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Guillermo Albareda [*]

PERU, the third-largest country in South America (1.285M [km.sup.2]), well-known for its extraordinary cultural and archaeological legacy and its imposing landscape, also has a large variety of natural resources, outstanding among which are its mining resources. Among the latter, gold is the metal that has been so significant for the country and Latin America.

The mastery evidenced by Peruvian pre-Columbian civilizations resulted in extraordinary creations, now in museums and exhibitions, by goldsmiths and metallurgists during the pre-Inca and Inca cultures which today still amaze the world.

This mastery was maintained during Spanish Colonial times and up to today.

In November 1532, the Inca leader Atahualpa, after being captured in Cajamarca (northern part of Peru), offered Conquistador Francisco Pizarro three rooms filled with gold and silver in exchange for his freedom. The payment of this ransom (reneged upon by Pizarro) had great impact because "it affected even the European economy, causing inflation and destabilization of the financial system." (1)

Due to the abundant mineral resource potential existing in the Peruvian soil, Peru ranks seventh among the world's major mining regions. Preliminary figures estimate that in 1999, Peru exported gold for a value of around $l.2B, a sum that exceeds by approximately 30% the total recorded the previous year ($925M). This has confirmed, for the second consecutive year, that gold is the leading export product of Peru.

With regard to production, according to the statistics of the Gold Committee of the National Mining, Petroleum, and Energy Society (SNMPE), gold production reached 130 mt. Peru thus recorded the highest gold production rate growth in the world, if it is taken into account that in 1989, gold production was only 9.9 mt.

Peru has risen in the world ranking of gold producers from 15th to eighth place.

Currently, and for the fourth consecutive year, Peru maintains its leadership among the gold producers of Latin America.


This growth has been possible thanks to a rehabilitated economy, with controlled inflation and significant international monetary reserves. The Peruvian economy is open to the world, and priority is given to competitiveness. Moreover, the existence of an adequate legal framework has attracted the attention of entrepreneurs who now consider Peru an important investment objective.

The great growth of mining production is due to the effort of both entrepreneurs and workers, internal stability, the government promotion of investments, and above all, to the richness of natural resources. Peru also has competent mining professionals and miners.

Due to Peru's immense mineral resources, mining has assumed the role of being the country's engine of development and the industry understands its obligation to minimize the environmental impact to achieve an adequate balance between conservation, sustained development, and the people's legitimate right to utilize their natural resources to fulfill their needs.


There are many potential gold-bearing trends in Peru, such as the Pataz-Buldibuyo trend (La Libertad), the Marcapata-Sandia trend (Puno), the Nazca-Ocona trend (Ica and Arequipa), the Cajamarca sector, and the Apurimac sector. In the last few years, local and foreign companies have been carrying out an aggressive exploration and development campaign in these and other areas, which has led to the discovery or rediscovery of several important deposits. Currently, the existing variety of deposit types has permitted the development of both underground and open pit operations.

Mineralogical studies show that the predominant gold mineralization in the deposits in the various gold trends or area in Peru are native gold and electrum.

According to De Montreuil's publication, gold is found as tellurides or nagyagite in some deposits [2]. Mineralogical research of Peruvian gold trends and areas confirm the great importance of the linking of native gold and electrum to pyrite and quartz mineralization, with pyrite frequently being the host of the gold.

In accordance with Plenge, the presence of gold is common practically throughout the whole of Peru: "The deposit types in identified areas include veins, disseminated deposits, gold placers and stratafied deposits where gold is the main element." [3]

The most important gold producers in Peru are Minera Yanacocha, Minera Barrick Misquichilca, Minera Sipan, Minera Ares, Minera Aurifera Retamas, Minera Podersa, Consorcio Minero Horizonte, and Cia de Minas Buenaventura, among others. Minera Yanacocha is located in Cajamarca, in northeastern Peru, and Pierma is located in Ancash, near Lima. Peru's Capital.

Minera Yanacocha's and Pierina's (Barrick Misquichilca) entry into production has resulted in a remarkable increase in Peru's gold output.

These two companies jointly account for 60.5% of the national production-38.7% for Minera Yanacocha, the largest gold producer company not only in Peru but in all of Latin America, and 21.8% for Barrick Misquichilca.


More than 100 gold projects and prospects under study have been currently identified by foreign and local companies, all of which seem to indicate that Peru's gold production will surpass 150 mt in the near future.

a) Projects with reserves seeing construction or production:

La Quinua. Located in Cajamarca, this is the fifth mine owned by Minera Yanacocha (Newmont and Buebaventura), and will commence producing in the year 2002. An investment of around $80M has been estimated, which includes both the construction and equipping of a leading pad. It has reserves of approximately 5M oz of gold in oxides.

Selene. These gold-silver projects located in Andahuaylas, Apurimac, belong to the Grupo Hochschild and have high-grade gold veins.

Antapite. This is a high-grade gold project (approximately 15 g/mt). Locaterd in Huancavelica, owned by Buenaventura and managed by INMINSUR Construction of the gold plant is expected to begin during the first half of this year. Construction of the plant will require an investment of approximately $14M.

Paula. Located in Castilla, Arequpa, this a joint venture of Buenaventura and Cedimin. This project has high-grade veins with direct shipping ore.

b) Projects in progress with significant resources:

Minas Conga. Owned by Newmont. Cedimin and Buenaventura, this a sulphide gold-copper project, located in Cajamera, 15 km northeast of Yanacocha. Resources are estimated at 400M mt ore, with grades of 0.93 g/mt Au and 0.32% Cu. The schedule has the feasibility study being carried out over two years, with develpoment beginning in 2003. An estimated investment of about $600M will be required.

Tantahuatay. Owned by Southern Peru Copper Corp., Buenaventura and INVELSA, this project will require an approximate $50M investment for its development. This deposit has both oxide gold and gold and copper in sulphides. Estimates have the production cost of some 650K oz Au (oxides) at $200/oz.

Tres Cruces. This project undergoing exploration is located in Quiruvilca, La Libertad. It is being explored by Battle Mountain Gold (BMG), which has a purchase option contract for 100% of the deposit with Oroperu Resources and Pan American Silver Corp. If BMG decides to exercise the purchase option for the deposit, it will have to pay $27M to its owners. Resources are estimated at 35M mt, with an average grade of 2 g/mt Au.

Huamachuco (La Arena-La Virgen). Owned by Cambior and located in Huamachuco, La Libertad, construction will begin in the second half of this year, with production slated for the first half of 2001. There is an estimated production level above 100K oz/yr, at a cost of $50/oz. Total estimated investment is around $50M-$75M. Some $6M were invested in 1999. It is estimated that this project has resources of more than 1M oz Au.

Shahuindo. This is a gold project located in the district of Cachachi, Cajamarca. A prefeasibility study has been carried out, which estimates resources of 600K oz Au.

La Zanja. This Newmont and Buenaventura joint venture, located in Santa Cruz is a disseminated oxide gold deposit with a 38M mt resource and an estimated grade of 0.64 g/mt Au.

Quicay. This project, located in Rancas, Cerro de Pasco, has been privitazed, and is now owned by Chancadora Centauro. It includes 14 concessions with a total area of 11.1K ha. It is estimated that this project will have a capacity of 70K oz/yr Au.

Tambo Grande. This is polymetallic (copper, zinc, gold, silver, and lead) deposit, located in the district of Tambo Grande, Piura, which was acquired by Manhattan Minerals Corp. In late September 1999, a diamond drilling program indicated the existence of more than 1.3 oz Au resources, with an estimated gold grade of 5.25 g/mt and significant silver content. This deposit is called TG-1. The company will invest $20M in this project's feasibility study which should be concluded within the span of the next two years. The estimated capex to carry out this project is $300M.

c) Projects of geological interest with favorable signs:

Huayquizongo. The gold prospect, owned by Buenaventura, is located in Cajamarca, southwest of Yanacocha. It is undergoing exploration.

Zona de Explorador. This prospect, owned by Hochschild, is located in Apurimac, in the Selene area. The production stage is estmiated to begin in the year 2001 and will require an investment of approximately $25-30M Sigfrid, Johannes, and San Fernando. Located in Huamachuco, La Libertad, these prospects are owned by Yolanda Quiroga de Laumer, and a three-year option for their purchase was granted to Cambior.

Pacapausa. Southwestern Gold Corp. agreed with Minorco Peru (a subsidiary of Anglo American Corp. of South Africa) to the acquisition of a purchase option for 51% of the Pacapausa property. It will be developing the feasibility study over the next three years. Moreover, both companies have signed four agreements to explore gold projects in northern and southern Peru.

Las Huaquillas. Sulliden Exploration reinitiated exploration of this gold deposit located in Cajamarca. It is currently undergoing the initial exploration phase. As of May 1998, Sulliden had invested $2.2M in this prospect.

Victoria. This prospect, which is in the exploration state, is a Pangea Goldfields and Sundust Resources joint venture. It is located 100 km north of Lima. It has resources of approximately 670K oz Au (as of May 1999). The company planned to invest $1M during 1999. Pangea also has two additional prospects located in the center-south region of the country--Prodigiosa and Santa Isabel.

Poracota. This prospect is located in Condesuyos, Arequipa, and is a Southwestern Gold Corp. and Teck joint venture. Various drilling campaigns were carried out up to 1998, with an estimated investment of $2.5M. These are disseminated gold deposits in tertiary volcanics, mainly sulphides.

El Toro. This is a prospect located in La Libertad and owned by Oroperu Resources through its subsidiary Nueva Condor.

Maria Angola, Chota, Chonta, Inca Wasi and Cajabamba. These are prospects that are located near La Granja and Huamachuco, which are currently under exploration with Cambior.

Huayquizongo. Newmont, in a partnership with Buenaventura, will be carrying out drilling operations in this gold prospect, located in Cajamarca.

Felix. Located in Moquegua, this gold and silver prospect with polymentallic veins is a Southwestern Gold Corp. and Pan American Silver joint venture.

Azul. Located in the Pucallpa jungle, this gold prospect is a Gitennes Exploration and Navigator Exploration joint venture through their subsidiary, Minera Kori Playa. The Azul property covers an area of 21K ha.

Lesbos. This Gitennes gold prospect, through its subsidiary Minera Kori Rumi, is located in Huancavelica, 2 km north of the Cofradia project. Exploration and sampling were initiated in May 1999.

Cofradia. This gold prospect is located in Huancavelica and is owned by Milpo and Minera Andina de Exploraciones, which was being explored by the company Pacific Rim Mining Corp.

Luicho. A 1,000-ha epithermal prospect with an estimated average grade of 2.06 g/mt Au, is located in Parinacochas, Ayacucho, which Pacific Rim Mining Corp. has been exploring.

Sapalache. This is a 14K-ha Au prospect located in the department of Piura and owned by Solitario Resources Corp. In late 1999, this company signed a letter of intent with AgloGold to carry out explorations therein. AngloGold is planning to invest $6M for access to 51% of the property for a period of four years.

Alicia-Gabrielas. These gold prospects, located in Quiruvilca, La Libertad, cover 2,500 ha and are owned by Southern Peru Copper Corp.

Halley and Leoncocha. These gold prospects, located in Apurimac, are owned by Maracote International Resources.

Winicocha. This is a gold prospect located in Chumbivileas, Cuzco, and was auctioned by the company Minero Peru. The contract was awarded to an individual, Marciano Aliga.

Pallacocha. Located in Condesuyos, Arequipa, this is another gold prospect auctioned by Minero Peru. It was awarded to Minera Hecla.

Champune and Santa Clarita. These are gold prospects owned by Minera Erika, located in Condesuyos, Arequipa.

Cueva Blanca. This prospect, located in Cajamarca, is owned by Inca Pacific Resources, and shows potential signs of polymetallic veins.

Cementerio. This prospect is located in San Ignacio, and is owned by Acuarios Minera y Exploradora.

Huarangayoc. This prospect is located in Carhuaz, Huaraz, and is owned by Anglo American Corp and Buenaventura.

Rio Palca. This gold prospect owned by South western Gold Corp. and Minorco.

Coripacha. This prospect is located in Huancavelica and is owned by Newcrest Mining Corp.

Carcapata, located in Huaral-Lima, Rodeo in Recuay-Ancash, and Rio Colorado in Santiago de Chuco-La Libertad, are all prospects owned by Altai Resources.

Titan, located in Condesuyos, Corimayo in Corimayo, Pararapa in La Union, Inca in Andahuaylas, Quilmana in Ca[tilde{n}]ete, Corianta in Otuzco, Estrella del Norte in Huari, Santo Domingo in Antabamba, Sureste in Arequipa, Satipo in Satipo, Angasmarca in Sanchez Carrion, and Rinconada in Piura, are prospects owned by the Grupo Hochschild.

Huayllura, located in La Union, Ontacota in Caylloma, and El Dorado in Condesuyos are SIMSA and Milpo joint ventures.

Jarhuarazo, El Tigre, Aucapampa, Paron, Puno, Colpayoc, Huilacollo, Yanama, and Pedregal, among others, are some other prospects of geological interest.


Today, Peru is a nation that possesses enormous mining potential. The country, having adapted itself to the current demands of world economy, has created conditions that will faciliate and encourage unprecedented mining development.

In fact, the good conditions established for the development of mining activities in Peru have encouraged the most important foreign mining companies to establish themselves in the country.

The opening of offices in Peru by companies such as AngloGold of South Africa, Barrick and Cambior of Canada, RTZ of the United Kingdom, Billiton of Holland, Broken Hill Proprietary of Australia, and Newmont and BMG of the United States, among others, confirms that Peru has a high ranking for investment potential, particularly in gold.

It must be pointed out that the investment outlook offered by Peruvian mining legislation includes a group of positive factors: low and standard customs tariff rates, total freedom for currency exchange and international market trading, a long-term legal stability system, and international agreements that guarantee foreign investment, such as the MIGA and OPIC.

An excellent opportunity to learn more about growth in these Peruvian markets is being offered by the Fourth International Gold Symposium, an event organized by the SNMPE Gold Committee. It will be held in Lima from May 2-5, 2000.

The main purpose of this fourth meeting is to provide information about Peru's natural resource potential and to contribute to the generation of new investments and business opportunities, not only in Peru, but also throughout the region.

Thus, the Symposium will be a meeting place for those involved in the Latin American gold industry, especially in Peru, and will facilitate the search for strategic partners, business opportunities, and/or financing for gold projects.

The Symposium program includes papers by well-known gold industry executives and experts.

There will be a concurrent exhibition of equipment, products, and services for mining.

More than 1,000 participants are expected to attend this event, including local and foreign executives, bankers, investors, government authorities, suppliers, and mining professionals.

(*.) Attorney, legal and administrative manager of the National Mining, Petroleum, and Energy Society (SNMPE) and executive manager of the Gold Committee.


(1.) Boza, Beatriz. "Peru, a Mining Country: Contribution of the Peruvian Model to APEC and Prospects for Development," SNMPE Monthly Bulletin, No. 5, May 1999.

(2.) De Montreuil, Luis Angel. "Mineralogy of Gold Deposits in Peru," Peru Lecture Volume: Second International Gold Symposium, SNMPE Gold Committee, May 1996, page 326.

(3.) Plenge, Robert O. "Metallogeny and Gold Prospecting in Peru," Peru Lecture Volume: Second International Gold Symposium, SNMPE Gold Committee, May 1996, page 124.

(4.) Apoyo Consultoria, "The Condition and Prospects of the Mining Sector," October 1999.
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Title Annotation:mining operations
Author:Albareda, Guillermo
Publication:E&MJ - Engineering & Mining Journal
Geographic Code:3PERU
Date:Apr 1, 2000
Next Article:STEEL.

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