UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended April 30, 2006
or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______ to _______

Commission File Number 333-66291

The Doe Run Resources Corporation
(Exact name of registrant as specified in its charter)
New York	13-1255630
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
1801 Park 270 Drive, Suite 300 St. Louis, Missouri	63146
(Address of principal executive offices)	(Zip Code)
(314) 453-7100
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[ ] Yes [X] No

Note: The Registrant files pursuant to an indenture, but is not otherwise subject to the reporting requirements of Section 13 or 15(d).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

[ ]Larger accelerated filer [ ] Accelerated filer [X] Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes [X] No

Number of shares outstanding of each of the issuer’s classes of common stock, as of October 19, 2006:

Common stock, $.10 par value1,000 shares

EXPLANATORY NOTE

The Doe Run Resources Corporation (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (the “Amended Filing”) to the Company’s Form 10-Q for the fiscal quarter ended April 30, 2006, as filed with the Securities and Exchange Commission on August 7, 2006 (the “Original Filing”), for purpose of revising its disclosure of gross margin on sales under the subheading “Results of Operations” in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” to reflect all costs of sales, including depreciation, depletion and amortization amounts attributable to cost of sales.

This Amended Filing also revises the Condensed Consolidated Statements of Cash Flows in “Item 1. Financial Statements” to reflect certain individual changes in the Company’s assets and liabilities.

Additionally, this Amended Filing clarifies the disclosure under “Item 4. Controls and Procedures” by stating that the Company’s disclosure controls and procedures were effective as of the date of the Company’s evaluation.

Finally, this Amended Filing corrects certain typographical errors in the Original Filing.

Except as described above, no other changes have been made to the Original Filing and this Amended Filing does not amend, update or change any other items or disclosures in the Original Filing. This Amended Filing continues to speak as of the date of the Original Filing and the Company has not updated the disclosure in this Amended Filing to speak to any later date.

Part I. FINANCIAL INFORMATION

THE DOE RUN RESOURCES CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
	April 30,			October 31,
	2006			2005
	(unaudited)
ASSETS
Current assets:
Cash	$	23,913		$	23,486
Trade accounts receivable, net of allowance for doubtful accounts		135,748			85,740
Inventories		167,496			105,634
Prepaid expenses and other current assets		27,588			20,814
Total current assets		354,745			235,674
Property, plant and equipment, net		262,715			253,263
Other noncurrent assets, net		8,633			5,838
Total assets	$	626,093		$	494,775
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Current maturities of long-term debt	$	113,587		$	114,947
Accounts payable		158,154			92,275
Accrued liabilities		106,749			87,060
Total current liabilities		378,490			294,282
Long-term debt, less current maturities		262,639			271,566
Other noncurrent liabilities		66,877			68,337
Total liabilities		708,006			634,185
Series A redeemable preferred stock, $1,000 par value per share, 5,000 shares
authorized; 2,849 shares issued and outstanding as of April 30, 2006 and
October 31, 2005, liquidation and redemption value		30,276			28,495
Shareholder's deficit:
Common stock, $.10 par value per share, 1,667 shares authorized;
1,000 shares issued and outstanding		-			-
Accumulated deficit		(65,644	)		(123,141	)
Accumulated preferred stock dividends in excess of paid in capital		(5,038	)		(3,257	)
Accumulated other comprehensive losses		(41,507	)		(41,507	)
Total shareholder's deficit		(112,189	)		(167,905	)
Total liabilities and shareholder's deficit	$	626,093		$	494,775
The accompanying notes are an integral part of these condensed consolidated financial statements.

THE DOE RUN RESOURCES CORPORATION
Condensed Consolidated Statements of Operations (unaudited)
(Dollars in thousands)
	Three Months Ended April 30,						Six Months Ended April 30,
	2006			2005			2006			2005
Net sales	$	380,221		$	247,716		$	694,345		$	483,698
Costs and expenses:
Cost of sales		306,960			219,328			570,347			417,331
Depreciation, depletion and amortization		7,015			5,764			13,128			11,901
Selling, general and administrative		15,461			11,759			28,568			22,686
Unrealized gain on derivative financial instruments		(2,301	)		(463	)		(4,256	)		(1,261	)
Other		1,808			1,321			3,115			3,158
Total costs and expenses		328,943			237,790			610,902			453,815
Income from operations		51,278			10,007			83,443			29,883
Other income (expense):
Interest expense, net		(988	)		(3,314	)		(3,725	)		(6,755	)
Other, net		579			(27	)		485			225
		(409	)		(3,341	)		(3,240	)		(6,530	)
Income before income tax expense		50,869			6,666			80,203			23,353
Income tax expense		3,428			-			5,270			-
Net income	$	47,441		$	6,666		$	74,933		$	23,353
Preferred stock dividends		(891	)		(791	)		(1,781	)		(1,583	)
Net income allocable to common shares	$	46,550		$	5,875		$	73,152		$	21,770
Total comprehensive income	$	46,550		$	6,696		$	73,152		$	23,487
The accompanying notes are an integral part of these condensed consolidated financial statements.

THE DOE RUN RESOURCES CORPORATION
Condensed Consolidated Statements of Cash Flows (unaudited)
(Dollars in thousands)
	Six Months Ended
	April 30,
	2006			2005
Cash flows from operating activities:
Net income	$	74,933		$	23,353
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization		13,128			11,901
Imputed interest and amortization of deferred financing costs		307			346
Unrealized gain on derivative financial instruments		(4,256	)		(1,261	)
Losses from impairment and disposal of long-lived assets		793			1,989
Increase (decrease) resulting from changes in:
Trade receivables		(50,008	)		(10,130	)
Inventories		(61,862	)		(21,704	)
Prepaid expenses and other current assets		(6,381	)		5,070
Accounts payable		65,879			19,236
Accrued liabilities		8,840			(565	)
Other noncurrent assets and liabilities, net		(4,022	)		(1,033	)
Net cash provided by operating activities		37,351			27,202
Cash flows from investing activities:
Purchases of property, plant and equipment		(23,131	)		(26,614	)
Net proceeds from sale of investments		-			333
Net cash used in investing activities		(23,131	)		(26,281	)
Cash flows from financing activities:
Proceeds from revolving loans
and short-term borrowings, net		455			5,335
Proceeds from long-term debt		10,000			-
Payments on long-term debt		(20,990	)		(14,638	)
Payments of financing costs		(925	)		-
Payments of tax dividends		(2,333	)		(310	)
Net cash used in financing activities		(13,793	)		(9,613	)
Net increase (decrease) in cash		427			(8,692	)
Cash at beginning of period		23,486			20,318
Cash at end of period	$	23,913		$	11,626
The accompanying notes are an integral part of these condensed consolidated financial statements.

THE DOE RUN RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands)

(1)Summary of Significant Accounting Policies

Unaudited Interim Financial Statements

These interim consolidated financial statements include the accounts of The Doe Run Resources Corporation (“Doe Run”) and its subsidiaries, including Doe Run Peru S.R.L. (“Doe Run Peru”, and together with Doe Run on a consolidated basis, the “ Company”). Doe Run’s issued and outstanding common stock is owned by a subsidiary of The Renco Group, Inc. (“Renco”). In the opinion of management, the interim consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the consolidated financial position as of April 30, 2006 and the results of operations for the three and six-month periods ended April 30, 2006 and 2005. Interim periods are not necessarily indicative of results to be expected for the year.

Reclassifications

Certain prior period balances have been reclassified in order to conform to the current presentation.

(2)Financial Condition

The Company is highly leveraged and has significant commitments both in the U.S. and Peru for environmental matters and for Environmental Remediation and Management Program (“PAMA”) expenditures, including the financial guarantees, that require it to dedicate a substantial portion of cash flow from operations to the payment of these obligations, which will reduce funds available for other business purposes (see Note 7: Asset Retirement and Environmental Obligations). These factors also increase the Company’s vulnerability to general adverse conditions, limit the Company’s flexibility in planning for, or reacting to, changes in its business and industry, and limit the Company’s ability to obtain financing required to fund working capital and capital expenditures and for other general corporate purposes. An unfavorable outcome to certain contingencies, discussed below, would have a further adverse effect on the Company’s ability to meet its obligations when due. The Company’s ability to meet these obligations is also dependent upon future operating performance and financial results which are subject to financial, economic, political, competitive and other factors affecting Doe Run, many of which are beyond the Company’s control.

Metal prices have risen dramatically over the past two fiscal years. Lead prices increased from a London Metal Exchange (“LME”) settlement monthly average of $911.40 per short metal ton in October 2005 to $1,061.80 per short metal ton in April 2006. The Company has benefited from this price increase in both its lead metal and lead concentrate sales.

The consolidated financial statements have been prepared assuming the Company will continue as a going concern. Doe Run Peru however has significant capital requirements under environmental commitments and substantial contingencies related to Peruvian taxes and has significant debt service obligations, each of which, if not satisfied, could result in a default under the Company’s credit agreements and collectively raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that the price improvements seen through fiscal year 2005 and in the first two quarters of fiscal year 2006, the potential revenues and cash flow enhancements from the Company’s new ferrite project in Peru and the approval by the Peruvian government of the application to extend the PAMA requirement for the construction of the sulfuric acid plants, will enable the Company to continue as a going concern. However, there can be no assurance that these actions will achieve the desired results.

Net unused availability at April 30, 2006 under the Doe Run Revolving Credit Facility was $34,689. Net unused availability at April 30, 2006 under the Doe Run Peru Revolving Credit Facility was approximately $200. In addition to the availability under its revolving credit facilities, the cash balance of Doe Run was $1,073 at April 30, 2006. The cash balance of Doe Run Peru was $22,840 at April 30, 2006. Doe Run Peru has reached and maintained its maximum borrowing level under the Doe Run Peru Revolving Credit Facility due in part to the higher metal prices resulting in higher outlays for concentrate purchases and higher VAT payments funded by cash from operations.

The Doe Run Revolving Credit Facility expires on August 29, 2008. The Doe Run Peru Revolving Credit Facility expires on September 22, 2006 and will require negotiations to extend its terms. There can be no assurance that the Company will be successful in extending the existing credit agreement or negotiating a new credit agreement, or if it is successful, that the extended or new credit agreement would be at terms that are favorable to the Company.

Any default under the requirements of the PAMA could result in a default under the Doe Run Peru Revolving Credit Facility. A default under the requirements of the Doe Run Peru Revolving Credit Facility results in defaults under the Doe Run Revolving Credit Facility and the indenture governing the bonds.

(3)Inventories

Inventories consist of the following:

	April 30,		October 31,
	2006		2005
Finished metals and concentrates	$	32,066	$	18,461
Metals and concentrates in process		101,843		55,681
Materials, supplies and repair parts		33,587		31,492
	$	167,496	$	105,634

Materials, supplies and repair parts are stated net of reserves for obsolescence of approximately $4,999 and $5,389 at April 30, 2006 and October 31, 2005, respectively.

(4)Income Taxes

Doe Run Cayman is subject to the regulations of the Cayman Islands, which currently have no corporate income or capital gains tax. Doe Run Cayman’s subsidiaries located in Peru are subject to Peruvian taxation. The statutory income tax rate in Peru is 30%. Doe Run Peru has obtained a ten-year tax stabilization agreement with the Peruvian government, which provides for Peruvian taxation based on tax statutes and regulations prevailing on November 6, 1997, beginning with the Peruvian tax year ending on December 31, 1997 through December 31, 2006.

On December 30, 1997, Doe Run Peru signed a Contract of Guarantees and Measures to Promote Investments (“Contract”) with the government of Peru.  The Contract, which has been modified various times through 2006, committed Doe Run Peru to making certain investments related to the improvements of its facilities in order to receive certain tax benefits.  The Contract provided that if the investments were completed according to the schedule by December 31, 2006, Doe Run Peru would receive an additional tax stability agreement covering the period beginning January 1, 2007 and ending December 31, 2021.  Doe Run Peru will be unable to complete the required investments and, therefore, requested an extension of the time, from the Ministry of Energy and Mines (“MEM”), for these investments that would coincide with the extended period of compliance for the PAMA. MEM denied the request. As a result, Doe Run Peru will not receive the benefits of the additional tax stabilization agreement.

Doe Run Peru has received income tax assessments from Peru’s tax authority (“SUNAT”) for tax years 1998 through 2001. The assessments primarily relate to Doe Run Peru’s income tax treatment of the December 1997 merger of Metaloroya S.A. into Doe Run Peru, which was purchased by Doe Run Peru in October 1997, and its effects on subsequent years’ taxable income. Under the assessment by SUNAT, the tax basis of Doe Run Peru’s fixed assets acquired would decrease, resulting in lower tax depreciation expense than originally claimed. The assessments of years 1999 through 2001 also relate to the disallowance of the deduction of interest paid, the offsetting of losses on derivatives executed in the U.S. and some leaseback and leasing operations. The estimated assessed amount consisting of additional income taxes due, penalties and interest as of April 30, 2006 totals approximately $121,100. The Company estimates that the effect of a similar assessment for tax years after 2001 would be approximately $32,900. Furthermore, Doe Run Peru would also be required to make additional workers’ profit sharing payments equal to 8% of the increase in taxable income generated by the changes discussed above, or approximately $11,300, for calendar years 1998 through 2005.

Doe Run Peru has also received Value Added Tax (“VAT”) assessments for the tax years 1999 through 2001 and for the period from January through July 2004. The assessments primarily relate to Doe Run Peru’s exports with holding certificates and differences in a tax credit application. The total assessment for these periods, calculated with penalties and interest as of April 30, 2006 was approximately $48,100. SUNAT offset the amount assessed for 2004 of approximately $2,300 against Doe Run Peru’s VAT receivable balance from July of 2004. Future VAT reimbursements cannot be used to offset the assessment by SUNAT. The Company discontinued the use of holding certificates for exports in June of 2004. The Company estimates expected additional assessments related to VAT for tax years 2002 and 2003, calculated with penalties and interest as of April 30, 2006 to total approximately $22,400 in regard to its exports with holding certificates.

Management of the Company believes that in each case Doe Run Peru has followed the applicable Peruvian tax statutes and intends to pursue all available administrative and judicial appeals. Doe Run Peru is not required to make any payments pending the administrative appeal process. If Doe Run Peru is not successful in the administrative appeal processes and were to appeal in the judicial system, some type of financial assurance would be required. No amounts have been accrued as liabilities related to these actions.

For the past several years, Doe Run Peru has generated net losses from operations that according to tax law may be used to offset taxable income in the future. The Company expects to utilize all of Doe Run Peru’s net operating loss carryforwards in the current fiscal year. As a result, Doe Run Peru has recorded $5,270 of income tax expense for the first two quarters of 2006.

Pursuant to the Company’s tax sharing agreement with Renco, a tax dividend is payable to Renco for federal and state income taxes that would be assessed if the Company was a C corporation. Tax dividends payable to Renco of $15,487 and $384 were reflected in the Company’s balance sheets at April 30, 2006 and October 31, 2005, respectively. The dividend payable at October 31, 2005 of $384 was paid in the second quarter of 2006 along with the tax dividend for the first quarter of 2006 of $1,949. The Company paid $12,842 of the dividend payable at April 30, 2006 in the third quarter of 2006 and the remaining $2,645 will be paid during the fourth quarter of 2006.

(5)Employee Benefits

Defined Benefit Plans

Net periodic benefit cost is comprised of the following:

	Three Months Ended						Six Months Ended
	April 30,						April 30,
	2006			2005			2006			2005
Service cost	$	(226	)	$	551		$	-		$	1,097
Interest cost on projected benefit obligation		2,577			1,670			3,412			3,325
Expected return on assets		(2,426	)		(1,435	)		(3,166	)		(2,858	)
Net amortization and deferral of unrecognized net losses		142			714			666			1,422
Net periodic benefit cost	$	67		$	1,500		$	912		$	2,986

The Company is required to make total contributions of $10,082 in 2006, of which $4,317 had been paid as of April 30, 2006.

Net Worth Appreciation Agreements

Certain current and former employees are parties to net worth agreements with Doe Run, pursuant to which, upon termination of each person’s employment with Doe Run, they are entitled to receive a fixed percentage of the increase in the net worth of the Company, as defined in such agreement, from a base date until the end of the fiscal quarter preceding the date of his termination or in accordance with the terms of the individual agreements. Such amounts are payable without interest in 40 equal quarterly installments, commencing three months after the termination of each person’s employment or in accordance with the terms of the individual agreements, and at three month intervals thereafter. The net worth appreciation agreements also provide that, in the event of payment of a dividend, other than tax dividends paid in accordance with the Company’s tax sharing agreement, or sale of the Company, the active participants will be entitled to receive a percentage of the dividend or the net proceeds of the sale equal to their maximum percentages under the agreements. The Company recorded $2,503 in expense during the first two quarters of 2006.

(6)Segment Information

The Company’s operating segments are separately managed business units that are distinguished by products, location and production processes. The primary lead segment includes integrated mining, milling and smelting operations located in Missouri. The recycling operation segment, located in Missouri, recycles lead-bearing materials, primarily spent batteries. The fabricated products segment, located in Washington and Arizona, produces value-added lead products. Doe Run Peru produces an extensive product mix of non-ferrous and precious metals.

Operating Segments - Revenues	Three Months Ended April 30,						Six Months Ended April 30,
	2006			2005			2006			2005
Revenues from external customers:
Doe Run Peru	$	247,673		$	158,316		$	450,365		$	306,701
Primary lead		101,094			65,143			183,868			129,080
Recycling operation		22,672			22,432			46,760			40,998
Fabricated products		4,030			3,386			7,393			7,201
Total		375,469			249,277			688,386			483,980
Revenues from other operating segments: (1)
Doe Run Peru		6,091			-			12,331			2,724
Primary lead		397			209			1,076			711
Recycling operation		100			82			182			180
Total		6,588			291			13,589			3,615
Total reportable segments		382,057			249,568			701,975			487,595
Metal sales not attributed to operating segments		6,982			(1	)		12,126			2,520
Realized losses on derivative contracts		(2,230	)		(1,560	)		(6,167	)		(2,802	)
Intersegment eliminations		(6,588	)		(291	)		(13,589	)		(3,615	)
Total revenues	$	380,221		$	247,716		$	694,345		$	483,698

(1)   Transactions between segments consist of metal sales recorded based on sales contracts that are negotiated between segments on terms that management feels are similar to those that would be negotiated between unrelated parties.

The measure of segment profit and loss used by the Company is earnings of the segment before interest, taxes, depletion, depreciation and amortization (“EBITDA”), as adjusted to exclude losses from impairment and disposal of long-lived assets and unrealized gains (losses) on derivatives (“Adjusted EBITDA”). Consolidated Adjusted EBITDA also excludes accretion expense under Statement of Financial Accounting Standards No. 143, Asset Retirement Obligations adopted November 1, 2002.

Operating Segments - Adjusted EBITDA	Three Months Ended April 30,						Six Months Ended April 30,
	2006			2005			2006			2005
Doe Run Peru	$	21,483		$	7,238		$	33,607		$	15,714
Primary lead		44,797			15,168			76,493			37,686
Recycling operation		3,328			3,957			7,507			7,629
Fabricated products		836			676			1,141			1,149
Total reportable segments		70,444			27,039			118,748			62,178
Realized losses on derivatives		(2,230	)		(1,560	)		(6,167	)		(2,802	)
Other revenues and expenses (1)		(1,229	)		(2,084	)		(2,191	)		(2,793	)
Corporate selling, general and administrative expenses		(9,298	)		(6,856	)		(16,011	)		(13,111	)
Intersegment eliminations		(44	)		(12	)		(3	)		13
Consolidated adjusted EBITDA		57,643			16,527			94,376			43,485
Depreciation, depletion and amortization		(7,015	)		(5,764	)		(13,128	)		(11,901	)
Interest expense, net		(988	)		(3,314	)		(3,725	)		(6,755	)
Unrealized gain on derivatives		2,301			463			4,256			1,261
Losses from impairment and disposal of long-lived assets		(668	)		(779	)		(793	)		(1,989	)
Asset retirement obligation accretion expense		(404	)		(374	)		(783	)		(748	)
Other		-			(93	)		-			-
Income before income taxes	$	50,869		$	6,666		$	80,203		$	23,353

(1)   Other revenues and expenses consist of the profit on metal sales not attributed to operating segments and expenses not allocated to operating segments, including environmental expenses relating to historic operations of $542 and $803 for the three and six months ended April 30, 2006, respectively and $2,877 for the three and six months ended April 30, 2005.

(7)Asset Retirement and Environmental Obligations

The Company is subject to numerous federal, state, local and other government environmental laws and regulations governing, among other things, air emissions, wastewater discharges, solid and hazardous waste treatment, storage and disposal and remediation of releases of hazardous substances. The Company’s facilities are located on sites that have been used for heavy industrial purposes for decades and may require remediation. The Company has made and intends to continue making the necessary expenditures for environmental remediation and compliance with environmental laws and regulations. Environmental laws and regulations may become more stringent in the future, which could increase costs of compliance.

Asset Retirement Obligations

Asset retirement obligations (“AROs”) are recognized as liabilities when incurred, with the initial measurement at fair value. These liabilities will be increased to full value over time through charges of accretion to operating expense. In addition, an asset retirement cost is capitalized as part of the related asset’s carrying value and will be depreciated over the asset’s useful life. Changes in the ARO liability resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows shall be recognized as an increase or a decrease in the carrying amount of the liability for an ARO and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset.

Doe Run’s mines and related processing facilities are governed by various agencies that have established minimum standards for reclamation. Doe Run’s primary smelter slag produced by and stored at the primary smelter in Herculaneum, Missouri, is currently exempt from hazardous waste regulation under the Resource Conservation and Recovery Act of 1976, as amended (“RCRA”), but is subject to a state closure permit, which requires Doe Run to contain and cover the pile upon cessation of operations. Doe Run’s mining and milling operations are subject to 

Missouri mine waste closure permit requirements and lease agreements that require Doe Run to reclaim surface areas, including remediation of mining waste disposal areas, and to perform closure activities underground. These activities, which tend to be site specific, generally include costs for earthwork, revegetation, water treatment and demolition. Closure activities may be performed over time.

Doe Run has a RCRA permit addressing the closure of portions of its recycling operation. The majority of the cost will arise from removing hazardous materials from the facility. No ARO liability or related asset cost has been recorded because the fair value of the obligation cannot be determined due to the indeterminate timing. The cost of closure, based on third party estimates for bonding purposes, is approximately $3,200. The life of the operation is considered indeterminable because there is not currently a cost-effective alternative to the lead acid batteries and because battery manufacturers are required to recycle the batteries.

Mine Closure Law No. 28090 (“Law”) became effective in Peru as of October 15, 2005. It applies to smelters and mines. The Law establishes the obligations and procedures that titleholders of mining activities must follow, including a financial guarantee for environmental issues.   Doe Run Peru must submit a mine closure plan to the MEM by August 17, 2006 which must include a description of the remediation measures to be done, along with their cost and timing, and the expected amount of the financial guarantee. Doe Run Peru has hired a technical mining consultant to prepare the mine closure plans for Cobriza and La Oroya to insure that they will comply with the technical and legal requirements. The financial guarantee will not be known until the final mine closure plan is approved therefore, the guarantee is estimated to be established in January of 2007.

Doe Run Peru has AROs at its Cobriza mine related to the costs associated with closing the mine openings and covering acid rock. Doe Run Peru is also responsible for the eventual covering and revegetation of mixed lead and copper slag also stored in Huanchan, an area a short distance from the La Oroya smelter where the slag is currently stored.

The Company’s total recorded liabilities for AROs were approximately $15,945 and $15,188 as of April 30, 2006 and October 31, 2005, respectively.

Environmental Remediation - Domestic Operations

The Company had recorded liabilities of approximately $15,000 and $20,000 related to remediation obligations as of April 30, 2006 and October 31, 2005, respectively.

Doe Run is subject to an Administrative Order on Consent (“AOC”) with the U.S. Environmental Protection Agency (“ U.S. EPA”), effective May 29, 2001, to study and address issues related to the slag pile, plant property, community soils adjacent to the primary smelter in Herculaneum, Missouri, elevated blood lead levels in the community and lead releases from the plant. This AOC was modified effective on May 20, 2004 which addressed the technical requirements concerning the slag pile design and construction along with adjustments to the remediation schedule. At April 30, 2006 the estimated remaining cost of remediating the soils of this community was approximately $434.

Doe Run signed a settlement agreement with the State of Missouri on April 26, 2002, whereby it agreed to offer to purchase approximately 160 residential properties in an area close to the smelter if the owner requests such an offer. Offers totaling $10,300 have been accepted and closed. The remaining offers have expired except for a few with pending closing dates or special arrangements for a total of $138. The formal program under the agreement is now essentially completed.

The Company’s statements of operations reflect losses from impairment or retirement of long-lived assets primarily related to the residential properties owned in Herculaneum, as it is probable that the cost of the properties will not be recovered through future cash flows.

Doe Run has received notice that it is a potentially responsible party (“PRP”) subject to liability under The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), at the following sites: six sites in St. Francois County, Missouri, including the Big River Mine Tailings site, the Bonne Terre site, the Federal site, the National site, the Rivermines site and the Leadwood site; sites comprising areas along roads 

in Iron, Dent and Reynolds counties in Missouri; the Oronogo-Durenweg site in Jasper County, Missouri; the Cherokee County site in Cherokee County, Kansas; the Tar Creek site in Ottawa County, Oklahoma; the Block “P” site in Cascade County and Judith County, Montana; and the Missouri Electric Works site in Cape Girardeau, Missouri. There are two additional sites in St. Francois County for which the U.S. EPA has indicated it will issue notice. CERCLA provides for strict and, in certain circumstances, joint and several liability for response costs and natural resource damages. The Company’s estimate of the cost of the remediation of these sites, including the two additional sites in St. Francois County, is included in the total liability for remediation obligations, which the Company believes is adequate based on its investigations to date. However, depending upon the types of remediation required and certain other factors, additional costs at these sites, individually or collectively, could have a material adverse effect on the results of operations, financial condition and liquidity of the Company.

In addition to being asked to conduct remediation at the above sites, the U.S. EPA may also seek reimbursement from Doe Run for response actions it has conducted at these sites. The U.S. Government has advised PRP’s at the Tar Creek site, including Doe Run, that it will seek reimbursement for approximately $125 million of such costs. Given legal issues about Doe Run’s responsibility for activities of a former subsidiary, the fact that the former subsidiary’s activities at the site were localized and small (less than 1% of the waste), and the major involvement at the site of the U.S. Government through the Bureau of Land Management’s and the Bureau of Indian Affairs’ management of mineral leasing at the site, the Company is unable to estimate the expected outcome of any such potential claim.

In February 2004 the U.S. Department of Agriculture issued a Unilateral Administrative Order (“UAO”) ordering certain remediation activities by Doe Run at the Block “P” mill site in Montana. Doe Run has requested that other parties be added to the order. Doe Run will seek reimbursement from the U.S. Government and these other parties. The final remediation was essentially completed as of October 31, 2005.

Doe Run has completed an Engineering Evaluation/Cost Analysis (“EE/CA”) for the Bonne Terre site and has signed two AOCs to conduct removal actions on the west and east portions of the site. Work is completed on the west Bonne Terre site and is nearly finished on the east site with completion expected in the summer of 2006.

Doe Run has completed an EE/CA for the Rivermines site and, while unable to accept certain financial assurance provisions of a proposed AOC, has agreed to conduct a removal action at the site under a UAO. Work has commenced on the removal action. The EPA accelerated the timeframe to complete the majority of the remediation effort by the summer of 2006.

Doe Run is subject to an AOC with the U.S. EPA to remediate the Big River Mine Tailings site. The remediation work required by the AOC has been substantially completed and will continue with revegetation and ongoing monitoring and maintenance activities.

Doe Run has also signed AOCs to perform an EE/CA on each of the National and Leadwood sites for remediation of mine waste areas. The National EE/CA was completed by the PRPs and was submitted to the U.S. EPA for approval. The U.S. EPA then had two EE/CA’s prepared, the last of which was accepted by them. The cost of their remedy is higher than that estimated by the EE/CA prepared by Doe Run. On July 6, 2006, the U.S. EPA issued a unilateral administrative order to four parties, the generating company and three landowners including Doe Run. Doe Run is negotiating its share with the generating PRP. The Leadwood EE/CA has been modified and submitted to the U.S. EPA for approval and it is contemplated that a unilateral order will be issued during the fiscal year to conduct the work. We would utilize Doe Run’s internal workforce which is about to complete work at Elvins-Rivermines. In addition, Doe Run has signed an AOC with the U.S. EPA to conduct a Remedial Investigation/Feasibility Study (“RI/FS”) to assess potential off-site impacts of these site operations on groundwater, residential soils, several creeks and a river and the need for related remediation. The initial draft of the RI/FS was submitted in early March of 2002. Doe Run signed an order to conduct interim measures, which consisted of blood lead testing of young children, residential soil sampling and limited soil remediation as indicated by the testing and sampling results, which was terminated and replaced by an AOC to conduct certain additional soil remediation in the area and has included its best estimate of these efforts in its recorded liabilities. The Company believes the recorded liabilities related to these sites are adequate. However, should remediation goals or areas change, requiring substantially increased measures, there can be no assurance that the recorded liabilities would be adequate.

In March of 2004, Doe Run received notice that it is a PRP subject to liability under CERCLA for contamination along roads in Iron, Dent and Reynolds counties in Missouri, along with a number of mining companies involved in the transportation of concentrates. After sampling approximately 750 houses by the U.S. EPA and the Missouri Department of Natural Resources, approximately 150 houses were identified as potentially requiring some level of remediation. Doe Run and four other mining companies have signed an AOC to conduct soil remediation at approximately 40 of these houses. The five companies have completed a mediation session concerning the allocation of costs and, subject to resolving certain outstanding issues, expect to modify the agreement between them resolving the allocation of the completed work. They are also expected to sign an agreement to resolve the management and expenditures regarding future work on this project. Also, in regard to potential contamination from transportation activities in and near the City of Viburnum, Doe Run has signed an AOC to conduct sampling and prepare a Preliminary Assessment/Site Inspection report. The draft of that work has been completed and submitted.

Doe Run has been advised that the U.S. EPA is considering taking certain response actions at a mine site in Madison County, Missouri known as the Mine LaMotte Site. Doe Run and the owner of the other 50% share of stock in the company that mined the site have signed an AOC to conduct an RI/FS at the site. This site is substantially smaller than the sites in St. Francois County where the Company has been named a PRP, and the potential issues are less complex. Doe Run has also been advised that remediation is required at a related small satellite mine site. After conducting an investigation, Doe Run has determined that it was not involved in operations at the satellite site, but further review will be required before a determination can be made as to whether it has any liability at the main site. At this time, based on preliminary information and an inspection of the sites, management does not believe that any future action will result in a material adverse impact to the results of operations, financial condition or liquidity of the Company.

Doe Run’s recycling facility is subject to corrective action requirements under RCRA as a result of a storage permit for certain wastes initially issued in 1989. This will involve remediation of solid waste management units at the site, and it is expected that the plan for corrective action will be approved in fiscal 2006. The Company’s estimate of the cost of this corrective action is $1,000. While management believes that recorded liabilities are adequate based on expectations of the closure plan requirements, regulators could require that additional measures be included in the finalized plan, which could change the estimate of the costs for corrective action.

Environmental Remediation - Foreign Operations

Doe Run Peru’s La Oroya operations historically and currently exceed some of the applicable maximum permissible limits established by MEM pertaining to air emissions and wastewater effluents quality. Prior to our acquisition of La Oroya, Metaloroya S.A., the former owner, a subsidiary of Empresa Minera del Centro del Peru S.A., which we refer to as Centromin, received approval from the Peruvian Government for a PAMA. The PAMA was designed to achieve compliance with MEM’s air and wastewater limits. It consisted of an environmental impact analysis, monitoring plan and data mitigation measures and a closure plan. The PAMA also set forth the actions and corresponding annual investments a company agrees to undertake in order to achieve compliance with the maximum permissible limits prior to expiration of the PAMA (ten years for smelters, such as Doe Run Peru’s operations in La Oroya, and five years for mining operations, such as Cobriza). The PAMA projects, which are more fully discussed below, were designed to achieve compliance with these requirements.

On December 29, 2004, the Peruvian Government issued a Supreme Decree No. 046-2004-EM (“Supreme Decree”), which recognized that exceptional circumstances may justify an extension of the time to complete one or more projects within the scope of a PAMA. Since Doe Run Peru expected that it would not be able to comply with the spending requirements of La Oroya’s PAMA investment schedule by the end of calendar year 2006 with respect to certain projects, Doe Run Peru applied for an extension on December 20, 2005.

On May 29, 2006, MEM approved the extension of certain PAMA projects through October 31, 2009 (the “Modified PAMA”). Pursuant to the terms of the Modified PAMA, Doe Run Peru is now required to complete the acid plant projects for the lead circuit and the copper circuit by September 30, 2008 and October 31, 2009, respectively and Doe Run Peru remains obligated under the original PAMA to implement the following projects at its La Oroya smelter by December 31, 2006:

§Upgrade the acid plant for the zinc circuit;

§Construct a treatment plant for the copper refinery effluent;

§Construct an industrial wastewater treatment plant for the smelter and refinery;

§Improve the slag handling system;

§Improve Huanchan lead and copper slag deposits;

§Construct an arsenic trioxide deposit;

§Improve the zinc ferrite disposal site;

§Construct domestic wastewater treatment and domestic waste disposal; and

§Construct a monitoring station.

The Modified PAMA also requires Doe Run Peru to comply with certain special measures not previously required. These measures include, but are not limited to, implementation of projects to reduce stack and fugitive emissions which are designed to meet certain air quality objectives, a continuing improvement provision that provides for additional pollution controls to address the shortfalls in meeting objectives or to further reduce risks and certain measures regarding protection of public health, including, among others, actions for the reduction of lead in blood levels and special health programs for children and expectant women.

MEM has also required that the cost of a planned replacement of the oxy-fuel reverberatory furnace with a submerged lanced reactor furnace that will reduce gas volume while enriching sulfurous gas feed to the copper circuit sulfuric acid plant be included as part of the cost of the Modified PAMA acid plant projects. The estimated cost of this reactor furnace is $57,000, which brings the total remaining investment needed to build the sulfuric acid plants to approximately $152,590.

Additional PAMA projects required for fiscal year 2006 include an upgrade of the ventilation system in the Sinter plant, completion of the enclosure work around the lead and dross furnace, the enclosure of the anode residue plant along with the elimination of its nitrous gases, and the reduction of fugitive emissions from the copper and lead beds. The total cost of the currently remaining Modified PAMA projects as f April 30, 2006 was approximately $175,000 of which $31,500 remains to be spent in the 2006 calendar year.

Doe Run Peru’s ability to complete the required projects by the specific deadlines depends in large part upon the availability of sufficient funds. Doe Run Peru believes that sufficient funds will be available on a timely basis, but the availability of sufficient funds is largely dependent upon the results of its business operations and the possibility of additional financing; therefore, there can be no assurance that sufficient funds will be available for these projects.

Consistent with the requirements of the Supreme Decree providing for the possibility of PAMA extensions, in addition to other terms and conditions, the Modified PAMA contains two separate financial security arrangements to ensure that Doe Run Peru fulfills its statutory obligation to complete the Modified PAMA projects.

First, Doe Run Peru has established an environmental trust account with Scotiabank Peru into which receipts from sales are required to be remitted directly in an amount to have cash available sufficient to pay the expenditures estimated to be incurred in each subsequent month by Doe Run Peru in complying with the Modified PAMA. Second, Doe Run Peru has provided to MEM a bank letter of guarantee in the amount of $28,641 (an amount estimated to be 20% of the projected cost of the Modified PAMA projects to be spent after 2006). Doe Run Peru deposited such amount with Standard Chartered Bank which has in turn provided for the issuance to MEM of the necessary bank letter of guarantee relying solely upon the funds so deposited. Doe Run Peru has amended the Doe Run Peru Revolving Credit Facility to allow for these arrangements.

Although not contemplated by the Supreme Decree providing for the possibility of PAMA extensions, as a condition of granting the Modified PAMA, MEM has provided that Doe Run Peru could lose the benefit of the extension if Doe Run Peru makes any payments to any shareholder or affiliate, which could affect the full and satisfactory compliance with the Modified PAMA obligations. This provision has not been agreed to by Doe Run or Doe Run Peru but was imposed under applicable law over their objection. Doe Run Peru was required, however, to provide a bank letter of guarantee in the amount of $4,000 which may be drawn upon to fund Modified PAMA projects if Doe Run Peru makes any payments to any shareholder or affiliate. Doe Run Peru satisfied this requirement

by depositing such amount with Standard Chartered Bank which has in turn provided for the issuance to MEM of the necessary bank letter of guarantee relying solely upon the funds so deposited.

Separately, Renco has confirmed to MEM that Renco understands that Doe Run Peru could lose the benefit of the extension if Doe Run Peru makes any payments to any shareholder or affiliate which could affect the full and satisfactory compliance with Doe Run Peru’s Modified PAMA obligations and Renco has stated that Renco has no intention of causing, and will not do anything to cause, Doe Run Peru to make any such payment.

In connection with its negotiations with MEM regarding the Modified PAMA, Doe Run voluntarily agreed to extend the maturity of Doe Run Peru’s $139,063 intercompany note payable to Doe Run until such time as the Modified PAMA has been completed.

No assurance can be given that implementation of the projects under the Modified PAMA is feasible or that their implementation will achieve compliance with the applicable legal requirements by the end of the Modified PAMA period. The Peruvian Government may, in the future, require compliance with additional environmental regulations that could adversely affect Doe Run Peru’s business, financial condition and results of operations, as well as their ability to comply with the Modified PAMA. After expiration of the Modified PAMA, Doe Run Peru must comply with all applicable standards and requirements.

The Cobriza mine has a separate PAMA in which Doe Run Peru committed to complete projects to manage tailings, mine drainage, sewage and garbage. Doe Run Peru completed its own PAMA requirements with respect to Cobriza in June of 2004 and is in compliance with emissions standards required by this PAMA.

In addition to its PAMA obligations, Doe Run Peru is responsible for the remediation costs relating to the zinc ferrite disposal site at La Oroya. The current closure plan provides for encapsulating the ferrite residues in place in Huanchan, an area a short distance from the smelter where they are currently stored, for which an environmental liability of $1,600 has been recorded as of April 30, 2006 and October 31, 2005.

Under the purchase agreement related to the acquisition of the La Oroya assets in October of 1997, Centromin, the prior owner of the La Oroya smelter and Cobriza mine, agreed to indemnify Doe Run Peru against environmental liability arising out of its prior operations and their apportioned share of any complaint related to emissions. Performance of the indemnity has been guaranteed by the Peruvian Government through the enactment of the Supreme Decree No. 042-97-PCM. However, there can be no assurance that Centromin will satisfy its environmental obligation and investment requirements or that the guarantee will be honored. Any failure by Centromin to satisfy its environmental obligations could adversely affect Doe Run Peru’s business, financial condition and results of operations.

Environmental Remediation -Consolidated

The Company believes its reserves for domestic and foreign environmental, mine closure and reclamation matters are adequate, based on the information currently available. Depending upon the type and extent of activities required, revisions to management’s estimates of costs to perform these activities are reasonably possible in the near term. Therefore, there can be no assurance that additional costs, both individually and in the aggregate, would not have a material adverse effect on the results of operations, financial condition and liquidity of the Company.

(8)Litigation

Doe Run is a defendant in 29 lawsuits alleging certain damages stemming from the operations at the Herculaneum primary smelter. Three of these cases are class action lawsuits. In two cases, the plaintiffs seek to have certified a class of property owners in a certain section of Herculaneum, alleging that property values have been damaged due to the operations of the smelter. In another case, plaintiffs seek to have certified a class of children who lived in Herculaneum during a period of time when they were less than six years old and children born to mothers who lived in Herculaneum during their pregnancies. The remedy sought is medical monitoring for the class. Twenty-six of the cases are personal injury actions by 161 individuals who allege damages from the effects of lead due to operations at the smelter. Punitive damages also are being sought in each case. Doe Run is also a defendant in a wrongful death action concerning a drowning in the City of Herculaneum.

A resident of Herculaneum has claimed personal injuries allegedly resulting from exposure to emissions from the smelter. No suit has yet been filed in this matter.

Doe Run is a defendant in 17 lawsuits alleging certain damages from discontinued mine facilities in St. Francois County. Four of the cases are class action lawsuits. The first case seeks to have certified a class consisting of property owners in Bonne Terre, Missouri, alleging that property values have been damaged due to the tailings from the discontinued operations. In the second case plaintiffs seek to have certified a class of children who lived, went to school or day care in Bonne Terre, or whose mothers lived in Bonne Terre during their pregnancies. The third and fourth cases are class actions for property damage and medical monitoring concerning alleged damages caused by chat, tailings and related operations in six areas in St. Francois County. The remainder of the cases allege personal injury to 28 individuals who were exposed to lead in St. Francois County.

Doe Run is a defendant in a lawsuit by the BNSF Railway Company, who has alleged that Doe Run and other companies associated with lead mining operations in Missouri are responsible for property damage at certain rail yards and for contribution and indemnity for costs incurred by BNSF associated with settlement by BNSF of lead exposure cases. Given the early stage of this case, the Company is unable at this time to estimate the expected outcome and any final costs of this action.

Doe Run is a defendant in five lawsuits alleging certain damages from past mining operations in Ottawa County, Oklahoma.  Three of these suits are class actions alleging personal injury and property damage in Picher and Quapaw, Oklahoma.  One lawsuit, a consolidation of five suits, alleges injury to seven children living in Picher, Oklahoma.  One lawsuit, a consolidation of two suits, alleges injury to 42 children living in Ottawa County.

Doe Run, with several other defendants, has been named in four cases in Maryland but has not yet been joined as a defendant in any of these cases. These suits seek damages, alleging personal injuries as a result of lead poisoning from exposure to lead paint and tetraethyl lead dust. The suits seek punitive damages. Doe Run was dismissed from two similar cases in which it was joined as a defendant. Until Doe Run is actually joined as a defendant in one or more of these cases, material liability from these cases is considered remote.

Doe Run is currently a defendant in three asbestos injury suits filed in Madison County, Illinois, each alleging that a worker was exposed to asbestos at the premises of the St. Joe Minerals Corporation. However, Doe Run has not been properly served in one of these cases. Doe Run has reached a tentative settlement in another of these cases prior to going to trial. Doe Run is also a defendant in an asbestos case filed in Lawrence County, Pennsylvania

Doe Run is in a commercial dispute with a buyer concerning one ocean shipment of lead concentrates. Buyer is seeking reimbursement of expenses incurred to address a large amount of water that appeared during the voyage on top of concentrates in the forward holds. This contract dispute is in arbitration before the LME.

Doe Run is a defendant in a lawsuit by Korea Zinc Co. and affiliates filed on January 19, 2006 in the Circuit Court of St. Louis County, concerning alleged violations of an agreement regarding the sale of zinc concentrates. Doe Run disputes the claim and will seek dismissal because the dispute should be subject to arbitration.

Doe Run is a defendant in a lawsuit filed by Nadist, LLC in U.S. District Court for the Eastern District of Missouri on June 23, 2006 concerning the Sweetwater Mine and Mill. The lawsuit purports to constitute a citizen suit alleging violations of certain U.S. environmental laws and includes certain state law allegations.

Doe Run has been named as a party in various lawsuits relating to certain operations of its predecessor. Fluor Corporation, the owner of Doe Run’s predecessor, retained the obligation for any costs of defense or claims relating to these lawsuits. Should Fluor Corporation become unable to fulfill its contractual obligation, Doe Run could be liable for any costs or claims resulting from these lawsuits. There is no reason at this time to believe that Fluor Corporation could not fulfill its contractual obligations.

Doe Run Peru is currently a defendant in 207 lawsuits in the Lima, Peru labor courts that allege damage to workers from industrial diseases. Doe Run Peru has made claims in most of the cases against Centromin and has also made claims against both governmental agencies and private companies that provide workers’ insurance. The average claim is $17. Of 19 previously concluded cases in this category, 18 were dismissed and 1 resulted in an award of $9.

Doe Run Peru is also currently a defendant in 164 lawsuits by workers alleging that they are owed certain differences in salaries and benefits. The average claim is $20. Of 38 previously concluded cases in this category, 29 were dismissed and 9 resulted in awards totaling $19. Doe Run Peru is also a defendant in a lawsuit by the Yauli-La Oroya Employees Union concerning salaries and benefits. The claims of the 149 workers remaining in the lawsuit have been valued at a total of $218 according to a report by an expert appointed by the court.

Doe Run Peru is also currently a defendant in 22 lawsuits alleging various labor claims including indemnification for arbitrary dismissal, nullity of dismissal, moral damage compensation, compensatory damages from work accident and readmission of worker. The average claim is $7. Of 30 previously concluded cases in this category, 26 were dismissed and 4 resulted in awards totaling $21.

The amount of awards in the various categories of lawsuits referenced above represented total judgments issued by the relevant courts. For certain of these lawsuits, Centromin will pay a portion of the total award.

On January 19, 2005, Doe Run Peru was served with a lawsuit by an association of municipalities of the Junin Region of Peru against Doe Run Peru and two other mining companies. This lawsuit alleges environmental damages to the Mantaro River basin in the amount of $5 billion. On February 2, 2006, Doe Run Peru was served with a lawsuit by the municipality of Jauja. This lawsuit alleges environmental damages to the Mantaro River basin in the amount of $5,000. Material liability to Doe Run Peru, in these two actions, is believed to be remote based on the opinion of management and outside counsel for Doe Run Peru. Any potential judgment would be subject to the indemnification obligations of Centromin, which are guaranteed by the Peruvian government.

On December 3, 2003, Doe Run Peru filed an administrative lawsuit against the Yauli - La Oroya Provincial City Hall in order to nullify and void a number of fines for the amount of $2,800. Doe Run Peru was fined for not having construction licenses for the PAMA projects.

Since most of the above cases are either in the pleading or discovery stages, the Company is unable at this time to estimate the expected outcome and the final costs, except as noted, of these actions. No amounts have been accrued as liabilities related to these actions. There can be no assurance that these cases would not have a material adverse effect, both individually and in the aggregate, on the results of operations, financial condition and liquidity of the Company. The Company has and will continue to vigorously defend itself against such claims.

(9) Guarantor Subsidiaries

The Guarantor Subsidiaries (Fabricated Products, Inc. (“FPI”) and DR Land Holdings, LLC (together with FPI, the “Domestic Guarantors”) Buick Resource Recycling Facility, LLC, Doe Run Cayman Ltd. (“Doe Run Cayman”) and its subsidiary Doe Run Peru) have jointly and severally, fully, unconditionally and irrevocably guaranteed the 11.75% notes of the Company. Doe Run Cayman has no operations separate from those of Doe Run Peru. Separate financial statements and other disclosures concerning certain Guarantor Subsidiaries and disclosures concerning non-Guarantor Subsidiaries have not been presented because management has determined that such information is not material to investors. Intercompany transactions eliminated in consolidation consist of various service and agency fees between Doe Run and Doe Run Peru and sales of metal to Doe Run by Doe Run Peru and to FPI by Doe Run.

Condensed Consolidating Balance Sheet (unaudited)
As of April 30, 2006
(Dollars in thousands, except share and per share data)
	The Company			Buick
	Excluding			Resource			Other			Doe Run
	Guarantor			Recycling			Domestic			Cayman and					The
	Subsidiaries			Facility, LLC			Guarantors			Subsidiary		Eliminations			Company
ASSETS
Current assets:
Cash	$	1,072		$	-		$	1		$	22,840	$	-		$	23,913
Trade accounts receivable, net of allowance for
doubtful accounts		84,869			-			2,565			55,677		(7,363	)		135,748
Inventories		42,495			-			1,605			123,436		(40	)		167,496
Prepaid expenses and other current assets		4,776			-			40			22,772		-			27,588
Due from subsidiaries/parent		9,023			2,512			-			-		(11,535	)		-
Total current assets		142,235			2,512			4,211			224,725		(18,938	)		354,745
Property, plant and equipment, net		75,477			14,720			805			171,713		-			262,715
Due from subsidiaries		156,753			-			-			-		(156,753	)		-
Other noncurrent assets, net		8,300			-			63			270		-			8,633
Investment in subsidiaries		27,984			-			-			-		(27,984	)		-
Total assets	$	410,749		$	17,232		$	5,079		$	396,708	$	(203,675	)	$	626,093
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt	$	67,581		$	-		$	-		$	46,006	$	-		$	113,587
Accounts payable		31,864			-			434			133,219		(7,363	)		158,154
Accrued liabilities		68,587			-			604			37,558		-			106,749
Due to parent/subsidiaries		2,512			-			9,023			-		(11,535	)		-
Total current liabilities		170,544			-			10,061			216,783		(18,898	)		378,490
Long-term debt, less current maturities		258,704			-			-			3,935		-			262,639
Due to parent		-			-			-			156,753		(156,753	)		-
Other noncurrent liabilities		63,414			-			3			3,460		-			66,877
Total liabilities		492,662			-			10,064			380,931		(175,651	)		708,006
Series A redeemable preferred stock		30,276			-			-			-		-			30,276
Shareholders' equity (deficit):
Common stock, $.10 par value, 1,667 shares authorized,
1000 shares issued and outstanding		-			-			-			-		-			-
Common stock, $1 par value, 1,000 shares authorized,
issued and outstanding		-			-			1			-		(1	)		-
Common stock, $1 par value, 2,005,000 shares authorized,
issued and outstanding		-			-			-			2,005		(2,005	)		-
Additional paid in capital		-			23,305			1,205			-		(24,510	)		-
Accumulated preferred stock dividends in excess								-					-			-
of paid in capital		(5,038	)		-			-			-		-			(5,038	)
Retained earnings (accumulated deficit) and accumulated
other comprehensive losses		(107,151	)		(6,073	)		(6,191	)		13,772		(1,508	)		(107,151	)
Total shareholders' equity (deficit)		(112,189	)		17,232			(4,985	)		15,777		(28,024	)		(112,189	)
Total liabilities and shareholders' equity (deficit)	$	410,749		$	17,232		$	5,079		$	396,708	$	(203,675	)	$	626,093

Condensed Consolidating Balance Sheet
As of October 31, 2005
(Dollars in thousands, except share and per share data)
	The Company			Buick
	Excluding			Resource			Other			Doe Run
	Guarantor			Recycling			Domestic			Cayman and						The
	Subsidiaries			Facility, LLC			Guarantors			Subsidiary			Eliminations			Company
ASSETS
Current assets:
Cash	$	8,916		$	-		$	1		$	14,569		$	-		$	23,486
Trade accounts receivable, net of allowance for doubtful accounts		56,454			-			2,202			31,637			(4,553	)		85,740
Inventories		35,613			-			1,301			68,756			(36	)		105,634
Prepaid expenses and other current assets		4,564			-			59			16,191			-			20,814
Due from subsidiaries		151,617			2,037			-			-			(153,654	)		-
Total current assets		257,164			2,037			3,563			131,153			(158,243	)		235,674
Property, plant and equipment, net		74,604			16,083			1,013			161,563			-			253,263
Due from subsidiaries		14,057			-			-			-			(14,057	)		-
Other noncurrent assets, net		5,775			-			63			-			-			5,838
Investment in subsidiaries		6,708			-			-			-			(6,708	)		-
Total assets	$	358,308		$	18,120		$	4,639		$	292,716		$	(179,008	)	$	494,775
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt	$	75,126		$	-			-		$	39,821		$	-		$	114,947
Accounts payable		29,007			-			706			67,115			(4,553	)		92,275
Accrued liabilities		55,392			-			468			31,200			-			87,060
Due to parent/subsidiaries		2,037			-			8,554			143,063			(153,654	)		-
Total current liabilities		161,562			-			9,728			281,199			(158,207	)		294,282
Long-term debt, less current maturities		271,566			-			-			-			-			271,566
Due to parent		-			-			-			14,057			(14,057	)		-
Other noncurrent liabilities		64,590			-			281			3,466			-			68,337
Total liabilities		497,718			-			10,009			298,722			(172,264	)		634,185
Series A redeemable preferred stock		28,495			-			-			-			-			28,495
Shareholders' equity (deficit):
Common stock, $.10 par value, 1,667 shares authorized,
1,000 shares issued and outstanding		-			-			-			-			-			-
Common stock, $1 par value, 1,000 shares authorized,
issued and outstanding		-			-			1			-			(1	)		-
Common stock, $1 par value, 2,005,000 shares authorized,
issued and outstanding		-			-			-			2,005			(2,005	)		-
Additional paid in capital		-			23,305			1,205			-			(24,510	)		-
Accumulated preferred stock dividends in excess
of paid in capital		(3,257	)		-			-			-			-			(3,257	)
Accumulated deficit and accumulated other
comprehensive losses		(164,648	)		(5,185	)		(6,576	)		(8,011	)		19,772			(164,648	)
Total shareholders' equity (deficit)		(167,905	)		18,120			(5,370	)		(6,006	)		(6,744	)		(167,905	)
Total liabilities and shareholders' equity (deficit)	$	358,308		$	18,120		$	4,639		$	292,716		$	(179,008	)	$	494,775

Condensed Consolidating Statement of Operations (unaudited)
Six Months Ended April 30, 2006
(Dollars in thousands)
	The Company			Buick
	Excluding			Resource						Doe Run
	Guarantor			Recycling			Domestic			Cayman and						The
	Subsidiaries			Facility, LLC			Guarantors			Subsidiary			Eliminations			Company
Net sales	$	237,845		$	-		$	7,393		$	462,696		$	(13,589	)	$	694,345
Costs and expenses:
Cost of sales		161,435			-			5,248			417,249			(13,585	)		570,347
Depletion, depreciation and amortization		4,771			1,364			219			6,774			-			13,128
Selling, general and administrative		15,425			-			1,327			11,816			-			28,568
Unrealized gain on derivative financial instruments		(1,963	)		-			-			(2,293	)		-			(4,256	)
Other		2,028			-			-			1,087			-			3,115
Total costs and expenses		181,696			1,364			6,794			434,633			(13,585	)		610,902
Income (loss) from operations		56,149			(1,364	)		599			28,063			(4	)		83,443
Other income (expense):
Interest expense, net		(2,004	)		-			(217	)		(1,504	)		-			(3,725	)
Other, net		(487	)		475			3			494			-			485
Equity in earnings of subsidiaries		21,275			-			-			-			(21,275	)		-
		18,784			475			(214	)		(1,010	)		(21,275	)		(3,240	)
Income (loss) before income tax expense		74,933			(889	)		385			27,053			(21,279	)		80,203
Income tax expense		-			-			-			5,270			-			5,270
Net income (loss)		74,933			(889	)		385			21,783			(21,279	)		74,933
Preferred stock dividends		(1,781	)		-			-			-			-			(1,781	)
Net income (loss) allocable to common shares	$	73,152		$	(889	)	$	385		$	21,783		$	(21,279	)	$	73,152

Condensed Consolidating Statement of Operations (unaudited)
Three Months Ended April 30, 2006
(Dollars in thousands)
	The Company			Buick
	Excluding			Resource						Doe Run
	Guarantor			Recycling			Domestic			Cayman and						The
	Subsidiaries			Facility, LLC			Guarantors			Subsidiary			Eliminations			Company
Net sales	$	129,015		$	-		$	4,030		$	253,764		$	(6,588	)	$	380,221
Costs and expenses:
Cost of sales		83,981			-			2,707			226,815			(6,543	)		306,960
Depletion, depreciation and amortization		2,447			684			109			3,775			-			7,015
Selling, general and administrative		8,958			-			671			5,832			-			15,461
Unrealized gain on derivative financial instruments		(2,278	)		-			-			(23	)		-			(2,301	)
Other		1,011			-			-			797			-			1,808
Total costs and expenses		94,119			684			3,487			237,196			(6,543	)		328,943
Income (loss) from operations		34,896			(684	)		543			16,568			(45	)		51,278
Other income (expense):
Interest expense, net		(851	)		-			(101	)		(36	)		-			(988	)
Other, net		(246	)		230			1			594			-			579
Equity in earnings of subsidiaries		13,642			-			-			-			(13,642	)		-
		12,545			230			(100	)		558			(13,642	)		(409	)
Income (loss) before income tax expense		47,441			(454	)		443			17,126			(13,687	)		50,869
Income tax expense		-			-			-			3,428			-			3,428
Net income (loss)		47,441			(454	)		443			13,698			(13,687	)		47,441
Preferred stock dividends		(891	)		-			-			-			-			(891	)
Net income (loss) allocable to common shares	$	46,550		$	(454	)	$	443		$	13,698		$	(13,687	)	$	46,550

Condensed Consolidating Statement of Operations (unaudited)
Six Months Ended April 30, 2005
(Dollars in thousands)
	The Company			Buick
	Excluding			Resource						Doe Run
	Guarantor			Recycling			Domestic			Cayman and						The
	Subsidiaries			Facility, LLC			Guarantors			Subsidiary			Eliminations			Company
Net sales	$	170,687		$	-		$	7,201		$	309,425		$	(3,615	)	$	483,698
Costs and expenses:
Cost of sales		130,709			-			5,240			285,010			(3,628	)		417,331
Depletion, depreciation and amortization		4,533			1,256			209			5,903			-			11,901
Selling, general and administrative		12,631			-			1,202			8,853			-			22,686
Unrealized (gain) loss on derivative financial instruments		(1,492	)		-			-			231			-			(1,261	)
Other		2,840			29			152			137			-			3,158
Total costs and expenses		149,221			1,285			6,803			300,134			(3,628	)		453,815
Income (loss) from operations		21,466			(1,285	)		398			9,291			13			29,883
Other income (expense):
Interest expense, net		(5,207	)		-			(314	)		(1,234	)		-			(6,755	)
Other, net		(438	)		446			2			215			-			225
Equity in earnings of subsidiaries		7,532			-			-			-			(7,532	)		-
		1,887			446			(312	)		(1,019	)		(7,532	)		(6,530	)
Income (loss) before income tax expense		23,353			(839	)		86			8,272			(7,519	)		23,353
Income tax expense		-			-			-			-			-			-
Net income (loss)		23,353			(839	)		86			8,272			(7,519	)		23,353
Preferred stock dividends		(1,583	)		-			-			-			-			(1,583	)
Net income (loss) allocable to common shares	$	21,770		$	(839	)	$	86		$	8,272		$	(7,519	)	$	21,770

Condensed Consolidating Statement of Operations (unaudited)
Three Months Ended April 30, 2005
(Dollars in thousands)
	The Company			Buick
	Excluding			Resource						Doe Run
	Guarantor			Recycling			Domestic			Cayman and						The
	Subsidiaries			Facility, LLC			Guarantors			Subsidiary			Eliminations			Company
Net sales	$	86,305		$	-		$	3,386		$	158,316		$	(291	)	$	247,716
Costs and expenses:
Cost of sales		70,671			-			2,290			146,646			(279	)		219,328
Depletion, depreciation and amortization		2,274			633			109			2,748			-			5,764
Selling, general and administrative		6,605			-			615			4,539			-			11,759
Unrealized gain on derivative financial instruments		(383	)		-			-			(80	)		-			(463	)
Other		1,319			-			(1	)		3			-			1,321
Total costs and expenses		80,486			633			3,013			153,856			(279	)		237,709
Income (loss) from operations		5,819			(633	)		373			4,460			(12	)		10,007
Other income (expense):
Interest expense, net		(2,528	)		-			(158	)		(628	)		-			(3,314	)
Other, net		(359	)		222			-			110			-			(27	)
Equity in earnings of subsidiaries		3,734			-			-			-			(3,734	)		-
		847			222			(158	)		(518	)		(3,734	)		(3,341	)
Income (loss) before income tax expense		6,666			(411	)		215			3,942			(3,746	)		6,666
Income tax expense		-			-			-			-			-			-
Net income (loss)		6,666			(411	)		215			3,942			(3,746	)		6,666
Preferred stock dividends		(791	)		-			-			-			-			(791	)
Net income (loss) allocable to common shares	$	5,875		$	(411	)	$	215		$	3,942		$	(3,746	)	$	5,875

Condensed Consolidating Statement of Cash Flows (unaudited)
Six Months Ended April 30, 2006
(Dollars in the thousands)
	The Company			Buick
	Excluding			Resource						Doe Run
	Guarantor			Recycling			Domestic			Cayman and						The
	Subsidiaries			Facility, LLC			Guarantors			Subsidiary			Eliminations			Company
Net cash provided by operating activities	$	41,081		$	475		$	129		$	16,941		$	(21,275	)	$	37,351
Cash flows from investing activities:
Purchases of property, plant and equipment		(5,869	)		-			(12	)		(17,250	)		-			(23,131	)
Net proceeds from sales of investments		-			-			-			-			-			-
Investment in subsidiaries		(21,275	)		-			-			-			21,275			-
Net cash used in investing activities		(27,144	)		-			(12	)		(17,250	)		21,275			(23,131	)
Cash flows from financing activities:
Proceeds from revolving loans and
short-term borrowings, net		455			-			-			-			-			455
Proceeds from long-term debt		-			-			-			10,000			-			10,000
Payments on long-term debt		(20,862	)		-			-			(128	)		-			(20,990	)
Payment of financing costs		-			-			-			(925	)					(925	)
Payments of dividends		(2,333	)		-			-			-			-			(2,333	)
Change in due to/due from parent/subsidiaries		959			(475	)		(117	)		(367	)		-			-
Net cash provided by (used in) financing activities		(21,781	)		(475	)		(117	)		8,580			-			(13,793	)
Net increase (decrease) in cash		(7,844	)		-			-			8,271			-			427
Cash at beginning of period		8,916			-			1			14,569			-			23,486
Cash at end of period	$	1,072		$	-		$	1		$	22,840		$	-		$	23,913

Condensed Consolidating Statement of Cash Flows (unaudited)
Six Months Ended April 30, 2005
(Dollars in thousands)
	The Company			Buick
	Excluding			Resource						Doe Run
	Guarantor			Recycling			Domestic			Cayman and						The
	Subsidiaries			Facility, LLC			Guarantors			Subsidiary			Eliminations			Company
Net cash provided by (used in) operating activities	$	13,758		$	417		$	(709	)	$	22,587		$	(8,851	)	$	27,202
Cash flows from investing activities:
Purchases of property, plant and equipment		(8,387	)		-			(130	)		(18,097	)		-			(26,614	)
Net proceeds from sales of investments		333			-			-			-			-			333
Investment in subsidiaries		(8,851	)		-			-			-			8,851			-
Net cash used in investing activities		(16,905	)		-			(130	)		(18,097	)		8,851			(26,281	)
Cash flows from financing activities:
Proceeds from revolving loans and
short-term borrowings, net		10,535			-			-			(5,200	)		-			5,335
Payments on long-term debt		(14,621	)		-			-			(17	)		-			(14,638	)
Payments of dividends		(310	)		-			-			-			-			(310	)
Change in due to/due from parent/subsidiaries		1,575			(417	)		839			(1,997	)		-			-
Net cash provided by (used in) financing activities		(2,821	)		(417	)		839			(7,214	)		-			(9,613	)
Net decrease in cash		(5,968	)		-			-			(2,724	)		-			(8,692	)
Cash at beginning of period		13,412			-			1			6,905			-			20,318
Cash at end of period	$	7,444		$	-		$	1		$	4,181		$	-		$	11,626

DOE RUN PERU S.R.L. Condensed Balance Sheets (U.S. dollars in thousands, except share and per share data)
	April 30,		October 31,
	2006		2005
	(unaudited)
ASSETS
Current assets:
Cash	$	22,840	$	14,569
Trade accounts receivable, net of allowance for doubtful accounts		55,677		31,637
Inventories		123,436		68,756
Prepaid expenses and other current assets		22,772		16,191
Total current assets		224,725		131,153
Property, plant and equipment, net		171,713		161,563
Other noncurrent assets, net		270		-
Total assets	$	396,708	$	292,716
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt	$	46,006	$	39,821
Accounts payable		133,219		67,115
Accrued liabilities		37,558		31,200
Due to related parties		-		143,063
Total current liabilities		216,783		281,199
Long-term debt, less current maturities		3,935		-
Due to parent company and related parties		156,753		14,057
Other noncurrent liabilities		3,460		3,466
Total liabilities		380,931		298,722
Shareholders' equity (deficit):
Capital stock, $0.01 par value, 15,912,083,739 shares, fully paid		2,005		2,005
Retained earnings (deficit) and comprehensive income (loss)		13,772		(8,011	)
Total shareholders' equity (deficit)		15,777		(6,006	)
Total liabilities and shareholders' equity (deficit)	$	396,708	$	292,716
The accompanying notes are an integral part of these condensed financial statements.

DOE RUN PERU S.R.L. Condensed Statements of Operations (unaudited) (U.S. dollars in thousands)
	Three Months Ended April 30,						Six Months Ended April 30,
	2006			2005			2006			2005
Net sales	$	253,764		$	158,316		$	462,696		$	309,425
Costs and expenses:
Cost of sales		226,815			146,646			417,249			285,010
Depletion, depreciation and amortization		3,775			2,748			6,774			5,903
Selling, general and administrative		5,832			4,539			11,816			8,853
Unrealized gain on derivative financial instruments		(23	)		(80	)		(2,293	)		231
Other		797			3			1,087			137
Total costs and expenses		237,196			153,856			434,633			300,134
Income from operations		16,568			4,460			28,063			9,291
Other income (expense):
Interest expense, net		(36	)		(628	)		(1,504	)		(1,234	)
Other, net		594			110			494			215
		558			(518	)		(1,010	)		(1,019	)
Income before income tax expense		17,126			3,942			27,053			8,272
Income tax expense		3,428			-			5,270			-
Net income	$	13,698		$	3,942		$	21,783		$	8,272
The accompanying notes are an integral part of these condensed financial statements.

DOE RUN PERU S.R.L. Condensed Statements of Cash Flows (unaudited) (U.S. dollars in thousands)
	Six Months
	Ended April 30,
	2006			2005
Net cash provided by operating activities	$	16,941		$	22,587
Cash flows from investing activities:
Purchases of property, plant and equipment		(17,250	)		(18,097	)
Net cash used in investing activities		(17,250	)		(18,097	)
Cash flows from financing activities:
Proceeds from (payments on) revolving loans and
short-term borrowings, net		-			(5,200	)
Proceeds from long-term debt		10,000			-
Payments on long-term debt		(128	)		(17	)
Payments of financing costs		(925	)		-
Change in amount due to/due from related parties		(367	)		(1,997	)
Net cash provided by (used in) financing activities		8,580			(7,214	)
Net increase (decrease) in cash		8,271			(2,724	)
Cash at beginning of period		14,569			6,905
Cash at end of period	$	22,840		$	4,181
The accompanying notes are an integral part of these condensed financial statements.

DOE RUN PERU S.R.L

Notes to Financial Statements

(U.S. dollars in thousands)

(1)Summary of Significant Accounting Policies

Unaudited Interim Financial Statements

These interim financial statements include the accounts of Doe Run Peru S.R.L. (“Doe Run Peru”). In the opinion of management, the interim financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position as of April 30, 2006 and results of operations for the three and six-month periods ended April 30, 2006 and 2005. All material intercompany balances and transactions have been eliminated. Interim periods are not necessarily indicative of results to be expected for the year.

Reclassifications

Certain prior period balances have been reclassified in order to conform to the current presentation.

(2)Financial Condition

Doe Run Peru is highly leveraged and has significant commitments for environmental matters and for Environmental Remediation and Management Program (“PAMA”) expenditures including the financial guarantees that require it to dedicate a substantial portion of cash flow from operations to the payment of these obligations, which will reduce funds available for other business purposes. (See Note 6: Asset Retirement and Environmental Obligations). These factors also increase Doe Run Peru’s vulnerability to general adverse conditions, limit Doe Run Peru’s flexibility in planning for or reacting to changes in its business and industry, and limit Doe Run Peru’s ability to obtain financing required to fund working capital and capital expenditures and for other general corporate purposes. An unfavorable outcome to certain contingencies, discussed below, would have a further adverse effect on Doe Run Peru’s ability to meet its obligations when due. Doe Run Peru’s ability to meet these obligations is also dependent upon future operating performance and financial results which are subject to financial, economic, political, competitive and other factors affecting Doe Run Peru, many of which are beyond Doe Run Peru’s control.

The effects of higher metal prices over the past two years have been positive. Comparing the first two quarters of 2006 to that of 2005, the value of the metal recovered over the amount paid for the metal has increased 33% from $13,967 to $18,608. The values of by-products have also improved from $10,568 to $13,663 or 29%. During the first two quarters of 2006, Doe Run Peru has benefited from its ferrites floatation plant which was placed in service at the end of the prior fiscal year. Though the plant has not reached its full capacity, it still contributed $6,033 to revenues.

While conversion costs have risen by $10,832 over the two periods and SG&A has risen $2,870, management believes that Doe Run Peru’s financial condition, as a result of the improved market conditions discussed in the preceding paragraphs, is stabilizing. There still exists, however, the possibility that concentrate supplies will tighten again in one or more metals in the near future or that one or more of Doe Run Peru’s significant local suppliers could cease delivery of concentrates. Under these circumstances there is no assurance that we would be able to secure sufficient replacement at economically favorable terms. An interruption in the feed supply would adversely affect production at La Oroya and impair financial condition and liquidity.

The financial statements have been prepared assuming Doe Run Peru will continue as a going concern. Doe Run Peru has significant capital requirements under environmental commitments and guarantees and substantial contingencies related to taxes and has significant debt service obligations under the revolving credit facility, each of which, if not satisfied, could result in a default under Doe Run Peru’s credit agreement and collectively raise substantial doubt about Doe Run Peru’s ability to continue as a going concern. Management believes that the price improvements seen through fiscal year 2005 and in the first two quarters of fiscal year 2006, the potential revenues and cash flow enhancements from the new ferrite project and the approval obtained on May 29, 2006 to extend certain PAMA projects will enable Doe Run Peru to continue as a going concern. However, there can be no assurance that these actions will achieve the desired results.

Doe Run Peru continues to have substantial cash requirements in the future, including the maturity of the revolving credit facility on September 22, 2006 and significant capital requirements under environmental commitments, (see Note 6: Asset Retirement and Environmental Obligation). In addition, there are substantial contingencies related to taxes (see Note 4: Income Taxes) and litigation (see Note 5: Litigation).

Net unused availability at April 30, 2006 under the Doe Run Peru Revolving Credit Facility was approximately $200. In addition to the availability under its revolving credit facility, the cash balance of Doe Run Peru was $22,840 at April 30, 2006. Doe Run Peru has reached and maintained its maximum borrowing level under the Doe Run Peru Revolving Credit Facility due in part to the higher metal prices resulting in higher outlays for concentrate purchases and higher Value-Added Tax (“VAT”) payments funded by cash from operations.

The Doe Run Peru Revolving Credit Facility expires on September 22, 2006 and will require negotiations to extend its terms. There can be no assurance that Doe Run Peru will be successful in extending the existing credit agreement or negotiating a new agreement, or if it is successful, that the extended or new credit agreement would be at terms that are favorable to Doe Run Peru.

Any default under the requirements of the PAMA could result in a default under the Doe Run Peru Revolving Credit Facility. A default under the requirements of the Doe Run Peru Revolving Credit Facility results in defaults under the Doe Run Revolving Credit Facility and the indenture governing the bonds.

(3)Inventories

Inventories consist of the following:

	April 30,		October 31,
	2006		2005
Finished metals and concentrates	$	17,489	$	10,397
Metals and concentrates in process		90,528		44,668
Materials, supplies and repair parts		15,419		13,691
	$	123,436	$	68,756

Materials, supplies and repair parts are stated net of reserves for obsolescence of approximately $1,357 and $1,162 at April 30, 2006 and October 31, 2005, respectively.

(4)Income Taxes

Doe Run Cayman is subject to the regulations of the Cayman Islands, which currently have no corporate income or capital gains tax. Doe Run Cayman’s subsidiaries located in Peru are subject to Peruvian taxation. The statutory income tax rate in Peru is 30%. Doe Run Peru has obtained a ten-year tax stabilization agreement with the Peruvian government, which provides for Peruvian taxation based on tax statutes and regulations prevailing on November 6, 1997, beginning with the Peruvian tax year ending on December 31, 1997 through December 31, 2006.

On December 30, 1997, Doe Run Peru signed a Contract of Guarantees and Measures to Promote Investments (“Contract”) with the government of Peru.  The Contract, which has been modified various times through 2006, committed Doe Run Peru to making certain investments related to the improvements of its facilities in order to receive certain tax benefits.  The Contract provided that if the investments were completed according to the schedule by December 31, 2006, Doe Run Peru would receive an additional tax stability agreement covering the period beginning January 1, 2007 and ending December 31, 2021.  Doe Run Peru will be unable to complete the required investments and, therefore, requested an extension of the time, from the Ministry of Energy and Mines (“MEM”) for these investments that would coincide with the extended period of compliance for the PAMA. MEM denied the request. As a result, Doe Run Peru will not receive the benefits of the additional tax stabilization agreement.

Doe Run Peru has received income tax assessments from Peru’s tax authority (“SUNAT”) for tax years 1998 through 2001. The assessments primarily relate to Doe Run Peru’s income tax treatment of the December 1997 merger of Metaloroya S.A. into Doe Run Peru which was purchased by Doe Run Peru in October 1997, and its effects on subsequent years’ taxable income. Under the assessment by SUNAT, the tax basis of Doe Run Peru’s fixed assets acquired would decrease, resulting in lower tax depreciation expense than originally claimed. The assessments of years 1999 through 2001 also relate to the disallowance of the deduction of interest paid, the offsetting of losses on derivatives executed in the U.S. and some leaseback and leasing operations. The estimated assessed amount consisting of additional income taxes due, penalties and interest as of April 30, 2006 totals approximately $121,100. Doe Run Peru estimates that the effect of a similar assessment for tax years after 2001 would be approximately $32,900. Furthermore, Doe Run Peru would also be required to make additional workers’ profit sharing payments equal to 8% of the increase in taxable income generated by the changes discussed above, or approximately $11,300, for calendar years 1998 through 2005.

Doe Run Peru has also received VAT assessments for the tax years 1999 through 2001 and for the period from January through July 2004. The assessments primarily relate to Doe Run Peru’s exports with holding certificates and differences in a tax credit application. The total assessment for these periods, calculated with penalties and interest as of April 30, 2006, was approximately $48,100. SUNAT offset the amount assessed for 2004 of approximately $2,300 against Doe Run Peru’s VAT receivable balance from July of 2004. Future VAT reimbursements cannot be used to offset the assessment by SUNAT. Doe Run Peru discontinued the use of holding certificates for exports in June 2004. Doe Run Peru estimates expected additional assessments related to VAT for tax years 2002 and 2003, calculated with penalties and interest as of April 30, 2006, to total approximately $22,400 in regard to its exports with holding certificates.

Management of Doe Run Peru believes that in each case Doe Run Peru has followed the applicable Peruvian tax statutes and intends to pursue all available administrative and judicial appeals. Doe Run Peru is not required to make any payments pending the administrative appeal process. If Doe Run Peru is not successful in the administrative appeal processes and were to appeal in the judicial system, some type of financial assurance would be required. No amounts have been accrued as liabilities related to these actions.

For the past several years, Doe Run Peru has generated net losses from operations that according to tax law may be used to offset taxable income in the future. Doe Run Peru expects to utilize all of its net operating loss carryforwards in the current fiscal year. As a result, Doe Run Peru has recorded $5,270 of income tax expense for the first two quarters of 2006.

(5)Litigation

All existing and pending litigations at the time of the acquisition of Doe Run Peru were retained by Centromin, the prior owner of the La Oroya smelter and Cobriza mine.

Doe Run Peru is currently a defendant in 207 lawsuits in the Lima, Peru labor courts that allege damage to workers from industrial diseases. Doe Run Peru has made claims in most of the cases against Centromin and has also made claims against both governmental agencies and private companies that provide workers’ insurance. The average claim is $17. Of 19 previously concluded cases in this category, 18 were dismissed and 1 resulted in an award of $9.

Doe Run Peru is also currently a defendant in 164 lawsuits by workers alleging that they are owed certain differences in salaries and benefits. The average claim is $20. Of 38 previously concluded cases in this category, 29 were dismissed and 9 resulted in awards totaling $19. Doe Run Peru is also a defendant in a lawsuit by the Yauli-La Oroya Employees Union concerning salaries and benefits. The claims of the 149 workers remaining in the lawsuit have been valued at a total of $218 according to a report by an expert appointed by the court.

Doe Run Peru is also currently a defendant in 22 lawsuits alleging various labor claims including indemnification for arbitrary dismissal, nullity of dismissal, moral damage compensation, compensatory damages from work accident and readmission of worker. The average claim is $7. Of 30 previously concluded cases in this category, 26 were dismissed and 4 resulted in awards totaling $21.

The amount of awards in the various categories of lawsuits referenced above represented total judgments issued by the relevant courts. For certain of these lawsuits, Centromin will pay a portion of the total award.

On January 19, 2005, Doe Run Peru was served with a lawsuit by an association of municipalities of the Junin Region of Peru against Doe Run Peru and two other mining companies. This lawsuit alleges environmental damages to the Mantaro River basin in the amount of $5 billion. On February 2, 2006, Doe Run Peru was served with a lawsuit by the municipality of Jauja. This lawsuit alleges environmental damages to the Mantaro River basin in the amount of $5,000. Material liability to Doe Run Peru, in these two actions, is believed to be remote based on the opinion of management and outside counsel for Doe Run Peru. Any potential judgment would be subject to the indemnification obligations of Centromin, which are guaranteed by the Peruvian government.

On December 3, 2003, Doe Run Peru filed an administrative lawsuit against the Yauli - La Oroya Provincial City Hall in order to nullify and void a number of fines for the amount of $2,800. Doe Run Peru was fined for not having construction licenses for the PAMA projects.

Since most of the above cases are either in the pleading or discovery stages, Doe Run Peru is unable at this time to estimate the expected outcome and the final costs, except as noted, of these actions. No amounts have been accrued as liabilities related to these actions. There can be no assurance that these cases would not have a material adverse effect, both individually and in the aggregate, on the results of operations, financial condition and liquidity of Doe Run Peru. Doe Run Peru has and will continue to vigorously defend itself against such claims.

(6)Asset Retirement and Environmental Obligations

Asset Retirement Obligations

Asset retirement obligations (“AROs”) are recognized as liabilities when incurred, with the initial measurement at fair value. These liabilities will be increased to full value over time through charges of accretion to operating expense. In addition, an asset retirement cost is capitalized as part of the related asset’s carrying value and will be depreciated over the asset’s useful life. Changes in the ARO liability resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows shall be recognized as an increase or a decrease in the carrying amount of the liability for an ARO and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset.

Mine Closure Law No. 28090 (“Law”) became effective in Peru as of October 15, 2005. It applies to smelters and mines. The Law establishes the obligations and procedures that titleholders of mining activities must follow, including a financial guarantee for environmental issues.  Doe Run Peru must submit a mine closure plan to the MEM by August 17, 2006 which must include a description of the remediation measures to be done, along with their cost and timing, and the expected amount of the financial guarantee. Doe Run Peru has hired a technical mining consultant to prepare the mine closure plans for Cobriza and La Oroya to insure that they will comply with all the technical and legal requirements. The financial guarantee will not be known until the final mine closure plan is approved therefore, the guarantee is estimated to be established in January of 2007.

Doe Run Peru has AROs at its Cobriza mine related to the costs associated with closing the mine openings and covering acid rock. Doe Run Peru is also responsible for the eventual covering and revegetation of mixed lead and copper slag also stored in Huanchan, an area a short distance from the La Oroya smelter, where the slag is currently stored.

Doe Run Peru’s total recorded liability for AROs was approximately $1,866 as of April 30, 2006 and October 31, 2005.

Environmental Remediation

Doe Run Peru’s La Oroya operations historically and currently exceed some of the applicable maximum permissible limits established by MEM pertaining to air emissions and wastewater effluents quality. Prior to our acquisition of La Oroya, Metaloroya S.A., the former owner, a subsidiary of Empresa Minera del Centro del Peru S.A., which we refer to as Centromin, received approval from the Peruvian Government for a PAMA. The PAMA was

designed to achieve compliance with MEM’s air and wastewater limits. It consisted of an environmental impact analysis, monitoring plan and data mitigation measures and a closure plan. The PAMA also set forth the actions and corresponding annual investments a company agrees to undertake in order to achieve compliance with the maximum permissible limits prior to expiration of the PAMA (ten years for smelters, such as Doe Run Peru’s operations in La Oroya, and five years for mining operations, such as Cobriza). The PAMA projects, which are more fully discussed below, were designed to achieve compliance with these requirements.

On December 29, 2004, the Peruvian Government issued a Supreme Decree No. 046-2004-EM (“Supreme Decree”), which recognized that exceptional circumstances may justify an extension of the time to complete one or more projects within the scope of a PAMA. Since Doe Run Peru expected that it would not be able to comply with the spending requirements of La Oroya’s PAMA investment schedule by the end of calendar year 2006 with respect to certain projects, Doe Run Peru applied for an extension on December 20, 2005.

On May 29, 2006, MEM approved the extension of certain PAMA projects through October 31, 2009 (the “Modified PAMA”). Pursuant to the terms of the Modified PAMA, Doe Run Peru is now required to complete the acid plant projects for the lead circuit and the copper circuit by September 30, 2008 and October 31, 2009, respectively and Doe Run Peru remains obligated under the original PAMA to implement the following projects at its La Oroya smelter by December 31, 2006:

§Upgrade the acid plant for the zinc circuit;

§Construct a treatment plant for the copper refinery effluent;

§Construct an industrial wastewater treatment plant for the smelter and refinery;

§Improve the slag handling system;

§Improve Huanchan lead and copper slag deposits;

§Construct an arsenic trioxide deposit;

§Improve the zinc ferrite disposal site;

§Construct domestic wastewater treatment and domestic waste disposal; and

§Construct a monitoring station.

The Modified PAMA also requires Doe Run Peru to comply with certain special measures not previously required. These measures include, but are not limited to, implementation of projects to reduce stack and fugitive emissions which are designed to meet certain air quality objectives, a continuing improvement provision that provides for additional pollution controls to address the shortfalls in meeting objectives or to further reduce risks and certain measures regarding protection of public health, including, among others, actions for the reduction of lead in blood levels and special health programs for children and expectant women.

MEM has also required that the cost of a planned replacement of the oxy-fuel reverberatory furnace with a submerged lanced reactor furnace that will reduce gas volume while enriching sulfurous gas feed to the copper circuit sulfuric acid plant be included as part of the cost of the Modified PAMA acid plant projects. The estimated cost of this reactor furnace is $57,000, which brings the total remaining investment needed to build the sulfuric acid plants to approximately $152,590.

Additional PAMA projects required for fiscal year 2006 include an upgrade of the ventilation system in the Sinter plant, completion of the enclosure work around the lead and dross furnace, the enclosure of the anode residue plant along with the elimination of its nitrous gases, and the reduction of fugitive emissions from the copper and lead beds. The total cost of the currently remaining Modified PAMA projects as of April 30, 2006 was approximately $175,000 of which $31,500 remains to be spent in the 2006 calendar ear..

Doe Run Peru’s ability to complete the required projects by the specific deadlines depends in large part upon the availability of sufficient funds. Doe Run Peru believes that sufficient funds will be available on a timely basis, but the availability of sufficient funds is largely dependent upon the results of its business operations and the possibility of additional financing; therefore, there can be no assurance that sufficient funds will be available for these projects.

Consistent with the requirements of the Supreme Decree providing for the possibility of PAMA extensions, in addition to other terms and conditions, the Modified PAMA contains two separate financial security arrangements to ensure that Doe Run Peru fulfills its statutory obligation to complete the Modified PAMA projects.

First, Doe Run Peru has established an environmental trust account with Scotiabank Peru into which receipts from sales are required to be remitted directly in an amount to have cash available sufficient to pay the expenditures estimated to be incurred in each subsequent month by Doe Run Peru in complying with the Modified PAMA. Second, Doe Run Peru has provided to MEM a bank letter of guarantee in the amount of $28,641 (an amount estimated to be 20% of the projected cost of the Modified PAMA projects to be spent after 2006). Doe Run Peru deposited such amount with Standard Chartered Bank which has in turn provided for the issuance to MEM of the necessary bank letter of guarantee relying solely upon the funds so deposited. Doe Run Peru has amended the Doe Run Peru Revolving Credit Facility to allow for these arrangements.

Although not contemplated by the Supreme Decree providing for the possibility of PAMA extensions, as a condition of granting the Modified PAMA, MEM has provided that Doe Run Peru could lose the benefit of the extension if Doe Run Peru makes any payments to any shareholder or affiliate, which could affect the full and satisfactory compliance with the Modified PAMA obligations. This provision has not been agreed to by Doe Run or Doe Run Peru but was imposed under applicable law over their objection. Doe Run Peru was required, however, to provide a bank letter of guarantee in the amount of $4,000 which may be drawn upon to fund Modified PAMA projects if Doe Run Peru makes any payments to any shareholder or affiliate. Doe Run Peru satisfied this requirement by depositing such amount with Standard Chartered Bank which has in turn provided for the issuance to MEM of the necessary bank letter of guarantee relying solely upon the funds so deposited.

Separately, Renco has confirmed to MEM that Renco understands that Doe Run Peru could lose the benefit of the extension if Doe Run Peru makes any payments to any shareholder or affiliate which could affect the full and satisfactory compliance with Doe Run Peru’s Modified PAMA obligations and Renco has stated that Renco has no intention of causing, and will not do anything to cause, Doe Run Peru to make any such payment.

In connection with its negotiations with MEM regarding the Modified PAMA, Doe Run voluntarily agreed to extend the maturity of Doe Run Peru’s $139,063 intercompany note payable to Doe Run until such time as the Modified PAMA has been completed.

No assurance can be given that implementation of the projects under the Modified PAMA is feasible or that their implementation will achieve compliance with the applicable legal requirements by the end of the Modified PAMA period. The Peruvian Government may, in the future, require compliance with additional environmental regulations that could adversely affect Doe Run Peru’s business, financial condition and results of operations, as well as their ability to comply with the Modified PAMA. After expiration of the Modified PAMA, Doe Run Peru must comply with all applicable standards and requirements.

The Cobriza mine has a separate PAMA in which Doe Run Peru committed to complete projects to manage tailings, mine drainage, sewage and garbage. Doe Run Peru completed its own PAMA requirements with respect to Cobriza in June of 2004 and is in compliance with emissions standards required by this PAMA.

In addition to its PAMA obligations, Doe Run Peru is responsible for the remediation costs relating to the zinc ferrite disposal site at La Oroya. The current closure plan provides for encapsulating the ferrite residues in place in Huanchan, an area a short distance from the smelter where they are currently stored, for which an environmental liability of $1,600 has been recorded as of April 30, 2006 and October 31, 2005.

Under the purchase agreement related to the acquisition of the La Oroya assets in October of 1997, Centromin, the prior owner of the La Oroya smelter and Cobriza mine, agreed to indemnify Doe Run Peru against environmental liability arising out of its prior operations and their apportioned share of any complaint related to emissions. Performance of the indemnity has been guaranteed by the Peruvian Government through the enactment of the Supreme Decree No. 042-97-PCM. However, there can be no assurance that Centromin will satisfy its environmental obligation and investment requirements or that the guarantee will be honored. Any failure by Centromin to satisfy its environmental obligations could adversely affect Doe Run Peru’s business, financial condition and results of operations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of the three-months and the six-months ended April 30, 2006 compared to the three-months and the six-months ended April 30, 2005 should be read in conjunction with the condensed consolidated financial statements of The Doe Run Resources Corporation (“Doe Run” and together with its subsidiaries, the “Company”) and the notes thereto, and other financial information included herein.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. The Company makes forward-looking statements in this Quarterly Report on Form 10-Q, which represent the Company’s expectations or beliefs about future events and financial performance. When used in this report, the words “expect,” “believe,” “anticipate,” “goal,” “plan,” “intend,” “estimate,” “may,” “will” or similar words are intended to identify forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to in this Quarterly Report on Form 10-Q and otherwise described in the Company’s periodic filings.

All predictions as to future results contain a measure of uncertainty, and accordingly, actual results could differ materially. Among the factors that could cause actual results to differ from those contemplated, projected or implied by the forward-looking statements (the order of which does not necessarily reflect their relative significance) are:

·   general economic and business conditions;

·   increasing industry capacity and levels of imports of non-ferrous metals or non-ferrous metals products;

·   industry trends, including the price of metals and product pricing;

·   competition;

·   currency fluctuations;

·   the loss of any significant customer or supplier;

·   availability of raw materials;

·   availability of qualified personnel;

·   effects of future collective bargaining agreements;

·   outcome of litigation;

·   historical environmental liabilities;

·   changing environmental requirements and costs, including the capital requirements in Peru;

·   political uncertainty and terrorism;

·   major equipment failures;

·   changes in accounting principles or new accounting standards; and

·   compliance with laws and regulations and other unforeseen circumstances.

In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. In addition, actual results could differ materially from those suggested by the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on the forward-looking statements. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should, however, review additional disclosures made by the Company from time to time in its periodic filings with the Securities and Exchange Commission.

This Quarterly Report on Form 10-Q should be read completely and with the understanding that the Company’s actual future results may be materially different from what the Company expects. All forward-looking statements made by the Company in this Quarterly Report on Form 10-Q and in the Company’s other filings with the Securities and Exchange Commission are qualified by these cautionary statements.

Recent events

On May 29, 2006, MEM approved the extension of certain PAMA projects through October 31, 2009 (the “Modified PAMA”). Pursuant to the terms of the Modified PAMA, Doe Run Peru is now required to complete the acid plant projects

for the lead circuit and the copper circuit by September 30, 2008 and October 31, 2009, respectively and Doe Run Peru remains obligated under the original PAMA to implement the following projects at its La Oroya smelter by December 31, 2006:

§Upgrade the acid plant for the zinc circuit;

§Construct a treatment plant for the copper refinery effluent;

§Construct an industrial wastewater treatment plant for the smelter and refinery;

§Improve the slag handling system;

§Improve Huanchan lead and copper slag deposits;

§Construct an arsenic trioxide deposit;

§Improve the zinc ferrite disposal site;

§Construct domestic wastewater treatment and domestic waste disposal; and

§Construct a monitoring station.

The Modified PAMA also requires Doe Run Peru to comply with certain special measures not previously required. These measures include, but are not limited to, implementation of projects to reduce stack and fugitive emissions which are designed to meet certain air quality objectives, a continuing improvement provision that provides for additional pollution controls to address the shortfalls in meeting objectives or to further reduce risks and certain measures regarding protection of public health, including, among others, actions for the reduction of lead in blood levels and special health programs for children and expectant women.

MEM has also required that the cost of a planned replacement of the oxy-fuel reverberatory furnace with a submerged lanced reactor furnace that will reduce gas volume while enriching sulfurous gas feed to the copper circuit sulfuric acid plant be included as part of the cost of the Modified PAMA acid plant projects. The estimated cost of this reactor furnace is $57,000, which brings the total remaining investment needed to build the sulfuric acid plants to approximately $152,590.

Additional PAMA projects required for fiscal year 2006 include an upgrade of the ventilation system in the Sinter plant, completion of the enclosure work around the lead and dross furnace, the enclosure of the anode residue plant along with the elimination of its nitrous gases, and the reduction of fugitive emissions from the copper and lead beds. The total cost of the currently remaining Modified PAMA projects as of April 30, 2006 was $175,000 of which $31,500remains to be spent in the 2006 calendar year.

Doe Run Peru’s ability to complete the required projects by the specific deadlines depends in large part upon the availability of sufficient funds. Doe Run Peru believes that sufficient funds will be available on a timely basis, but the availability of sufficient funds is largely dependent upon the results of its business operations and the possibility of additional financing; therefore, there can be no assurance that sufficient funds will be available for these projects.

Consistent with the requirements of the Supreme Decree providing for the possibility of PAMA extensions, in addition to other terms and conditions, the Modified PAMA contains two separate financial security arrangements to ensure that Doe Run Peru fulfills its statutory obligation to complete the Modified PAMA projects.

First, Doe Run Peru has established an environmental trust account with Scotiabank Peru into which receipts from sales are required to be remitted directly in an amount to have cash available sufficient to pay the expenditures estimated to be incurred in each subsequent month by Doe Run Peru in complying with the Modified PAMA. Second, Doe Run Peru has provided to MEM a bank letter of guarantee in the amount of $28,641 (an amount estimated to be 20% of the projected cost of the Modified PAMA projects to be spent after 2006). Doe Run Peru deposited such amount with Standard Chartered Bank which has in turn provided for the issuance to MEM of the necessary bank letter of guarantee relying solely upon the funds so deposited. Doe Run Peru has amended the Doe Run Peru Revolving Credit Facility to allow for these arrangements.

Although not contemplated by the Supreme Decree providing for the possibility of PAMA extensions, as a condition of granting the Modified PAMA, MEM has provided that Doe Run Peru could lose the benefit of the extension if Doe Run Peru makes any payments to any shareholder or affiliate, which could affect the full and satisfactory compliance with the Modified PAMA obligations. This provision has not been agreed to by Doe Run or Doe Run Peru but was imposed under applicable law over their objection. Doe Run Peru was required, however, to provide a bank letter of guarantee in the amount of $4,000 which may be drawn upon to fund Modified PAMA projects if Doe Run Peru makes any payments to any shareholder or

affiliate. Doe Run Peru satisfied this requirement by depositing such amount with Standard Chartered Bank which has in turn provided for the issuance to MEM of the necessary bank letter of guarantee relying solely upon the funds so deposited.

Separately, Renco has confirmed to MEM that Renco understands that Doe Run Peru could lose the benefit of the extension if Doe Run Peru makes any payments to any shareholder or affiliate which could affect the full and satisfactory compliance with Doe Run Peru’s Modified PAMA obligations and Renco has stated that Renco has no intention of causing, and will not do anything to cause, Doe Run Peru to make any such payment.

In connection with its negotiations with MEM regarding the Modified PAMA, Doe Run voluntarily agreed to extend the maturity of Doe Run Peru’s $139,063 intercompany note payable to Doe Run until such time as the Modified PAMA has been completed.

No assurance can be given that implementation of the projects under the Modified PAMA is feasible or that their implementation will achieve compliance with the applicable legal requirements by the end of the Modified PAMA period. The Peruvian Government may, in the future, require compliance with additional environmental regulations that could adversely affect Doe Run Peru’s business, financial condition and results of operations, as well as their ability to comply with the Modified PAMA. After expiration of the Modified PAMA, Doe Run Peru must comply with all applicable standards and requirements.

Doe Run Peru had obtained a ten-year tax stabilization agreement with the Peruvian government, which provides for Peruvian taxation based on tax statutes and regulations prevailing on November 6, 1997, beginning with the Peruvian tax year ending on December 31, 1997 through December 31, 2006. On December 30, 1997, Doe Run Peru signed a Contract of Guarantees and Measures to Promote Investments with the government of Peru.  This contract, which has been modified various times through 2006, committed Doe Run Peru to making certain investments related to the improvements of its facilities in order to receive certain tax benefits.  This contract provided that if the investments were completed according to the schedule by December 31, 2006, Doe Run Peru would receive an additional tax stability agreement covering the period beginning January 1, 2007 and ending December 31, 2021.  Doe Run Peru will be unable to complete the required investments and as a result Doe Run Peru will not receive the benefits of the additional tax stabilization agreement through 2021.

Doe Run received a notice from the U.S Environmental Protection Agency of a potential unilateral order concerning transportation matters under the Resource Conservation and Recovery Act of 1976, section 7003 on July 5, 2006. It included an offer to negotiate the terms to a voluntary agreement. The Company is evaluating the issues presented in the letter and has arranged to meet with the agency to explore the matter. It is too early to understand any impact such an agreement will have.

On June 19, 2006 Doe Run Peru, the Ministry of Health and the Regional Government of Junin signed a cooperation agreement for the implementation of the plan to reduce contamination at La Oroya. This agreement is an extension of a previous one signed between Doe Run Peru and the Ministry of Health in 2003. In the agreement Doe Run Peru commits to support the Ministry of Health’s environmental health clinic, supplemental educational program, family environmental health training, and community cleaning programs. Doe Run Peru will continue to make certain building space and equipment available and provide specified professional and support personnel.

On July 31, 2006, the majority warrantholders exercised their right to require Doe Run to repurchase all of the warrants as promptly as practicable in the manner specified by the Warrant Agreement dated October 29, 2002 between Doe Run and State Street Bank and Trust, as Warrant Agent. Doe Run is in the process of engaging an appraiser to value the warrants.

Results of Operations

Metals Pricing

The following table sets forth average London Metal Exchange prices for lead, copper and zinc and the average London Bullion Market Association price for silver for the periods indicated:

	Three Months Ended				Six Months Ended
	April 30,				April 30,
Average Prices	2006		2005		2006		2005
Lead ($/ton)	$	1,100.80	$	898.00	$	1,062.80	$	886.80
Copper ($/ton)		4,937.20		3,033.60		4,513.00		2,942.60
Zinc ($/ton)		2,312.60		1,210.80		1,984.60		1,136.20
Silver ($/troy ounce)		10.76		7.13		9.63		7.11

These prices reflect the continued tightening in the worldwide metal supply and the effect of other macroeconomic factors such as exchange rates, interest rates, and oil prices.

Production

All references to “ton” are in short tons.

The following table sets forth the Company’s production statistics for the periods indicated:

	Three Months Ended						Six Months Ended
	April 30,						April 30,
	2006			2005			2006			2005
U.S. Operations
Lead metal - primary (tons)		39,158			39,943			81,093			80,359
Lead metal - secondary (tons)		34,008			32,812			67,072			66,510
Lead concentrates (metal content, tons)		67,841			71,497			136,641			136,645
Ore grade (lead)		5.20	%		5.40	%		5.38	%		5.38	%
Doe Run Peru Operations
Refined copper (tons)		16,657			15,594			33,548			31,508
Refined lead (tons)		33,126			33,135			66,070			64,895
Refined zinc (tons)		11,122			11,088			22,630			27,316
Refined silver (thousands of troy ounces)		9,200			8,727			18,418			16,966
Refined gold (thousands of troy ounces)		18			15			36			30
Copper concentrates (metal content, tons)		4,649			3,607			9,098			7,379
Ore grade (copper content)		1.05	%		0.96	%		1.03	%		0.98	%

The metal contained in lead concentrates produced at the Company’s primary lead operation’s mines in the 2006 second quarter was 5% lower than the 2005 second quarter, but was the same production when comparing the 2006 six-month period with the 2005 six-month period. The lower 2006 second quarter lead concentrate production was due to the ore grade being about 4% lower than the corresponding 2005 second quarter, but the ore grade for the 2006 six-month period was identical to the 2005 six-month period. The volume of ore processed for the 2006 second quarter and 2006 six month period were essentially at plan.

Development of the drift connecting the south end of the Fletcher mine to a new ore body called RC West Fork is continuing at the planned pace, with ore production expected to begin in the fourth calendar quarter of 2006.

In the 2006 second quarter, the Herculaneum primary smelter operation’s lead metal production was about 2% lower than in the 2005 second quarter, but the 2006 six-month period was 1% higher than the 2005 six-month period. Lead metal production was at plan for the 2006 second quarter, but 7% below plan for the 2006 six-month period due to the necessary replacement of a major component in the acid plant in December.

Doe Run is subject to a State Implementation Plan (“SIP”) with the Missouri Department of Natural Resources and the Missouri Air Conservation Commission to attain and maintain compliance with the ambient air quality standard for lead promulgated under the federal Clean Air Act for the city of Herculaneum. The plan was included in a consent judgment entered into by Doe Run and has been approved at the state level and by the U.S. EPA. The air quality monitors reflected attainment of the lead standard for 11 of the last 15 quarters, including the second quarter of the 2006 calendar year. However, once the air quality monitors reflected two quarters of non-compliance, the permitted annual capacity of the Herculaneum primary smelter decreased from 250,000 to 200,000 tons. This decrease in permitted capacity does not affect results at current production levels. Further non-compliance could result in SIP revisions that could have a material adverse financial impact on the Company. Management is in discussions with the Missouri Department of Natural Resources to explore options intended to improve the smelter’s ability to attain and maintain compliance in the future.

Lead production at the Company’s U.S. recycling operation was almost 4% and 1% higher in the 2006 second quarter and 2006 six-month period, respectively, than in the 2005 second quarter and 2006 six-month period, but was 8% lower than planned for the 2006 six-month period. The production increases are the result of process changes made to the desulphurization circuit and to the furnace operations to allow the facility to handle feeds with higher levels of sulfur in an effort to further increase production regardless of the sulfur content of available feed. The recycling operation continues to make other adjustments to the processes in an effort to further increase production with the high sulfur feeds.

During the 2006 second quarter, Doe Run Peru’s copper, silver and gold production increased 6.8%, 5.4% and 17.6%, respectively, compared to the 2005 second quarter. These increases were due, principally, to factors that occurred during the 2005 second quarter that no longer affected operations in the 2006 second quarter. These factors included:

·   maintenance on the oxy-fuel furnace that limited the availability of blister copper for the copper refinery which had lead to a reduction in copper slimes from which precious metal products, including silver and gold ore, are derived; and

·   gold content in copper concentrates acquired in the 2006 second quarter exceeded the content in the 2005 second quarter.

The metal content in the copper concentrates produced at Doe Run Peru’s Cobriza mine in the 2006 second quarter was approximately 29% higher than the 2005 second quarter due to the correction of mine stability problems, improved mine preparation and development, and increased recoveries from pillars and sills. Production of lead remained essentially unchanged from the 2005 quarter to the 2006 quarter.

Results of Operations

Gross Margin increased from $22.8 million in the 2005 second quarter to $66.5 million in the 2006 second quarter and gross margin for the 2005 six-month period and 2006 six-month period increased from $54.9 million in the 2005 six-month period to $111.3 million in the 2006 six-month period. Gross margin for Doe Run’s U.S. operations increased from $13.9 million in the 2005 second quarter to $43.3 million in the 2006 second quarter and Doe Run’s U.S. operations’ gross margin for the 2005 six-month period and 2006 six-month period increased from $36.4 million in the 2005 six-month period to $72.6 million in the 2006 six-month period. Gross margin for Doe Run Peru increased from $9.0 million in the 2005 second quarter to $23.2 million in the 2006 second quarter and Doe Run Peru’s gross margin for the 2005 six-month period and 2006 six-month period increased from $18.5 million in the 2005 six-month period to $38.7 million in the 2006 six-month period.

Gross margin is net sales less cost of sales, including depreciation, depletion and amortization attributable to cost of sales as disclosed in the table below.

	Depreciation, Depletion and Amortization Attributable to Cost of Sales
	(Dollars in the Millions)
	Second Quarter				Six-month Period
	2006		2005		2006		2005
U.S. operations	$	3.0	$	2.8	$	6.0	$	5.6
Doe Run Peru		3.8		2.7		6.7		5.9
Consolidated	$	6.8	$	5.5	$	12.7	$	11.5

The increases in gross margin for our U.S. operations for the 2006 second quarter and 2006 six-month period are due in part to increases in sales of approximately $43.1 million and $67 million, respectively. Of these increases, $7.4 million and $19.7 million, respectively, were a result of a 14.7% and 18.6% increase in our U.S. operations’ realized prices for lead metal, fueled by a 22.6% and 19.8% increase in London Metal Exchange prices and higher premiums achieved over the London Metal Exchange for the 2006 second quarter and 2006 six-month period compared to the 2005 second quarter and 2005 six-month period, respectively. Additionally, an increase in lead concentrate sales volume and increases in copper and zinc prices contributed $2.6 million and $31.2 million in sales, respectively, in the 2006 six-month period and $1.7 million and $26.2 million, respectively for the 2006 second quarter. The 2006 six-month increase was partially offset by a decrease in copper concentrate volume of $1.9 million. These increases in sales for the 2006 second quarter and 2006 six-month period were offset by higher production costs at Doe Run’s primary operations, primarily due to slightly higher production, higher salaries, wages and employee benefits and maintenance and fuel costs and increased conversion costs at the recycling operation, due to higher metallurgical coke and propane costs, which were partially offset by improved feed costs per unit of metal produced.

The $14.2 million increase in Doe Run Peru’s gross margin from the 2005 second quarter to the 2006 second quarter and the $20.2 million increase in Doe Run Peru’s gross margin from the 2005 six-month period to the 2006 six-month period were primarily the result of an improvement in the treatment charges received for processing concentrates and higher metal prices, offset by a LIFO inventory adjustment.

Selling, General and Administrative costs increased $3.7 million in the 2006 second quarter over the 2005 second quarter and $5.9 million in the 2006 six-month period over the 2005 six-month period. The increase was due primarily to increased salaries and employee benefit costs, legal fees, and professional fees related to software implementation.

Unrealized Gains on derivative financial instrumentsarerelated to the change in fair market value of derivative financial instruments that are a part of the Company’s risk management strategy. The change from an unrealized gain of $1.3 million in the 2005 six-month period to an unrealized gain of $4.3 million in the 2006 six-month period and the increase from $0.5 million to $2.3 million in the 2006 second quarter versus 2005 second quarter is primarily the result of the settled 2006 positions. These gains were overcome by realized losses included in net sales. Also see “Item 3. Quantitative and Qualitative Disclosures About Market Risk.”

Other Expenses increased $0.5 million from the 2005 second quarter to the 2006 second quarter and remained essentially unchanged from the 2005 six-month period to the 2006 six-month period.

The Renco Group, Inc., the parent company of Doe Run’s sole shareholder (referred to as Renco), has elected for the Company to be treated as a qualified subchapter S subsidiary for U.S. federal tax purposes. Most states in which the Company operates will follow similar tax treatment. Subchapter S status requires the ultimate shareholders to include their pro rata share of the Company’s income or loss in their individual tax returns. As a result of the Company’s tax status in the U.S., the Company is not generally subject to U.S. federal and most state income taxes, however, under a tax sharing agreement with Renco, the Company is liable to Renco for pro forma federal and state income taxes as defined in the agreement and our costs are shown as tax dividends.

Liquidity and Capital Resources

Overview

Our auditors issued unqualified opinions on the 2005 audited consolidated financial statements of the Company and the 2005 audited financial statements of Doe Run Peru that expressed substantial doubt about the Company’s and Doe Run Peru’s ability to continue as going concerns. Doe Run Peru has significant capital requirements under environmental commitments, substantial contingencies related to Peruvian taxes and has significant debt service obligations, each of which, if not satisfied, could result in a default under the Company’s credit agreements and collectively raise substantial doubt about the Company’s ability to continue as a going concern. These commitments require Doe Run Peru to dedicate a substantial portion of cash flow from operations to the payment of these obligations which includes future expenditures of approximately $175 million under the terms of the Modified PAMA. These commitments will reduce funds available for other business purposes. In addition, the Company is highly leveraged. These factors also increase the Company’s vulnerability to general adverse conditions, limit our flexibility in planning for or reacting to changes in its business and industry, and limit the Company’s ability to obtain financing required to fund working capital and capital expenditures and for other general corporate purposes. An unfavorable outcome to lawsuits and tax assessments in Peru would have a further adverse effect on the Company’s ability to meet its obligations when due.

The period for Doe Run Peru’s compliance with the PAMA requiring the construction of sulfuric acid plants at its La Oroya smelter was due to expire on December 31, 2006. On May 29, 2006, the Peruvian Ministry of Energy and Mines issued a resolution, pursuant to Supreme Decree No. 046-2004-EM, extending the completion dates of certain PAMA projects to October 31, 2009. The sulfuric acid plant projects for the zinc circuit, the lead circuit and the copper circuit are required to be completed by December 31, 2006, September 30, 2008 and October 31, 2009, respectively. They were all originally required to be completed by December 31, 2006. Management believes the Modified PAMA compliance period, in addition to high metal prices and other revenue enhancements will enable the Company to continue as a going concern. The Company’s ability to meet obligations after 2006 could be affected by future operating performance and financial results, which are subject to financial, economic, political, competitive and other factors affecting the Company, many of which are beyond the Company's control, or an unfavorable outcome to the items noted above, and, accordingly, no assurance can be given that it will be able to meet such obligations.

Capital Resources and Debt Instruments

Net unused availability at April 30, 2006 under the Doe Run Revolving Credit Facility was approximately $34.7 million and under the Doe Run Peru Revolving Credit Facility was $0.2 million at April 30, 2006. In addition to the availability under these revolving credit facilities, cash balances at Doe Run and Doe Run Peru were $1.1 million and $22.8 million, respectively, at April 30, 2006. In Peru, continued high metal prices have resulted in outlays for concentrate purchases and value-added tax payments being funded by cash from operations, as Doe Run Peru has reached its maximum borrowing level under the Doe Run Peru Revolving Credit Facility. Accounts payable have increased during the 2006 six-month period due, in part to the high metal prices for materials and, in part to Doe Run Peru extending its payment terms with certain suppliers in response to the lack of borrowing availability.

The Company’s term note of $8 million has been paid, however, the Company still has substantial debt service requirements in the future, including interest payments of $12.9 million in October of 2006 for the Company’s 11.75% notes which are due in 2008. The Doe Run Peru Revolving Credit Facility expires on September 22, 2006 and will require negotiations to extend its terms. There can be no assurance that the Company will be successful in extending the existing credit agreement or negotiating a new credit agreement, or if it is successful, that the extended or new credit agreement would be at terms that are favorable to the Company.

During the period beginning on October 29, 2005 and ending on October 29, 2012, the majority warrantholders, pursuant to the Warrant Agreement dated as of October 29, 2002 between Doe Run and State Street Bank and Trust Company, as Warrant Agent, will have the right to require Doe Run to repurchase all, but not less than all, of the warrants and any outstanding shares issued upon the exercise thereof at a price equal to the fair market value of the warrants, as determined by a third party appraisal. Management engaged a nationally recognized valuation firm to calculate the fair value of the 

warrants. Management’s estimate of the fair value of the warrants based on the valuation is approximately $0.6 million at April 30, 2006.

Tax Commitments

Income tax assessments from Peru’s tax authority, SUNAT, for the tax years 1998 through 2001, show an assessed amount due from Doe Run Peru, consisting of additional income taxes due, penalties and interest as of April 30, 2006, of approximately $121,100. Value-added tax, referred to as VAT, assessments for tax years 1999 through 2001 and for the period from January through July 2004, calculated with penalties and interest as of April 30, 2006, show a total assessment amount of approximately $48,100. SUNAT offset the amount assessed for 2004 of approximately $2,300 against Doe Run Peru’s VAT receivable balance from July 2004. In addition, the Company estimates that the effect of similar assessments for periods not yet assessed would be approximately $32,900 and $22,400 for the income tax and VAT matters, respectively. Furthermore, Doe Run Peru would also be required to make additional workers’ profit sharing payments equal to 8% of the increase in taxable income generated by the changes discussed above, or approximately $11,300 for calendar years 1998 through 2005.

Management of the Company believes that in each case Doe Run Peru has followed the applicable Peruvian tax statutes and intends to pursue all available administrative and judicial appeals. Doe Run Peru is not required to make any payments pending the administrative appeal process. If Doe Run Peru is not successful in the administrative appeal processes and were to appeal in the judicial system, some type of financial assurance would be required, which would have a significant adverse effect on liquidity.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, an evaluation was performed by our management, under the supervision and with the participation of our Chief Executive Officer, the principal executive officer, and Chief Financial Officer, the principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-5(e) and 15(d-15(e) promulgated under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (b) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

No change in our internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 6. Exhibits.

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE DOE RUN RESOURCES CORPORATION (Registrant)
Date: October 19, 2006	/s/ Theodore P. Fox, III
	Theodore P. Fox, III
	Chief Financial Officer
	(duly authorized officer and principal financial officer)