(Figures in millions of constant pesos)

• Between January and September of 2005, operating income grew +25.5%, EBITDA +18.7% and gross income +17.2% over the same period of last year.All of these are record results in the company's history.
• Net income was Ps1,122.2, rising +69.2% over the amount reported in the same quarter of 2004.
• Sales-billed- reached a quarterly record of US$472.4 million.
• In the present quarter the company reached record quarterly production levels of metallic gold, silver and lead content from its mines.
• The quarter also registered quarterly production records by the metallurgical complex of refined gold and silver.

1.- EXECUTIVE SUMMARY

In January-September 2005, Peñoles reported record billed sales (not including the results of metals and exchange-rate hedging) totaling Ps14,973.6, an increase of +18.0% over the same period of last year.Similarly, gross income was Ps3,905.8, rising +17.2% in the same period, EBITDA was Ps2,629.0, up +18.7% and operating income totaled Ps1,659.7 an increase of +25.5%. Net income in the first nine months of 2005 was Ps1,122.2, comparing well against the income of Ps663.2 reported in 3Q04.

In dollar terms, billed sales in the year to date total US$1,356.0 million, and advanced +26.7% over 2004; in the present quarter, billed sales reached a record level of US$472.4 million. The YTD growth in sales in dollar terms (+26.7%) is greater than the rise in peso terms (+18.0%) because of the effects of the peso's revaluation against the dollar.

These positive results were caused by:

(i) Higher quotations on zinc +26.3%, lead +10.4%, silver +9.1% and gold +7.6%;
(ii) Higher sales volume of gold +35.8, magnesium sulfate +17.0%, silver +9.1%, lead +6.0%, magnesium oxide +4.5% and zinc +1.3%;
(iii) Net foreign-exchange gains of Ps60.8 due to the peso's revaluation against the dollar, compared to a net foreign-exchange loss of Ps49.8 in the same period of 2004; and
(iv) an extraordinary gain of Ps553.5 from the sale of a gold exploration project called Mezcala in the first quarter of this year.

All of these aspects helped offset the impact of the peso's strength again the dollar, which adversely affects the company's results because close to 95% of its revenues are dollar-denominated.In the period in question, the average exchange rate was Ps10.9591 per dollar, -2.8% lower than the average for the same period of 2004.

The Cost of Goods sold increased +20.2% due to:
(i) Greater purchases of concentrates from third parties in the Met-Mex metallurgical complex, to complement the supply from its own mines, as well as higher prices on the metals contained; and
(ii) A rise in energy costs: natural gas, fuel oil, diesel and metallurgical coke.

However, the higher metals prices had a positive impact on treatment fees because they affect the price scale, and this helped offset the impact of the preceding increases.

Investment in exploration increased +50.6% due to an increased pace of activity at Francisco I. Madero, Fresnillo, La Herradura, Pecobre and regional exploration in Mexico. This exploration is bringing encouraging results that will ensure the future of our operations.

In terms of monetary position effect, a lower inflation index (1.90% compared to 3.37% in the same period of 2004) led to a reduction of -Ps42.9 on this line.

As a result of these positive aspects and the revenues from the sale of the above-mentioned exploration project, the income tax prevision rose +68.2%, and minority interest grew +456.5%, because the Newmont Gold Company was 44% owner of the exploration project that was sold.

The following table sums up these results:

		% change
	3Q05 3YTD05 2Q05 3Q04 3YTD04     Sales $5,043.5 $14,915.5 +2.8 +25.3 +19.4     Gross earnings 1,254.0 3,905.8 (2.1) +16.3 +17.2     EBITDA 814.3 2,629.0 (4.4) +15.6 +18.7     Operating income 489.6 1,659.7 (6.2) +21.6 +25.5     Total financing cost 39.2 99.1 +184.4 +31.3 (51.4)     Net income 256.0 1,122.2 (17.9) +15.7 +69.2

The following are the most salient changes in the comparison of year-to-date operating results against the same period last year.

In the mining division, the production of metallic content increased over the year-earlier period, as follows:
(i) Lead +5,183 metric tons (+12.8%) due to higher grade and higher recovery at Francisco I. Madero and La Ciénega;
(ii) Gold +23,326 ounces (+9.3%) because of greater operating efficiency at La Herradura; and
(iii) Silver +2,729,876 ounces (+8.4%) due to capacity expansions at Fresnillo, which started up operations in September 2004.

In the current quarter, mining production of metallic gold content (94,041 ounces), silver (12,644,437 ounces) and lead (15,631 metric tons) all marked quarterly record levels.

In the metals division, production of refined metal was higher than in January-September 2004:

(i) Refined gold +217,006 ounces (+37.4%), refined silver +5.5 million de ounces (+9.0%) due to higher entries of content-rich materials at the lead foundry and the lead-silver refinery; and
(ii) Lead +5,041 metric tons (+5.0%) due to higher entries of content-rich materials at the foundry.

In the third quarter of 2005, production volume of refined gold (287,878 ounces) and silver (22.7 million de ounces) reached record levels for the quarter.

At the close of the period, Peñoles reported a total debt load of US$551.4 million. The current amount of debt consists of:

(i) A private placement in 1997 for US$380.0 million, at a fixed rate of 8.39% and which begins repayment in 2006 in installments of US$15.2 million per quarter; and
(ii) Drafts totaling US$129.0 million on a credit taken out in late 2004 for US$155.0 million to build the Milpillas copper project.

Construction of the Milpillas copper project in Sonora will begin testing in the fourth quarter of 2005.To date, the project is 90% complete; this mine will turn out an average of 55,000 metric tons of fine copper a year.

In January-September 2005, the gross cash flow totaled Ps2,643.6, rising +75.6% over the year-earlier period. However, working capital increased by Ps746.9 because of a rise in accounts receivable, in turn due to higher sales volume and metals prices, and higher inventories due to an increase in the volume of imported materials rich in precious metal content late in the quarter.Because of the characteristics of these materials and their location in the plants of the metallurgical complex, they will be processed during October of this year.

Looking at the main uses of resources, we find:
(i)Ps1,263.4 in properties, plant and equipment, used mainly to build the Milpillas copper project and expand the gold mine at La Ciénega; and
(ii)Dividend payments of Ps529.1 to company shareholders.

At the close of the period, the company had cash on hand totaling Ps910.6, equivalent to US$83.9 million.

Comparing the results of the third quarter (3Q05) against those of the same quarter of last year (3Q04), there was considerable improvement, as follows: gross earnings were higher by +16.3%, el EBITDA rose +15.6%, operating income increased +21.6% and net income gained +15.7%. These results were mainly the result of higher quotations on zinc +32.4%, gold +9.5% and silver +8.9%; higher sales volume of gold +67.8%, magnesium sulfate +60.3%, lead +20.3%, silver +13.3% and zinc +7.7%. The adverse effects of lower lead quotations (-4.4%), higher unit costs of gas natural (+39.9%) and coke +68.6%, and a lower average exchange rate (-6.5%) were more than offset by the increase in quotations and sales volume.

Comparing the results of this most recent quarter (3Q05) against the second quarter of this year (2Q05), the results are as follows: gross income declined -2.1%, EBITDA -4.4%, operating income -6.2% and net income -17.9%. These results were affected primarily by factors beyond our control, such as: a lower average exchange rate -2.5%, lower lead quotations, -9.6%, higher energy prices; lower net foreign-exchange gains -Ps47.2; lower hedging results -Ps26.2; and a drop in the income from associate companies, -Ps22.0.

However, higher gold quotations, increased production of metallic content of silver (+6.2%), gold (+4.7%) and lead (+2.1); and a rise in the production of refined zinc (+32.9%), gold (+12.4%), silver (+5.4%) and lead (+3.3%) made up in part for the reduction in gross income.

2.- ECONOMIC ENVIRONMENT AND METALS PRICES

	3Q04 1Q05 2Q05 3Q05     Inflation (%):     In the period 1.71 0.79 0.01 0.97     12 months 5.06 4.38 4.33 3.56     Exchange rate (pesos/dollar):     Close 11.4106 11.2942 10.8428 10.8495     Average 11.4549 11.1821 10.9823 10.7129     Devaluation (reevaluation) exchange rate at close (%):           In the period -0.009 +0.26 -4.00 +0.062     12 months +4.42 +1.26 -4.98 -4.92     Devaluation-inflationspread (points):           In the period -1.72 -0.53 +4.01 -0.91     12 months -0.64 -3.12 -9.31 -8.48

	Gold ( US$/Oz) Silver ( US$/Oz) Lead ( US$/lb) Zinc ( US$/lb)     1st. quarter 2004 408.44 6.71 38.30 48.54     2nd. quarter 2004 393.14 6.25 36.78 46.61     3rd. quarter 2004 401.29 6.49 42.29 44.44     4th. quarter 2004 433.97 7.25 43.48 50.51     Average 2004 409.21 6.68 40.21 47.53     1st. quarter 2005 427.23 6.99 44.40 59.73     2nd. quarter 2005 427.25 7.16 44.75 57.75     3rd. quarter 2005 439.49 7.07 40.44 58.82     %Chge. 3Q05 vs 3Q04 +9.5 +8.9 -4.4 +32.4     %Chge. 3Q05 vs 2Q005 +2.9 -1.3 -9.6 +1.9     %Chge. YTD05 vs YTD04 +7.6 +9.1 +10.4 +26.3

Remarks on key trends in the quarter:

Gold: average quotations for the quarter rose +2.9% over the second quarter of the year. This metal benefited from a number of events: the euro's strength against the dollar, terrorist attacks in London, a revaluation of the Chinese currency and the possibility that the People's Bank of China would change part of its reserves to gold, a possible strike by the mining union in South Africa, mutual fund liquidations, the negative economic effects of hurricane Katrina, and the rising trend in oil prices.

Silver: average quotations during the quarter declined -1.3% against the preceding quarter. Although this metal maintained its correlation with gold and the industrial metals, and continued to hold the interest of speculative funds, the difference was marked by the possible launch of an investment product known a “Silver ETF” in the second quarter of the year.

Lead: average quotations for this metal in the third quarter sank -9.6% from their second-quarter levels. Prices have been affected mainly by a slight rise in inventory levels and weak fundamentals.

Zinc: average quotations moved up +1.9% over the second quarter of the year.The price benefited from a continuing slide in LME inventories, the revaluation of the Yuan and an increase in demand from China, a strike at the Trail mine (Teck Cominco) and the negative effects of hurricane Katrina.

3.- OPERATING RESULTS

		Production Volume
	3QO4 2Q05 3Q05     Mining Division     Ore milled (Mton) 1,788 2,011 2,039     Stacked deposited(a) (Mton) 2,057 2,109 1,824     Gold (kg) 2,568 2,792 2,925     Silver (ton) 316.9 370.3 393.3     Lead (ton) 12,070 15,316 15,631     Zinc (ton) 52,327 52,824 51,950     (a) La Herradura: open-pit mine.     Metals & Chemicals Division:     Gold (kg) 5,191 7,967 8,954     Silver (ton) 617.0 670.3 706.5     Lead (ton) 31,449 33,784 34,910     Zinc (ton) 62,446 46,654 61,988     Sodium sulfate (ton) 155,000 152,000 153,500     Magnesium oxide (ton) 22,392 23,990 23,155     Ammonium sulfate (ton) 54,844 52,264 47,618     Magnesium sulfate (ton) 8,700 8,600 8,650

Mining Division (metallic content in concentrates and other materials):

Change 3Q05 vs 3Q04 YTD:
- Lead (+12.8%): higher grade at Francisco I. Madero and La Ciénega and higher milled ore at Fresnillo.
- Gold (+9.3%): Greater recoveries at La Herradura.
- Silver (+8.4%): higher milled ore at Fresnillo and Sabinas, higher grade at Francisco I. Madero, and higher milled ore and grade at Tizapa.

*Change 3Q05 vs. 3Q04:
- Lead (+29.5%): higher milled ore and grade at La Ciénega and Naica, and higher grades at Francisco I. Madero.
- Silver (+24.1%): mainly at Fresnillo due to higher amounts of milled ore.
- Gold (+13.9%): greater amounts of rich solution treated at La Herradura.

*Change 3Q05 vs. 2Q05:
- Silver (+6.2%): higher milled ore and grade at Fresnillo and La Ciénega, and higher milled ore at Tizapa.

Metals Division (production of refined metal):

*Change 3Q05 vs 3Q04 YTD:
- Gold (+37.4%): higher entries of semi-processed materials from third parties to the refinery
- Silver (+9.0%): higher direct entries of content-rich concentrates at the foundry plant.
- Lead (+5.0%): higher direct entries of content-rich concentrates at the foundry plant.
- Magnesium oxide (+21.4%): higher demand for refractory grade on export market, higher demand for caustic grade and hydroxide on the domestic market, and operating continuity.
- Ammonium sulfate (-14.5%): due to inventory controls in processing at the lead foundry plant.
- Magnesium sulfate (-13.0%): preventive maintenance and difficulties with the supply of electrical energy

*Change 3Q05 vs. 3Q04:
- Gold (+72.5%): higher receipts of semi-processed content-rich materials at the refinery.
- Silver (+14.5%): higher receipts of content in concentrates from third parties at the foundry plant.
- Lead (+11.0): higher entries of content in concentrates from the company's own mines to the foundry plant.
- Ammonium sulfate (-13.2%): due to inventory controls.

*Change 3Q05 vs. 2Q05:
- Zinc (+32.9%): due to operating continuity--in the second quarter work was shut down as programmed for major maintenance.
- Gold (+12.4%): higher entries of content-rich concentrates at the lead foundry.
- Silver: (+5.4%): higher entries from third parties to the foundry plant
- Ammonium sulfate (-8.9%): the result of efforts to adjust to market demand, and inventory controls.

4.- FINANCIAL RESULTS

A) Comparison of year-to-date results as of 3Q05 vs. same period of 2004:

	(Millions of pesos) 3YTD05 3YTD04 Chge. ($) % Chge.     Net sales (*) $14,915.5 $12,491.7 2,423.8 +19.4     Gross income 3,905.8 3,334.0 571.8 +17.2     Gross margin 26.2% 26.7%     EBITDA 2,629.0 2,215.0 414.0 +18.7     EBITDA margin 17.6% 17.7%     Operating income   1,659.7 1,322.5 337.2 +25.5     Operating margin   11.1% 10.6%     Net income   1,122.2 663.2 459.0 +69.2     Net margin 7.5% 5.3%

(*) Includes metal and exchange-rate hedging gains.

The primary changes are analyzed below:
Net sales were +Ps2,423.8 higher (+19.4%) rising from Ps12,491.7 to Ps14,915.5. the increase breaks down as follows:
a) Higher sales volume, +Ps1,715.7 due to increased sales of gold, silver, lead, zinc and magnesium oxide, and concentrates sold by the mining division to third parties;
b) Higher prices, +Ps1,376.5 on virtually all the products sold;
c) Lower metals and exchange-rate hedging losses, +Ps140.2;
d) Lower average exchange rate -Ps305.1 (Ps10.9591 vs. Ps11.2748 per dollar); and
e) Effects of restating last year's figures in constant pesos as of September 30, 2005, -Ps503.5.

In dollar terms net sales totaled US$1,350.7 million, composed of billed sales of (US$1,356.0 million hedging losses of US$5.3 million.

A rise of +Ps1,852.0 (+20.2%) in the cost of goods sold was the result of:
a) Increased production costs, +Ps396.3 (+8.9%)due to higher costs for preventive maintenance in order to extend the useful life of the equipment, higher personnel expenses, energy (increased unit costs on coke and diesel, and increase consumption and unit costs on natural gas), and a higher cost of direct materials for the mining division;

b) Higher metals costs--net of treatment fees-- +Ps1,413.8 mainly due to higher prices and volumes of metal purchased from third parties, offset by a lower exchange rate; and
c) Inventory movements, consolidation and restatement effects, +Ps41.9.

As a result of the increase in net sales (+Ps2,423.8) and the less pronounced rise in the cost of goods sold (+Ps1,852.0), gross earnings came to Ps3,905.8, rising +Ps571.8 (+17.2%) over the year-earlier period, bringing the gross margin (in proportion to sales) to 26.2 percent.

Operating expenses--excluding depreciation--totaled Ps1,276.8, an increase of +Ps157.9 (+14.1%) due to:
a) Higher exploration expenses, +Ps130.4 primarily because of increased activity in the areas of the Fresnillo, La Herradura and Francisco I. Madero mines, as well as greater regional exploration in Mexico, and
b) Higher SG&A expenses, +Ps27.5.

With gross earnings up by +Ps571.8, more than offsetting the increase of +Ps157.9 in operating expenses, EBITDA came to Ps2,629.0, rising +Ps414.0 (+18.7%), and bringing the EBITDA margin (EBITDA/sales) to 17.6%.

Total financing cost was Ps99.1, below the Ps104.6 reported for the same period of 2004.This change of -51.4% breaks down as follows:

a) Higher net foreign-exchange gains contributed -Ps110.6 of the reduction, because the peso gained 3.69% against the dollar in 2005 YTD, compared to a devaluation of 1.55% en 2004;
b) Lower net financial expenses -Ps37.0; and
c) Lower net monetary position gains, +Ps43.0.

The other expenses (revenues) line shows a net gain of Ps494.7 compared to a net expense of Ps18.3 last year. The benefit in 2005 was mainly the result of the sale of the Mezcala gold project in Guerrero to Goldcorp-Wheaton River for a net amount of Ps553.5, as well as the sale of Milo shares and fixed assets no longer in use.

The income tax and profit-sharing provisions -net- line showed a charge of Ps744.6, +Ps316.1 higher than in the same period of last year. This change is explained by the amount of pretax earnings reported this year--Ps2,055.3 compared to Ps1,100.5 in 2004.

Equity in the earnings of associate companies rose +Ps3.8, primarily due to the recognition of higher income from the companies in which Peñoles has a minority stake.

The minority interest line shows a gain of Ps223.6, higher than the 2004 figure, which was Ps40.2. The increased earnings are mainly the result of the joint venture with Newmont Gold, which took a proportional share of the sales of the Mezcala gold project, as well as better operating results from the Tizapa and Penmont mining companies.

B) Comparison of results for 3Q05 vs.3Q04:

	(Millions of pesos) 3Q05 3Q04 Chge. ($) % Chge.     Net sales (*) $5,043.5 $4,024.6 1,018.9 +25.3     Gross income 1,254.0 1,078.0 176.0 +16.3     Gross margin 24.9% 26.8%     EBITDA 814.3 704.4 109.9 +15.6     EBITDA margin 16.1% 17.5%     Operating income   489.6 402.6 87.0 +21.6     Operating margin   9.7% 10.0%     Net income   256.0 221.2 34.8 +15.7     Net Margin 5.1% 5.5%

(*) Includes metal and exchange-rate hedging gains.

The outstanding changes are discussed below:

Net sales were Ps5,043.5, rising +Ps1,018.9 (+25.3%) due to the following factors:
a) Higher sales volume, +Ps943.8 mainly of gold, silver, lead, zinc, concentrates sold by the mining division to third parties, and the water business;
b) Higher prices on most of the products sold, except lead,+Ps560.7;
c) Lower average exchange rate (Ps10.7129 vs. Ps11.4549 per dollar) -Ps320.8;
d) Higher losses on metals and foreign-exchange hedging -Ps11.8; and
e) Effects of restating figures in constant pesos of the current quarter,-Ps153.0.

In dollar terms, net sales totaled US$469.2 million, which breaks down into billed sales of (US$472.4 million and hedging losses of US$3.2 million.

The cost of good sold increased +Ps843.0 due to the following influences:
a) Higher production costs, +Ps121.0 (+7.7%) due to increased consumption and costs of operating material at the mining division; higher costs on coke and diesel; personnel costs stemming from increased bonuses and overtime; and preventive maintenance of equipment inside the mine;
b) Higher metal costs--net of treatment fees-- +Ps673.2 due to increased prices and greater volumes of metals purchased from third parties, offset by a lower exchange rate; and
c) Inventory movements, restatement and consolidation effects, +Ps48.8.

Because net sales, which rose +Ps1,018.9, outran the +Ps843.0 growth in the cost of goods sold, gross income was +Ps176.0 higher, and the gross margin (in proportion to sales) was 24.9%.

Operating expenses--excluding depreciation--totaled Ps439.7, +Ps66.1 higher, due to:
a) Increased exploration expenses, +Ps38.4 mainly at Fresnillo, La Herradura and Francisco I. Madero;
b) Higher SG&A expenses, +Ps27.7.

Thanks to the rise in gross income (+Ps176.0), some of which was offset by higher operating expenses (+Ps66.1), EBITDA came to Ps814.3, rising +Ps109.9 (+15.6%), and resulting in an EBITDA margin of 16.1%.

Similarly, due to the growth of EBITDA (+Ps109.9), which was offset in part by higher depreciation charges (+Ps22.9), operating income gained +Ps87.0, rising to 9.7% of sales.

In the period analyzed, total financing cost came to Ps39.2, an increase of Ps29.8 over the same period of 2004.The change of +Ps9.3 can be explained by the following:
a) Lower monetary position effect, +Ps17.6 basically the result of a lower inflation index;
b) A rise in foreign-exchange gains, which took -Ps6.4 off TFC; and
c) Lower net interest expenses, -Ps1.9.

The other expenses (revenues) line shows an outlay of Ps26.0, compared to en Ps2.4 in the same quarter of last year. The increased expense is the result of lower recovery of insurance from the mining division; and an adjustment in the book value of some properties, plant and equipment.

The income tax and profit-sharing (net) line contains a charge of Ps164.8, up +Ps9.8 over the year-earlier period. This charge is the result of pretax earnings of Ps424.4 in 2005, compared to Ps370.3 in 3Q04.

Equity in the earnings of associate companies totaled Ps9.2, a reduction of-Ps8.3, chiefly because of lower earnings from the companies in which Peñoles has a minority stake.

The minority interest line shows a gain of Ps12.8, +Ps1.1 more than in the third quarter of last year.

C) Comparison of results for 3Q05 vs. 2Q05:

	(Millions of pesos) 3Q05 2Q05 Chge. ($) % Chge.     Net sales (*) $5,043.5 $4,905.4 138.1 +2.8     Gross income 1,254.0 1,281.4 (27.4) (2.1)     Gross margin 24.9% 26.1%     EBITDA 814.3 852.0 (37.7) (4.4)     EBITDA margin 16.1% 17.4%     Operating income   489.6 522.1 (32.5) (6.2)     Operating margin   9.7% 10.6%     Net income   256.0 311.7 (55.7) (17.9)     Net Margin 5.1% 6.4%

(*) Includes metal and exchange-rate hedging gains.

Net sales came to Ps5,043.5, rising +Ps138.1 (+2.8%) due to the following elements:
a) Higher volume +Ps268.0, mainly of gold, silver and zinc;
b) Higher prices +Ps35.8 mainly on gold and zinc; offset by lower prices on silver and lead;
c) Lower average exchange rate -Ps116.4 (Ps10.7129 vs. Ps10.9823 per dollar);
d) Higher losses from trading in futures and options on the exchange rate, -Ps26.2;
e) Effects of restating figures in constant pesos of the current quarter and others, -Ps23.1.

The cost of goods sold increased by +Ps165.4, due to the higher cost of metal purchased, in turn the result of higher quotations (+Ps106.8), in addition to increased consumption of electrical energy and diesel, operating material and personnel costs, offset in part by higher revenues from treatment fees, due to an improved price scale and greater entries from third parties.

The cost of goods sold rose by more than net sales (+Ps165.4 vs. +Ps138.1), so gross earnings was reduced by -Ps27.4 bringing the gross margin to 24.9% of sales.

Operating expenses--excluding depreciation charges-- totaled Ps439.7, rising +Ps10.3 due to:
a) Higher exploration expenses, +Ps6.6, mainly because of exploration in the Fresnillo, La Herradura and Pecobre zones; and
b) Higher SG&A expenses, +Ps3.7.

Due to lower gross income (-Ps27.4), and higher operating expenses (-Ps10.3), EBITDA went from Ps852.0 to Ps814.3, a reduction of -Ps37.7, and the EBITDA margin came to 16.1% of sales.

Total financing cost for the quarter was Ps39.2, comparing negatively against the Ps13.8 cost reported in the previous quarter.The change of +Ps25.4 can be attributed to:
a) Higher interest expense, +Ps7.1;
b) Lower foreign-exchange gains +Ps47.2, the result of a slight depreciation of the peso (Ps0.0067 per dollar) compared to a slight revaluation in the preceding quarter (-Ps0.4514 per dollar); and
c) Higher monetary position gains, -Ps28.9.

The "other expenses" line shows a charge of Ps26.0, compared to Ps32.6 in the previous quarter.

Under income tax and profit sharing, the results show a charge of Ps164.8, down from Ps180.3 in the preceding quarter. The lower charge in the third quarter (-Ps15.5) is due to a reduction in pretax earnings-- Ps424.4, compared to Ps475.6 in the second quarter.

Equity in the income of associate companies showed an income of +Ps9.2, the result of higher earnings by the companies in which Peñoles owns a minority stake.

Minority interest was a gain of Ps12.7 in the third quarter, compared to Ps14.8 in the second.

5.- PROJECTS

Construction of the Milpillas copper project in Sonora is now 90% complete, and will begin testing in the fourth quarter of 2005, with an average production of 55,000 metric tons of fine copper a year.The total investment is estimated at US$217.8 million.

6.- SOCIAL AND ENVIRONMENTAL ASPECTS

In its productive activities, Peñoles reiterates its commitment to education, protecting the environment, and improving quality of life in the areas where it is present.

In this period, Peñoles signed the worldwide pact promoted by the United Nations on Corporate Ethics and Social Responsibility.In Coahuila, a graffiti contest was held, sponsored by the town council of Torreón and Met-Mex Peñoles, in which 375 young arts from across the nation competed.A team from Tlaxcala was chosen as the winner.

In an anti-addiction program for high school students in the community surrounding the industrial complex in Torreón, Coahuila, three youth committees were formed to work on a program to fight addictions, which will reach 3,000 students in the area.

Peñoles signed an agreement with the Zig-Zag museum in Zacatecas, which is an alternative space for learning, culture, science and technology. Through this agreement, the companies of Peñoles that are located in that state will sponsor visits to the museum by neighboring primary school children.

To commemorate world food day, campaigns were held in some of Peñoles' operating units to promote greater awareness of the importance of personal wellness.

The company also took part in a program called "Clean up the world, clean up Torreón", helping to clean two kilometers of the bed of the Nazas River, which runs between the cities of Torreón and Gómez Palacio.