of 2010, filed with the Medellin Chamber of Commerce on April 6 of same year under No. 5067. Its corporate purpose is to carry out any licit civil or commercial act, especially mining exploration activities. The financial situation of the company at December 31 of 2010 was as follows:

Assets Liabilities Equity Capital stock Year’s results

Financial Statement

- EXPLORADORA MINERA S.A.S.

Financial leasing contracts: Net fixed assets (vehicles) acquired through financial leasing with Leasing Bancolombia Projects: Amount invested in exploration to determine possible economically exploitable gold deposits. (1) Costs and expenses incurred in rubber plantation and biofactory projects on the Company’s land.

Corresponds to balance to be amortized of exploration, development , and pre-operating expenses of the La Ye mine (entering operation in May 2010) TOTAL (1) At December 31, the amounts invested in mining projects are as follows:

ITEM La Ye Mine El Bagre District Caldas Province Projects Nechí Project Tolima Project Remedios Project Join Venture Anglo Gold Guamocó Amalfi Project Santa Elena (Bolivar Province)Project Other mining projects TOTAL

2010

2009

$ 18.096.893 3.050.715 4.861.959 4.221.024 5.058.721 2.492.124 2.617.956 1.851.954 25.804 $ 42.277.150

$ 36.382.718 9.433.589 2.959.742 2.184.499 1.814.804 1.389.671 906.518 766.673 $ 55.838.214

In the year 2010, the Company carried to the period’s results $1,827,910 of economically non-exploitable mining projects ($3,911,944 in 2009).

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

43

- NOTE 10 TRANSACTIONS WITH RELATED PARTIES At December 31, transactions with related companies included:

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

Accounts receivable Balance payable by Proyecto Sabaletas S.A.S. (See Note 3) Balance payable by Operadora Minera S.A.S. (See Note 3) Balance payable by Exploradora Minera S.A.S. (See Note 3) TOTAL ACCOUNTS RECEIVABLE

2010

2009

$ 241.955 448.126 36.363 $ 726.444

$ 1.384.104 1.265 _ $ 1.385.369

As provided in First Title, Chapter III, number 1 of External Circular Letter 02 of 1998 of the Securities Superintendency (today, Financial Superintendency), it is also disclosed that: a. In the years 2010 and 2009, the following transactions were carried out with related corporations and/or subsidiaries:

RECEIVED FROM

FOR

2010

Mineros Nacionales S.A. Mineros Nacionales S.A.

$

Mineros Nacionales S.A. Mineros Nacionales S.A. Proyecto Sabaletas S.A.S. Proyecto Sabaletas S.A.S. Operadora Minera S.A.S. Operadora Minera S.A.S. Exploradora Minera S.A.S

Real property leasing Technical Services Participation in stand-by letter of credit fees Financial yields Recoveries and realizations Financial yields Servicios de administraci贸n Servicios de administraci贸n Rendimientos financieros Servicios de administraci贸n

PAID TO

FOR

Mineros Nacionales S.A.

Participation in gold price hedge contracts

Mineros Nacionales S.A.

Mineros Nacionales S.A.

2009

-

$ 41.533 55.417

-

34.204

3.848 230.434 426.786 34.632

86.319 11.147 99.683 932 -

2010

2009

-

$ 2.010

Services

-

956

Proyecto Sabaletas S.A.S.

Purchase of supplies

-

20.889

Operadora Minera S.A.S.

Operation services for La Ye Mine Exploration services for several projects

12.925.685

4.035.250

1.352.563

-

Exploradora Minera S.A.S

$

b. The previously described operations were conducted under normal market conditions and no differences existed with respect to the general terms applicable to similar operations carried out with third parties.

In MINEROS S.A., some of the entries paid to Operadora Minera S.A.S. and Exploradora Minera S.A.S. were recorded as increased value of the respective project.

44

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

RE-APPRAISALS As provided in Decree 2649 of 1993, the Company has recorded the following amounts as re-appraisals in assets and equity accounts:

ASSET TYPE PROPERTY, PLANT AND EQUIPMENT Land Buildings Machinery and equipment River equipment Transport equipment Aqueducts, plants and networks SUBTOTAL Marketable investments

2010

2009

$ 4.727.092 3.777.676 34.042.029 176.611 526.470 6.031.198 $ 49.281.076

$ 4.112.064 3.025.116 19.502.799 71.780 1.446.449 4.863.905 $ 33.022.113

2.331.012

402.186

9.403.363 11.734.375 $ 61.015.451

9.605.449 10.007.635 $ 43.029.748

2010

2009

$ 18.120 69.053 $ 87.173

$ 24.585 52.093 $ 76.678

Rights in trust estates (PA Grupo Comtempo Oficinas Oxo) Long-term investments Investments in corporations - Net (See Note 8) SUBTOTAL TOTAL RE-APPRAISALS

2010 - MINEROS S.A.

- NOTE 11-

Financial Statement

c. Outside commercial operations carried out with corporations where some economic link exists with members of the Company’s Board of Directors, indicated in the management reports, no other mercantile operations were carried out with legal representatives or corporations where any of the previously mentioned is the beneficial owner of 10% or more of the total outstanding shares of MINEROS S.A.

- NOTE 12 FINANCIAL LIABILITIES At December 31, financial liabilities included:

ITEM Credit cards Financial leasing contracts (1) TOTAL FINANCIAL LIABILITIES

(1) At December 31 of 2010, financial leasing contracts No. 103632 and 108668 with Leasing Bancolombia S.A. for purchase of two vehicles, as follows:

CONTRACT INSTALLMENTS No. 103632 No. 108668 TOTALES

52 60

BALANCE

EXPIRES

16.977 Ene 3/2014 52.076 Marzo 15/2015 $ 69.053

PENDING PURCHASE INSTALLMENTS OPTION

RATE

36 51

11.08% E.A 17% E.A.

849 595 $ 1.444

ACCRUED INTEREST 4.091 3.451 $ 7.542

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

45

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

At December 31 of 2009, financial leasing contract No. 103632 with Leasing Bancolombia S.A. for purchase of one vehicle, as follows:

46

CONTRACT

INSTALLMENTS

BALANCE

No. 103632 TOTAL

52

52.093 $ 52.093

EXPIRES

PENDING PURCHASE INSTALLMENTS OPTION

Ene 3/2014

48

RATE

ACCRUED INTEREST

849 11.08% E.A $ 849

8.060 $ 8.060

- NOTE 13 SUPPLIERS Corresponde a obligaciones por concepto de adquisición de bienes para el desarrollo de las operaciones relacionadas con la actividad minera; a diciembre 31 los principales saldos a favor de proveedores eran los siguientes:

SUPPLIER Distracom y Cia. Ltda.

Industria Militar Calle Toro Arles Distribuidora de Químicos Ind. S.A. Eduardoño S.A. Sait S.A. Forjas Bolívar S.A. Atlas Copco Colombia Ltda.

Organización Terpel S.A. Sandvik Colombia S.A.S Metalúrgica Esp. de Colombia S.A. Ambientes Elect. Seguros Ing. S.A.S. Icobandas S.A. Iberoandina de Químicos S.A. Eléctricas de Medellín Ltda.

Asteco S.A. Equielect Ltda.

Luís A. Manjarres – Maquinamos Shell Colombia S.A. Grainger Colombia S.A.S. Comercializadora S y E y Cía. S.A. Chevron Petroleum Company Hidromecánica Ltda.

Induelectro Ltda.

Melexa S.A. P.A. Fiduciaria Colpatria Tabsucol Ltda.

Taesmet Ltda.

Torhefe S.A. Other suppliers with individual balances of less than $50,000 TOTAL

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

2010 $

684.495 328.369 137.367 135.627 100.711 90.340 88.173 83.620 71.312 70.813 62.598 61.929 58.126 58.137 57.989 56.369 55.217 54.340 51.506 51.438 1.182.126 $ 3.540.602

2009 $

111.302 80.174 50.937 58.460 62.899 67.952 55.253 52.115 63.826 59.888 310.110 84.330 104.255 97.382 78.221 1.282.592 $ 2.619.696

CONCEPTO FL Smidth Minerals S.A.C. (2) Retenciones en la fuente por pagar (3) Compañías Vinculadas (1) Retenciones y aportes de nómina Anglo Gold Ashanti Colombia S.A. Seguros Perfotec S.A.S. Mensula S.A. Sodexo Colombia S.A. Seguridad de Occidente Ltda.

García G. Luis F. Seguridad e Higiene Construc. S.A.S. Construc. Civiles Acabados Portugales S.A.S. Servicios Ambientales y Geográficos S.A. Aguado P. Carmen E. Designe Ltda.

Integral S.A. Depositarios Corporación IPS Cruz Blanca Cummins de los Andes S.A. Forjas Bolívar S.A. Helicentro Ltda.

Hernández R. Emilia Industrias Astivik S.A. Indústrias Ceno S.A. Outsourcing Hidraulic Systems Ltda.

P.C. Mejía S.A. Teckbox Ltda.

Other suppliers with individual balances of less than $50,000 TOTAL

2010

2009

$ 1.727.189 1.645.113 1.114.500 1.078.673 806.269 213.184 208.818 154.047 120.247 102.434 99.000 79.954 78.513 61.151 60.610 56.735 52.800 49.910 -

$ 1.930.193 2.000.389 463.883 1.487.892 832.814 166.126 281.937 145.265 129.636 80.389 108.125 68.774 106.504 55.603 314.865 150.800 149.501 104.795 61.424

1.855.876

965.318

$ 9.565.023

$ 9.604.233

2010 - MINEROS S.A.

CUENTAS POR PAGAR Corresponde a obligaciones a corto plazo por distintos conceptos, originadas en el giro normal de los negocios de la Compañía, así:

Financial Statement

- NOTE 14 -

(1) Balance in favor of Operadora Minera S.A.S. for services rendered in the mining exploitation of the La Ye Mine and Cordero projects in the municipality of Zaragoza for $697,015, and in favor of Exploradora Minera S.A.S. for mining exploration services of stages III, IV and V described in ANS for $417,485 (2) Balance corresponding to payable invoices for purchase and installation of equipment for setup of La Ye Mine; final amount is being determined by the contractor.

(3) Corresponds to the balance of tax statements of the months of August, October and November ($1,037,572) and December of 2010 ($602,947) for income tax, stamp tax and sales tax (regular and simplified regimes) withholding.

This amount will be set off with the credit balance of sales tax bimonthly statements 05 and 06 of 2010. It additionally includes turnover tax withholding for last two months of 2010 ($4,594).

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

47

- NOTE 15 TAXES, LIENS AND DUTIES The balance of this account included:

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

ITEM Tax provision Less - advance income tax paid Less - withholding tax Less – industrial machinery VAT discount Add – provision of prior years TOTAL

Law 1111 of 2006 (articles 25 through 30) created the equity tax for certain taxpayers for fiscal years 2007 to 2010. For the year 2010, MINEROS S.A. determined in its private equity tax calculation a tax for this concept for $1,241,370 (same amount for 2009).

The Company is subject to income tax at a nominal rate of 33%, applicable to taxable income

2010

2009

$ 29.967.672 13.668.865 689.748 54.167 544.031 $ 16.098.923

$ 22.466.776 8.465.960 524.381 1.076.276 1.046.148 $ 13.446.307

Effective tax rates stood at 24.60% for the year 2010 and 16.38% for the year 2009, due to the permanent differences between commercial income and net taxable income.

Below is a summary of the main entries to reconciliate commercial income and net taxable income, as well as accounting equity and fiscal equity.

a. Reconciliation between commercial income and net taxable income ITEM

2010

2009

$ 121.837.609

$ 137.143.156

(11.865.591)

-

(13.245.528)

(2.056.428)

(3.688.396)

2.635.179

-

(1.814.143)

Revenues from re-appraisal of shares Deductions for new rubber plantations (Article 157, Fiscal Law)

(1.677.880) -

(39.061.436) (303.321)

Donations paid against reserve that constitute fiscal deduction

(1.000.000)

(603.796)

3.031.012 $ 93.391.226

79.274 $ 90.748.127

(9.869.633)

(22.666.986)

NET TAXABLE INCOME 33% income tax on net taxable income Plus: Tax on windfall profits

$ 83.521.593 27.562.125 2.405.547

$ 68.081.141 22.466.766 -

TOTAL INCOME TAX AND SURTAX PROVISION

$ 29.967.672

$ 22.466.766

Per books pre-tax income Menos: Profit from the sale of shares of Mineros Nacionales S.A. (windfall profit) Income from the sale of shares Less: Revenues not constituting income or windfall profit Revenues not earned from equity method Recovery of provisions not requested as fiscal deduction

Plus: Non-deductible expenses NET INCOME Less: Special 30% deduction (40% in 2009) for investment in incomeproducing assets - Article 8 of Law 1111 of 2006.

48

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

Sale of shares Less: Fiscal cost of shares Windfall profit taxable at 33%

$ 64.992.935 (57.703.398) $ 7.289.537

b. Reconciliation between accounting equity and fiscal equity

Difference between per-books equity and fiscal equity

2010

Per books shareholders’ equity Plus:

2009

$ 380.534.221 $ 311.656.590

Liabilities not fiscally recognized

544.031

-

Land fiscal adjustment Loss of value provision Intangibles appraisal (mining concessions - Article 75, Fiscal Law)

744.077 -

202.175

-

32.650.056

2.331.012

3.213.290

(61.015.451)

(43.029.748)

Investments fiscal adjustment Less: Appreciation of property, plant and equipment not fiscally recognized FISCAL TAXABLE EQUITY Current liabilities show the net balance payable by the Company for income tax, after discounting tax withholding applied to the Company, self-withholding for financial yields in the year 2010, and the advanced payment of the same year.

The Company’s income tax and surtax returns for fiscal

2010 - MINEROS S.A.

Supplementary tax on windfall profit generated from sale of the 203,362 shares owned in subordinate Mineros Nacionales S.A.S., was determined as follows:

Financial Statement

*

$ 323.137.890 $ 304.692.363

years 2008 and 2009 are still pending revision by tax authorities, who have two (2) years to do so, given that for such fiscal years the Company was not covered by the audit benefit provided for in article 28 of Law 863 of 2003, since it requested special 40% deduction on investment in real productive fixed assets established in article 8 of Law 1111 of 2006.

- NOTE 16 LABOR LIABILITIES At December 31, labor liabilities included:

ITEM Severance payments Interest on severance payments Vacations Salaries payable TOTAL

2010

2009

$ 2.034.529 236.087 706.431 299.744 $ 3.276.791

$ 2.068.796 232.260 644.488 6.082 $ 2.951.626

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

49

- NOTE 17 DIVIDENDS The balance at December 31 corresponds to:

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

ITEM Regular dividends declared (1) Former periods dividends Accrued dividends payable TOTAL

2009

$ 6.280.498 395.036 93.424 $ 6.768.958

$ 5.613.195 388.587 $ 6.001.782

(1) According to Minutes No. 49 of the Shareholder’s Meeting of March 17 of 2010, the proposal for payment of dividends was approved. Monthly dividend is $8 per share on total 261,687,402 outstanding shares, for a monthly value of $2,093,499,216 for the April-2009-March-2010 period, payable between the 10th and the 20th day of each month. Shareholders registered in the shareholder register on the ex-dividend day of the same period, are entitled to the month’s dividend, under the terms indicated in External Circular Letter No 13 of 1998, and Circular Letter No. 004 of 1999 of the Securities Superintendency (today Financial Superintendency).

$25,121,990 thousand was appropriated from earnings of the year 2009 for payment of dividends.

For the current fiscal year, $18,841,492 thousand has been paid corresponding to April to December.

- NOTE 18 OTHER LIABILITIES For 2009, corresponded to advanced payment received from Medoro Resources Colombia Inc., under the shares purchase agreement subscribed on October 1 of 2009 for purchase of 100% of shares owned by MINEROS S.A. in subsidiary Mineros Nacionales S.A. The transaction closed legally and ownership transfer to the new shareholders took place on February 15, 2010.

- NOTE 19 RETIREMENT PENSIONS The retirement pensions currently under the responsibility of MINEROS S.A. correspond to those workers, who on the date of the ISS transfer Resolution (November of 1997), had expectations to qualify for the special retirement pension agreed in the Collective Bargaining Agreement (18 years of service, 47 years of

50

2010

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

age), and therefore, the recognition date depended on the worker’s will, or to those workers, who on the date of the same Resolution were not active Company workers, and had retired with the expectation of retirement pension, with only the age requirement pending.

Fiscal regulation is used as the basis for recording of retirement pensions. The Company has carried out actuarial calculations for retirement pensions on the basis of the technical parameters determined in Decree 2498/88. These parameters were modified as of 1998 upon issuance of Regulatory Decree 1517/98 (Paragraph 1, article 1), by article 1 of Decree 2783 of December 20 of 2001, by article 1 of Regulatory Decree 51 of 2003, and recently, by article 1 of Decree 4565 of December 7 of 2010, distributing the percentage to amortize actuarial calculation up to the year 2029 in a linear form. At December 31 of 2010, the accumulated amortized percentage of the actuarial calculation stands at 55.97% (51.97% at December 31/09).

Pension liabilities according to actuarial estimates Less: Retirement pension provision recorded by the Company Retirement pensions to be provided in the next 30 years TOTAL

2010

2009

$ 1.228.128

$ 1.168.365

(687.418)

(607.232)

540.710

561.133

$ 540.710

$

561.133

As of December 31, the value carried to expenses breaks down as follows:

$ 80.186 151.952 $ 232.138

Pension appropriations Pension payments

TOTAL

$ 100.796 148.299 $ 249.095

2010 - MINEROS S.A.

ITEM

Financial Statement

At December 31, retirement pensions included:

Pension liabilities correspond to seventeen (17) people at December 31 of 2009 (2009 people at December 31 of 2008).

- NOTE 20 EQUITY

a. Capital Pubic deed 1030 of April 13 of 2005 of Notary Public Office 17 of Medellin formalized Minutes 44 of the Regular Shareholders’ Meeting of March 18 of 2005, where the authorized capital of $200,000 thousand was divided into 400,000,000 common shares, each with a par value of fifty cents ($0.50). Of these shares, 317,906,252 had been subscribed and paid for at December 31 of 2010 and 2009.

least 10% of annual net income to a legal reserve until the balance of the reserve is equal to 50% of subscribed capital. Such reserve cannot be distributed but can be used to absorb losses. At December 31 of 2010 and 2009, the reserve balance equals $79,477 thousand or 50% of subscribed and paid-in capital.

c. Equity revaluation and additional paid-in capital Equity revaluation ($35,191,596) and additional paid-in capital ($1,551,099) cannot be distributed as earnings but are susceptible of tax-free capitalization.

At December 31 of 2010 and 2009, reserve for repurchase of shares totals $11,191,283 thousand.

Decline in equity revaluation account with respect to December 31 of 2009 is explained by the equity tax calculated for tax year 2010 (paragraph, article 25, Law 1111/06, for $1,241,369.

At December 31 of 2010 and 2009, total 56,218,850 repurchased shares stand at $5,611,007 (no repurchase of own shares took place along the years 2010 or 2009).

Other reserves

In accordance with article 396 of the Colombian Code of Commerce, as long as these shares remain the property of the corporation, the rights inherent to them shall be suspended.

In 2010, $2,400,000 thousand of earnings of 2009 were appropriated for asset protection, $33,485,208 thousand for new projects, and $39,061,436 thousand to establish special reserve for re-appraisal of marketable investments (article 1, DR 2336/95). In this way, accumulated reserve balance stands at $185,166,909 thousand and at $110,220,265 thousand for 2009.

b. Legal reserve Colombian law requires the Company to transfer at

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

51

- NOTE 21-

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

MEMORANDUM ACCOUNTS Correspond to the following items and amounts:

MEMORANDUM ACCOUNTS Difference between per-books income and fiscal income Difference between per-books equity and fiscal equity Special 30% (40% in 2009) deduction on investment in real productive fixed assets - Article 8, Law 1111/06 Sub-Total Fiscal Memorandum Accounts Infrastructure leasing contracts pending execution (1) Contingent liabilities for ongoing labor claims.

Banco Santander stand-by letter of credit (US$ 2,500,000) Retirement pensions policy reserve Appreciation of fully depreciatedproperty, plant and equipment (2) TOTAL MEMORANDUM ACCOUNTS

2010

2009

$ 38.316.016 57.396.331

$ 69.062.015 6.964.227

9.869.633

22.666.986

105.581.980 70.000.000

98.693.228 -

200.000

238.975

4.784.950 6.762.621

5.110.575 6.334.570

85.654.933

-

$ 272.984.484

$ 110.377.348

(1) Corresponds to infrastructure leasing contracts No. 119709 and 119710 subscribed on December 28 of 2010 with Leasing Bancolombia S.A. for expansion of Central Hidroeléctrica Providencia I and construction of Central Hidroeléctrica Providencia III, worth $12,000,000 and $58,000,000,000 respectively, for a duration of 144 months and an interest rate equivalent to DTF T.A., plus 3.25 points for both contracts.

(2) In accordance with the provisions of Communication No. 2010045038-011 of August 13 of 2010 of the Financial Superintendency regarding recording of this kind of appreciations.

- NOTE 22 OPERATING REVENUES Amounts received and/or accrued as a result of the activities developed in compliance with its corporate purpose through delivery of goods proper to the mining activity. In order to comply with the provisions of Number 2, of Article 117 of Regulatory Decree

52

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

2649/93, regarding disclosure of revenue received from main customers, or from official entities, or from exports, 24.44% of precious metal output (gold, silver) was sold to Argor Heraeus S.A. (Switzerland), 22.44% to Metalor (USA), 34.17% to INTL Commodities Inc. (USA), 14.39% to C.I.J. Gutiérrez y Cía S.A. (Colombia), 4.51% to C.I. Fundicion Escobar S.A. (Colombia) and 0.05%% to C.I. Dhows Congo S.A. (Colombia).

2010 - MINEROS S.A.

NON-OPERATING REVENUES AND EXPENDITURES As of December 31, these accounts included:

NON-OPERATING REVENUES Income from the sale of investments Dividends Gold price hedge contracts Income from equity method Financial yields Exchange difference Revenues from re-appraisal of shares Recoveries and realizations Services Other financial yields Indemnities Rentals UVR accounts adjustment Income from the sale of fixed assets Recovery of provisions Sale of agricultural products TOTAL NON-OPERATING REVENUES

NON-OPERATING EXPENDITURES Exchange difference Amortization of mining projects Fees of sale of Mineros Nacionales S.A. Other expenses Premiums paid in options Commissions Aids and charities (2) Investments loss of value Loss in securities trading (1) Interest and financial expenses TOTAL NON-OPERATING EXPENDITURES TOTAL REVENUES AND EXPENDITURES NON OPERATING – NET

2010

2009

$ 13.518.895 11.225.720 5.606.175 3.688.396 3.659.027 1.950.972 1.677.880 1.206.566 1.190.405 511.380 492.781 58.717 96.565 70.504 69.199 52.082 $ 45.075.264

$ 1.365.930 861.513 4.168.850 2.635.179 3.846.248 2.779.647 39.061.436 1.274.172 406.217 344.706 122.972 87.827 3.480 1.814.143 $ 58.772.320

2010

2009

$ 2.615.312 2.573.980 2.351.719 1.743.856 1.318.843 496.021 480.407 432.489 26.338 23.847 $ 12.062.812

$ 5.116.828 3.911.944 546.551 2.250.924 392.671 262.355 53.644 745.904 84.294 $ 13.365.115

$ 33.012.452

$ 45.407.205

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

Financial Statement

- NOTE 23 -

53

(1) Loss on securities trading

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

ENTITY CEMEX BBVA Halliburton United Health Group Toyota Motors Altria Group American Express Petrobras Banco Colpatria J.P. Morgan Pepsico Goldman Sachs Tidis – Tes Minor balances TOTAL

2010 $

26.338 $ 26.338

2009 $

151.894 141.196 79.233 73.386 65.478 64.419 51.587 32.745 15.067 14.325 10.925 10.514 6.735 28.400 $ 745.904

(2) Aids and charities

ENTITY Antioquia Chess League Operation Smile Colombia Foundation MINEROS S.A.Foundation Colombia Humanitaria Museo de Antioquia Profamilia Corp. Santa Fe de Antioquia Film Festival Secretos para Contar Foundation Fundación para el Progreso de Antioquia –Proantioquia: Comité Rehabilitación Antioquia Nechí Municipality Corporación Excelencia en la Justicia Corporación Prodeminas Social Promotion University Camps Botanical Garden Foundation TOTAL

54

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

2010

2009

$ 82.340 55.000 50.000 50.000 50.000 42.000 30.000 26.610 18.114 11.622 4.800 7.500 $ 480.407

$ 43.374 31.846 24.531 14.400 7.000 16.000 15.029 30.000 $ 262.355

ENTITY

BBVA Banco Colpatria Banco de Bogotá INTL Commodities (USA) INTL Commodities (USA)

TYPE OF OPERATION Foreign Exchange Hedges (Collars) Foreign Exchange Hedges (Collars) Foreign Exchange Hedges (Collars) Gold price hedges (put options) Gold price hedges (call options)

TOTAL

VALOR NOMINAL USD

CANTIDAD ONZAS AU

4.200.000 6.100.000 10.950.000 12.000 _

12.000

USD 21.250.000

24.000

2010 - MINEROS S.A.

SPECIAL COMMITMENTS – FUTURE OPERATIONS As provided in No. 17 of article 115 of Regulatory Decree 2649/93, the operations of futures on financial assets executed by the Company with different entities, valid as of December 31 of 2010, are listed below:

Financial Statement

- NOTE 24 -

At December 31 of 2009, these operations included:

ENTITY

TYPE OF OPERATION

Bancolombia

Foreign Exchange Hedges (options structure)

12.495.000

Helm Bank

Foreign Exchange Hedges (options structure)

6.490.000

Banco de Bogotá

Foreign Exchange Hedges (options structure)

4.575.000

Banco de Occidente

Foreign Exchange Forwards

20.405.000

Banco Santander

Foreign Exchange Forwards

7.000.000

INTL Commodities (USA)

Gold price Hedges (options hedge)

INTL Commodities (USA)

Gold price forwards

TOTAL

NOMINAL VALUE US$

GOLD OUNCES

18.000 _

3.000

USD 50.965.000

21.000

With respect to these operations of futures, we inform that: a. Operations corresponding to currency hedges (collars) were hired at different floor (call) and ceiling (put) prices. b. Gold price hedges structured as options were hired at different floor (call) and ceiling (put) prices. c. In accordance with the terms of the respective hedge negotiations, at December 31 of 2010, the Company had neither rights nor obligations with respect to these contracts, given that operation compliance is agreed upon on different dates of the year 2011.

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

55

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

- NOTE 25 -

56

SUBSEQUENT EVENTS As of fiscal year 2011, no payer of income tax and surtaxes shall be entitled to special deduction for investment in real productive assets, which stands as an important figure for the Company, given its future investment plans.

Whoever has requested, prior to November 1 of 2010, legal stability agreements, including stabilization of this deduction, shall be able to subscribe legal stability agreements that will include such deduction. In these cases, term of legal stability for the special deduction cannot exceed three years. MINEROS S.A. filed its legal stability agreement in November of 2009, but pronouncement by the corresponding committee is still pending.

F I N A N C I A L S TAT E M E N T 2 0 1 0 - M I N E R O S S . A .

Fi n a n c i a l S t a t e m e n t 2 0 1 0