Peruvian General Mining Law Mining Entrepreneurs Association Peuqueños

7/28/2019 Peruvian General Mining Law Mining Entrepreneurs Association Peuqueos

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Wednesday, June 3, 1992

ENERGY AND MINES

THE UNIQUE ORDERED TEXT OF THE GENERAL MINING LAW IS APPROVED

SUPREME DECREE No. 01492EM

(*) The Unique Ordered Text, approved through the present Supreme Decree was published on 06.04.92.

(*) In accordance with Article 5 of The Supreme Decree No. 0152001EM published on 03.29.2001, it isstated that from the effective date of such Supreme Decree, references to the existing Public MiningRegistry in the Unique Ordered Text of the General Mining Law in force, approved by the present SupremeDecree and other related laws and regulations, shall be construed as referring to the National Institute ofMining Concessions and Cadastre INACC.

CONCORDANCES: S.D. No. 01892EMS.D. No. 02392EMD.R. No. 16392EMDGM; Art. 1S.D. No. 02493EMS.D. No. 0394EM (Regulation)S.D. No. 0794EMS.D. No. 4094EM; Art. 1L. No. 26615L. No. 27343LAW No. 27474S.D. No. 0152001EM

S.D. No. 0262001

EMS.D. No. 0292001EM

M.R. No. 2972001EMVMMLAW No. 27506S.D. No. 0432001EMS.D. No. 0462001EMD.R. No. 1282001EMDGMS.D. No. 0052002EFLAW No. 27651S.D. No. 0102002EMLAW No. 27623S.D. No. 0822002EFLAW No. 27909, Art. 1

M.R. No.1842005

MEM

DM (Consolidated Annual Statement

AC)

R. No. 0032010SUNAT, Art. 14R. No. 3362010SUNAT, Art. 18 (Approved Provisions and Forms for Annual

Income Tax Declaration and Financial Transactions of the 2010 Fiscal Year)

THE PRESIDENT OF THE REPUBLIC

WHEREAS:

The General Mining Law was enacted by Legislative Decree No. 109 and the Investment PromotionLaw for the Mining Sector was enacted by Legislative Decree No. 708; the latter partially amending theGeneral Mining Law;


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The Ninth Transitional Provision of Legislative Decree No. 708 states that by Supreme Decree

countersigned by the Ministry of Energy and Mines, The Unique Ordered Text of The General Mining Law

will be approved, incorporating the provisions of the mentioned Legislative Decree;

Pursuant to the provisions of subsection 26) of Article 211 of the Political Constitution of Peru;

DECREES:

Article 1. To approve The Unique Ordered Text of The General Mining Law which consists offifteen Titles, fiftyfour Chapters, two hundred twentysix Articles, sixteen Transitional Provisions and eightFinal Provisions as part of the present Supreme Decree.

Article 2. The amendments made through Legislative Decree No. 708 to Legislative Decree No.109, contained in The Unique Ordered Text approved by the present Supreme Decree will apply from thedate of entry into force of Legislative Decree No. 708, except for those which state a different date in their

own text. (*)

(*) Legislative Decree No. 708, which full text has been incorporated into this Unique Ordered Text, wasenacted on 11/06/91 and published in the Official Gazette "El Peruano" on 14/11/91.

Article 3. While the decentralization and/or deconcentration rational scheme is being preparedaccording to the needs of the regions referred to in Article 2, paragraph 9), of The Decree Law No. 25418,Basic Government Law on Emergency and National Reconstruction, the functions assigned to theJurisdictional and Administrative Mining Organs by the General Mining Law will be governed by theprovisions of Supreme Decree No. 00292EM/VMM.

Issued at the Government House in Lima, on the second day of June nineteen ninety two.

Signed by the Constitutional President of the Republic.

JAIME YOSHIYAMA TANAKAMinister of Energy and Mines


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ENERGY AND MINES

Unique Ordered Text of the General Mining LawSUPREME DECREE No. 01492EM

(*)The present Supreme Decree was published on June 03, 1992 without attaching theTUO (Unique Ordered Text) text, which was published on this date.

(*)In accordance with the Single Transitional Provision of Decree Law No. 25998,published on 12/26/92, contracts subscribed by virtue of the provisions under Article 35 ofLegislative Decree No. 109 prior to the entry into force of The Unique Ordered Text of theGeneral Mining Law, shall be governed by the provisions contained therein and the ones

that were in effect at the time of their signing.

(*)In accordance with Article 5 of Supreme Decree No. 0152001EM published on03/29/2001, it is stated that since the entry into force of the mentioned Supreme Decree,references to the existing Public Mining Registry in the Unique Ordered Text of TheGeneral Mining Law, approved by the present Supreme Decree and other related laws andregulations, shall be construed as referring to The National Institute of Mining Concessionsand Cadastre INACC.

CONCORDANCES: S.D. No. 0394EM

(Regulation of various Titles of the Unique Ordered Text of The General Mining Law)

S.D. No. 018

92

EMS.D. No. 02392EM

S.D. No. 02592EM (TUPA Unique Text of Administrative Procedures)

D.R. No. 16392EMDGM; Art. 1

S.D. No. 01993EM (TUPA)

S.D. No. 02493EM

S.D. No. 0794EM

S.D. No. 4094EM; Art. 1

L. No. 26615

S.D. No. 05599EM (TUPA)

L. No. 27343

LAW No. 27474

S.D. No. 0152001EM

S.D. No. 0262001EM

S.D. No. 0292001

EM

M.R. No. 2712003EMDM

R. No. 0522004SUNARPSN (Mineral Rights Registry Entry Regulations)

A.R. No. 29652005INACCJ

S.D. No. 0332005EM (Mine Closure REGULATION)

A.R. No. 46962006INACCJ (Allocate amount collected as payment for Operational mining

rights and for Mining Claims formulation corresponding to September 2006)

S.D. No. 0842007EM (Regulate The Mining Rights and Cadastre System SIDEMCAT)

LEG. D. No. 1010, Fourth Transitional Supplementary Provision.

S.D. No. 0552010EM (Supreme Decree that approves the Occupational Health and Safety

Regulation and other complementary measures in mining)

D.R. No. 9472011MEMDGM (Approves the electronic application form for accreditation

or renewal of Smallscale Mining producers and Artisanal Mining Producers status as well

as the respective Record form)


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Law No. 29790 (Law establishing the legal framework of the Special Mining Levy)

THE PRESIDENT OF THE REPUBLIC

WHEREAS:

The General Mining Law was enacted by Legislative Decree No. 109 and the InvestmentPromotion Law for the Mining Sector was enacted by Legislative Decree No. 708; the latterpartially amending The General Mining Law;

The Ninth Transitional Provision of Legislative Decree No. 708 states that by SupremeDecree countersigned by The Ministry of Energy and Mines, The Unique Ordered Text of TheGeneral Mining Law will be approved, incorporating the provisions of the mentioned LegislativeDecree;

Pursuant to the provisions of subsection 26) of Article 211 of the Political Constitution ofPeru;

DECREES:

Article 1. To approve The Unique Ordered Text of The General Mining Law whichconsists of fifteen Titles, fiftyfour Chapters, two hundred twentysix Articles, sixteen TransitionalProvisions and eight Final Provisions as part of this Supreme Decree.

Article 2. The amendments made by Legislative Decree No. 708 to Legislative Decree No.109, contained in The Unique Ordered Text approved by the present Supreme Decree will apply

from the date of entry into force of Legislative Decree No. 708, except for those that state adifferent date in their own text. (*)

(*)Legislative Decree No. 708, which full text has been incorporated into the present UniqueOrdered Text, was enacted on 11/06/91 and published in the Official Gazette "El Peruano" on14/11/91.

Article 3. While the decentralization and/or deconcentration rational scheme is beingprepared according to the needs of the regions referred to in Article 2, paragraph 9), of DecreeLaw No. 25418, Basic Government Law on Emergency and National Reconstruction, the functionsassigned to The Jurisdictional and Administrative Mining Organs by The General Mining Law will be

governed by the provisions of Supreme Decree No. 00292

EM/VMM.

Issued at the Government House in Lima, on the second day of June nineteen ninety two.

Signed by the Constitutional President of the Republic

JAME YOSHIYAMA TANAKAMinister of Energy and Mines


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INDEX OF THE GENERAL MINING LAW UNIQUE ORDERED TEXT

PRELIMINARY TITLE

FIRST TITLE Mining Activities and Ways to Practice them

Chapter I Informal Exploration and Prospecting Arts. 1 to 2Chapter II Commercialization Arts. 3 to 5Chapter III Other Mining Activities Art. 6

SECOND TITLE Concessions

Chapter I Mining Concessions Arts. 7 to 16

Chapter II Beneficiation Concessions Arts. 17 to 18Chapter III General Work Concessions Arts. 19 to 21Chapter IV Mining Transport Concessions Arts. 22 to 23

THIRD TITLE The State in The Mining Industry Arts. 24 to 30

FOURTH TITLE Persons that are unfit to practice mining activities Arts. 31 to 36

FIFTH TITLE Common Rights of Concession Holders Art. 37

SIXTH TITLE OBLIGATIONS OF HOLDERS OF CONCESSIONS

Chapter I In Mining Concessions Arts. 38 to 43Chapter II Grouping Arts. 44 to 45Chapter III In Beneficiation Concessions Art. 46Chapter IV In General Work Concessions y Mining Transport Art. 47Chapter V Common Obligations Arts. 48 to 56

SEVENTH TITLE State Income Distribution Art. 57

EIGHTH TITLE Extinction of Concessions

Chapter I Extinction Art. 58Chapter II Maturity Arts. 59 to 61Chapter III Forfeiture Art. 62Chapter IV Annulment Art. 63Chapter V Rescission Arts. 64 to 65Chapter VI Destination Arts. 66 to 70

NINTH TITLE Warranties and Investment Promotion Measurements


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Chapter I General Provisions Art. 71Chapter II Basic Benefits Art. 72Chapter III Tax regime Arts. 73 to 77Chapter IV Tax Regime Stability Arts. 78 to 90

TENTH TITLE Smallscale mining producers Arts. 91 al 92

ELEVENTH TITLE Mining Jurisdiction

Chapter I Administrative Jurisdictional Bodies Art. 93Chapter II Mining Council Arts. 94 to 100Chapter III General Directorate of Mining Art. 101Chapter IV Mining Direction and Supervision Art. 102

Chapter V Public Mining Registry Arts. 103 to 109Chapter VI Impediments Art. 110

TWELFTH TITLE Procedures

Chapter I General Provisions Arts. 111 to 116Chapter II Ordinary Procedures for Mining Concessions Arts. 117 to 128Chapter III Procedures for Beneficiation Concessions,

General Work y Mining Transport Art. 129Chapter IV Procedures for Expropriation and Easement Arts. 130 to 135Chapter V Mining Use of Loam Land and Barren Land Arts. 136 to 137Chapter VI Accumulation Art. 138Chapter VII Waiver Art. 139Chapter VIII Claims Arts. 140 to 142Chapter IX Other Procedures Art. 143Chapter X Opposition Arts. 144 to 147Chapter XI Annulment Art. 148 to 150Chapter XII Forfeiture Art. 151Chapter XIII Challenge Art. 152Chapter XIV Resolutions Art. 153 to 156Chapter XV ContentiousAdministrative Action Art. 157

Chapter XVI Terms Arts. 158 to 160Chapter XVII Notifications Art. 161

THIRTEENTH TITLE Mining Contracts

Chapter I General Provisions Arts. 162 to 163Chapter II Transfer Contracts Art. 164Chapter III Option Contracts Art. 165Chapter IV Mining Transfer Contracts Arts. 166 to 171Chapter V Mortgage Contracts Arts. 172 to 177


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Chapter VI Mining Liens Arts. 178 to 183Chapter VII Contractual Corporations and Branches Arts. 184 to 185Chapter VIII Legal Partnerships Arts. 186 to 203Chapter IX Shared Risk Contracts Arts. 204 to 205

FOURTEENTH TITLE Wellbeing and Security Arts. 206 to 218

FIFTEENTH TITLE Environment Arts. 219 to 226

Transitory Provisions I to XVIFinal Provisions I to IX


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GENERAL MINING LAW

UNIQUE ORDERED TEXT

PRELIMINARY TITLE

I. The present Law comprises everything related to the use of soil and subsoilmineral substances of the national territory as well as the maritime domain. Oil andhydrocarbon analogs, guano deposits, geothermal resources and medicinal waters areexcluded from the scope of the present Law.

(I Prel. Tit., Leg. Dec. No.109)

II. All mineral resources belong to the State, which property is inalienable andimprescriptible.

The State evaluates and preserves natural resources, having to develop a basicinformation system for the promotion of investment; rules the mining activity nationallyand monitors according to the basic principle of administrative simplification.

The exploitation of mineral resources is carried out through State and privateenterprises, by the use of the system of concessions.

(Art.17, Leg. Dec. No. 708)

III. The State protects small and mediumscale mining and promotes largescalemining. (*)

(IV Prel. Tit., Leg. Dec. No. 109)

(*)Numeral replaced by Article 4 of Law No. 27651 published on 01.24.2002, which readsas follows:

III. The State protects and promotes smallscale and artisanal mining as well as

mediumscale mining, and promotes largescale mining".

IV. A mining concession is bound by an obligation which consists in the investmentfor the production of minerals.

(Art. 28, Leg. Dec. No. 708)

V. The mining industry is a public interest and the promotion of investments in itsactivity is of national interest. (*) CORRECTED BY ERRATUM


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(Art. 1, Leg. Dec. No. 708).

CONCORDANCES: S.D. No. 0212003

EM

S.D. No. 0222003EMS.D. No. 0232003EM

VI. The following are activities regarding the mining industry: informal exploring,prospecting, exploration, exploitation, general work, beneficiation, commercialization, aswell as mining transport.

The State is responsible for the rating of the mining activities.

In order to perform the above activities, the State or private entities shall complywith the provisions of this Law.

(VII Prel. Tit., Leg. Dec. No. 109 and Art. 20, paragraph b), Leg. Dec. No. 708)

CONCORDANCE: Annex S.D. No. 0332005EM, Art. 2

VII. The practice of mining activities, except for informal exploration, prospecting ycommercialization, is carried out exclusively under the concession system, which isaccessed under procedures that are matters of public policy. Concessions are granted forboth State and private corporate action, without distinction or privilege.

(Art. 18 and 19, Leg. Dec. No. 708).

FIRST TITLE

MINING ACTIVITIES AND WAYS TO PRACTICE THEM

CHAPTER I

INFORMAL EXPLORATION Y PROSPECTING

Article 1. Informal exploration is the action that leads to prove evidence of

mineralization through elementary mining works.

Prospecting refers to the research process which might help to identify areas ofpotential mineralization, through chemical and physical data, measures of precisioninstruments and techniques.

(Definitions, Leg. Dec. No. 109).

Article 2. Informal exploration and the prospecting are free activities throughoutthe national territory. These activities may not be carried out by third parties in areas


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where there are mining concessions, areas where land claims are no allowed and enclosedor cultivated land, except with the prior written permission of the holder or owner, asapplicable.

Informal exploration and prospecting is prohibited in urban or urban expansionareas in areas reserved for national defense, in archaeological sites and property of publicuse, except with the prior authorization of the competent body.

(Art.18, Dec. Leg. No. 708).

CONCORDANCE: S.D. No. 0202008EM, Art. 5 (On environmental studies included inthe mentioned Regulation)

CHAPTER IICOMMERCIALIZATION

Article 3. The commercialization of mineral products is free, internally andexternally, and the granting of a concession is not required to it carry out.

(Art. 20. Last paragraph, Leg. Dec. 708)

Article 4. Mineral products purchased from authorized persons who can use them,are not claimable. The buyer is subject to liability when purchasing mineral products tounauthorized persons. The buyer is required to verify the origin of these mineralsubstances.

(Art. 38, Leg. Dec. No. 708).

CONCORDANCES: S.D. No. 0552010EM, Art. 3 (Supreme Decree which approves theOccupational Health and Safety Regulation and other complementary measures in mining)

Article 5. Enforce Supreme Decree No. 00591EM/VMM on freecommercialization of gold.

(Art. 23, Leg. Dec. No. 708).

CHAPTER III

OTHER MINING ACTIVITIES

Article 6. The State may declare through special law, the reservation of certainmineral substances of national interest.

(Art. 5, Leg. Dec. No. 109)


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Article 7. The exploration, exploitation, beneficiation, general work and miningtransport activities are carried out by national or foreign natural and legal persons,through the concession system.

(Art. 8, Leg. Dec. No.109).

SECOND TITLE

CONCESSIONS

CHAPTER I

MINING CONCESSIONS (*)

(*) In accordance with Article 1 of Supreme Decree No. 3194EM, published on 06/24/94,

the admission of applications for to Mining Concessions referred to in this Chapter issuspended from that date until 12/31/94.

Article 8. Exploration is a mining activity aimed at showing the dimensions,position, mineralogical characteristics and reserves, as well as values of mineral deposits.

Exploitation is the activity of extracting the minerals contained in a deposit.

Development is the operation carried out to enable the exploitation of the mineralcontained in a deposit.

(Definitions, Leg. Dec. No.109)

CONCORDANCES: S.D. No. 0202008EM (The approval of The EnvironmentalRegulations for Mining Exploration Activities)

Article 9. The mining concession grants its holder the right to explore and exploitmineral resources granted, which are within a solid area of indefinite depth, bounded byvertical planes corresponding to the closed sides of a square, rectangle or polygon whichvertices refer to Universal Transverse Mercator (UTM) coordinates.

The mining concession is a distinct and separate property from the land where it islocated.

The integral and ancillary parts of a mining concession still remain as property evenif they are located outside the perimeter, unless the differences are agreed by contract.

Works carried out aiming to use such substances are an integral part of the miningconcession. Accessory parts are all property owned by the grantee that are appliedpermanently to the economic purpose of the concession.


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(Art. 20, paragraph a), Leg. Dec. No. 708 and Art. 16, Leg. Dec. No.109)

Article 10. The mining concession grants its holder a right in rem, which is the sumof the attributes that the present Law recognizes in favor of the grantee.

Concessions are irrevocable, as long as the holder complies with the obligationswhich the present law requires to remain relevant.(*)

(Art. 17, Leg. Dec. No.109)

(*)In accordance with Article 6 of The Decree Law No. 25998, published on 12/26/92, it isstated that the principle described in the first paragraph of the present article is alsoapplicable to the beneficiation concessions, mining transport and general work.

Article 11. The basic surface measurement unit for mining concessions is ageometrical figure, delimited by UTM coordinates, with an area of 100 hectares, accordingto the Grid System that The Ministry of Energy and Mines will make official. (*)CORRECTED BY ERRATUM

Concessions will be granted in areas of 100 to 1,000 hectares, in grids or set ofgrids adjacent at least on one side, except in the maritime domain where areas aregranted in grids of 100 to 10,000 hectares.

The mining concession area may be fractionated to grids not less than 100hectares. For this purpose, an application submitted through the holder of the concessionwill suffice.

(Art. 20, paragraph a), Leg. Dec. No.708)

CONCORDANCES: M.R. No. 2092010MEMDM (Provides for the submission of theAnnual Affidavit UTM PSAD 56 coordinates along with the submission of the ConsolidatedAnnual Statement for the year 2009 and modifies the form approved by MR No. 184 2005MEM/DM)

Article 12.

Should there be claims or applications for mining concessions withinthe area enclosed by a grid prior to December 15, 1991, the new applications will onlyinclude the free areas of the grid or set of grids.

(Art. 20, paragraph a), Leg. Dec. No.708)

CONCORDANCES: S.D. No.3594EM, Art. 1A.R. No.042002000RPMS.D. No. 0394EM, Art. 16


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Article 13. Mining concessions granted after December 15, 1991, shall beclassified as metallic and nonmetallic, depending on the type of substance, withoutoverlap or priority among themselves.

The mining concession may be converted to a different substance of what wasoriginally granted, for which purpose the formulation of such statement by the holder willsuffice.


Article 14. In accordance with the provisions of The Decree Law No. 21419,Legislative Decree No. 613, and the Seventh Supplementary Provision of The Law forPromotion of Investments in The Agricultural Sector, Legislative Decree No. 653, no

nonmetallic concessions or nonmetallic concession extensions will be established onintangibles agricultural areas, or rural land for agricultural use, excluding natural pasturesfrom the latter.

In the case of urban or urban expansion areas, the concession title will be awardedprior authoritative agreement by the respective Provincial Council.

To this effect, it shall be deemed approved if the Provincial Council has not actedwithin sixty calendar days following the filing of the application.

(Art. 22, Leg. Dec. No.708).

Article 15. The nonmetallic concession of saline substances up to the firstprocessing of the product is subject to this Chapter, being its use and commercializationgoverned by the provisions on the subject.


Article 16. Radioactive substances are no longer reserved for the State; therefore,they may be subject to private mining activity.

(Art. 27, Leg. Dec. No.708).

CHAPTER II

BENEFICIATION CONCESSIONS

Article 17. Beneficiation is the set of physical, chemical and/or physicochemicalprocesses performed to extract or concentrate the valuable parts of an aggregate ofminerals and/or to purify, smelt or refine metals. It comprises the following steps:


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1. Mechanical Preparation. The process by which a mineral is reduced in size,classified and/or washed.

2. Metallurgy.

Set of physical, chemical and/or physicochemical processes carriedout to concentrate and/or extract the valuable mineral substances.

3. Refining. Process that purifies metals of products obtained from previousmetallurgical processes.

(Definitions, Leg. Dec. No.109, modified by Art. 20, paragraph b), Leg. Dec. No.708)

Article 18. The beneficiation concession grants the holder the right to extract orconcentrate the valuable part of an uprooted mineral aggregate and/or to melt, purify or

refine metals, either through a set of physical, chemical and/or physicochemicalprocesses.

(Art. 20, paragraph b), Leg. Dec. No.708).

The set of physical, chemical and/or physicochemical processes that artisanalminers carry out to extract or concentrate the valuable parts of an aggregate of mineralsand/or to purify, smelt or refine metals are not within the scope of this Title. In order tocarry out these processes, the application attached to the technical information and anEnvironmental Impact Statement signed by a competent professional in the field will berequired. The respective authorization shall be issued by the General Directorate ofMining.(*)

(*) Paragraph added by Article 5 of Law No. 27,651, published on 01/24/2002.

CONCORDANCES: S.D. No. 0052009EM, Art. 17 (Regulation of Law No. 27651 Lawfor theFormalization and Promotion of Artisanal andSmallscale Mining)

CHAPTER III

GENERAL WORK CONCESSIONS

Article 19.

General work is all mining activity that provides ancillary services, suchas ventilation, sewage, hoisting or extraction to two or more concessions granted todifferent concessionaires.

(Definitions, Leg. Dec. No.109).

Article 20. The general work concession grants the holder the right to provideancillary services to two or more mining concessions.

(Art. 20, paragraph c), Leg. Dec. No.708)


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Article 21. In the event that a general work discovers waters containing usable

mineral substances, the use of these shall correspond to the general work concessionaire,unless otherwise agreed.

(Art. 78, Leg. Dec. No.109).

CHAPTER IV

MINING TRANSPORT CONCESSION

Article 22. Mining transport refers to systems used for the continuous bulktransport of mineral products by unconventional methods.

Systems to be used may be the following:

Conveyor belts; Ducts; or, Track cables.

The General Directorate of Mines, with a favorable report from the Ministry ofTransport and Communications and the Mining Council's view, may add new systems tothis definition.

(Definitions, Leg. Dec. No.109 and Article 20, paragraph d), Leg. Dec. No.708)

Article 23. A mining transport concession confers upon its holder the right toinstall and operate a system for continuous bulk transport of mineral products betweenone or more mining centers and a port or processing plant, or a refinery or in one or moresections of these routes.

(Art. 20, paragraph d), Leg. Dec. No.708)

THIRD TITLE

THE STATE IN THE MINING INDUSTRY

Article 24. The State is entitled to exercise, without exception, all activities in themining industry.

(Art. 28, Leg. Dec. No.109).

Article 25. The Ministry of Energy and Mines may only authorize areas that arenot available for claims to the Institute of Geology, Mining and Metallurgy INGEMMET,for periods of up to two calendar years, with the sole purpose that such institution carriesout regional mining prospecting works, observing acquired rights.


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Each of these areas may not include more than one hundred thousand (100,000)

hectares.

Under its responsibility, INGEMMET will make available to the public, forconsideration, the studies containing information of their regional prospecting work, onemonth before the expiration of the time allowed, after which they will be freely available.(*) CORRECTED BY ERRATUM (*)

(Art. 25, Leg. Dec. No.708).

(*)Article amended by the Sole Article of Law No. 28196, published on 03.27. 2004, whichreads as follows:

Article 25. The Ministry of Energy and Mines may only authorize areas that arenot available for claims to the Institute of Geology, Mining and Metallurgy INGEMMET,for periods of up to two calendar years, with the sole purpose that such institution carriesout regional mining prospecting works, observing acquired rights and areas adjacent tothe archaeological sites of the country.

Each of these areas may not include more than one hundred thousand (100,000)hectares.

Under its responsibility, INGEMMET will make available to the public, forconsideration, the studies containing information of their regional prospecting work, onemonth before the expiration of the time allowed, after which they will be freely available;except for the following:

a) The Private Investment Promotion Agency PROINVERSION or its substitute,in agreement with Regional Governments may carry out the process of promotinginvestment in all or part of these areas, when approved by its Board within the two yearsterm provided in the first paragraph of this article, ratified through Supreme Resolution,establishing the mechanism of compensation for expenses incurred by INGEMMET. Inthis case, the incorporated areas shall have the status of nonadmission of claims and/or

applications areas and shall remain as such according to the result of the process, until themining concession is granted. The National Institute of Concessions and Mining Cadastre INACC, shall grant mining concessions in respect of those areas to the winner of the bidthat acquires the ownership or exercises the option, pursuant to provisions in thecontract. If the transfer contract or mining option agreement is not signed within two (2)years after the said supreme resolution has been issued, the respective areas shall bedeclared available.

b) PROINVERSION or its substitute may request to the Ministry of Energy andMines the incorporation in the process of promoting investment the area of up to one


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hundred thousand (100,000) hectares according to the technical and economic studies ofthe project and within the radius in relation to the mining concessions included in suchpromotion process, observing acquired rights. These incorporated areas shall have thestatus of non

admission of claims and/or applications areas and shall remain as such

according to the result of the process, until the mining concession is granted.

c) The incorporation referred to in the preceding paragraph shall be approvedthrough Supreme Decree with the approval of The Council of Ministers, with a term of two(2) years. Once the deadline is due, if the transfer contract or mining option agreement isnot signed within two (2) years after the said supreme resolution has been issued, therespective areas shall be declared available." (*)

(*)Article replaced by Article One of Legislative Decree No. 1010, published on May 09,

2008. The said Legislative Decree shall enter into force upon the approval of theRegulations, by Fifth Transitory and Supplementary Provision, which text reads as follows:

Article 25. The Ministry of Energy and Mines may authorize areas that are notavailable for claims to the Institute of Geology, Mining and Metallurgy INGEMMET, formaximum periods of five calendar years, with the purpose that such institution carries outregional mining prospecting works, observing acquired rights and areas adjacent to thearchaeological sites of the country.

Each of these areas may not include more than three hundred thousand (300,000)hectares.

Concessions and mining applications that revert to the State for any ground maybe subject to declaration of nonacceptance of applications.

Under its responsibility, INGEMMET will make available to the public, forconsideration, the studies containing information of their regional prospecting work, onemonth before the expiration of the time allowed, after which they will be freely available;except for the following:

a) The Private Investment Promotion Agency PROINVERSION or its substitute,

in agreement with Regional Governments may carry out the process of promotinginvestment in all or part of these areas, when approved by its Board within the fiveyearterm provided in the first paragraph of this article, ratified by supreme resolution,establishing the mechanism of compensation for expenses incurred by INGEMMET. Inthis case, the incorporated areas shall have the status of nonadmission of claims and/orapplications areas and shall remain as such according to the result of the process, until themining concession is granted. INGEMMET shall grant mining concessions in respect ofthose areas to the winner of the bid that acquires the ownership or exercises the option,pursuant to provisions in the contract. If the transfer contract or mining option agreement


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is not signed within two (2) years after the said supreme resolution has been issued, therespective areas shall be declared available.

b) PROINVERSIN or its substitute may request to the Ministry of Energy andMines the incorporation in the process of promoting investment the area of up to onehundred thousand (100,000) hectares according to the technical and economic studies ofthe project and within the radius in relation to the mining concessions included in suchpromotion process, observing acquired rights. These incorporated areas shall have thestatus of nonadmission of claims and/or applications areas and shall remain as suchaccording to the result of the process, until the mining concession is granted.

The incorporation referred to in the preceding paragraph shall be approved bysupreme decree with the approval of the Council of Ministers, with a term of two (2)

years. Once the deadline is due, if the transfer contract or mining option agreement is notsigned within two (2) years after the said supreme resolution has been issued, therespective areas shall be declared available.

CONCORDANCES: D.S. N 0542008EM

Article 26. Concessions should be taken to public auction when agencies orentities of the National Public Sector acquired concessions granted to private entities,within three months following the acquisition. If no bidders submit, they will be declaredavailable for claims in accordance with the rules established in the present Act for thispurpose.

(Art. 31, Leg. Dec. No.109).

Article 27. The State mining activities, except for commercialization, shall beexercised directly by Empresa Minera del Peru and/or through affiliates or subsidiaries.

(Art. 59, Leg. Dec. No. 109 and Art. 26, Leg. Dec. No.708).

Article 28. The selling prices and/or fees for treatment and/or refining services ofmineral products are defined according to each product according to representative

international prices and within the general rules of international transactions. In theabsence of representative international prices, the selling prices and/or fees for treatmentand/or refining services shall be fixed following the usual international standards.

(Art. 36, Leg. Dec. No. 109).

Article 29. In acquisitions and/or treatment and/or refining services for thedomestic market of mineral products that are exported, the value to be paid for theseproducts will be calculated in accordance with the preceding article. In the case of


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acquisitions, expenses and losses that would be incurred in when placing the products inthe international market will be deducted.

(Art. 38, first paragraph, Leg. Dec. No. 109).

Article 30. The import of mineral products required by the domestic market willbe governed by the terms and prices of the international market. The reexport of mineralproducts will also be subject to the provisions of Article 28.

(Art. 38 second paragraph, Leg. Dec. No. 109).

FOURTH TITLE

PERSONS THAT ARE UNFIT TO PRACTICE MINING ACTIVITIES

Article 31. The persons that are unfit to work in the mining industry during theexercise of their administration or employment are the President of the Republic,Members of the Legislative and Judiciary Branches, the State Ministers and Officials whohave this rank, the Comptroller General, The Attorneys General of the Republic and theofficers and employees of the Energy and Mining Sector appointed or assigned to SeniorManagement, Board of Mining, The General Directorate of Mining, Auditing Department,The Mining Regional Bodies and The Public Mining Registry.

Also, personnel working at agencies or departments of The National Public Sectorand Public Decentralized Agencies are unfit to work in the mining industry exercising

judicial functions or performing mining activities.

(Art. 60, Leg. Dec. No.109).

Article 32. , Political authorities and members of The Armed and Police Forcesmay not perform activities of the mining industry in the territory of their jurisdiction.

(Art. 61, Leg. Dec. No.109).

Article 33. , Spouses and relatives who are economically dependent of the persons

mentioned in the previous articles may not perform activities of the mining industry.

(Art. 62, Leg. Dec. No.109).

Article 34. The prohibition contained in the preceding paragraphs does notinclude the practice of mining activities related to rights obtained prior to the election orappointment of the persons involved, or those acquired by inheritance or bequest afterthe election or the appointment, nor the one the spouse brings to the marriage.

(Art. 63, Leg. Dec. No.109).


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Article 35. The acquisition of the all or part of the concessions carried out by the

persons mentioned in Articles 31 to 33 is void, and such acquisitions will become propertyof the state at no cost.

Nullity shall be declared by the Head of the Public Mining Registry, ex officio orupon request, when the file is subject to the administrative jurisdiction. Once theconcession title is inscribed, it may be brought for administrative litigation before theJudiciary Branch, within 30 days.

(Arts. 64 and 178, Leg. Dec. No. 109 and Art. 43, Leg. Dec. No. 708).

Article 36. The partners, directors, representatives, employees and contractors of

natural or legal persons engaged in mining activities may not acquire concessions forthemselves, within a radius of ten kilometers of any point on the perimeter that enclosesthe area where concessions of people they are linked to are locate, unless authorized bythe holder. This prohibition applies to relatives who are financially dependent on unfitpersons.

Affected individuals have the right to be replaced in the respective file, withinninety days of publication of the notice made or the notification referred to in Article 122of this Law. If the affected person did not use this right in the aforementioned term, theimpairment will disappear.

(Article 65, Leg. Dec. No. 109).

FIFTH TITLE

COMMON RIGHTS OF CONCESSION HOLDERS

Article 37. Holders of concessions, have the following attributes:

1. In concessions granted in barren land, for free mining use of the surfacecorresponding to the concession, for economic purposes thereof, without any additionalapplication.

2. To request the mining authority the right to free mining use for the samepurpose on barren land located outside the concession.

3. To request the mining authority the authorization in order to establisheasements on third parties lands necessary for the rational use of the concession. Theeasement will be established prior compensation value appraised if applicable.

Previous officio or at the request of the affected owner, the mining authorities willcarry out the expropriation if the easement undermines the right of ownership.


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4. To request permission to establish mining use or easements, if any, on the

surface land of other concessions, provided they do not impede or hinder the miningactivity of the owners.

5. To perform in neighboring concessions the necessary works to have access,ventilation and sewage for their own concessions, mineral transportation and safety ofworkers, after appropriate compensation if they cause any damage and exempted of taxfor servant concessions, leaving in the site, free of cost for these concessions, the mineralsresulting from the works performed. The servant concessions holders may use this workspaying the respective compensation which amount will be fixed by the mining authority inthe absence of agreement between the parties.

6. To carry out on loam land, works that have the same purposes mentioned in theprevious paragraph, with authorization from The General Directorate of Mining.

7. To request expropriation, prior appraised value compensation, of propertyintended to another economic activity, if according to the mining authority the area isnecessary for the rational use of the concession and if such mining industry proves to bemore important than the affected activity.

In cases where expropriation includes properties located in urban or urbanexpansion areas, the views of The Ministry of Transport, Communications, Housing andConstruction will be sought (*) CORRECTED BY ERRATUM or through the relevant RegionalBody.

8. To use the water necessary for domestic service by the workers and operationsof the concession, in accordance with the laws on the subject.

9. To exploit the minerals contained in the waters discovered during works.

10. To inspect the neighboring or adjoining mining concessions works, wheninvasion is suspected or when flood, landslide or fire is feared due to the neighbors poorwork condition in the development of works carried out by them.

(Art. 79, Leg. Dec. No.109).

11. To hire specialized companies registered in the General Directorate of Miningfor the execution of exploration, development, exploitation and processing works. (*)

(*) Paragraph 11 has been added by Article 2 of Legislative Decree No. 868 issued on11/01/96.

CONCORDANCES: S.D. No. 0432001EM


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S.D. No. 0052008EM, Arts. 1, 2, 3, 4, 6 paragraph d)

SIXTH TITLE

OBLIGATIONS OF HOLDERS OF CONCESSIONS

CHAPTER I

IN MINING CONCESSIONS

Article 38. In accordance with the provisions of Article 122 of the PoliticalConstitution of Peru, the mining concession creates an obligation that must be attained,obligation that consists in the investment for the production of minerals.

The production may not be less than the equivalent in national currency to US$

100.00 per year per hectare granted in the case of metallic substances, as well as theequivalent in national currency to US$ 50.00 per year per hectare granted in the case ofnonmetallic substance.(*)

(*) Second paragraph was substituted by Article 6 of Law No. 27651, published on01.24.2002, which text reads as follows:

Production may not be less than the equivalent in national currency to US$100.00 per year per hectare granted in the case of metallic substances, and the equivalentin national currency to US$ 50.00 per year per hectare granted in the case of nonmetallicsubstances. In the case of smallscale mining producers, production may not be less thanthe equivalent in national currency to US$ 50.00 per year per hectare granted whateverthe substance. In the case of artisanal mining producers, production may not be less thanthe equivalent in national currency to U$ 25.00 per year per hectare granted whatever thesubstance.

Production must be obtained no later than the expiration of the eighth year,computed from the year in which the application for the concession was submitted. (*)

(*)Third paragraph replaced by Article 1 of Law No. 27341, published on 08.18. 2000,which text reads as follows:

"Production must be obtained no later than the expiration of the sixth year,computed from the year in which the concession title was granted".

Production must be accredited with sales settlements.

In the case of domestic sales, settlements shall be issued by commercialization orprofit companies duly registered in The Public Mining Registry, or by companies nonholders of mining activities registered in The National Office of Public Records.


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Such sales settlements must be submitted before the mining authorities in theform provided thereof, within 180 days after the end of each calendar year, on sales ofthe year. (1)(2)

(Art. 28, Leg. Dec. No.708).

(1) In accordance with Article 3 of The Legislative Decree No. 913 issued on 04.09.2001,the term referred to in this article, in the case of concessions that are owned bycompanies participating in the promotion of private investment process, is computedfrom the year in which the transfer to the private sector occurs, according to provisions inthe regulations.

(2) Article replaced by Article One of The Legislative Decree No. 1010, published on May

09, 2008. The mentioned Legislative Decree shall enter into force upon the approval of theRegulations, by Fifth Transitory and Supplementary Provision, which text reads as follows:

Article 38. In accordance with the provisions of Article 66 of the PoliticalConstitution of Peru, by organic law, the conditions for the use of natural resources andtheir granting to private entities are set, therefore establishing that the mining concessioncreates an obligation that must be attained, obligation that consists in the investment forthe production of minerals.

Production may not be less than the equivalent to a UIT per year per hectaregranted in the case of metallic substances, and the equivalent to 10% of a UIT per year perhectare granted in the case of nonmetallic substances. In the case of smallscale miningproducers, production may not be less than the equivalent to 10% of a UIT per year perhectare granted in the case of metallic substances and to 5% of a UIT per year per hectaregranted in the case of nonmetallic mining. In the case of artisanal mining producers,production may not be less than 5% of a UIT per year per hectare granted whatever thesubstance.

Production must be obtained no later than the expiration of the seventh year,calculated from the year when the concession was granted Production must be accreditedwith sales settlements.

In the case of domestic sales, settlements shall be issued by commercialization orprofit companies duly registered in the National Office of Public Records.

Such sales settlements must be submitted before the mining authorities in theform provided thereof, until June 30 of the following year, on sales of the previous year.(*)

(*) Article amended by Article 1 of Legislative Decree No. 1054, published on June 27,2008, which text reads as follows:


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Article 38. In accordance with the provisions of Article 66 of The Political

Constitution of Peru, through Organic Law, the conditions for the use of natural resourcesand their granting to private entities are set, therefore establishing that the miningconcession creates an obligation that must be attained, obligation wich consists in theinvestment for the production of minerals.

Production may not be less than the equivalent to a UIT per year per hectaregranted in the case of metallic substances, and the equivalent to 10% of a UIT per year perhectare granted in the case of nonmetallic substances. In the case of smallscale miningproducers, production may not be less than the equivalent 10% of a UIT per year perhectare granted in the case of metallic substances and to 5% of a UIT per year per hectaregranted in the case of nonmetallic mining. In the case of artisanal mining producers,

production may not be less than 5% of a UIT per year per hectare granted whatever thesubstance. Production must be obtained no later than the expiration of the tenth year,calculated from the year when the concession was granted. Production must beaccredited with sales settlements.

In the case of domestic sales, settlements shall be issued by commercialization orprofit companies duly registered in the National Office of Public Records.

Such sales settlements must be submitted before the mining authorities in theform provided thereof, until June 30 of the following year, on sales of the previous year.

CONCORDANCES: S.D. No. 0292001EMM. R. No. 2712003EMDM, Art. 1S.D. No. 0542008EM, Art. 3, 7 and Unique Transitional Provision,

num. 2 y 3.S.D. No. 0052009EM, Art. 21 (Regulations of Law No. 27651 Law

for the Formalization and Promotion of Artisanal and Smallscale Mining)

Article 39. Beginning of year when the application was formulated, the miningconcessionaire is obliged to pay the Validity Right.

The Validity Right is the local currency equivalent to US$ 2.00 per year per hectaregranted or requested.

For small mining producers and for holders of nonmetallic mining concessions, theValidity Right will be the local currency equivalent to US$ 1.00 per year per hectaregranted or requested.

The Validity Right, for the year in which the mining concession application issubmitted, shall be paid and credited as a result of the formulation of the request.


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The Validity Right for the second year, computed as of January 1 of the followingyear when the mining concession application was submitted, shall be paid by June 30 ofthe second year. The same rule will apply to the following years. (*)

(Art. 29, Leg. Dec. No.708).

(*)Article replaced by Article 3 of The Legislative Decree No. 868, published on 01/11/96,which text reads as follows:

"Article 39. Beginning of year when the application was formulated, the miningconcessionaire is obliged to pay the Validity Right.

The Validity Right is the local currency equivalent to US$ 2.00 per year per hectare

granted or requested." (*)

(*) Paragraph substituted by Article 2 of Law No. 27341, published on 08.18. 2000, whichtext reads as follows:

"The Validity Right is US$ 5, 00 or its equivalent in local currency per year perhectare granted or requested."

For smallscale mining producers, the Validity Right is the local currency equivalentto US$ 1.00 per year per hectare granted or requested. (*)

(*)Paragraph substituted by Article 2 of Law No. 27341, published on 08.18. 2000, whichtext reads as follows:

"For Smallscale mining producers, the Validity Right is US$ 1, 00 or its equivalentin local currency per year per hectare granted or requested."


The Validity Right for the second year, computed as of January 1 of the following

year when the mining concession application was submitted, shall be paid by June 30 ofthe second year. The same rule will apply to the following years.

In accordance with Article 9 of this Law, the mining concession is property distinctand separate from the estate where it is located, which is why the validity right feepayment to which the holder of the mining right is bound, is independent of the paymentof taxes to which the property owner is bound". (*)

(*) Article replaced by Article 1 of Legislative Decree No 913, published on 04 092001,which text reads as follows:


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Article 39. Beginning of year when the application was formulated, the mining

concessionaire is obliged to pay the Validity Right.

The Validity Right is US$ 3, 00 or its equivalent in local currency per year perhectare granted or requested.

For Smallscale mining producers, the Validity Right is US$ 1, 00 or its equivalent inlocal currency per year per hectare granted or requested ". (*)

(*) Third paragraph substituted by Article 7 of Law No. 27651, published on 01.24.2002,which text reads as follows:

For Smallscale mining producers, the Validity Right is US$ 1, 00 or its equivalent

in local currency per year per hectare granted or requested. For artisanal miningproducers the Validity Right is US$ 0.50 or its equivalent in local currency per year perhectare granted or requested.


The Validity Right for the second year, computed as of January 1 of the followingyear when the mining concession application was submitted, shall be paid by June 30 ofthe second year. The same rule will apply to the following years.

In accordance with Article 9 of this Law, the mining concession is property distinctand separate from the estate where it is located, which is why the validity right feepayment to which the holder of the mining right is bound, is independent of the paymentof taxes to which the property owner is bound.(1)(2)(3)(4)

(1) In accordance with Article 1 of Urgency Decree No. 079 2001, issued on 07.07.2001,the chance to pay for 2001is extended until 10/31/2001.

(2) In accordance with Article 1 of Emergency Decree No. 1232001, issued on 10312001,

the chance to pay for 2001 is extended until 10/31/2001.

(3) In accordance with Article 1 of the Emergency Decree No. 0342002, issued on07.03.2002, the chance to pay for 2002 in the department of Madre de Dios, is extendeduntil 07152002.

(4) In accordance with Article 1 of Law No. 28104, published on 11.21.2003, the legal termfor the validity right and penalties of mining rights payment that have expired on June 30of this year included in this article is for one last time until 12/31/2003.


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CONCORDANCES: S.D. No. 0292001EMA.R. No. 27482006INACCJA.R. No. 26082006INACCJ (Extends deadline for payment of the

validity right and penalties for the year 2006)

Article 40. Failure to comply with the provisions of Article 38, from thefirst half of the ninth year, computed from the date on which the mining concessionapplication has been filed, the concessionaire shall pay a national currency penaltyequivalent US$ 2.00 per year per hectare, until the year the required minimum annualproduction is complied with.

If the smallscale mining producer fails to comply with the provisions of Article 38,from the first half of the ninth year, computed from the date on which the mining

concession application has been filed, the concessionaire shall pay a national currencypenalty equivalent to US$ 1.00 per year per hectare, until the year the required minimumannual production is complied with.

If the breach continues, from the fourteenth year, the local currency penalty willbe equivalent to US$ 10.00 per year per hectare. For the small scale mining producer, theamounts indicated in this paragraph shall be reduced by half. The corresponding penaltymust be paid for and accredited together with the Validity Right. (*)

(Art. 30, Leg. Dec. No.708).

(*)Article replaced by Article 3 of Law No. 27341, published on 08.18.2000, which textreads as follows:

"Article 40. Failure to comply with the provisions of Article 38, from the first halfof the seventh year, computed from the date on which the mining concession title hasbeen granted, the concessionaire shall pay a penalty equivalent US$ 6.00 or its equivalentin national currency per year per hectare, until the year the required minimum annualproduction is complied with. In the case of smallscale mining producers, the penalty willbe US$ 3,00 or its equivalent in national currency per year per hectare, until the year therequired minimum annual production is complied with.

If the breach continues, from the twelfth year, the penalty will be US$ 20.00 or itsequivalent in local currency per year per hectare. From the twelfth year for the smallscalemining producer, the penalty will be US$ 7, 00 or its equivalent in local currency per yearper hectare. The corresponding penalty must be paid for and accredited together with theValidity Right." (1)(2)(3)(4)

(1) In accordance with the First Transitional and Supplementary Provision of Law No.27341, published on 08/18/2000, for purposes of applying the provisions of this Article,time limits are established for payment of the penalty.


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(2) In accordance with Article 1 of the Emergency Decree No. 0792001, issued on07.07.2001, the opportunity to pay for 2001 is extended until 10/31/2001.

(3) In accordance with Article 1 of the Emergency Decree No. 1232001, issued on 10.31.2001, the opportunity to pay for 2001 is extended until 12/31/2001.

(4) Article replaced by Article 8 of The Law No. 27651, published on 01.24. 2002, whichtext reads as follows:

Article 40. Failure to comply with the provisions of Article 38, from the first halfof the seventh year, computed from the date on which the mining concession title hasbeen granted, the concessionaire shall pay a penalty equivalent US$ 6.00 or its equivalent

in national currency per year per hectare, until the year the required minimum annualproduction is complied with. In the case of smallscale mining producers, the penalty willbe US$ 1, 00 or its equivalent in national currency per year per hectare, until the year therequired minimum annual production is complied with. In the case of artisanal miningproducers, the penalty will be US$ 0.50 or its equivalent in national currency per year perhectare, until the year the required minimum annual production is complied with.

If the breach continues, from the twelfth year, the penalty will be US$20.00 or its equivalent in local currency per year per hectare. From the twelfth year forthe smallscale mining producer, the penalty will be US$ 5.00 or its equivalent in localcurrency per year per hectare. From the twelfth year for the artisanal mining producer,the penalty will be US$ 3.00 or its equivalent in local currency per year per hectare.

The corresponding penalty must be paid for and accredited together with theValidity Right. (1)(2)(3)

(1) In accordance with Article 1 of the Emergency Decree No. 0342002, issued on07.03.2002, the deadline for payment in the department of Madre de Dios for the year2002 has been extended until 07/15/2002.

(2) In accordance with Article 1 of Law No. 28104, published on 11.21.2003, the legal term

for the validity right and penalties of mining rights payment that have expired on June 30of this year included in this article is for one last time until 12/31/2003.

(3) Article replaced by Article One of Legislative Decree No. 1010, published on May 09,2008. The Legislative Decree shall enter into force upon the approval of the Regulations,according to its Fifth Transitory and Supplementary Provision which text reads as follows:

Article 40. Failure to comply with the provisions of Article 38, from the first halfof the eighth year, computed from the date on which the mining concession title has beengranted, the concessionaire shall pay a penalty equivalent to 10%, of the required


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minimum annual production per year per hectare, until the year the required minimumannual production is complied with. The corresponding penalty must be paid for andaccredited together with the Validity Right.

The mining concession will expire if the breach continues until the thirteenthyear. (*)

(*) Article amended by Article 1 of Legislative Decree No. 1054, published on June 27,2008, which text reads as follows:

Article 40. Failure to comply with the provisions of Article 38, from the first halfof the eleventh year, computed from the date on which the mining concession title hasbeen granted, the concessionaire shall pay a penalty equivalent to 10%, of the required

minimum annual production per year per hectare, until the year the required minimumannual production is complied with. The corresponding penalty must be paid for andaccredited together with the Validity Right.

The mining concession will expire if the breach continues until the fifteenth year.

CONCORDANCES: S.D. No. 0292001EMM.R. No. 2712003EMDMA.R. No. 27482006INACCJA.R. No. 0612007INACCJS.D. No. 0542008EM, Art. 3, 5, 7 and Unique Transitional provision,

num. 2 y 3R. No. 10662010INGEMMETPCDPM (List of mining rights that

have expired for nonpayment of penalty for the years 2008 and 2009)

Article 41. The concessionaire may be exempted from paying the penalty, if heproves to have made the previous year investments equivalent to no less than ten timesthe amount of the penalty which he is liable to pay for the concession or administrativeeconomic unit, as appropriate.

This investment must be substantiated with a copy of the Annual Income Tax

Declaration and the proof of payment of the Validity Right. (*)

(Art. 31, Leg. Dec. No. 708).

CONCORDANCE: M.R. N 2712003EMDM, Art. 1

(*)Article replaced by Article One of Legislative Decree No. 1010, published on May 09,2008. The Legislative Decree shall enter into force upon the approval of the Regulations,according to its Fifth Transitory and Supplementary Provision which text reads as follows:


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Article 41. No grounds for expiration will be incurred in noncompliance of theminimum production if it is due to a fortuitous event or force majeure, duly proved. (*)

(*)Article amended by Article 1 of Legislative Decree No. 1054, published on June 27,2008, which text reads as follows:

Article 41. The concessionaire will not incur in grounds for expiration after thefifteenth year specified in Article 40 is due and up to a maximum non extendable period offive years if noncompliance of the minimum production is due to a fortuitous event orforce majeure or any fact not attributable to the holder of the mining activity dulysupported and approved by the competent authority.

Also, the concessionaire may be exempted from paying the penalty, within the

period prescribed in the preceding paragraph, by paying the penalty and also creditinginvestments equivalent to no less than ten times the amount of the penalty which he isliable to pay. To this effect, the holder may prove mining investment intended to miningand/or basic infrastructure for public use. This investment must be accredited inaccordance with provisions in the Regulation.

CONCORDANCES: S.D. No. 0542008EM, Art. 7

Should failure to comply continue until the maturity of the twentieth yearscalculated from the following year in which the concession was awarded, it will beinevitably as expired.

CONCORDANCES: S.D. No. 0542008EM, Art. 4 and 6 and Unique Transitionalprovision, num. 2 and 3

Article 42. The holders of the mining industry who after having started theexploitation stage, stop producing as parameter set by Article 38 of this Law, willadditionally pay the Validity Right, the charges set forth in Article 40.

(Art. 33, Leg. Dec. No.708).

Article 43. Those concessionaires who carry out drillings within the country mayfreely make use of fifty percent of each longitudinal core section and/or samples obtainedin such perforations, being obliged to keep a record of the remaining fifty percent of coresamples, allowing easy identification and location on the ground.

(Art. 86, Leg. Dec. No.109).

CHAPTER II

GROUPING


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Article 44. To fulfill the work obligations established in the previous chapter, theholder of more than one mining concession of the same kind and nature, may group theminto Economic Administrative Units, provided they are located within an area of 5kilometer radius, in the case of non

ferrous metallic minerals or primary gold metallic

minerals; 20 kilometer radius in the case of iron, coal and nonmetallic mineral, and 10kilometers in detritus gold metallic deposits or detritus heavy minerals.

The grouping of mining concessions constitutes an economicadministrative unitand requires approving resolution from the General Directorate of Mining. (*)

(Art. 101, Leg. Dec. No.109, Ninth Final Provision, Leg. Dec. No.708 and Art. 1, S.D. No.00292EM/VMM).

(*)In accordance with Article 1 of Supreme Decree No. 05299

EM, published on 09/28/99,

the functions set forth in this Article are assigned to the Public Mining Registry.

Article 45. The production or investment made in an Economic AdministrativeUnit (UEA) cannot be attributed to other mining concessions not included in such Unit.When two or more mining concessions are considered under the UEA system, thecalculation to determine the penalty shall be based on the oldest concession application.

(Art. 32, Leg. Dec. No.708).

CHAPTER III

IN BENEFICIATION CONCESSIONS

Article 46. When applying for a beneficiation concession, the applicant will payfor the Validity Right an amount computed according to the following scale:

Up to 350 MT/day, 0.5 of a UIT From 350 to 1,000 MT / day, 1.00 UIT From 1,000 to 5,000 MT / day, 1.5 UIT For each 5,000 MT / day, in excess /2 UIT.

The MT/day refers to the installed capacity and in case of extensions only additionswill be paid.

Nonmetallic substances beneficiation concessionaires will pay half the ValidityRight. (*)

(Art. 102, Leg. Dec. No.109 and Art. 34, Leg. Dec. No.708).

(*)Article replaced by Article 4 of Legislative Decree No. 868, published on 11/01/96,which text reads as follows:


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" Article 46. Beginning of year when a beneficiation concession is requested, the

holder shall be required to pay an annual Validity Right according to its installed capacity,as follows:

Up to 350 MT/day, 0.0014 of a UIT per each MT/day. More than 350 up to 1,000 MT/day, 1.00 UIT More than 1.000 up to 5.000 M /day, 1.5 UIT For each 5,000 MT/day in excess, 2.00 UIT

The MT/day refers to treatment installed capacity. In cases of expansion, paymentaccompanying the application is on the increased capacity."

CHAPTER IVIN GENERAL WORK AND MINING TRANSPORT CONCESSIONS

Article 47. When applying for a general work or mining transport concession, theapplicant will pay for the Validity Right 0.003% of a UIT per linear meter of projected work.

(Art. 103. Leg. Dec. No.109 and Art. 34, Leg. Dec. No.708.

CHAPTER V

COMMON OBLIGATIONS (*)

(*)In accordance with Article 1 of Directorial Resolution No. 0872000EMDGM, publishedon 05/19/2000, as of the effective date of the Resolution, mining holders are required tokeep a record of incidents for each mining unit, which will be provided by the Head of theSecurity Department, supervised through the Operations Manager, under theresponsibility of the General Manager. Such incidents shall be classified according to thetype of risk, analysis of causes, among other things.

Article 48. Each holder of a mining activity is required to perform the tasksassociated with it, according to systems, methods and techniques that tend to improvethe development of the activity and are subject to the rules of safety and hygiene and

environmental sanitation applicable to the mining industry.

Damages to third parties should be avoided in the development of such activities,being the holder bound to compensate them for any damages caused.

(Art. 104, Leg. Dec. No.109).

Article 49. The holders of mining activities are required to provide at any time,free access to the mining authority for the control of their respective obligations.


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(Art. 105, Leg. Dec. No.109).

Article 50. The holders of the mining activity are required to submit annually aConsolidated Annual Statement containing the information to be specified by TheMinisterial Resolution. The present information will remain confidential.

Failure to comply with this requirement shall be fined.

Fines shall not be less than zero point one percent (0.1%) of a UIT, or greater thanfifteen (15) UIT, according to the scale of fines for offenses to be established by MinisterialResolution.(*)

(*)Paragraph substituted by Article 9 of Law No. 27651, published on 01.24.2002, which

text reads as follows:

Fines shall not be less than zero point one percent (0.1%) of one (1) UIT, nor morethan fifteen (15) UIT, according to the scale of fines for offenses to be established byMinisterial Resolution. For smallscale mining producers, the maximum amount shall betwo (2) UIT, and in the case of artisanal mining producers, the maximum amount shall beone (1) UIT.

Failure to pay the fines, which application is deemed accepted, will be subject tocoercive collection.

On the basis of the declaration referred to in the first paragraph of this Article, theMinistry of Energy and Mines will redistribute the information required by the PublicSector, and holders of mining activities will not be required by other Agencies or Bodies ofthe Public Sector to submit additional statements.

(Art. 106, Leg. Dec. No.109 and Art. 36, Leg. Dec. No.708).

CONCORDANCES: M.R. No. 4202003MEMDMM.R. No. 2722003EMDMD.R. No. 2262003MEMDGM

D.R. No. 3862004

MEM

DGM

M.R. No. 1842005MEMDM (Consolidated Annual Statement Form DAC)

D.R. No. 1512005MEMDGM, (Establishes deadlines andprocedures for the submission of the Consolidated Annual Statement DAC)

D.R. NO. 3202006MEMDGMD.R. NO. 9532008MEMDGM (Establishes deadlines for the

submission of the Consolidated Annual Statement DAC corresponding to the year 2007)


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Article 51. The holder of the mining activity is forced to admit in its workplace, tothe extent possible, engineering students in the specialties of Mining, Metallurgy,Geology, Industrial and Chemistry, in order to perform their practices during the holidayperiod, as well as facilitate visits to their facilities.

Once the specialties mentioned have been covered, vacancies may be filled byundergraduates from other specialties.

(Art. 107, Leg. Dec. No.109).

CONCORDANCES: S.D. No.0552010EM, Art. 70 (Supreme Decree that approves theOccupational Health and Safety Regulations and other mining supplementary measures)

Article 52.

The person who extracts minerals without having the right to do so,shall return to the State improperly extracted minerals, or their values, without deductingcosts and subject to legal action as may be appropriate.

(Seventh Final Provision, Leg. Dec. No.708).

Article 53. If during the execution of the tasks associated with the concession orworks and ancillary works, the holder invades other concessions without authorization, heis obliged to stop work and return to the aggrieved party the value of the mineralsextracted without deducting costs and to pay damages, if any.

In case that the invasion was greater than 10 meters measured perpendicularlyfrom the plane that limits the invaded mining right, the invader must pay sums referred toin the preceding paragraph.

(Eighth Final Provision, Leg. Dec. No.708).

Article 54. In case of legal dispute over the validity of a concession, the obligationof payment of monetary obligations is still in force. The petitioner is also obliged tocomply with the monetary obligations within the periods prescribed in this Law, duringthe trial, less be subject to the Failure of Parties to Act provision in regards to the disputed

concession.

Once the petitioner has fulfilled the payment, it must be accredited in therespective file.

After the controversy is concluded, defeated complainant may seekreimbursement of the amounts that have been paid.

(Art. 110, Leg. Dec. No.109).


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CONCORDANCES: S.D. No.0772009EM, Art. 2

Article 55. The concessionaire authorized by the mining authority who carries outworks in a neighboring concession intended for the economic purpose of his concession, isbound to deliver that concessionaire, at no cost, all extracted minerals and to compensatehim for damages caused.

(Art. 111, Leg. Dec. No.109).

Article 56. The cessation or reduction of mining activities involving downsizingwill require an opinion from the Mining Direction and Supervision Office in the procedureestablished in accordance with the relevant legislation.

(Art. 112, Leg. Dec. No.109).

SEVENTH TITLE

STATE INCOME DISTRIBUTION

Article 57. Income received by way of Validity Rights and penalties established inTitle Sixth of this Law, are own resources, and shall be distributed as follows:

a) Forty percent (40%) for Local Governments where the concession or applicationfor a concession is located.

b) Thirty percent (30%) goes to INGEMMET.

c) Thirty percent (30%) goes to the Ministry of Energy Mines and the Public MiningRegistry, in equal parts, for the purposes of maintenance and development of the MiningConcessions and Cadastre System as well as Metallurgical Mining Information System. (*)

(Art. 35, Leg. Dec. No.708).

(*)Article replaced by Article 4 of Law No. 27341, published on 08.18.2000, which textreads as follows:

" Article 57. Income received by way of Validity Rights and penalties establishedin Title Sixth of this Law, are own resources, and shall be distributed as follows:

a) Forty percent (40%) for Local Governments where the concession or applicationfor a concession is located;

b) 35% (thirty five percent) is distributed between the district municipalities of thedepartment or departments where the concession or application for a concession is


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located and whose populations are classified as extreme poverty, according to theprovisions of the Regulations of this Law;

c) 15% (fifteen percent) goes to INGEMMET, and

d) 10% (ten percent) goes to the Ministry of Energy Mines for the purposes ofmaintenance and development of the Mining Concessions and Cadastre System as well asMetallurgical Mining Information System." (1)(2)

(1) In accordance with the Second Transitional and Supplementary Provision of Law No.27341, published on 08.18. 2000, the distribution of the Validity Right referred to in thisarticle shall apply from 2001.

(2) Article replaced by Article 1 of Urgency Decree No. 0032001, issued on 01.13.2001,

which text reads as follows:

Article 57. Income received by way of Validity Rights and penalties established inTitle Sixth of this Law, are direct own resources, and shall be distributed as follows:

a) 40% (forty percent) for Local Governments where the concession or applicationfor a concession is located;

b) 35% (thirty five percent) is distributed among the district municipalities of thedepartment or departments where the concession or application for a concession islocated and whose populations are classified as extreme poverty, according to theprovisions of the Regulations of this Law;

c) 10% (ten percent) goes to INGEMMET, and,

d) 5% (five percent) goes to the Ministry of Energy Mines for the purposes ofmaintenance and development of the Metallurgical Mining Information System.

e) 10% (ten percent) goes to the Public Mining Registry for the purposes ofmaintenance and development of The Mining Concessions System and Cadastre. (*)

(*)Article replaced by Article 1 of Legislative Decree N 913, issued on 04 092001, whichtext reads as follows:


a) 40% (forty percent) for Local Governments where the concession or applicationfor a concession is located;


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b) 35% (thirty five percent) is distributed between the district municipalities of thedepartment or departments where the concession or application for a concession islocated and whose populations are classified as extreme poverty, according to theprovisions of the Regulations of the present Law;

c) 10% (ten percent) goes to INGEMMET, and;

d) 5% (five percent) goes to the Ministry of Energy Mines for the purposes ofmaintenance and development of the Metallurgical Mining Information System;

e) 10% (ten percent) goes to the Public Mining Registry for the purposes ofmaintenance and development of the Mining Concessions and Cadastre System and theValidity Right Distribution System. (*)

(*)Article replaced by Article 1 of Law N 28327, issued on 08112004, which text reads asfollows:


a) Seventyfive percent (75%) goes to the district municipality or districtmunicipalities where the concession or application for a concession is located for theimplementation of investment and development programs in their respectiveconstituencies. In case the concession or application for a concession is located in two ormore district municipalities, distribution will be made in equal shares.

b) 10% (ten percent) goes to INGEMMET.

c) Five percent (5%) goes to The Ministry of Energy Mines for the purposes ofmaintenance and development of the Metallurgical Mining Information System.

d) Ten percent (10%) goes to The National Institute of Mining Concessions andCadastre INACC, for the purposes of maintenance and development of the MiningConcessions and Cadastre System and the Validity Right Distribution System. (*)

(*)Article amended by Article 2 of Law No. 29169, issued on December 20, 2007, whichtext reads as follows:

Article 57. Article 57. Income received by way of Validity Rights and Penaltiesestablished in Title VI of this Law, are direct own resources, and shall be distributed asfollows:

a) Seventyfive percent (75%) goes to the district municipality or districtmunicipalities where the concession or application for a concession is located for the


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implementation of investment and development programs in their respectiveconstituencies. In case the concession or application for a concession is located in two (2)or more district municipalities, distribution will be made in equal shares.

b) Twenty percent (20%) goes to the Institute of Geology, Mining and MetallurgyINGEMMET.

c) 5% (five percent) goes to The Ministry of Energy Mines for the purposes ofmaintenance and development of the Metallurgical Mining Information System.

d) Regional governments shall receive the percentages indicated in subparagraphsb) and c) which correspond to the payment made by Small scale Mining Producers andArtisanal Mining Producers to carry out mining activities transferred under the

decentralization process, especially those related to environmental protection.(1)(2)

(1) In accordance with Article 3 of Law No. 29169, published on December 20, 2007, theprovisions of the present subsection shall apply from payments made from the followingmonth of publication.

(2) In accordance with Article 1 of Resolution No. 0422007MEMDGM, published onFebruary 20, 2007, the National Institute of Mining Concessions and Cadastre INACC isresponsible for performing the allocation of amounts collected from Validity Rights andpenalties in favor of the beneficiary institutions as provided in this article.

CONCORDANCES: S.D. No. 0152001EM, Art. 33D.R. No. 11902EMDGMA.R. No. 01862004INACCJA.R. No. 26722004INACCJA.R. No. 35272004INACCJA.R. No. 38032004INACCJA.R. No. 04512005INACCJD.R. No. 0512005MEMDGMA.R. No. 08442005INACCJA.R. No. 14032005INACCJ

A.R. No. 22642005

INACC

J

D.R. No. 0332005EF76.01 (Directive No. 0132005EF76.01),Specifications for the Registry and Allocation of Expenditures IVA.R. No. 26522005INACCJA.R. No. 39942005INACCJA.R. No. 51062005INACCJA.R. No. 53752005INACCJD.R. No. 0192006MEMDGMA.R. No. 01642006INACCJA.R. No. 18532006INACCJ


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A.R. No. 23492006INACCJA.R. No. 23502006INACCJA.R. No. 36712006INACCJA.R. No. 3999

2006

INACC

J

A.R. No. 40942006INACCJA.R. No. 53882006INACCJA.R. No. 06412007INACCJA.R. No. 11322007INACCJA.R. No. 14362007INACCJR. No. 1092007INGEMMETPCDR. No. 0112008INGEMMETPCDR. No. 0432008INGEMMETPCDR. No. 0532008INGEMMETPCD

EIGHTH TITLE

EXTINCTION OF CONCESSIONS AND DESTINATION

CHAPTER I

EXTINCTION

Article 58. Concessions are extinguished by maturity, forfeiture, annulment,rescission and expropriation.

(Art. 114, Leg. Dec. No. 709).

CHAPTER II

MATURITY

Article 59. Failure to timely payment of Validity Rights or penalty as applicable fortwo consecutive or three alternate years is ground for maturity of mining concessions.(*)

(Art. 37, Leg. Dec. No. 708).

(*) Article replaced by Article 5 of Legislative Decree No. 868, published on 11/01/96,which text reads as follows:

"Article 59. Failure to timely payment of Validity Rights or penalty as applicablefor two (2) consecutive years is grounds for maturity of claims, applications and miningconcessions as well as beneficiation concessions, general work and mining transport.

The regularization of the payment omitted for one year may be satisfied withpayment and accreditation for the current year, within the period provided for in Article39 of this Law.


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In any case, payment will be charged to the previous year due and unpaid." (1)(2)"

(1) In accordance with the First Transitional Provision of Legislative Decree No. 868, issuedon 11.01.96, the amendment of this article, under this Legislative Decree is applicable tothe payment of Validity Rights from the year 1996, provided mining rights are notobsolete.

(2) Article amended by Sole Article of Law No. 28196, published on 03.27.2004, which textreads as follows:

" Article 59. Failure to timely payment of validity rights or penalty as applicablefor two (2) consecutive years is grounds for maturity of claims, applications and mining

concessions as well as beneficiation concessions, general work and mining transport. Theregularization of the payment omitted for one year may be satisfied with payment andaccreditation for the current year, within the period provided for in Article 39 of thepresent Law. In any case, payment will be charged to the previous year due and unpaid.

Mining concessions, beneficiation concessions, general work and mining transportmay not be subject to maturity if the administrative authority has not issued a MaturityResolution after five (5) years of having submitted the alleged grounds. This period shallnot apply in the event that the respective administrative and judicial proceedings werecommenced prior to maturity. (*)

(*)Article replaced by the Sole Article of Legislative Decree No. 1010, published on May09, 2008. The said Legislative Decree shall enter into force upon the approval of itsRegulations, according to its Fifth Transitory and Supplementary Provision, which textreads as follows:

Article 59. Failure to timely payment of validity rights for two consecutive yearsor not is grounds for maturity of claims, applications and mining concessions as well asbeneficiation concessions, general work and mining transport. The regularization of thepayment omitted for one year may be satisfied with payment and accreditation for thecurrent year, within the period provided for in Article 39 of the present Law.

In any case, payment will be charged to the previous year due and unpaid.

In addition to the grounds provided for in Article 40, failure to comply for two (2)years with the obligations of production referred to in Article 38 also constitutes groundsfor maturity of mining concessions.

Mining concessions, beneficiation concessions, general work and mining transportmay not be subject to maturity if the administrative authority has not issued a MaturityResolution after five (5) years of having submitted the alleged grounds. This period shall


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not apply in the event that the respective administrative and judicial proceedings werecommenced prior to maturity.

CONCORDANCES: S.D. No. 0542008

EM, Art. 7 and The Unique Transitional provision,

num. 2 y 3

Article 60. Failure to start production within the period granted by the miningauthority and failure to timely payment of validity rights for two consecutive or threealternate years is grounds for maturity of beneficiation concessions.(1) CORRECTED BYERRATUM (2)

(Art. 117, paragraph 1) Leg. Dec. No.109).

(2) Article repealed by The First Final Provision of Legislative Decree No. 868, issued on11/01/96.

Article 61. Failure to perform constructions and installations within the periodestablished and breach of the concession and the timely payment of validity rights for twoconsecutive or three alternate years is grounds for maturity of general work and miningtransport. (*) CORRECTED BY ERRATUM (*)

(*) First paragraph repealed by the First Final Provision of The Legislative Decree No. 868,issued on 11/01/96.

Once the concession for general work has expired, the mining authority shall notifythe concessionaires, so they indicate within 30 days, their willingness to be replaced bythe previous holder in the concession title. Once the period stated above has expired, ifthere is agreement of two or more concessionaires, they will proceed to appoint a proxyin common, unless the parties have expressed their decision to form a company inaccordance with The General Law of Companies.

Once the deadline established in this Article has expired and none of theconcessionaires have expressed their willingness to be replaced by the previous generalwork concessionaire, the concession file will be archived.

(Art. 118, Leg. Dec. No.109 and Art. 43, paragraph b), Leg. Dec. No.708).

CHAPTER III

FORFEITURE

Article 62. Failure by the person concerned to comply with the mining procedurerules applicable to this title is grounds for forfeiture.

(Art. 119, paragraph 1), Leg. Dec. No.109).


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CHAPTER IV

ANNULMENT

Article 63. The application for concessions by unfit persons under Articles 31, 32and 33 of this Law is grounds for annulment.

(Art. 120, Leg. Dec. No.109).

CHAPTER V

RESCISSION

Article 64. Applicati

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