MAC: Mines and Communities

Barrick up in arms over Peru royalty plans

Published by MAC on 2004-05-05

Peru has followed Chile's recent step of announcing it plans to chargea royalty on mining companies' gross sales. Many in the industryare infuriated , especially Canada's leading gold mining company

Barrick up in arms over Peru royalty plans

May 05, 2004

Canada's Barrick Gold stands firmly opposed to a mining royalty being proposed by the government of Peru. According to Business News Americas, the Peruvian government last week announced it plans to charge mining companies 1% to 3% of gross sales depending on metal prices.

The amount would be deducted from income tax payments in following years. The royalty would generate US$71million in its first year of operation.

"Our main concern is that they are changing the rules in the middle of our investment in the Alto Chicama gold project," Barrick's regional vice president in Peru Igor Gonzalez said.

Alto Chicama, which is estimated to have reserves of 7.16 million ounces of gold and is due to come on-line at 535-560,000oz per annum in the second half of 2005, is expected to push the country's gold production past the 185-ton mark, Peru's National Society for Mining Energy and Petroleum told Dow Jones.

Barrick's Pierina operation, the second largest goldmine in Peru after Newmont's Yanacocha project, would remain unaffected by a new royalty.

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