Lupaka Gold goes arbitration mode against PeruPublished by MAC on 2020-11-20
The Invicta Gold operation is suspended since October 2018 due to a community road blockade.
In the midst of the covid pandemic, Canadian miner Lupaka Gold is seeking compensation from the Peruvian government in an amount in excess of $100 million. The company submitted a request for arbitration before the World Bank’s International Centre for Settlement of Investment Disputes, related to the social issues that has halted all work at the Invicta gold mine for the past two years. Given the company´s inability to resolve the conflict, Lupaka was not able to pay down a gold loan that provided funding for Invicta’s development. This situation led the lender to foreclose the loan in August 2019.
The Invicta poly-metallic deposit is located in the Huaura Province, North of Lima, next to the Lacsanga, Santo Domingo and Parán communities.
Valentina Ruiz Leotaud
November 1, 2020
Lupaka Gold (TSX-V: LPK) submitted a request for arbitration before the World Bank’s International Centre for Settlement of Investment Disputes related to what the company deems the lack of support from the Peruvian government in a social conflict that has halted all work at the Invicta mine for the past two years.
The Canadian miner is seeking compensation in an amount in excess of $100 million.
The submission is based on Article 36 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, known as the ICSID Convention, and Article 824 of the Free Trade Agreement between Canada and the Republic of Peru.
“The dispute arises out of Peru’s breaches of the FTA in relation to Lupaka’s investments in Peru. More specifically, the dispute stems from the Republic of Peru’s actions, namely the illegal acts of its subdivision, the Community of Parán, which illegally invaded Lupaka’s project held through Invicta Mining Corp. and set up a permanent blockade to the site, as well as from the lack of support from the Peruvian police force, prosecutors and central government officials to remove the illegal blockade and restore Lupaka’s rights to its investment,” the company said in a media statement.
Lupaka had initially planned to invest $4.3 million at Invicta and produce 185,000 gold equivalent ounces in six years of expected mine life.
The protest action mentioned by the miner has been taking place since October 2018. The road directly outside the mine’s main gate has been blocked since then and access to the site has been restricted.
According to Lupaka, the blockaders were often violent and “did not hesitate to fire rifles and threaten” mine personnel and people from the community of Lacsanga’s, who are the holders of the surface rights and with whom the company’s subsidiary, Invicta Mining, has signed mutually beneficial agreements.
“Both Lacsanga and IMC requested that authorities assist to remove the blockade and restore access to the mine. This assistance was not provided,” Lupaka Gold’s submission to the ICSID states.
Given that the conflict was not resolved, Lupaka was not able to process ore at the mine and create enough cash flow to pay down a gold loan that provided funding for Invicta’s development. This situation led the lender to foreclose the loan in August 2019 and Lupaka to lose its investment.
“Lupaka’s loss of IMC and the mine was a consequence of Peru’s acts and omissions. Lupaka has therefore commenced arbitration proceedings against the Republic of Peru seeking compensation in an amount in excess of USD 100 million, to be further quantified during the course of the arbitration,” the firm’s announcement reads.
Before the whole situation started, Lupaka’s subsidiary had developed approximately 3,000 metres of underground workings, secured community agreements from the community of Lacsanga, completed a 29-kilometre access road sufficient to handle 40-tonne ore trucks and completed numerous metallurgical tests ranging in size from a few hundred to a few thousand tonnes.
In September 2018, IMC requested that the final inspection of the completed works take place in order to allow exploitation to begin but then the protesters hit the operation.
Lupaka had forecasted a six-year mine life and a total production of 185,000 gold equivalent ounces.
Lupaka’s project in Peru hit by demonstrators
October 26, 2018
Lupaka Gold (TSXV: LPK) denounced today that operations at its Invicta Gold Development Project, which is located some 120 kilometres north of the Peruvian capital, have been impacted by an ongoing demonstration organized by a group of residents of the nearby community of Paran.
According to the Canadian miner, the protesters have blockaded the access road directly outside of the main gate of the mine, which restricts access to the site. Thus, they had to find alternative ways to evacuate workers and they also had to halt the transportation of 18,000 tonnes of material for toll processing. Mining and development activities, however, have not been significantly impacted and technical work is being carried out from a remote office.
“The Company has complied with its contractual obligations and has a productive and positive relationship with the communities of Lacsanga and Santo Domingo, which are directly impacted by Invicta, and for which community agreements are in place. The Company does not have a community agreement with the Paran community, as Invicta and the main access road are not on Paran lands. The demonstration is taking place on the legally registered lands of the Lacsanga community and has restricted its ability to provide support services to Invicta,” Lupaka said in a media statement.
In the release, the firm explains that on October 24, 2018, management held a meeting with representatives of the demonstrators and the Peruvian Ministry of Energy and Mines. In order for the meeting to happen in the first place, the demonstrators had to agree to abandon the blockade but they did not comply with the request. Therefore, Lupaka said it had to get in touch with federal and regional police, while still trying to negotiate with the protesters, in order to regain use of the access road.