Grana y Montero - Credit Suisse

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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06 January 2015

Americas/Peru

Equity Research

Building Materials & Construction

Grana y Montero (GRAM) INITIATION

Painful Backlog Transition from Mining to

Infrastructure, Initiating with Neutral

■ We are initiating on GRAM with a neutral rating and a US$13.5/Adr TP

(10% upside). G&M is transitioning its backlog from mining to infrastructure,

and we think it has the potential to grow and create value, but see 2015-16

as a painful transition period, with difficult industry conditions. Despite the

40% y/y plunge in the Adr price, we fail to see near term catalysts or a

significant improvement in the E&C environment in Peru in the short term.

■ Low metal prices and difficult permit situation for mining projects to

impact G&M. The market anticipates US$60bn of mining projects in Peru for

the next 8 years. Our mining insight makes us hesitant to believe it. With

gold and copper prices falling to the 5-year lows and crashing IRRs for

miners in Peru, mining projects are bound to face rationalization. We dug

deep into the permit situation for mining projects, where we see difficulties to

get the green light. Sales related to mining represent ~50% of '14e total. Our

model relies on G&M's ability to keep on increasing its E&C backlog while

keeping backlog/sales at 2x, its historical levels. We rely on G&M's expertise

to win most of the mining project bids that we estimate to materialize in Peru.

■ Integration in the construction and infrastructure sector to yield by '17.

G&M's integration across segments coupled with a healthy balance sheets

puts it in an advantaged turf to benefit from Peru's infrastructure pipeline.

We expect this to ramp up thru '16, and to be visible in G&M's P&L by '17.

■ GRAM trades at 6.8x '15e EV/Ebitda. In line with LatAm peers. We

believe that the challenging macro situation is reflected in the stock's price.

Share price performance

11

16

21

Jan-14 Apr-14 Jul-14 Oct-14

Daily Jan 06, 2014 - Jan 02, 2015, 1/06/14 = US$21.35

Price Indexed S&P 500 INDEX

On 01/02/15 the S&P 500 INDEX closed at 2058.2

Quarterly EPS Q1 Q2 Q3 Q4 2013A 0.13 0.16 0.23 0.32 2014E 0.18 0.18 0.26 0.21 2015E — — — —

Financial and valuation metrics

Year 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) 2,178.3 2,414.4 2,827.0 2,640.6 EBITDA (US$ m) 372.5 327.2 361.5 401.6 EBIT (US$ m) 239.7 193.1 227.4 235.0 Net income (US$ m) 110.3 108.7 125.1 126.8 EPS (CS adj.) (US$) 0.84 0.82 0.95 0.96 Dividend yield (%) — 0.7 3.1 3.1 P/E (x) 14.8 15.0 13.1 12.9 EV/EBITDA 4.2 6.1 6.3 5.4 P/B (x) 1.6 1.6 1.5 1.4 ROE stated - return on equity 14.5 10.6 11.7 11.0 ROIC (%) 14.79 8.81 8.17 8.48 Net debt (US$ m) -60 360 643 532 Net debt/equity (12/14E, %) -5.1 29.9 49.2 37.8 Capex (US$ m) -292 -398 -400 -206

Source: Company data, Credit Suisse estimates.

Rating NEUTRAL* Price (05 Jan 15, US$) 12.39 Target price (US$) 13.50¹ 52-week price range 21.97 - 11.70 Market cap. (US$ m) 1,639.90 Enterprise value (US$ m) 1,999.98

*Stock ratings are relative to the coverage universe in each

analyst's or each team's respective sector.

¹Target price is for 12 months.

Research Analysts

Santiago Perez Teuffer

52 55 5283 8901

[email protected]

Ana Zinser

52 55 5283 3821

[email protected]

Bruno Savaris, CFA

55 11 3701 6332

[email protected]

06 January 2015

Grana y Montero (GRAM) 2

Table of contents Graña & Montero – Peruvian Construction Champion 3 Investment Thesis 5

Negatives/Risks 5 Difficult environment for mining projects, driven by permit processes in Peru and

lower metal prices 5 Backlog transition towards infrastructure will take longer than expected 6 Limited visibility on infrastructure pipeline in Peru. The need is there, but deployment

should take time. 6 Positives/Catalysts 6

Solid balance sheet should sustain more bids in the future 6 Proven track record in mining and infrastructure and positioned among the best in

Peru 7 Business model to benefit across segments by 2017 7

Valuation 8 Relative Valuation 9

Our unique View of Graña y Montero; Seeing it Through Our Mining Lens 11 The Hassle Behind a Project's Approval 14

Political Instability the Underlying Problem behind Low Mining Investments 15 US$60bn Pipeline Could be Jeopardized by Political Risk in Each Region 16

Peru's Natural Competitive Advantage Limited by Social Unrest 17 Bullish price expectations have historically boosted capex deployments 18

G&M's Performance Reliant on the Mining Industry 19 Even if Social and Political Interests are Aligned, Projects Might not be Economically

Attractive Under Current Gold and Copper Prices 20 Backlog and Value Creation 22

Infrastructure Projects in Peru Struggling to be Approved 23 Infrastructure Investment Gap in Peru 24 Public-Private Partnerships in Peru 24 Project Delays Have Impacted E&C and Concession Investments 26

Oil & Gas Division 28 Hydrocarbon Extraction 28 Gas Processing 28 Fuel Storage Terminals 28

Appendix 30 Engineering and Construction 30 Norvial 30 Survial 31 Canchaque 32 Via Expresa Sur 33 Via Expresa Javier Pardo 34 Line 1 of Lima Metro 34 La Chira water treatment plan 35 GMP 36 Block I and V oil fields 36 Gas Processing 37 Fuel Storage Terminals 37 Real Estate Division 38 Technical Services Segment 39 Operation and Maintenance of Infrastructure Assets 39

06 January 2015


Graña & Montero – Peruvian Construction Champion Graña y Montero (G&M) is an engineering and construction company in Peru, mainly

focused on the construction of projects related to the mining industry, which represents

68% of 2014E revenue, with a current backlog of US$3.6bn and a 1.6x backlog/revenue. It

has strong complementary businesses in infrastructure, real estate and technical services.

For an in depth description of each of the company's business segments, please refer to

the Appendix on page 30.

Exhibit 1: Breakdown of G&M's 2014e Financials by Segment, Backlog Breakdown to 3Q14

E&C

68%

Infrastructure

11%

Real Estate

3%

Technical

Services

18%

Revenues

E&C

54%

Infrastructure

32%

Real Estate

6%

Technical Services

8%

Ebitda

E&C

84%

Infrastructure

13%

Real Estate

3%

Backlog

TechTechnical

Services

.4%

Source: Company data, Credit Suisse estimates

The company was listed on October 31st, 1997 on the Lima Stock Exchange and on July

23th, 2013 on the New York Stock Exchange; has a market. cap. of US$1.6bn, free float of

65.5% and average daily liquidity of US$2.9mn .

Exhibit 2: Share price and liquidity performance Share Price (LHS), Volume (RHS)

Volume

$USD mn

GRAMONC1 PE

Equity

0

20

40

60

80

100

120

140

160

180

0

2

4

6

8

10

12

14

Nov-97 Nov-99 Nov-01 Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13 Source: Company data, Bloomberg, Credit Suisse estimates

06 January 2015


Since G&M began its operations in 1933 it has consolidated its position in Peru through

strategic mergers and JVs. The latter has allowed the company to get involved in a variety

of projects that range from the operation of highways to onshore oil fields. As of 2013,

3.3% of the company's Ebitda came from JVs and the remaining, from the company's own

operations.

Exhibit 3: G&M's Timeline

GRAMONVEL is founded

Company builds the south Pan-

American highway

Hydroelectric central in Cañon del Pato is finished

Construction ofLima’s airport is

finished

Growth is focused on mining and oil projects

Oil services, IT, and engineering consulting divisions are created.

Graña y Montero islisted in Lima’s Stock

Exchange

Stracon GyMsubsidiary is created.

The company is listed in the NYSE under the ticker GRAM

1933 1953 1957 1961 1976 1983 1997 2011 2013 2014

G&M acquires Morelco, adding

~15% to the backlog.

Source: Company data

G&M is one of the most experienced mine constructors in LatAm, having participated in Peru's most important mine

projects, including Cuajone, Yanacocha, Antamina, Pierina, Alto Chicama, Cerro Verde, Antapaccay, Las Bambas, and

Toromocho. These mines account for 75% of Peru's estimated copper production in 2014 and 31% of gold production.

06 January 2015


Investment Thesis

Negatives/Risks

Difficult environment for mining projects, driven by permit processes in Peru and

lower metal prices

Peru's top quality ore bodies and below average costs, are not enough to unlock the

country's potential in the mining industry. We have a bearish view on the execution of

Peru's mining projects. Sustained by a long and inefficient process for the approval of the

Environmental Impact Assessment (EIA) and strong political issues, which have been the

main reasons for project delays in the past. In our view, the US$60bn pipeline for the

2014-2020 period is too ambitious and hard to materialize.

Exhibit 4: US$60bn Pipeline According to Execution Risk in US$bn

12.7

6.4

1.54.2

7.6

4.2

0.3

10.2

10.10.8

2015 2016 2017 2018 2019 2020

Projects with low and medium

execution risk

Projects with high execution risk

Source: Peruvian Ministry of Energy and Mining, Credit Suisse estimates

On top of an unfavorable political environment, projects will have to overcome a scenario

of low metal prices. At current price scenarios, it is hard to justify large capex deployments

and we believe the metals market is unlikely to witness a recovery in the short -run.

Exhibit 5: Sensitivity of Peruvian Gold Mining Projects to

Gold Prices X axis in US$/oz. IRR real, unlevered.

Exhibit 6: Sensitivity of Peruvian Copper Mining Projects

to Copper Prices X axis in US$/lb. IRR real, unlevered.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

30%

35%

40%

45%

50%

55%

60%

65%

1,400 1,300 1,200 1,100 1,000

Ebitda Mg FCF Coversion IRR

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

20.0%

20%

27%

34%

41%

48%

55%

62%

4.5 4.0 3.5 3.0 2.5


Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

06 January 2015


Backlog transition towards infrastructure will take longer than expected

Infrastructure projects in Peru can take years before they enter the construction stage,

even after the project is approved. Thirteen of the 34 projects approved from 2010 to

2013, have not started the construction process, this accounts for a US$3.6bn delay in

infrastructure spending.

Our current target price assumes the company is able to execute on average 50% of its

backlog per year, failure to obtain construction permits on time would add potential

downside risk to our current target price.

Limited visibility on infrastructure pipeline in Peru. The need is there, but

deployment should take time.

Currently the country has an infrastructure gap of US$88bn, defined as the investment

needed to sustain current growth. If this infrastructure plan was successfully implemented,

poverty will be reduced ~6% between 2012 and 2016.The lack of vertical integration

between the local and federal governments, coupled with an unpredictable process for

project approval, makes it hard to predict the actual timeframe for execution of the

projects.

Our model is assuming a constant increase in the company's backlog. If the government

fails to execute a solid infrastructure plan in the upcoming years, this would represent

additional downside to our model.

Positives/Catalysts

Solid balance sheet should sustain more bids in the future

The company currently has a 2014e net debt/ Ebitda position of 1.1x, below its LatAm

peers' leverage of 2.9x. We believe that if the pipeline for mining and infrastructure

projects were to materialize G&M would be in a solid position to enhance its portfolio. Its

healthy capital structure allows the company to maintain its cost of debt at 6%, close to the

country's average of 5%. G&M will be able to increase its leverage levels, if needed,

without significantly affecting its cash flows.

Exhibit 7: 2014e Net Debt/Ebitda

-2.2-0.8 -0.5

0.3

0.3

0.3

1.1

1.3 1.4 1.72.6 2.6 2.7 2.8

4.55.3

7.2

1.8

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Net Debt/Ebitda Average

Source: Company data, Bloomberg, Credit Suisse estimates

06 January 2015


Proven track record in mining and infrastructure and positioned among the best in

Peru

Since G&M began its operations in 1933 it has consolidated its position in Peru through

mergers and JVs. Through these strategic alliances the company has been able to

increase its asset mix, while reducing its dependence on the mining industry.

We believe one of G&M's main competitive advantage in the industry is its local know-

how. Its solid understanding of Peru's political dynamics, has provided the company with

additional bargaining power which is crucial considering the project approvals are highly

dependent on political matters. G&M's market share in mining projects has been ~50% on

average, a trend we expect to continue.

Business model to benefit across segments by 2017

Its expertise among different sectors, puts G&M in a great position to benefit from

upcoming projects. The company is able to bid for a variety of projects in the infrastructure

sector, offering its operational know-how and experience. We expect the match between

the construction and the infrastructure segments to be visible by 2017, as several of the

projects granted to the infrastructure division will feed the company's backlog during their

construction stage.

We welcome the company's strategy to offer not only construction services but a fully

integrated portfolio throughout its GMI segment, which provides engineering services. The

company expects that, in the near future, contracts awarded by G&M to GMI will account

for close to 60% of GMI contracts, today at 40%; evidence of the company's efforts to

achieve greater integration between segments.

06 January 2015


Valuation – Setting a US$13.5/Adr Target Price

We have valued G&M through a DCF method. Generally, we are taking into account a

growth expectation in new contract requests of 1.0x GDP, while we are expecting the

company is able to normalize its backlog/sales to historical levels.

We are valuing all the concessions to maturity, while adding a perpetuity value to the

period after the company's last concession expires, based on the assumption that the

company will be able to continue to secure more contracts for its E&C segment.

We believe the company will be able to achieve a CAGR of 4% in revenues and average

Ebitda growth of 7.3% from 2014 to 2018. On this front, we expect G&M to expand its

margin by around 180bps, as we expect the infrastructure projects granted during 2014-

2015 to be executed by 2017.

Our Ke is built using an updated Rf of 3% and, a country risk of 2%, which we think

reflects Peru's long-term economic situation. We are also using an equity risk premium of

6%, resulting in a yield of 10.4% Ke.

Under this assumptions and our projections on G&M's operations, we arrive to an equity

value of US$1.8bn, implying a US$13.5 per ADR target price.

Exhibit 8: G&M's DCF in millions, unless otherwise stated

2015 DCF - Equity Value 1,790

# Adr (mn) 132

Target price GRAM (US$) 13.5

Potential Upside (Downside) to GRAM 10%


06 January 2015


Relative Valuation

Exhibit 9: 2014e EV/Ebitda

4.4 5.05.4

5.4 5.55.7 5.8

5.8 6.1

6.6

6.97.7

8.4 8.5 9.0 9.19.6

17.20%

15% 13% 10% 12% 10%

-14%

5%

-17%

11%

-2%9% 9%

70%

35%

13%4%

13%

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EV/Ebitda Ebitda CAGR '14-'17


Exhibit 10: 2014e P/E

5.2 5.5 6.7 7.07.8 8.5 8.7 13.5 13.1 12.0 12.5 13.0 10.0 14.3 14.9

17.1

24.031.8

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14 P/E Average


Exhibit 11: 2014e Ebitda Margin

81%

68% 65%

43%

33%

18% 14%

12% 11% 9%

9% 8% 8% 7% 7% 6% 6% 6% 5% 5%21%

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Ebitda Margin Average


06 January 2015


Exhibit 12: G&M Corporate Template In $US millions, unless otherwise stated

BASICS COMPANY DESCRIPTION

Sector Toll Roads Ticker GRAM

Price (Ps$) 12.3

Target (Ps$) 13.5

Potential Upside (Downside) 10%

Recommendation NEUTRAL POSITIVES

Mkt. cap. (Ps$ mn) 1,624

Free Float (% ) 65.5%

SHAREHOLDERS (mn) Total

GH Holding Group 17.8% NEGATIVES

Bethel Enterprises 5.1%

ING Group 6.2%

Scotiabank 5.3%

Free Float 65.5%

US$60bn Pipeline According to Execution Risk 2014e E&C Revenues by Sector

FINANCIAL METRICS (US$mn) 2012A 2013A 2014E 2015E 2016E 2017E OPERATING METRICS 2012A 2013A 2014E 2015E 2016E 2017E

Revenues 1,944 2,178 2,414 2,827 2,641 2,864 Backlog/Revenues 2.3x 2.1x 1.7x 1.2x 1.2x 1.0x

Gross Profit 126 105 341 386 393 421 E&C % of revenues 67% 69% 70% 72% 69% 71%

Gross margin 6% 5% 14% 14% 15% 15% Infrastructure % of revenues 10% 11% 12% 11% 11% 11%

EBIT 197 240 193 227 235 252 Real Estate % of revenues 5% 5% 3% 2% 3% 3%

EBIT margin 10% 11% 8% 8% 9% 9% Serv ices % of revenue 21% 20% 18% 15% 16% 16%

EBITDA 287 373 327 361 402 427

EBITDA margin 15% 17% 14% 13% 15% 15% LEVERAGE 2012A 2013A 2014E 2015E 2016E 2017E

Net financial income (expenses) -4 -41 -28 -34 -37 -38 Net debt/ EBITDA 0.1x -0.2x 1.1x 1.8x 1.3x 1.2x

Equity Income from subs. 0 12 19 22 20 22 Net debt / Equity 0.1x -0.1x 0.3x 0.6x 0.4x 0.4x

Net income 108 111 109 125 127 138 EBITDA/Net Interest Exp. 75.4x 9.0x 11.5x 10.6x 10.8x 11.3x

Net margin 6% 5% 5% 4% 5% 5%

# Adrs (mn) 132 132 132 132 132 132 RETURN / YIELD 2012A 2013A 2014E 2015E 2016E 2017E

EPS (Us$) 0.8 0.8 0.8 0.9 1.0 1.0 ROIC 30.7% 24.3% 15.6% 16.3% 16.1% 16.1%

Effective tax rate -29% -32% -29% -30% -30% -30% WACC 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%

D&A 90 133 134 134 167 174 Cost of Equity (ke) 10.4% 10.4% 10.4% 10.4% 10.4% 10.4%

Div idends 0 0 11 50 50 51 ROE 21.1% 11.0% 10.5% 11.3% 10.7% 10.8%

FCFE Generation 288 62 -136 -82 160 114 FCF Yield 17.7% 3.8% -8.4% -5.1% 9.9% 7.0%

Capex 0 -292 -398 -400 -206 -212 EV/FCF 6.3x 27.5x -15.8x -29.8x 14.8x 21.1x

Total assets 1,844 2,304 2,584 2,972 3,002 3,240 Div. Yield 0.0% 0.0% 0.7% 3.1% 3.1% 3.1%

Cash 288 350 198 65 176 238

Total debt 319 291 558 708 708 758 VALUATION 2012A 2013A 2014E 2015E 2016E 2017E

Net debt 31 -60 360 643 532 520 EV / EBITDA 6.3 4.6 6.6 6.8 5.9 5.6

Book value 514 1,010 1,035 1,110 1,187 1,274 EV / IC 2.2x 1.3x 1.4x 1.4x 1.3x 1.2x

Market cap. 1,624 1,624 1,624 1,624 1,624 1,624 P/E 15.0x 14.7x 14.9x 13.0x 12.8x 11.8x

EV 1,799 1,721 2,152 2,461 2,376 2,392 P/B 3.2x 1.6x 1.6x 1.5x 1.4x 1.3x

Invested capital 832 1,301 1,593 1,818 1,895 2,032

Graña y Montero is an Engineering and Construction Company involved in the transportation, sanitation,

housing, electricity , IT, oil, and mining industries. It currently holds concessions for 4 toll roads, Line 1 of

Lima's subway, and a water treatment plant; it also operates a gas processing plant and 9 fuel terminals.

Solid balance sheet.

Business model to benefit across segments by 2017.

Backlog transition towards infrastructure will take longer than expected.

Difficult env ironment for mining projects owing to permits processes in Peru and lower metal prices.

Limited v isibility on infrastructure pipeline in Peru. The need is there, but deployment should take time.

Proven track record in mining and infrastructure and positioned among the best in Peru.


06 January 2015


Our unique View of Graña y Montero; Seeing it Through Our Mining Lens Today the mining industry accounts for 9.5% of Peru's GDP and has a significant weight in

the country's exports, currently close to ~50% of the total. Copper represents close to 50%

of Peru's mining exports and gold, around 37%. Thus, our next analysis on G&M's

potential backlog will focus mainly on projects related to these two metals.

The mining industry is currently G&M's most important market, accounting for 37% of the

company's total revenues and 55% of the revenues from the E&C division in 2013.

Exhibit 13: 2014e E&C Revenues by Sector

Mining

70%

Real Estate

11%

Transportation

6%

Power

5%

Water Sewage

3%

Oil & Gas

5%


Peru is currently the third -largest copper producer in the world. We are expecting a 23.3%

2014-2017 production CAGR, under the assumption that Toromocho will start production

in 2014, Las Bambas in 2015, and Toquepala by 2017.

Exhibit 14: Peru's Total Copper Production in Kt

483 536 554

722845 843

1,036 1,010 1,0481,190

1,268 1,2761,204 1,202 1,260

1,369 1,322

1,711

2,281

2,481

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E

Source: Peruvian Ministry of Energy and Mining,Credit Suisse estimates

As of now, Peru is the world's fifth largest gold producer. We are estimating Inmaculada to

begin production by 2015, Shahuindo by 2016 and other mines to adjust to our

06 January 2015


expectations of the region projected through our coverage of BVN and SCC. Under these

assumptions we arrive at a CAGR of 1.9% for production in 2014-2017.

Exhibit 15: Peru's Total Gold Production In Koz

3,029

4,131 4,2634,454

5,065

5,550 5,569

6,687 6,521

5,4735,783 5,916

5,275 5,343 5,176

4,7164,501 4,501 4,405 4,249

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E

Source: Peruvian Ministry of Energy and Mining , Credit Suisse estimates

06 January 2015


Exhibit 16: Pipeline of Mine projects

Project Company Expected Annual Output Capex US$bn Start Date

Toromocho Aluminium Corp. of China 275kt of copper 3.5 2014

Constancia HudBay Minerals 80kt of copper 1.8 2014

Inmaculada Hochschild/IMZ 124koz. of gold and 4.2mnoz. of silver 0.4 2014

Colquijirca* Buenaventura 220kt of z inc 0.3 2015

Crespo Hochschild 28koz. of gold and 2.7mnoz. of silver 0.1 2015

Explotacion de

relavesBaiyin/Shougang 19kt of copper, 30kt of z inc, and 80kt of Iron 0.2 2015

Uchucchacua* Buenaventura Additional 1mnoz of silver 0.0 2015

Anama Guido del Castillo 60koz of gold 0.0 2015

Marcona* Shougang 3.5 mn tons of iron 1.5 2016

Las Bambas MMG/Guoxin/CITIC 400kt of copper and 5koz. of molybdenum 6.0 2016

Shahuindo Rio Alto 84koz of gold, and 167koz of silver 0.1 2016

Corani Bear Creek Mining 13.5mnoz of silver 0.6 2016

Ollachea Minera IRL 113koz of silver 0.2 2016

Toquepala* Southern Copper 100kt of copper and 3.1koz. of molybdenum 1.2 2017

Cerro Verde* Minera Cerro Verde 300kt of copper and 7,257koz. of molybdenum 4.6 2017

Tia Maria Southern Copper 120kt of copper 1.4 2017

Quellaveco Anglo American 225kt of copper 3.3 2019

Conga Newmont/Buenaventura 54kt of copper and 680koz. of gold 4.8 n.a.

Invicta Andean American Mining 160koz. of gold 0.1 n.a.

Fosfatos Pacasmayo / Mitsubishi 500kt of phosphate 0.5 n.a.

San Luis Silver Standard 12koz ofMes n.a. n.a.

Bayovar* Vale From 3.9 to 5.8 mn tons of Phosphate 0.5 2016

Toromocho* Aluminium Corp. of China 25kt of copper 1.3 2016

Pukaqaqa Votarantim Metais 40kt of copper 0.6 2016

Tambomayo Buenaventura 250koz of gold, 3mnoz of silver 0.3 2016

Pampa de PongoNanjinzhao /Zibo

Hongda15mnt of Iron 1.7 2016

Ilo refinery* Southern Copper 820kt of copper n.a. n.a.

Santa Ana Bear Creek Mining 5mnoz of gold 0.1 n.a.

Anubia Guido del Castillo 20kt of copper 0.1 2015

Quechua Pan Pacific/JX Nippon/Mitsui 60kt of copper 0.5 2015

Marcobre (Mina Justa)Bresia/Korea Resources/LS-

Nikko Copper110kt of copper 0.7 2016

Hilarion Votarantim Metais n.a. 0.5 2016

Rondoni Volcan 50kt of copper 0.4 2016

Magistral Votarantim Metais 31kt of copper 0.8 2016

Bofedal II Brescia 6.3kt of tin 0.2 2016

Chucapaca Buenaventura 500koz of gold 1.2 2017

Galeno Minmetals/Jiangxi350kt of copper, 82koz of gold, 2.3kt of

molybdenum, and 2mnoz of silver2.5 2017

La Granja Rio Tinto 500kt of copper 1.0 2017

Zafranal AQM/Teck Resources 103kt of copper and 30koz of gold 1.1 2017

Accha Zincore 60kt of z inc, 40kt of lead 0.3 2017

Cañariaco Candente Copper 119kt of copper 1.6 2018

Los Chancas Southern Copper 80kt of copper 1.6 2018

Los Calatos Metminco Limited 83kt of copper 1.3 2018

Rio Blanco Zijin Mining 200kt of copper 1.5 2019

Haquira Antares Minerals 190kt of copper 2.8 2019

Hierro Apurimac Strike Resources 20mnt of iron 2.3 2020

Don Javier Junefields companies n.a. 0.6 n.a.

Cerro OcopaneCuervo Resources/Strike

Resourcesn.a. n.a. n.a.

Salmueras de Sechura Growmax agri 250kt of potassium chloride 0.1 n.a.

Fosfatos MantaroFocus Venture/Stonegate

Agricomn.a. 0.9 n.a.

Quicay II Centauro n.a. 3.0 n.a.

EIA being evaluated

In Exploration

With EIA Approved / In Construction

*Brownfields


06 January 2015


The Hassle Behind a Project's Approval

We believe that, despite the natural competitive advantage of the country's geology, the

real obstacle for unlocking the country's potential is its social and environmental issues.

Currently, the approval of the EIA is the biggest milestone required for new projects and

expansions to receive the green light for construction. Delays occur mainly due to issues

regarding water and land, especially because mining is not a sustainable economic

alternative for the communities, which makes it an easy target for social disturbances.

Exhibit 17: Unaligned Incentives?

Agriculture vs Mining

(Community’s eyes)

Agriculture vs Mining

(Peru’s eyes)

Agriculture

20% of total

workforce

Mining

1% of total

workforce

Mining

9.4% of GDP

Agriculture

5% of GDP


Exhibit 18: Theoretical Timeline for a Project's Approval; It Could Take Years for a Project to Receive the Green Light

EIA is presented

The Ministry’s Environmental Office

will review the information

The EIA is presented on the Ministry’s webpage and the Public Audience is announced in local

press

Public Audience

is held

Ministry’s Environmental

Office evaluation

Additional workshops might take place, public comments are received

Successful

Cancelled

in 20 calendar days

Max 30

calendar days

Directorial

Resolution

Construction works can

begin

Successful

Max 30 calendar days

If

approved

If

operational

details are

correct

The ministry decides if it has been

resolved, after the

company corrects the issues

Operation Feasibility Study

and the environmental resolution are sent to the Ministry’s

Operation Office

New Public Audience

Observations to the study are

presented to the Company


06 January 2015


Political Instability the Underlying Problem behind Low Mining Investments

In our view, an unstable political environment, coupled with high poverty levels in the

majority of the mining districts, has led to significant project delays and has become the

main obstacle to unlocking the country's mining potential. In order to track this relationship

we used a (country's literacy level/GDP per capita) ratio as a proxy for political risk. The

graph below shows the strong correlation between these two variables.

Exhibit 19: Mining Investments Strongly Correlated with Peru's political risk in US$ millions, unless otherwise stated

Mining

Investment

Political Risk

0.0000

0.0002

0.0004

0.0006

0.0008

0.0010

0.0012

0

2000

4000

6000

8000

10000

12000

2004 2006 2008 2010 2012 2014 Source: Company data, Credit Suisse estimates

Cajamarca is the living proof of the effects that an unstable social environment and a

unfavorable political situation can have on the execution of mining projects. From 2011

when the local major stepped in office, through 2013, gold production declined by 11%,

while copper production contracted 20%. We expect this downward trend to continue, as a

consequence of the 55% fall in mining investments from 2012 to 2013 in this region.

Exhibit 20: Gold Production by Region

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Tacna Puno Pasco Moquegua Madre de Dios Lima

La Libertad Junín Ica Huancavelica Cusco Cajamarca

Ayacucho Arequipa Apurimac Ancash Source: Peruvian Central Bank, Credit Suisse estimates

06 January 2015


US$60bn Pipeline Could be Jeopardized by Political Risk in Each Region

Exhibit 21: Mining Projects in Peru and the Political Risk of the Region

Ollachea

Corani

Constancia

Santa AnaChucapaca

Quellaveco

ToquepalaIlo Refinery

Lós CalatosTia Maria

CercanaCerro Verde

TambomayoZafranal

QuechuaAccha

Cerro

Ocopane

AnubiaHierro Apurimac

Las Bambas

Crespo

Los ChancasHaquira

Pampa de Pongo

MarconaMarcobre (Mina Justa)

E.R. Shouxin

Inmaculada

Pukaqaqa

Cerro Lindo

Invicta

Hilarión

San Luis

Magistral

Colquijirca

Fosfatos MantaroQuicay II

ToromochoRondoni

Shahuindo

Galeno Michiquillay

CongaLa Granja

Cañariaco

Rio Blanco

Salmueras de SechuraFosfatosBayovar

With E.I.A. Approved / In Evaluation

Exploration

With E.I.A. Approved / In Construction

Anama

Explotacion de Relaves

Don Javier

Bofedal II

Uchucchacua

Low Risks:

<15% poverty or 2 or

less mining conflicts

Medium Risk:

Poverty: 15%-30%

2-4 mining conflicts

High Risk:

Poverty > 30% or 4+

mining conflicts

No Mining Projects

Source: MINEM, Credit Suisse estimates

Exhibit 22: US$60bn Pipeline According to Execution Risk in US$bn

12.7

6.4

1.54.2

7.6

4.2

0.3

10.2

10.10.8

2015 2016 2017 2018 2019 2020

Projects with low and medium

execution risk

Projects with high execution risk


The company's historical market share in mining projects has been ~50%, and we believe

the company is in great position to maintain this market share in the future.

06 January 2015


Peru's Natural Competitive Advantage Limited by

Social Unrest

We believe the size of Peru's reserves, the quality of its ore grades, and its ability to

extract most metals at costs significantly below the global average creates potential for a

lot more. The government stated it expects Peru to become the second-largest global

producer of copper and silver by 2016 and 2017, respectively.

Exhibit 23: Copper Reserves and Costs Cash Cost in US$/lb

2%3% 4% 4%

6%8%

13%

29%

2.0

3.0

0.6

2.1

0.9

2.1

1.7

2.2

Congo DR Zambia Indonesia Canada Mexico USA Peru Chile

Reserves All in Cash Costs (Excluding Capex)

Global

Average (%)

2.03

Source: Wood Mackenzie

Exhibit 24: Gold Reserves and Costs Cash Cost in US$/oz.

3%4%

5% 5%5%

7%8% 9%

9%

11%

792

1,033

543 726

978

1,101

870

1,1701,100

959

Peru Brazil Indonesia China Chile Australia Russia South

africa

Canada Usa

Reserves All in Cash Costs (Excluding Capex)

987

Global Average

Source: Wood Mackenzie

Production has been growing steadily, supported by a CAGR of 41.1% in investments in

mining projects from 2003 to 2013. The government provided an expected pipeline that

adds up to US$60bn in 54 projects that range from exploration to expansions of mines

currently in operating operation.

06 January 2015


Bullish price expectations have historically boosted capex deployments

Historically, mining investments in Peru have been influenced by mineral prices; from 1996

to 2004 prices were relatively flat just as investments. The year 2006 saw a big boost in

mineral prices that marked the beginning of the ramp-up in investments, and both touched

their highest levels in 2011-2013.

Exhibit 25: Mining investments in Peru, Driven by metal prices. in US$ million, Mineral price base 100: January 1996

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

2000

4000

6000

8000

10000

12000

0

200

400

600

800

1000

Mining Investments

Copper

Gold

Silver

Source: Peruvian Ministry of Energy and Mining, Bloomberg, Credit Suisse estimates

We made an exercise to assess the impact of metal prices on mining investments, all else

constant and without the introduction of new projects. Investments in this type of projects

are strongly correlated with the behavior of gold prices.

We ran a regression using historical quarterly mining investments and gold prices from

1996 to 2014. Our aim was to explain mining investments in Peru through the behavior of

gold prices and found a high correlation between them.

Exhibit 26: Mining Investments Can be Explained by Price Behavior

Y-Axis: Mining Investments US$mn, X-Axis: Gold Price /oz

R² = 0.7867

0

400

800

1200

1600

2000

2400

2800

0 500 1000 1500 2000

Gold PxLinear (Gold Px)

Source: Peruvian Ministry of Energy and Mining, Bloomberg, Credit Suisse estimates

06 January 2015


With the results of the regression we built three scenarios: (i) a base case scenario using

CSe for gold prices (which we normalize at US$ 1,250/oz), (ii) a bull case that considers

prices 15% above our original estimates and, (iii) a bear case scenario, which shows a

15% decline in prices.

Exhibit 27: Mining investments scenarios

Estimated

0

500

1000

1500

2000

2500

3000

1996 1997 1999 2000 2001 2003 2004 2006 2007 2008 2010 2011 2013 2014 2016 2017 2018 2020

Bear Case Base Case Bull Case


Gone are the days when gold prices hovered above US$1,600/oz., and we do not expect

them to return to this level in the foreseeable future. Using scenarios with prices varying

from US$1,000/oz. to US$1,400/oz. we found a range for mining investments in the

coming years of US$4.8bn – US$6.8bn. Within this investment range, G&M revenues

derived from the mining industry could be similar to those received in 2010.

G&M's Performance Reliant on the Mining Industry

To fully grasp how mining investments in Peru can influence G&M's performance, we took

a look at Sigdo Koppers and Ferreycorp, which provide services to the mining industry.

The correlation between mining investments and these stocks' performance is strong.

Exhibit 28: Mining investments in Chile Exhibit 29: Mining investments in Peru

Sigdo

Koppers

Mining

Investments in

Chile

0

50

100

150

200

250

300

350

400

450

500

50

100

150

200

250

300

350

Oct-05 Oct-07 Oct-09 Oct-11 Oct-13

Mining

Investments in

Peru

Ferreycorp

0

200

400

600

800

1000

1200

50

550

1050

1550

2050

2550

3050

Oct-96 Oct-99 Oct-02 Oct-05 Oct-08 Oct-11 Oct-14 Source: Chilean Mining Counsel, Bloomberg, Credit Suisse estimates Source: Peruvian Ministry of Energy and Mining, Bloomberg, Credit

Suisse estimates

06 January 2015


Both companies are very sensitive to mining investments and reached share price peaks

in years in which mining investments were at all-time-high levels. Currently, share prices

are affected by a cut in mining investments in 2014 in both countries. We are hesitant to

believe that mining investment will materialize as expected in Peru, let alone recover to the

levels reached a couple of years ago.

Exhibit 30: Mining investments in Peru have impacted G&M share price

Graña y Montero

Mining investments

in Peru US$mn

0

2000

4000

6000

8000

10000

12000

0

2

4

6

8

10

12

14

Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13 Source: Peruvian Ministry of Energy and Mining, Bloomberg, Credit Suisse estimates

Even if Social and Political Interests are Aligned, Projects Might not be

Economically Attractive Under Current Gold and Copper Prices

As witnessed since 2010, it is unquestionable that Peru has a strong challenge in aligning

political and social interests with the development of mining projects. But there is an

additional problem; metal prices. Gold and copper prices have stumbled 9% and 15% y/y,

respectively, to a level that puts at risk the high capex deployment in mining projects.

We ran an exercise using a set of data from our extensive gold and copper mining

coverage in Peru and crossed them with our data on miners to see the level of IRRs

projects get in Peru under different price scenarios.

We modeled an average mining project in Peru for each gold and copper price scenario.

The project execution assumptions are based on the following averages:

i. Average capex in Peru projects per ton for copper, and average capex per ounce

for gold projects.

ii. Mine life in major gold and copper projects in Peru.

iii. Flat maintenance capex until the end of mine life, representing the current

average maintenance capex per produced unit

We used the following assumptions for the P&L:

- Gold cash- cost assumption (C1) of US$502/oz, which is the average in Peru

provided by Wood Mackenzie.

- Copper cash -cost assumption (C1) of US$0.90/lb, which is the average in Peru

provided by Wood Mackenzie.

- Other by-product prices were based on current Credit Suisse price estimates

- We assumed the tax scheme stays as it is for mining companies in Peru

06 January 2015


With the above mentioned assumptions we tested our synthetic mine to see how, Ebitda

margins, FCF conversion, and IRRs shifted with metal prices movements and arrived at

the following results for an average Peruvian project:

Exhibit 31: Sensitivity of Peruvian Gold Mining Projects to

Gold Prices X axis in US$/oz. IRR real, unlevered.

Exhibit 32: Sensitivity of Peruvian Copper Mining Projects

to Copper Prices X axis in US$/lb. IRR real, unlevered.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

30%

35%

40%

45%

50%

55%

60%

65%

1,400 1,300 1,200 1,100 1,000


0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

20.0%

20%

27%

34%

41%

48%

55%

62%

4.5 4.0 3.5 3.0 2.5



Based on our experience in the mining industry, we believe that gold mining projects need

high single digit IRRs for high amounts of capex deployment to make sense. Given that

copper prices are more volatile than gold prices, we think that copper projects need to be

at least low double digit IRR's to proceed.

This leads us to conclude that a substantial part of the US$60bn capex announced and

estimated by the government is at risk of being delayed or cancelled by companies, which

will seek to get returns above ~5% in gold projects and ~10% in copper projects.

06 January 2015


Backlog and Value Creation

Exhibit 33: Impact on G&M's Numbers- 2015 Backlog 15% above CSe and 15% below CSe

in US$ million, unless otherwise stated

15% below CSe 15% above CSe

Valuation

TP 9.8 15.0

Discount to NPV -23.0% 18.6%

2015 2,697 2,876

Revenues 2016 2,307 2,768

2017 2,381 3,048

2015 354 364

Ebitda 2016 381 410

2017 397 438

2015 13.1% 12.7%

Ebitda Mg 2016 16.5% 14.8%

2017 16.7% 14.4%

2015 15.7% 16.4%

ROIC 2016 14.8% 16.6%

2017 14.4% 16.8%

Operational Impact


The company's future performance has great sensitivity to backlog increases. After making

an exercise to assess the impact of a +/- 15% change on G&M's 2015 backlog, we were

able to observe an important increase in revenues and Ebitda, though taking a toll on

margins. Since E&C is far from being the company's most profitable segment.

06 January 2015


Infrastructure Projects in Peru Struggling to be Approved

Peru's public and private investments as a percentage of GDP have been constantly rising

since the 1990s, reaching 4.3% in 2014, one of the highest in Latin America and above the

region's average of 3.5%.

Exhibit 34: Public and Private investments in infrastructure in Peru as a Percentage of GDP Investment (LHS), GDP Growth (RHS)

Private

Investment

GDP

Growth

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Region

Avg.

3.5%

Public

Investment

Source: CEPAL, UN, Credit Suisse estimates

According to the World Economic Forum, Peru has an average infrastructure quality

compared to that of its LatAm peers, but efforts currently being made aim to position the

country's infrastructure among the best in the region.

Exhibit 35: World Economic Forum's Ranking of Infrastructure Quality in the region.

WEF – Quality of Infrastructure 2014-2015 (1= Best performer, 148= Worst performer) Colombia Mexico ChilePeruBrazil

1 (Best performer) 148 (Worst)

Airports


Ports


Railroads


Highways


OverallInfrastructure

Argentina


ElectricitySupply

11378 896345

122876235

110 122 1261025231

9064 73

1231201081056950

1238960 71 8054

95 96 102

90 123

91

Source: The World Economic Forum, Credit Suisse estimates

06 January 2015


Infrastructure Investment Gap in Peru

According to industry sources in Peru, the country needs to invest US$88bn to close the

infrastructure gap, defined as the investment needed to sustain current growth in the

country. G&M participates in projects in the energy, telecommunications, and

transportation sector; which account for 83% of the gap.

Exhibit 36: 2012-2021 infrastructure investment gap

Energy, 37%

Transportation, 24%

Telecommunications, 22%

Hidraulic Infrastructure, 10% Water treatment &

Sewage, 6%

Health & Education, 1%

Total:

US$88bn

Source: National Infrastructure Promotion Association Credit Suisse estimates

To close the gap, the government expects investments in energy, communications, and

transportation infrastructure of US$21.6bn in the remaining term of the current

administration.

Public-Private Partnerships in Peru

Public-Private Partnership arrangements have been used as a way to boost private

investments in infrastructure. Since July 2011 projects worth up to US$14bn have been

awarded and a US$14bn pipeline is expected in the short term, accounting for 64% of the

programmed investments in transportation, communications, and energy infrastructure of

the current administration.

While the US$4bn pipeline will most likely be granted in 2015, it will take three to four

years for the investments to start flowing and for the construction companies to start

receiving the benefits.

06 January 2015


Exhibit 37: Pipeline of PPP Projects

Project Description Scheme Location Status

Estimated

Investment

US$mn

Estimated

grant

date

G&M's Interest in

the Project.

Toll Roads

Mountain range

transveral road 4

Maintenance and operation of 965km of road, upgrade of

117km, and maintenance for 311km.

Co-financed concession with a

life of +25 years

Junin, Huancavelica,

Ayacucho, Apurimac,

and Ica

Waiting for Finance

Minister favorable opinion340 4Q15

Mountain range

transveral road 5Maintenance and operation of 422km of roads.


life of 25 yearsCusco and Puno To be contested n.a. 1Q15

Urban toll road in

LimaConstruction and Operation of a 33km urban toll road in Lima.

Co-Financed Private Project

InitativeLima In Evaluation n.a. 2015

Ica - Quilca section

of the pan-american

highway.

Construction and operation of 3 bypasses in the pan-american

highway.

Sustainable Private Project

InitativeArequipa In Evaluation n.a. 2015

Rail

Lima subway's line 3

& 4Construction and operation of 62 km in two subway lines.


life of 35 yearsLima Studies in progress ~10,000 2016

Huancayo -

Huancavelica

Railroad

Modernization of tracks, briges, and tunnels on 128kms of

railroad.


life of 30 yearsJunin & Huancavelica. Studies in progress n.a. 4Q15

Arequipa's monorail Construction and operation of 14km of a monorail in Arequipa. Private Project Initative Arequipa In Evaluation n.a. 3Q15

Electricity

Azangaro-Juliaca-

Puno transmission

line

Construction and operation of 114km circuit, a 220/138kV sub-

station, and extension of a 220kV Sub-station.30-year concession Puno

Contest and basis

published.68.9 4Q14

G&M didn't

participate.

Carapongo sub-

stationConstruction and operation of a 500/220kV sub-station. 30-year concession Lima

Contest and basis

published.31.3 2Q15

Quillabamba

Termical Station

Construction and operation of a 200MW thermoelectric plant, a

13.8/220 kV sub-station, and a 35km transmission line.

20-year investment

commitment contractCusco To be contested 200 2Q15

1200 MW

Hidroelectric plants

projects

Construction and operation of various hydroelectric plants to

provide 1,200MW.Supply contract n.a. To be contested 2,700 2015

The construction of

Cañon del Pato,

Ralco, and Huanza

plants have given

G&M experience in

this projects.

Hydrocarbons

Natural Gas Storage

Tanks at Melchorita

Construction and operation of a 130,000 m3 natural gas storage

tank20-year concession Lima Reprogrammed 250 n.a.

G&M could be

interested since they

have the concession

to a similar project in

Ayacucho.

Logistics

Logistics zone in the

port of CallaoConstruction and operation of a logistics yard.

Self sustainable public-private

partnershipLima

Contest and basis

published.n.a. 2015

G&M has no

previous experience

in this sector

Riverways

Amazonas river wayConstruction and operation of a navigation channel in the

Huallaga, Marañon, Ucayali, and Amazonas river.20-year concession Loreto and Uyacali

Contest and basis

published.69.4 2Q14

G&M has no

previous experience

in this sector

Water treatment

Water supply

infrastructure for

Lima

Construction and operation of two dam extensions, a water

treatment plant, and complementary works.30-year concession Junin and Lima Studies in process 400 1Q15

La Chira's

concession could

have synergies with

this project.

Chillon river dam Construction of a Dam in the Chillon river 20/30-year concession Lima To be contested 70 n.a.

G&M has

constructed the

Cerro del Aguila dam.

Ayacucho broadbandConstruction and operation of a 1,898km optic fiber network to

provide internet access to 179,000 people.

Transfer of state owned

company to private.Ayacucho

Contest has been

announced54.9 4Q14

Apurimac broadbandConstruction and operation of a 1,409km optic fiber network to

provide internet access to 123,000 people


company to private.Apurimac

Contest has been

announced42.3 4Q14

Huancavelica

broadband

Construction and operation of a 1,327km optic fiber network to

provide internet access to 143,000 people


company to private.Huancavelica

Contest has been

announced46.8 4Q14

Lambayeque

broadband

Construction of a 567km optic fiber network to provide internet

access to 302,000 people


company to private.Lambayeque

Contest has been

announced19 4Q14

Aerial Lift in

Choquequirao

Construction and operation of an Aerial lift from Kiuñalla to the

Choquequirao.20-year concession Contest suspended 123 n.a.

G&M has no

previous experience

in this sector

Experience in

construction and

operation of Toll

Roads could boost

G&M's interest.

Telecommunications

Others

G&M constructed

and operates Line 1

E&C division has

experience in the

construction of

stations and

transmission lines.

G&M has no

previous experience

in this sector

Source: Peruvian Investment Promotion Agency (ProInversion)

06 January 2015


The Peruvian government, and ProInversion (government's agency that promotes private

investment) have established a program to help narrow the infrastructure and public

services deficit, by allowing private players to propose infrastructure projects.

Exhibit 38: Process for a Project Initiative

Proposal is

presented by a

private player to

ProInversion

The project is

evaluated

If the project

meets with the

requirements,

other private bids

can be presented

If there are no

additional proposals

the proponent wins

the project. If it looses

all the expenses are

reimbursed

Source: ProInversion, Credit Suisse estimates

If the project is approved it will fall into one of two categories and, depending on their

financial characteristics, they can be self-sustainable or co-financed with subsidies or

guarantees provided the government.

We welcome this new proposal and expect tangible benefits for G&M. During 2014 the

government received close to 65 proposals from the private sector, out of which 14

were presented by G&M. The projects presented by the company account for US$4bn,

two initiatives have already been rejected, these account for US$1.5bn. The government

will open in January a new window for the presentation of project initiatives, and we expect

G&M to present more project proposals.

Project Delays Have Impacted E&C and Concession Investments

While the process of awarding the projects has been relatively smooth, their actual

execution is sometimes a bumpier process. Of the 34 projects awarded between 2010 and

2013, 13 (which account for US$3.6bn) have not started. These projects are usually

delayed for three to four years due to a large number of permits and rights of way required

to start construction works.

Exhibit 39: Delay in Infrastructure Projects: a Clog in investment flows

Name of the project Date grantedInitial start of

operations date

Expected start date

of operationsDelay (years)

Initial Capex

US$mn

Autopista del sol

(Trujillo - Sullana)Jun-09 Jan-15 Jan-18 3 360

Road Network 4

(Patvilica - Trujillo)Feb-09 Jul-05 Jul-05 2 350

Source: Peruvian Minister of Communications and Transportation, Initiative for the Integration of the Regional

Infrastructure of South America, Credit Suisse estimates

06 January 2015


G&M's Main competitors

The company's main competitors have a strong international presence but differ according

to the segment.

Exhibit 40: Main Competitors in the E&C Segment Exhibit 41: Main Competitors in Real estate

E&C Country

Besalco Chile

Odebrecht Braz il

Andrade Gutierrez Braz il

Obrascón Huarte Lain Spain

JJC Contratistas Generales Peru

Cosapi Peru

Techint Italy

SSK Montajes e Instalaciones Chile

Skanska del Perú Sweden

Mota-Engil Peru Portugal

Grupo San Jose Spain

Salfacorp Chile

Constructores Interamericanos (COINSA) Peru

San Martin Contratistas Generales (ICA) Mexico

Real Estate Country

Paz Centenario Global Peru

Paz Centenario Inmobiliaria Peru

Corporación Lider Peru Peru

Urbana Peru Colombia

Los Portales Mexico - Peru

Inmobiliari Peru

Imagina Grupo Inmobiliario Chile

ENACORP Chile

Besco Peru

Gerpal Peru


Exhibit 42: Breakdown of Toll Road Concessionaires in Peru , by Km.

Odebrecht,

17.8%

Concay,

Incoequipos,

Nexus , Viviendas

del Perú, 7.0%Graña y Montero,

19.0%

JJC contratistas

Generales, 13.1%

Andrade

Gutierrez,

Camargo Correa,

Queiroz Galvao,

5.7%

Hidalgo e

Hidalgo, Casa,

Conorte, 28.4%

OHL , 6.8%

Obrainsa, 0.9%Conalvias, 1.4%

Total:

5,300km

Source: Peruvian Ministry of Transportation and Communications, Credit Suisse estimates

06 January 2015


Oil & Gas Division

Hydrocarbon Extraction

Under hydrocarbon extraction services contracts with Perupetro, the company operates

and extracts oil and natural gas from Block I and Block V, which are mature oil fields

located in the province of Talara.

Exhibit 43: G&M's Oil Fields

Contract

Maturity

Wells Avg. daily

barrels

Crude oil proved

reserves (Mbbl)

Natural Gas proved

reserves (MMcf)

Undeveloped

Acreage

Block I Dec-2021 195 1,460 3,555 14,205 21.40%

Block V Oct-2023 48 132 711 n.a. 30.30%

Blocks III & IV Apr-2045 n.a. 1,700 n.a. n.a. n.a.


In December the company was awarded the concession for Blocks III and IV. Both blocks

produce a daily average of 1,700 bbl/day and the company expects to increase production

to up to 5,000 bbl/day.

Exhibit 44: Contract and Fee structures

Oil Price (US$) Fee (% of price)

$80 >= 50%

For each US$ below 80 -0.05%

Contract Scheme

Oil & Gas extracted is delivered to

Perupetro in exchange of a variable fee.


Gas Processing

G&M owns a gas processing plant, with processing capacity of 44Mcf per day, which

transforms natural gas received from EEPSA into dry natural gas and liquids that are

returned to EEPSA or sold in the market.

Under the contract that expires in 2023, the company pays for the operating costs of the

plant but keeps the revenue from the natural gas liquids sold in the market after paying a

variable royalty that depends on volume produced. In 2013 revenues from the gas

processing plant accounted for 13.9% of the Oil & Gas division.

Fuel Storage Terminals

Through a 50% stake in Consorcio Terminales, the company operates seven fuel storage

terminals with a storage capacity of 2.6MMbbl under which revenues are obtained from

storage and throughput fee.

In June 2014 Consorcio Terminales was awarded the concession to operate five additional

fuel terminals, in which the company will have to invest US$37.2mn and a reimbursable

investment of US$180mn.

Additionally, G&M has a stake in an export terminal for gasoline, diesel, propane, and

butane (Terminal Marino Pisco Camisea), and in an export terminal for sodium

hydrosulfide, used by mining companies (Terminal de Quimicos de Matarani).

0

6 J

an

ua

ry 2

01

5

Gra

na

y M

on

tero

(GR

AM

) 2

9

Exhibit 45: G&M's Peers Comparison

Mkt Cap

Company US$ mn 14 15E 16E 14 15E 16E 14 15E 16E 14 15E 16E 14 15E 16E 14 15E 16E

Asia and Pacific

Leighton Holdings 6,114 13.7 13.8 14.7 2.2 2.1 2.0 4.4 4.2 4.2 8% 8% 8% 17% 16% 15% 0.28 0.18 0.13

Transfield Services Ltd 659 11.5 8.7 8.3 1.1 1.0 0.9 5.5 5.0 4.8 5% 6% 6% 9% 10% 10% 2.68 1.75 1.56

Monadelphous Group 704 5.5 7.2 8.7 2.1 2.2 2.2 5.8 4.1 4.5 9% 9% 9% N.A. N.A. N.A. -0.82 -1.06 -1.33

China State Construction Engineering 34,131 8.5 7.4 6.5 1.5 1.3 1.1 5.0 4.4 3.8 6% 5% 6% N.A. N.A. N.A. 1.33 1.22 0.92

Simple Average 9.8 9.3 9.6 1.7 1.6 1.6 5.1 4.4 4.3 7% 7% 7% 13% 13% 13% 0.87 0.53 0.32

Mkt Cap. Weighted Average 9.3 8.3 7.8 1.6 1.4 1.3 4.9 4.4 3.9 6% 6% 6% 3% 3% 2% 1.2 1.0 0.8

Europe

ACS 10,873 11.3 11.4 10.2 2.2 2.2 2.0 5.8 5.4 5.0 7% 7% 8% N.A. N.A. N.A. 1.70 1.51 1.27

AMEC 4,902 9.8 9.3 8.1 3.8 3.5 3.1 7.7 6.8 5.8 9% 9% 9% 9% 10% 12% 1.43 0.96 0.48

Ohl 2,193 5.2 5.9 5.1 0.6 0.6 0.6 5.5 5.3 5.1 33% 33% 32% N.A. N.A. N.A. 4.54 4.35 4.19

Simple Average 8.8 8.9 7.8 2.2 2.1 1.9 6.4 5.8 5.3 16% 16% 16% 9% 10% 12% 2.6 2.3 2.0


North America

SNC Lavalin Group 5,506 78.3 14.1 12.1 2.5 2.5 2.3 6.9 8.1 7.3 12% 8% 9% N.A. N.A. N.A. 5.32 8.70 9.00

Fluor 9,148 14.3 12.7 10.7 2.4 2.1 1.9 5.4 4.4 4.7 6% 6% 6% 65% 70% 30% -2.24 -2.37 -1.26

AECOM Technology Corp. 4,464 12.5 9.5 8.3 1.3 1.3 1.2 8.5 5.1 4.6 5% 6% 6% N.A. N.A. N.A. 0.97 1.84 1.38

Jacobs Engineering 5,618 13.0 11.9 10.7 1.3 1.2 1.1 8.4 6.9 5.1 6% 6% 7% 9% 10% 12% 0.33 0.13 -0.80

Simple Average 29.5 12.1 10.5 1.9 1.8 1.6 7.3 6.2 5.4 7% 6% 7% 37% 40% 21% 1.1 2.1 2.1


Latin America

G&M 1,383 14.9 13.0 12.8 1.6 1.5 1.4 6.6 6.8 5.9 14% 13% 15% 15.6% 16.3% 16.1% 1.10 1.78 1.33

Empresas ICA 698 17.1 10.3 5.7 0.4 0.4 0.4 9.1 8.9 6.5 18% 18% 19% N.A. N.A. N.A. 7.23 7.07 5.48

Ferreycorp 537 7.0 5.9 5.3 0.9 0.9 0.8 5.7 5.2 4.5 11% 12% 12% N.A. N.A. N.A. 2.59 2.30 1.99

SalfaCorp 324 7.8 8.3 7.3 0.6 0.7 0.7 9.6 9.0 8.5 7% 7% 7% N.A. N.A. N.A. N.A. N.A. N.A.

Besalco 333 24.0 11.8 8.3 2.8 1.4 N.A. 9.0 7.0 6.2 8% 11% 13% N.A. N.A. N.A. N.A. N.A. N.A.

Arteris 1,494 8.7 8.2 6.7 1.9 1.7 1.5 5.4 5.1 4.5 68% 69% 69% 11% 12% 13% 2.76 2.68 2.31

Pinfra 4,731 31.8 24.7 23.1 3.8 3.3 2.9 17.2 14.9 13.2 65% 66% 70% 18% 20% 19% -0.53 -0.74 -0.73

OHL Mexico 2,962 6.7 7.0 15.4 0.8 0.7 0.6 6.1 6.3 9.9 81% 84% 82% 18% 15% 9% 2.58 2.88 4.88

OHL Mexico (Cash EV/EBITDA) 33.8 28.8 25.2 43% 54% 65%

Simple Average 14.8 11.2 10.6 1.6 1.3 1.2 11.4 10.2 9.4 34% 35% 36% 16% 16% 14% 2.9 2.7 2.5


P/E (x) ROICP/B (x) EV/EBITDA (x) EBITDA Margin Net Debt / Ebitda


06 January 2015


Appendix

Exhibit 46: G&M's Corporate Structure

Real Estate development

VIVAGyM

Land parcels

ALMONTE

Engineering services

E&C services in Chile

DSD

GMI

Construction services

GyM

Contract mining services

STRACONGyM

Construction services in Chile

VIAL Y VIVES

Water plant concession

Mass transit system concession

FERROVIASGyM

CHIRA

O&G prod., gas processing & fuel storage

GMP

Road concession

VESUR

Toll-road concession

NORVIAL


SURVIAL


CONCHAQUE

IT services

GMD 86%

Operation and maintenance of infra. assets

CONCAR 99%

Electricity network services

CAMGyM75%

86%

89%

93%

74%

80% 75%

50%

95%

99%

67%

99%

99%

98%

50%

G&M

Engineering and Construction Infrastructure Real Estate Technical Services


Engineering and Construction

G&M's E&C segment is one of the largest players in Peru and is engaged in engineering,

civil, electro-mechanic, and mining construction in Peru and other countries such as

Colombia, Panama, Chile, Bolivia, Dominican Republic, and Mexico. In 2013 80% of

construction revenues came from private-sector projects.

Exhibit 47: E&C Segment 2014/2015 Financials in US$ 000's, unless otherwise stated

2014 2015

Revenues 1,700.9 2,041.5

Operating expenses

and SG&A

1,594.1 1,921.1

D&A 72.5 72.2

Operating Profit 106.7 120.4

Adj. Ebitda 178.5 192.6

Adj. Ebitda Margin 10% 9%

Backlog 2,849.9 2,342.6

Backlog/Revenues

ratio

1.7x 1.1x


Norvial

In 2003 Norvial was awarded a the concession to operate and maintain the 183 km toll

road that connects Lima to northwestern Peru, known as Red Vial 5. The concession ends

in 2028. G&M has a stake of 67% in Norvial under a partnership with JJC Contratistas

Generales.

Under the concession, Norvial has to expand the existing road by adding two additional

lanes. The first stage of the expansion project was finished in 2008 and the second stage

will require an investment of US$105mn.

Norvial revenues come from toll rates that are established in the concession agreement

and adjusted for the PEN/USD Exchange rate and inflation.

06 January 2015


Exhibit 48: Norvial 2014/2015 Financials in US$ 000's, unless otherwise stated

2014 2015

Revenues 56.8 60.1

Operating expenses

and SG&A

39.0 40.2

D&A 3.6 3.6


Adj. Ebitda 22.3 23.4



Exhibit 49: Norvial Concession

Oyon

Huaura

Huaral

Canta

Huancho

Ancon

Lima

Huarochin

Yauyos

Canete

Ica

Callao

Supe Puerto

Barranca

CajatamboPativilca

Ancash

Pacific Ocean

PERU

Panamerican highway

Norvial


Survial

In 2007 Survial was awarded a concession to operate and maintain the 750 km toll road

that runs from the San Juan de Marcona port to Urcos, a city connected to the

interoceanic highway that runs to the Brazilian border. Survial revenues come from an

annual fee paid by the Ministry of Transportation and Communications that varies

according to the maintenance required by the highway. The concession expires in 2032.

06 January 2015


Exhibit 50: Survial 2014/2015 Financials in US$ 000's, unless otherwise stated

2014 2015

Revenues 37.3 28.0

Operating expenses

and SG&A

34.8 26.5

D&A 0.1 0.1


Adj. Ebitda 2.5 1.6



Exhibit 51: Survial Concession

PERU San

Juan de

Marcona

Nazca

Puquo

Chahuanca

AbancayCusco

Puerto

Maldonado

Pune

Maquegua

Arequipa

Huancayo

Brazil

Bolivia

Interoceanica highways

Panamerican highway

Survial concession(San Juan de Marcona-Urcos)

Urcos

Pacific

Ocean


Canchaque

In 2006 Canchaque was awarded a concession to operate and maintain the 78 km toll

roads that run from the city of Buenos Aires to Canchaque. The concession expires in

2025 and G&M fully owns it. Revenues come from an annual fee paid by the Ministry of

Transportation and Communications that varies according to the maintenance required by

the road.

Exhibit 52: Canchanque 2014/2015 Financials in US$ 000's, unless otherwise stated

2014 2015

Revenues 5.6 3.0

Operating expenses

and SG&A

3.3 1.9

D&A 0.0 0.0


Adj. Ebitda 2.4 1.2



06 January 2015


Exhibit 53: Canchaque Concession

Buenos Aires

La Matanza

San

Miguel de

El Faique

Serran

Malacasi

San Juan

de Bigote

0 km10 km

20 km

30 km

40km

50 km 60 km

75 km

La

Virgen

Yamango

Tunal

El PozoBarrios

Silla

San Francisco

Pueblo

NuevoMorropón

Polvasal

Jacocha

Salitral

Canchaque


Via Expresa Sur

In 2012 G&M was awarded a 40-year concession to build, maintain, and operate the

4.6km extension of one of the main highways in Lima, to connect it to the south Pan-

American Highway that runs from Ecuador to Chile.

The estimated investment in this toll road is approximately US$200mn and it is expected

to start operations in 2019. The concession's revenues will come from the toll rates

charged from users, with a guaranteed revenue of US$18mn for the first two years of

operations and US$19.6mn for the third year. The land for the project has yet to be

expropriated for construction works to start.

Exhibit 54: Via Expresa Extension Project

Actual estación

Las Flores del

MetropolitanoPaseo de la

Republica La

Merced

BARRANCO

La

Caselliana

Ayacucho

Surco

Monte de

los Olivos

Av Los

Próteres

Panamericana

Sur

RoundaboutsBridges

Length: 4.6 km

San

Juan de

Miraflores

Barranco

Zona

ampliada

1967 1st stage1969 2nd stage2019 3rd stage (Concessioned)

Via Expresa Sections

Characteristics

(road width): 70m)

Bus Lanes

17m

Estación

Central

Via Expresa Extension


06 January 2015


Via Expresa Javier Pardo

The company has 50% of a joint operation awarded in 1990 to build and operate a 20km

urban toll road that runs from east to west of Lima, but discussions about this concession

ceased in 1990 and were resumed in 2012.

The estimated investment in this project is US$900mn and it will take five to seven years

to build it. In the original contract the concession period was 37 years and the revenues

from the joint operation came from toll rates charged from users.

Line 1 of Lima Metro

GyM Ferrovias, company in which G&M has a 75% stake, was awarded a concession in

2011 to operate Line 1 of the Lima Metro, a 33km metropolitan railway. Under the

concession, GyM Ferrovias has to maintain five existing trains, acquire 19 new trains, and

build a railway maintenance and a repair yard by the end of the concession period in 2041

GyM Ferrovias currently operates 14 trains and the remaining 10 will begin operations

when the second stretch of Line 1 one is completed. As of December 2013 GyM Ferrovias

had spent US$196.6mn on the Lima Metro. The revenue from this concession is obtained

through a quarterly fee paid by the government based on the kilometers travelled per train.

Exhibit 55: Line 1 of Lima Metro 2014/2015 Financials in US$ 000's, unless otherwise stated

2014 2015

Revenues 58.1 65.3

Operating expenses

and SG&A

49.2 39.9

D&A 0.2 0.2





06 January 2015


Exhibit 56: Line 1 of Lima Metro

Pirámide Del Sol

El Angel

Miguel Grau

Nicolás Arriola

Gamarra

La Cultura

San Borja Sur

Angamos

AyacuchoLos Cabitos

Jorge Chavez

Atocongo San Juan

Villa MaríaMaría Auxiliadora

Parque Industrial

Villa El Salvador

Bayovar

Santa RosaSan Martin

San Carlos

Los Jardines

Caja de Agua

Presbítero Maestro

Los Postes

Pumacahua

PERU

LIMA


La Chira water treatment plan

G&M has a 50% stake in a project that was awarded the concession to construct, operate,

and maintain the La Chira waste water treatment plant. The expected investment in this

concession is US$83.1mn and the projects will receive an annual payment of US$24.2mn

(~US$9.3mn) for the investment made in the construction and an annual payment of

S$6.8mn (~US$2.6mn). The project is currently under construction and is expected to be

completed by 2015. With a 25- year period, the concession expires in 2037.

Exhibit 57: La Chira 2014/2015 Financials in US$ 000's, unless otherwise stated

2014 2015

Revenues 11.7 14.2

Operating expenses

and SG&A

10.9 13.2

D&A 0.1 0.1


Adj. Ebitda 0.8 1.0



06 January 2015


GMP

The company operates three energy businesses through GMP, a subsidiary of the

company.

Exhibit 58: GMP 2014/2015 Financials in US$ 000's, unless otherwise stated

2014 2015

Revenues 118.5 135.5

Operating expenses

and SG&A

82.2 109.6

D&A 24.6 28.6





Block I and V oil fields

Under hydrocarbon extraction services contracts with Perupetro, the company operates

and extracts oil and natural gas from Block I and Block V in 242 wells, which are mature oil

fields located in northern Peru in the province of Talara.

Under the contract, the company is required to deliver all of the oil and gas it produces to

Perupetro in return for a variable fee per barrel based on the level of production and

international crude oil prices. In the last three years, this fee has been on average 77% of

crude oil Brent price.

Exhibit 59: G&M's Oil Fields.

Contract Maturity Wells 2013 average daily

barrels

Crude oil proved

reserves (Mbbl)

Natural Gas proved

reserves (MMcf)

Undeveloped Acreage

Block I Dec-21 195 1,460 3,555 14,205 21.4%

Block V Oct-23 48 132 711 n.a. 30.3%


In December the company was awarded a concession to operate and extract oil from

Blocks III and IV. Under the 30-year contract that starts in April 2015, the company

undertakes to drill 560 wells before April 2025, with an approximate investment of

US$560mn. Both blocks produce a daily average of 2,000 bbl/day and the company

expects to increase production to up to 5,000 bbl/day.

06 January 2015


Exhibit 60: Block I and V located in northern Peru

XIX

Z-36

Z-1

XX

XXIIV

Z-34 Z-28

X

XV

XXIII

IX

IV

Z-6

XXII-A

I


Gas Processing

G&M owns a gas processing plant with a processing capacity of 44Mcf per day, located 7

km north to the city of Talara. Under a long-term contract with EEPSA, the company

receives wet natural gas and processes and fractions it into dry natural gas and liquids.

Dry natural gas is returned back to EEPSA and natural gas liquids are sold in the market.

Under the contract that expires in 2023, the company pays for the operating costs of the

plant but keeps the revenue from the natural gas liquids sold in the market after paying a

variable royalty to EEPSA that depends on volume produced.

Fuel Storage Terminals

G&M owns a 50% stake in Consorcio Terminales, a company that has a contract with

Petroperu to operate seven fuel storage terminals for refined petroleum located along the

Pacific coast and two inland storage terminals with capacity of 2.6MMbbl.

Revenues are earned from storage and throughput fees. Storage fees are calculated per

barrel and are correlated with stored volumes in tanks. Throughput fees are paid based on

the effective number of barrels delivered per month.

G&M has a stake in an export terminal for gasoline, diesel, propane, and butane (Terminal

Marino Pisco Camisea) and in an export terminal for sodium hydrosulfide, which is used

by mining companies (Terminal de Quimicos de Matarani).

In June 2014 Consorcio Terminales was awarded a concession to operate five additional

fuel terminals, in which the company will have to invest US$37.2mn and a reimbursable

investment of US$180mn.

06 January 2015


Exhibit 61: Fuel Storage Terminal Locations

PERU

Cusco

Juliaca

Ilo

Mollendo

Pisco

Supe

Chimbote

Salaverry

Eten

LIMA

ICA


Real Estate Division

The real estate segment of the company is one of the largest developers of apartment

buildings in Peru.

Exhibit 62: Real Estate Segment Developments

m2 Developed m

2 Under Construction

Affordable housing 568,000 71,000

Housing 310,000 3,900

Office space 115,000 24,000

Shopping centers 43,000 -


The company also owns 812 hectares of undeveloped land, of which 86% is located in

Lima and 14% in other regions.

06 January 2015


Exhibit 63: Real Estate 2014/2015 Financials in US$ 000's, unless otherwise stated

2014 2015

Revenues 67.0 66.1

Operating expenses

and SG&A

55.1 53.7

D&A 8.4 8.4





Technical Services Segment

The technical services segment of G&M is engaged in the operation and maintenance of

infrastructure assets, information technology services, and electricity networks services.

Exhibit 64: Technical Services 2014/2015 Financials in US$ 000's, unless otherwise stated

2014 2015

Revenues 443.8 413.3

Operating expenses

and SG&A

435.0 393.5

D&A 24.6 20.9





Operation and Maintenance of Infrastructure Assets

The company provides operation and maintenance services to its toll roads concessions,

for the Lima Metro, and for some government's highways. The company operates and

maintains more than 5,000km of highways and earns its revenues from fees charged

under its concessions or maintenance service contracts awarded by the government.

06 January 2015


Exhibit 65: Roads operated and maintained by G&M

CV Sullana (440 km)

CV Buenos Aires

Conchaque (77 km)

Chiclayo

CV Lambayeque (262 km)

CV Bappo (253 km)

Norvial (183 km)

Lima

CV Ayacucho-Andahuaytas (381 km)

CV Icapal (380 km)

Survival (758 km)

CV Tecna (400 km)

CV Cora Cora (526 km)

Cusco network 1 (641 km)

Cusco network 3 (532 km)

CV La Merced

(230 km)


IT Services

GMD, a subsidiary of G&M, provides IT outsourcing services and equipment to large

companies and public institutions in Peru. GMD also has strategic partnerships with IT

vendors such as Cisco, Microsoft, Hewlett-Packard, Oracle, SAP, Citrix, VMware, CA

Technologies, and Louis Berger Group.

Electricity Networks Services

This segment of the company offers installation, operation and maintenance of electricity

infrastructure for power utilities in Chile, Colombia, Brazil, and Peru. More specialized

services include the monitoring of electrical consumption for 420,000 industrial,

commercial, and residential customers and the development anti-theft solutions for power

utility companies. The company also operates warehouse facilities in Brazil and Chile for

power utility companies and leases residential electricity meters to power utility companies

in Chile.

06 January 2015


Companies Mentioned (Price as of 05-Jan-2015)

ACS (ACS.MC, €28.555) AECOM Technology Corp. (ACM.N, $29.02) AMEC (AMFW.L, 838.0p) AQM (AQM.V, C$0.06) Anglo American Plc (AAL.L, 1126.5p) Antares Minerals (ANM.V^L10, C$8.4) Antares Minerals (ANM.V^L10, C$8.4) Antares Minerals (ANM.V^L10, C$8.4) Antares Minerals (ANM.V^L10, C$8.4) Arteris (ARTR3.SA, R$11.74) Bear Creek Minng (BCM.V, C$1.54) Besalco (BES.SN, CLP$356.79) CITIC Resources (1205.HK, HK$1.05) CSCEC (601668.SS, Rmb7.34) Candente Copper (DNT.TO, C$0.1) Cementos Pacasmayo (CPAC.N, $8.57) Chalco China (ACH.BA, $24.1) Compania de Minas Buenaventura (BVN.N, $10.25) Empresas ICA (ICA.MX, $17.25) Ferreycorp (FER.LM, S/.1.58) Fluor (FLR.N, $58.56) Freeport-McMoRan Inc (FCX.N, $22.15) Grana y Montero (GRAM.N, $12.39) Hochschild Min (HOCM.L, 86.0p) HudBay Minerals (HBM.N, $8.63) Jacobs Engineering (JEC.N, $43.03) Jiangxi Copper Company Ltd (600362.SS, Rmb20.28) KBR Inc. (KBR.N, $16.52) Leighton Holdings (LEI.AX, A$22.97) MMG Ltd. (1208.HK, HK$2.51) Minera IRL (IRL.LM, $0.048) Mitsubishi Materials (5711.T, ¥406) Monadelphous Group (MND.AX, A$9.62) Newmont Mining (NEM.N, $19.46) OHL Mexico (OHLMEX.MX, $25.51) Ohl (OHL.MC, €18.39) Promotora y Operadora de Infraestructura, S.A.B. d (PINFRA.MX, $167.21) Rio Alto Ming (RIOM.N, $2.56) SNC Lavalin Group (SNC.TO, C$42.41) SalfaCorp (SAL.SN, CLP$445.0) Sigdo Koppers (SK.SN, CLP$930.0) Silver Standard Resources Inc. (SSO.TO, C$6.35) Southern Copper Corporation (SCCO.N, $27.04) Strike Resources (SRK.AX, A$0.038) Teck Res (TCK.N, $13.26) Transfield Services Ltd (TSE.AX, A$1.58) Vale (VALE.N, $7.73) Volcan Minera (VOLa.LM, S/.1.5) Zijin (ZIJMY.PK, $5.7)

Disclosure Appendix

Important Global Disclosures

Santiago Perez Teuffer and Bruno Savaris, CFA, each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

06 January 2015


3-Year Price and Rating History for Grana y Montero (GRAM.N)

GRAM.N Closing Price Target Price

Date (US$) (US$) Rating

02-Sep-13 19.60 24.00 O *

03-Jan-14 21.43 R

03-Feb-14 20.35 24.00 O

18-Mar-14 19.03 NR

* Asterisk signifies initiation or assumption of coverage.

O U T PERFO RM

REST RICT ED

N O T RA T ED

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.

Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.

Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.

*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiv eness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10 -15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark.

Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:

Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.

Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.

Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.

*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)

Outperform/Buy* 46% (53% banking clients)

Neutral/Hold* 38% (50% banking clients)

Underperform/Sell* 14% (43% banking clients)

Restricted 2%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

06 January 2015


Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein.

Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and-analytics/disclaimer/managing_conflicts_disclaimer.html

Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Price Target: (12 months) for Grana y Montero (GRAM.N)

Method: We are approaching GRAM through a DCF method. Our Ke is built by an updated Rf rate of 3%, coupled with a country risk of 2%, which we think reflects Peru's long term economic situation. We are also using an equity risk premium of 6%. This as a result yields a 10.4% Ke. We are valuing all of concessions to maturity. As such we reached our US$13.5/Adr target price.

Risk: Our model is based on Credit Suisse inflation, GDP and FX assumptions for Peru, if these were not to materialize, projections could differ significantly. Our projections might be altered at any time, depending of the actual timeframe of project execution in Peru. The before mentioned factors represent a risk to our US$13.5/Adr target price.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names

The subject company (GRAM.N, TSE.AX, LEI.AX, KBR.N, FLR.N, PINFRA.MX, JEC.N, OHLMEX.MX, FCX.N, 600362.SS, CPAC.N, NEM.N, VALE.N, SCCO.N, AAL.L, SSO.TO, 1208.HK, 5711.T) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

Credit Suisse provided investment banking services to the subject company (PINFRA.MX, OHLMEX.MX, NEM.N, SCCO.N, AAL.L, 1208.HK) within the past 12 months.

Credit Suisse provided non-investment banking services to the subject company (SCCO.N) within the past 12 months

Credit Suisse has managed or co-managed a public offering of securities for the subject company (PINFRA.MX, OHLMEX.MX, AAL.L) within the past 12 months.

Credit Suisse has received investment banking related compensation from the subject company (PINFRA.MX, OHLMEX.MX, NEM.N, SCCO.N, AAL.L, 1208.HK) within the past 12 months

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (GRAM.N, TSE.AX, LEI.AX, KBR.N, FLR.N, PINFRA.MX, ACM.N, JEC.N, OHLMEX.MX, FCX.N, 600362.SS, CPAC.N, BVN.N, NEM.N, VALE.N, SCCO.N, AAL.L, SSO.TO, 1208.HK, 5711.T) within the next 3 months.

Credit Suisse has received compensation for products and services other than investment banking services from the subject company (SCCO.N) within the past 12 months

As of the date of this report, Credit Suisse makes a market in the following subject companies (GRAM.N, KBR.N, FLR.N, ACM.N, JEC.N, FCX.N, CPAC.N, BVN.N, NEM.N, VALE.N, SCCO.N).

As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (PINFRA.MX, ARTR3.SA).

Credit Suisse has a material conflict of interest with the subject company (SCCO.N) . The analyst Ivano Westin has a relationship with a natural person who may provide remunerated services to one or more of the companies covered in this report

Credit Suisse has a material conflict of interest with the subject company (1208.HK) . Credit Suisse Securities (Europe) Limited is acting as financial advisor in connection with the GlencoreXstrata sale of its interest in the Las Bambas copper mine project in Peru to a consortium owned 62.5% by MMG Limited, 22.5% by GUOXIN International Investment Corporation Limited and 15.0% by CITIC Metal Co. Limited.

For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (GRAM.N, GRAM.N, TSE.AX, LEI.AX, KBR.N, FLR.N, PINFRA.MX, ARTR3.SA, AMFW.L, ACM.N, JEC.N, OHLMEX.MX, FCX.N, CPAC.N, BVN.N, NEM.N, VALE.N, SCCO.N, AAL.L, SSO.TO, 1208.HK, 5711.T) within the past 12 months

06 January 2015


Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.

Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.

For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml.

The following disclosed European company/ies have estimates that comply with IFRS: (AAL.L).

Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (GRAM.N, PINFRA.MX, ARTR3.SA, OHLMEX.MX, NEM.N, SCCO.N, AAL.L) within the past 3 years.

As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.

I, Bruno Savaris, CFA, certify that (1) The views expressed in this report solely and exclusively reflect my personal opinions and have been prepared independently, including with respect to Banco de Investimentos Credit Suisse (Brasil) S.A. or its affiliates ("Credit Suisse"). (2) Part of my compensation is based on various factors, including the total revenues of Credit Suisse, but no part of my compensation has been, is, or will be related to the specific recommendations or views expressed in this report. In addition, Credit Suisse declares that: Credit Suisse has provided, and/or may in the future provide investment banking, brokerage, asset management, commercial banking and other financial services to the subject company/companies or its affiliates, for which they have received or may receive customary fees and commissions, and which constituted or may constitute relevant financial or commercial interests in relation to the subject company/companies or the subject securities.

To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Casa de Bolsa Credit Suisse (Mexico), S.A ..................................................................................................... Santiago Perez Teuffer ; Ana Zinser

Banco de Investments Credit Suisse (Brasil) SA or its affiliates. .......................................................................................... Bruno Savaris, CFA

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

06 January 2015


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Grana y Montero - Credit Suisse