Lupaka Gold (TSX-V: LPK) has before the World Bank鈥檚 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.聽
鈥淭he dispute arises out of Peru鈥檚 breaches of the FTA in relation to Lupaka鈥檚 investments in Peru. More specifically, the dispute stems from the Republic of Peru鈥檚 actions, namely the illegal acts of its subdivision, the Community of Par谩n, which illegally invaded Lupaka鈥檚 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鈥檚 rights to its investment,鈥� 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 over six years of expected mine life
The protest action has been taking place since October 2018. The road directly outside the mine鈥檚 main gate has been blocked since then and access to the site has been restricted.聽
According to Lupaka, the blockaders were often violent and 鈥渄id not hesitate to fire rifles and threaten鈥� mine personnel and people from the community of Lacsanga, who are the holders of the surface rights and with whom the company鈥檚 subsidiary, Invicta Mining, has signed mutually beneficial agreements.聽
鈥淏oth Lacsanga and IMC requested that authorities assist to remove the blockade and restore access to the mine. This assistance was not provided,鈥� Lupaka Gold鈥檚 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鈥檚 development. This situation led the lender to foreclose the loan in August 2019 and Lupaka to lose its investment.
鈥淟upaka鈥檚 loss of IMC and the mine was a consequence of Peru鈥檚 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,鈥� the firm鈥檚 announcement reads.
Before the situation started, Lupaka鈥檚 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.聽
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.聽