Peru is a Mineral Producing Country

The Largest Gold Mines in Peru: Alto Chicama; Antapite; Lagunas Norte; Orcopampa;

Pierina and Yanacocha.

Peru is active in the following commodities: Bulk Concentrate, Copper, Gold, Lead,

Molybdenum, Silver and Zinc (amongst others).

The Companies Below Have Operations in Peru

Gold Mines: Barrick Gold Corporation, Buenaventura Mining Company Inc, International

Finance Corporation and Newmont Mining Corporation

Copper Mines: BHP Billiton Limited, Buenaventura Mining Company Inc, Freeport-

McMoRan Copper & Gold Inc, Gold Fields Ltd, Sociedad Minera Corona S.A., Southern

Copper Corporation, Sumitomo Corporation, Sumitomo Metal Mining Co. Limited and Xstrata

plc

Copper Smelters: Australasian Resources Limited, Centromin S.A., Doe Run Company,

Grupo Mexico S.A.B. de C.V., IMX Resources Limited, Other - Public Companies,

Governments, Minor Parties and Southern Copper Corporation

Copper Refineries: Australasian Resources Limited, Centromin S.A., Doe Run Company,

Grupo Mexico S.A.B. de C.V., IMX Resources Limited, Other - Public Companies,

Governments, Minor Parties and Southern Copper Corporation

Lead Mines: Buenaventura Mining Company, Inc

Zinc Mines: (Various), BHP Billiton Limited, Buenaventura Mining Company Inc, CEDIMIN

S.A.C., Centromin S.A., Compaa Minera Atacocha S.A.A., Compania Minera Casapalca S.A.,

Compania Minera Milpo S.A.A., Compaa Minera Raura S.A., Compaa Minera San Ignacio de

Morococha S.A. , Glencore International AG, Inversiones Colquijirca, Mitsubishi Materials

Corporation, Mitsui & Co Ltd, Morococha SA, Pan American Silver Corp, Perubar S.A.,

Sociedad Minera Corona S.A., Teck Resources Limited, Volcan Cia Minera S.A.A.,

Votorantim Group and Xstrata plc

Iron Ore Mines: (Various) and Shougang Corporation

Iron Ore Pellet Plants: (Various) and Shougang Corporation (amongst others).

UK Trade and Investment Sector Briefing Report for 2010:

“Mining Opportunities in Peru”

There are more than 600 active mining sites of which 188 are underground, and a further 1,300 sites under exploration. All mining activity is in the hands of private companies operating under long-term licenses granted by the Peruvian central government. Private foreign investment in the sector is encouraged and practically all of the world’s major mining companies are present. Mining is the bedrock of the Peruvian economy and acts as a driver for other sectors such as power, construction,

railways and financial services. In 2009, mining exports were US $16.3 billion, approximately 62% of the Peru’s total

exports.

“The Peruvian economy is among the top performers in Latin America with average 6% GDP growth 2001-9. The UK is

the second largest investor in Peru with a stock of US $3.8 BILLION in 2009 contributing 20% of total FDI stock. The

Peruvian government encourages and protects foreign investment.”

Both Peru’s Ministry of Energy and Mines (MEM) and the National Society of Mining Petroleum and Energy (SNMPE – a

private sector body) estimate US $ 40 billion will be invested in the next 6-7 years in Peru’s mining sector. Investment in

this sector in 2009 totaled more than US $2.7 billion with almost US $500 million invested directly in mining equipment.

Amongst the companies that have announced future investments are:

Anglo American (UK) US $2.9 billion, Xstrata Copper UK/Swiss) US $2.9 billion, Southern Peru Copper Corp. (Mexico) US $2.1 billion, Chinalco (China) US $2.1 billion, Antamina (JV / Xstrata and BHP Billiton) US $1.2 billion, Rio Tinto (UK) US $1 billion, Minmetals (China) US $2.2 billion, Zijin Mining (China) US $1.4 billion, Shougang Corp. (China) US $1billion, Votoramtim Metais (Brazil) US $500 million, Norsemont Mining (Canada) US $500 million, Newmont-Yanacocha (USA-Peru) US $400 million, Bear Breek (USA) US $300 million, Pan Pacific Copper (Japan) US $490 million. Southern Peru Copper Corp. - SPCC will start the construction of the Tia Maria copper/molybdenum open cast project located at 127 kilometres of Arequipa city with an investment of US$950 million. It is estimated that the first stage will start to operate from 2012 to 2024 and the second stage from 2024 to 2030. The project is aimed to produce during 18 years an average of 120,000 tonnes of copper cathodes with 99,999% purity per year. Antamina (copper/zinc and molybdenum/silver /lead) project will upgrade their installations and producing capacity through an expansion plan of 38% in their mineral processing, rising from 94,000 to 130,000 tonnes per day approximately, extending the life of the project from 2023 to 2029. The works will include modifications in the concentrating plant, expansion of the power supply and modifications to the port. Pan American Silver announced in February 2010 an investment of US $126 million for the construction of their new concentrating plant. The plant located in Morococha, Junin Region will have a capacity to process 2,200 tonnes of mineral per day extracted from their six producing units. Xstrata is in the process of constructing a port at Ocoña in the Arequipa Region to enable them to deliver the future copper concentrates from their projects Las Bambas. This terminal will have a capacity to attend bulk carrier vessels of up to 250,000 TM dead weight. The port will require a total investment of US $60 million and should be ready by 2013. There is a large number of companies in Peru dedicated to supplying the mining sector. Many act as agents for foreign suppliers. Although for historical reasons British products do not currently feature strongly in this market they do have a presence, and are supplied both through direct selling and agency or representative operations. Consumable items like drills and chemicals are preferably sold through a local importer, while major capital items should be marketed and sold directly to the logistics departments of the mining companies.

Mining investment in Peru exceeded US$4.02 billion in 2010

Lima, Feb. 12 (ANDINA).

Mining investment in Peru amounted

to US$4.02 billion in 2010 exceeding

the amount raised the previous years,

the Ministry of Energy and Mines

(MEM) estimated Saturday.

The country attracted far more

mining investment in 2010 than in

2009 (US$2.82 billion), 2008 (US$

1.7billion) and 2007 (US$

1.24billion).

MEM Mining Promotion Director

Henry Luna highlighted that only one

percent of the country's territory is used for mining exploration, operation and related purposes

though.

Luna said mining is an ancient activity tied to our history as tar, oil and gas extraction, which

began in the 19th century in northern Peru.

―Nowadays, our country possesses a modern, extremely strict legal framework and, if a

concession is required, miner holders are aimed at contributing to local sustainable

development and boosting environmental and social management,‖ he stated.

(END) JJN/PGS/RMB

BBVA:

China could become Peru’s top trade partner in 2011

January 21, 2011 by Andean Air Mail & Peruvian Times

China could displace the United States as Peru’s top commercial partner this year if

commodities maintain their current high prices, according to BBVA Banco Continental.

―The ability of China to become Peru’s top commercial partner will depend on the price of

commodities,‖ state news agency Andina reported the bank’s head of foreign trade, Jose Miguel

Vasquez, as saying. ―If the tendency is upwards, then we calculate that this will occur this year

or, at the latest, in 2012.‖

In 2010, China accounted for 16 percent of Peruvian exports,

while the United States took in 18 percent.

Bilateral trade with China totaled $9.5 billion last year, and is

expected to climb 4-5 percent in 2011 depending on

commodity prices.

Peru’s mining sector accounts for about 60 percent of its total

exports and China is the main destination for base metals.

According to the Mines and Energy Ministry, China imported

28.4 percent of Peruvian copper between January and

September 2010. More than 32 percent of Peru’s zinc shipments went to China, 67 percent for

lead and 91 percent for iron ore.

Latest News in Peru

Mining & Energy | February 9, 2011

Mining employs 2.5 million Peruvians, reports ministry

The Ministry of Energy and Mines of Peru

(MEM) announced today that the number of

people whose livelihood is based on mining in

Peru is 2,519,520. That number includes direct

jobs, indirect and dependent workers.

"These figures show the impact of mining and

what it represents as the main source of income

for large segments of the population," said Henry

Luna, Director of Mining Promotion of MEM.

The salaries received by the miners, according to

the National Statistics Institute, are higher than

other sectors of the economy.

The information is in the new book "Peruvian Mining: Contribution to Economic

and Social Development," of the Institute of Mining Engineers of Peru.

In 2009 the salaries that were paid in the mining sector amounted to 4.3 billion

soles, a figure that does not include the salaries to employees coming from abroad

for certain specialized jobs

LivinginPeru.com

Mining is one of the most important sectors of

the Peruvian economy.

Peru Mining Society Sees $10 Billion Investments In 2011, 2012 Published February 08, 2011 | Dow Jones Newswires

LIMA -(Dow Jones)- About $10 billion dollars is due to be invested in Peru's mining sector this year and

next, said Peru's National Mining, Petroleum and Energy Society.

In the hydrocarbon sector, investments of $3.3 billion are expected between now and 2013. Over the

same period, about $2.6 billion in investments is due in the electricity sector.

Speaking to journalists at a news conference this week, the mining society president, Pedro Martinez, said

total investments in the three sectors over the next 10 years are set at $56.10 billion.

Of that, $41.9 billion is destined for the mining sector, $9 billion for the hydrocarbon sector and $5.2

billion for the electricity sector.

Mine projects due to go into production next year include Xstrata's (XTA.LN) Antapaccay copper project,

with about $1.5 billion in investments.

Also expected to begin production in 2012 is the Mar Cobre copper project, owned by Canada's Chariot

Resources (CHD.TSX), with an estimated investment of $744 million.

In 2014 Anglo American PLC's (AAL.LN, AAUKY) Quellaveco copper mine project, with about $3 billion in

investments, and the $3 billion Minas Congas gold project owned by Yanacocha, should both go into

production.

Yanacocha is owned by Newmont Mining Corp. (NEM), which has a 51.35% stake, and Compania de Minas

Buenaventura (BVN, BUENAVC1.VL) which has a 43.65% stake. The International Finance Corp., a World

Bank affiliate, has a 5.0% stake in Yanacocha.

The mining society estimates that 60% of Peru's exports are mining related.

Asked about the possibility of the Peruvian government making moves to raise mining royalties or apply a

new windfall tax, Martinez said these proposals were being mooted by presidential candidates in the

period before Peru's general election in April.

He said changing the rules of the game would not be in Peru's interests and that the country needed to

maintain its edge in the face of competition for investments from other mining countries such as Chile,

Canada and Australia.

On the subject of Peru's natural-gas exports, which began in June, the president of the SNMPE's

committee on hydrocarbons, Barbara Bruce, said she expected shipments of about 165,000 tons every

week.

Outlook 2011: Peru Catches Up to its Potential

Lisa K. Wing / Dec 01, 2010

High commodity prices keep

Peru’s mining sector humming

along, but a broad range of

industries is driving the country’s

economic expansion.

LIMA — ―It’s a good time to be living

in Peru,‖ announced Julio Noriega, a

43-year-old business executive who two

years ago decided to leave a high-level

position in the United States and move

back home.

Now a senior executive at Grupo El

Comercio, Peru’s leading media group, Noriega said his decision was primarily based on family and

professional reasons. But the time was right to leave his post at the Cisneros Group after working in the United

States for a decade and return to Lima.

―Two decades of political stability and sound macroeconomic policies have resulted in strong economic

growth, fueled by private international and local investment in many sectors,‖ Noriega said. ―I feel

fortunate to be working in such a thriving business environment.‖

And thriving it is. Peru has one of the fastest growth rates in the region, with the gross domestic product

forecast to expand at close to 8 percent this year. Inflation, meanwhile, should remain at 1.7 percent,

among the lowest in Latin America. Financial analysts and economists expect the country’s sound

economic policies — most of which were established during the administration of former President

Alberto Fujimori in the early 1990s — to help maintain strong growth, keep inflation in check and shrink

the public debt.

Increased private and public sector investment and economic diversification have helped fuel the

economic expansion and keep it going, experts say. This is quite a feat, given the global economic crisis

that hit in late 2008, throwing most of the world’s economies into a slump.

―Peru is seen as a preferred destination for capital in the region, not only because of the opportunities

that exist but also because the rules of the game are clear,‖ said Álvaro Correa, chief financial officer of

Banco de Crédito, Peru’s largest bank. ―This has generated trust — and optimism — among investors.‖

Local residents are also feeling this optimism over the economy. ―There is a resurgence in national pride,

which, coupled with the sustained economic growth the country is experiencing, is helping to integrate the

country,‖ noted Daniel Córdova, dean of the graduate school at Peru’s Universidad del Pacífico and president of

Instituto Invertir, a local think tank that works to promote entrepreneurial activity.

―The country has positive macroeconomic indicators, which have attracted investments and turned Peru

into the star of Latin America — what Chile was 10 years ago.’’

―Growth in Peru has been quite extraordinary over the past three years,‖ said Richard Francis, director

of sovereign ratings at Standard & Poor’s, which raised Peru’s foreign currency debt rating to

investment grade in 2008.

―Although it has been driven by trade — particularly the increase in commodity prices — this is not the

whole story. The government policies and macro stability established in the early 1990s has led to the

basis for the improvements we are seeing now.‖

More than Mining

Although Peru’s economic growth still largely depends on gas and mining investment, the expansion is also

being driven by agriculture, fishing, construction, commerce and financial services. ―Peru is no longer just a

mining story,‖ Francis said.

Mining still represents nearly 60 percent of the country’s exports, but non-traditional exports such as agriculture

products, textiles and apparel and chemicals are expanding. Overall exports totaled $7.7 billion in the first

quarter of this year, a 43 percent increase compared with the same period last year, according to Peru’s Export

and Tourism Promotion Board.

Yet for this growing demand to be sustainable and attract further investment, it has to be accompanied by

significant improvements in basic infrastructure, opinion leaders say. According to a recent study by AFIN, the

National Association for the Promotion of Infrastructure, Peru still needs more than $37 billion in new

infrastructure to meet World Bank guidelines.

―Infrastructure is necessary for the competitiveness and development of all sectors and particularly for mining,

which takes place in remote places that are difficult to get to,‖ said Roque Benavides, CEO of Compañía de

Minas Buenaventura, Peru’s largest publicly traded precious metals company.

Looking Ahead

Business executives concur that the economy will continue to grow, since no change is economic policies is

expected after presidential elections that will take place in April.

―As a country, we are just taking off. There is still much to do,‖ said Hugo Santa María, chief economist

of APOYO Consultoría, an advisory services company in the Peruvian capital.

―Much of this has to do with the country being paralyzed for many years. Its GDP per capita in 2000 was

similar to what it was in 1975,‖ Santa María said. ―This is why we have had 10 years of strong growth. We have

had, and still have, a lot of catching up to do.‖

Posted on January 21st, 2011

Peru Booms as Does its Mining Industry

Peru’s Ministry of Energy and Mines (MEM) estimates record exports

of $21 billion in 2010. MEM has also estimated the investments

required for the mining projects startups in the pipeline at $41 billion

for the next ten years. Half of these projects will materialize between

2011 and 2015.

The Vice Minister of Mines, Fernando Gala, announced that mining

exports in 2010 reached an historic record value of $21 billion, during the closing ceremony of

the Mining Engineer Week, in the premises of the CD Lima of the Peruvian College of

Engineers (CIP).

The Central Reserve Bank of Peru (BCRP) reported that mineral exports, during January-

November 2020 amounted to $19,294 million and represented 60.9% of Peru’s total exports.

This is 32.4% more than that recorded in the same period of 2009.

Copper led the pack of best-selling metals at $7,899 million, followed by gold at $6,986

million, lead at $1,377 million, zinc at $1,449 million and molybdenum at $407 million.

Mining investment reached $3,391 million between January and November 2010, according to

MEM, approximately 20% higher than the $2,821 million recorded in the same period of 2009.

Of that sum, $696 million were allocated to infrastructure construction, $650 million to mineral

exploitation, and $538 to exploration works to replenish reserves, etc.

Cusco came first in attracting mining investments, with $557 million during the January-

November period of 2010, due to the commencement of construction activities of Xstrata’s

Antapaccay mine. Following behind were Arequipa, with $479 million; Cajamarca with $476

million; Ancash, with $323 million and Pasco with $318 million.

If an updated estimate were made, the portfolio of mining projects could reach an investment

amount of $50 billion, suggested Carlos Santa Cruz, Vice President of South American

operations for Newmont Mining, MinerAndina.e reports.

Santa Cruz stated that, in the best scenario, the annual mining investment in Peru would climb

to $50,000 million from 2011. ―This is equivalent to constructing two Antaminas each year,‖ he

said.

Maximixe, Lima, a multidisciplinary Latin American research and consulting group, has

projected gold exports fromPeru to grow by 24.7% in 2011, in other words, up to $9,220

million compared to the $7,395 million recorded in 2010.

Four Peru mining projects to start operations in

2011, reports ministry

Andina

Four new mining projects located in different

areas of Peru would start operations this year, the

Ministry of Energy and Mines reports today.

Chinese-owned Shougang Hierro Peru is

expected to start operations this year at their

expanded iron ore mine located in Marcona, Ica.

"One billion dollars will be invested in this

project, which is expected to be concluded in

2011," Henry Luna of the mining ministry said to

Andina.

Compañía Minera Antamina's expanded mine in Ancash is also expected to be completed this

year.

"Antamina is investing US$1.1 billion in expanding its mine which will generate more

economic resources for the region," Luna said.

Antamina, which started operations in 2001 and mainly produces copper and zinc, recently

announced a US$1.28 billion investment to expand its processing capactity in its San Marcos

deposit, located in Huari, Ancash.

The two other projects are Compañía de Minas Buenaventura's Colquijirca project in Junin and

the Tantahuatay project in Cajamarca operated by Buenaventura and Southern Copper

Corporation.

The Tantahuatay mine is expected to produce between 80,000 and 100,000 ounces of gold and

426,000 ounces of silver a year, requiring a US$56 million investment.

Peru Mining Report 2010

Published by Business Monitor International on May 21, 2010

Peru has a fast-growing mining sector, and is host to an array of natural resources, including

copper, gold, iron ore, lead, silver and zinc, among other minerals. Peru is now the world's

number one producer of silver and second largest producer of copper, after Chile. The Peruvian

mining sector has proved attractive to foreign investment, with industry giants BHP Billiton,

Rio Tinto, Vale and Barrick Gold all having investments in Peru.

The industry benefits from relatively good levels of political and financial stability, coupled

with a developing regulatory framework. In addition, the local industry managed to weather the

global economic crisis relatively unscathed, according to our estimates.

New Data

For 2010 BMI has made significant changes to the way in which we forecast mining data. As

well as using local statistics agencies and associations, we also draw on the expertise of the

UN's Industrial Commodity Statistics Database, the US Geological Survey and the World

Bureau of Metal Statistics for our historical export and production data. We then forecast this

data using our own proprietary econometric model.

Human intervention plays a necessary and desirable role in our mining forecasting; experience,

expertise and knowledge of industry trends and developments ensure that we spot likely future

changes and anomalous data that a purely mechanical model would not.

Industry Forecast

Peru's mining sector performed much better in 2009 than many of its regional peers. Given this

fact, and with demand for Peruvian raw materials set to grow rapidly in the coming years, we

now believe that the scene is set for strong growth from the industry to 2014.

We believe the sector will grow at an average rate of about 8.9% over our forecast period, as a

raft of new mining projects come on stream.

Peru Gold Production Rebound Seen In 2011 After 2010 Decline

By Sophie Kevany Published November 18, 2010 | Dow Jones Newswires

LIMA -(Dow Jones)- A drop in Peruvian gold production this year has been somewhat masked by

rising export prices for the refuge metal, although a partial recovery is expected in 2011 thanks to

the planned start-up of a number of small and medium-sized projects.

Peru's 2011 gold output should increase by about 5%, having dropped almost 11% in the first nine

months of 2010 compared to the same period last year, according to a report from Scotiabank. Losses

are due to lower output at key mines including Yanacocha, South America's largest gold mine which

is majority owned by the Newmont Mining Corp. (NEM: 60.32 ,0.00 ,0.00%). Peruvian precious

metals miner Compania de Minas Buenaventura SAA (BVN, BUENAVC1.VL) has about a 44% stake in

Yanacocha.

Up to September of this year, Yanacocha's accumulated production was down 27.5%, Scotiabank

said. Production by Peru's other leading gold miner, Minera Barrick Misquichilca SA, was down 15.2%

in the same period.

Together Barrick and Yanacocha produce about half of Peru's gold. Gold production was 122,974

kilograms--3.95 million ounce -- in the first nine months of 2010, according to the Mining Ministry.

Although no major projects will come on line in 2011, gold production should be boosted by small to

mid-sized projects including La Zanja and Tantahuatay. La Zanja, owned by Buenaventura and

Newmont, is expected to produce about 100,000 ounces in 2011.

At the Tantahuatay mine, owned by Buenaventura and Southern Copper Corp. (SCCO: 44, 65 ,0.00

,0.00%), production should start in July and end the year between 30,000 and 50,000 ounces.

Buenaventura's chief financial officer, Carlos Galvez, said Thursday that Buenaventura is forecasting

gold production next year of about 1.2 million ounces, compared to this year's 1.1 million ounces.

Other gold mine projects due to boost Peru's production in 2011 include La Arena and Pucamarca. La

Arena is owned by Rio Alto Mining Limited (RIO.VL) and should produce about 75,000 ounces in

2011, rising to 100,000 ounces over the following six years, according to company projections.

Scotiabank said the Pucamarca project, owned by Peruvian tin miner Minsur SA (MINSURI1.VL), is

expected to start production in the first few months of 2011 and should add another 70,000 ounces

of gold annually.

The extension of Barrick's Pierina gold mine life to 2014 should also help output, Scotiabank added,

while better production at its Lagunas Norte project is expected in 2011.

Last year Peru was the world's sixth largest gold producer, its top silver producer, and

second largest copper producer, according to mining ministry figures.

Peru’s Mining Industry Set to Experience its Second Boom in 15 years

Peru, one of the most important mining centers in South America, looks set for a second ―mining boom‖ in the next few

years, following on the first such boom in the mid-1990s, triggered by major economicreforms (including large-scale

privatizations) and the restoration of security in the country.

―Looking forward, we feel we are preparing for a second round, as a sector, as we are looking at investment of up to $35-

billion over the next five to seven years in new mines, expansion of existing ones, and new investment,‖ Peru National

Society for Mining, Petroleum and Energy president Hans Flurry told USA Today last week.

―Mining is a key sector in Peru’s development because it generates the resources that are necessary for growth: the money

government needs to meet its constitutional obligations in providing healthcare, security and education.‖ The importance

of this can be judged from the fact that Peru’s gross domestic product (in purchasing power parity terms) was estimated at

$251.4-billion for last year.

Separately, Peruvian Finance Minister Ismael Benavides has warned against increasing the country’s mining

taxes. ―I don’t think this is a good time to evaluate a potential increase in mining taxes; we are about to

welcome a further $40-billion or more in mining investment and only 10% to 12% of the territory with mining

potential has been explored.‖

Peru, he asserted, needed to attract more investment and stimulate further growth in mining, which would see mines

opened, and so benefitting regions where currently there is no mining. ―We should not calculate a potential increase in

mining taxes, because it will immediately stop investment, raise concerns in the sector and undermine the country’s

development.‖

According to the Ministry of Energy and Mines, Peru’s mining sector grew by 6.2% in 2009. This included a

109% increase in exploration expenditure. Investment in the Peruvian mining sector is forecast to rise by 7%

this year, compared with figures for last year, to reach some $3-billion. Between January and July this year, the

country’s mining exports amounted to $11.6-billion, a 4.2% growth over the figure for the corresponding period

in 2009.

Peru’s central bank reports that between January and July, the country’s zinc exports jumped by 80.1%, copper

exports by 74.2%, while gold exports rose by 26%.Downstream, exports of jewelry and iron and steel products

in the first seven months of this year came to $74-million, a 61.5% increase, compared with figures for the

corresponding period last year.Mining product exports amounted to $1.6-billion in July, a 20.5% increase over

those for July 2009.

Peru is today the world’s number one producer of silver, the number two in copper and zinc production,

number three in tin, number four in lead, and number six in gold.

Over the past 15 years, the growth rate in the mining sector has exceeded the growth rate of the Peruvian economy as a

whole, and it has become the country’s main economic motor. Mining is now responsible for 60% of the country’s exports

and provides 120,000 direct jobs and 400,000 indirect jobs in Peru, which has a total population of about 30-million.

―This is why I would like to see these [future] investments receive their permits and licenses’as quickly as

possible, without any hiccups, so that we can show that mining is an activity that can be carried out with respect

for the community and with a commitment to do things the right way from an environmental point of view,

without having a negative impact on the environment where the activities are carried out,‖ said Flurry.

Edited by: Martin Zhuwakinyu - October 1, 2010

Export Wise - Summer 2008 - Peru: A New Era of Opportunities

By Bruce Gillespie

With one of the stronger economies in Latin America, Peru is a market

with significant opportunities for Canadian companies; particularly in

light of the recently signed Canada-Peru Free Trade Agreement.

Although Peru may be best known for Machu Picchu, the lost city of the

Incas, the country’s burgeoning economy, and its mining and extractive

industry in particular, make it an attractive market for Canadian

companies.

―Peru offers a playing field that is very welcoming to either investors or exporters, and in the past 20

years, they’ve strengthened their economy to the point where it is almost investment grade,‖ says Stephen

Benoit, EDC Regional Manager for the Andean and Caribbean Regions.

Peru, a democratic republic, is home to approximately 28.4 million people, 72 per cent of whom live in urban

areas. In 2006, the country’s Gross Domestic Product (GDP) was USD 93.4 billion, which is expected to grow

by an average of 4.5 per cent in the medium term, while inflation is expected to settle at about 2.5 per cent.

The country enjoys healthy consumer confidence, increasing employment and positive growth. Economic

activity continues to grow mostly as a result of strong investment in projects in the mining and oil and gas

sectors but is also due to strong housing construction and public infrastructure spending.

―Peru today is a very stable country in which to do business,‖ says Benoit, noting that Canada is its

fourth-largest investor, concluding almost $2.5 billion in two-way trade in 2007.

Open for trade: The recent Canada-Peru Free Trade Agreement (FTA) will provide greater market access for a

number of Canadian agricultural products, paper products and equipment. More than 90 per cent of tariffs on

both countries’ exports will be eliminated.

Provisions on cross-border trade in services will also benefit

Canadian business in a variety of sectors, including mining, energy

and professional services. The agreement has also achieved greater

stability, transparency and protection for investors, providing a

more receptive environment for the rapidly growing stock of

Canadian investment in Peru.

―The FTA opens up a significant number of opportunities because the legal environment will be easier to

understand,‖ says Benoit, ―and Canadian companies will have the comfort of having a signed agreement as an

extra layer of protection for doing business there.‖ Even before the conclusion of free trade negotiations,

Benoit says Peru was serious about attracting Canadian business and investment.

The government had established a foreign investment protection act that meant foreign investors could

expect fair and equal treatment under the law, which paved the way for free trade negotiations.

EDC also has an agreement with the Corporación Financiera de Desarrollo S. A. (COFIDE), one of Peru’s

major financial development agencies. A deal signed in January 2007 initiated a cooperative program to identify

and develop investment projects of mutual interest.

In particular, the agreement identified possibilities for Canadian capital in support of Peruvian public and

private projects in municipal and transportation infrastructure projects, medical and scientific facilities, refinery

and mining projects, power generation and information and telecommunications and security projects.

Benoit says COFIDE is one of two national banks that can manage trust funds, which is increasingly important

as the Peruvian government continues to explore decentralization. As regions undertake their own infrastructure

projects, they are funded by trust funds. ―EDC is working right now on a mechanism for those municipalities to

assume some form of foreign debt using these trust funds as securitization,‖ says Benoit.

Active mining sector: As is the case in Canada, the Peruvian economy gains

much of its strength from the extractive sector, which includes exploration and

mining operations. According to Jon Baird, Managing Director of the Canadian

Association of Mining Equipment and Services for Export (CAMESE), the

rejuvenation of the sector in Latin America as a whole began about 20 years ago,

when governments and economies in countries such as Peru began to stabilize

and terrorism was brought under control, all of which was essential to a healthy

extractive industry.

While Peru is known for its gold – it accounts for 42 per cent of Latin American gold production, and it is

the world’s sixth-largest gold producer, slightly ahead of Canada – Baird says the country has an

excellent endowment of other mineral deposits as well, including copper and zinc.

In addition to opportunities for mining companies in Peru, there is also strong demand for supplying and

servicing those companies. ―Peru, like most developing countries, cannot supply a modern mining industry,‖

explains Baird. ―Modern mining needs high productivity, so it needs goods and services that are reliable and

low-cost, so there’s great opportunity for Canadian mining suppliers.‖

What’s more, he says Canadian mining companies and suppliers are well-regarded for their commitment

to corporate social responsibility practices, which enhances their positive image in Peru and around the

globe.

―A modern mining industry has to be safe and healthy – mining is no longer a pick and shovel industry,‖ says

Baird. ―Canadians going out into Peru and elsewhere in the world to invest apply Canadian standards to their

activities so that the environment is properly protected.‖

Steve Bozic, International Sales Manager for Mining Technologies International Inc. (MTI) of Sudbury,

Ontario, says MTI will be focusing on the Peruvian market. MTI manufactures a wide range of mining

equipment, from development and production drilling to rail haulage and underground loaders, and specializes

in equipment for narrow vein operations.

―We believe that the South American market is the place to be, and there’s going to be lots of

opportunities in this new mining market that we can work with in Peru and Chile.‖

EDC has served many Canadian companies in Peru since the 1970s. It was a major lender for the giant

Antamina mine in north-central Peru, one of the world’s largest deposits of copper-zinc ore, and arranged $650

million of political risk insurance, which at the time was essential to attracting bank participation.

Antamina is also notable for the respect the project sponsors garnered from World Heritage authorities and non-

governmental organizations alike for their engagement of local communities and the care the project design

demonstrated for the surrounding environment and people.

More recently, EDC has increasingly facilitated trade between Canada and Peru by providing Canadian

companies, their foreign buyers and other foreign partners more than $500 million in financing and insurance in

2007. Today, EDC is open with its full range of products in Peru and has strong relationships with key local

banks and more than 110 Canadian companies operating in the region, including Teck Cominco, Barrick Gold,

Scotia Bank and SNC-Lavalin, many of which view Peru as their headquarters for the Andean region.

―We’re very comfortable with the market. This goes back to the economic stability present within Peru

for the last number of years, matched by a political stability that makes it very appealing,‖ says Benoit.

In 2007, two-way trade between Canada and Peru totaled almost $2.5 billion

Other opportunities for Canada: Although the extractive sector has attracted the most Canadian interest and

investment in Peru to date, there are several other sectors and niche markets that exporters and investors should

consider, says Benoit. He notes that there is an infrastructure deficit of between $25 to $30 billion in Peru,

which indicates significant opportunities for Canadians in roads, ports, airports, water, electricity and hydro.

―These are areas where Canada has some real strength, so it’s just matching up the right opportunity with the

right capabilities,‖ he says.

Benoit notes that Peru also has an under-developed oil and gas industry that is only now beginning to be

explored with the increase in the price of oil and recent discoveries of heavy oil fields in nearby Colombia and

Venezuela. ―Colombia has been more aggressive in promoting oil and gas exploration, and some people are

saying that Peru is where Colombia was three or four years ago,‖ he explains. As such, it is ripe for exploration

and investment.

Yaa-Hemaa Obiri-Yeboah, Trade Commissioner for the Andean Region with Foreign Affairs and International

Trade Canada, says Canadians are well-placed to do business in Peru. ―Our corporate social responsibility plays

a role in our competitive image. We’re certainly quite strong in terms of that in the mining sector, so we have a

positive image in Peru, and I think that’s an asset,‖ she says.

In terms of entering the Peruvian market, Obiri-Yeboah says knowledge of Spanish is an advantage but that the

trade commissioner’s office has locally engaged staff on the ground who are very good at assisting exporters

and setting the scene in terms of what they can expect of working in Peru.

She says the Peruvian market is a friendly one to Canadians given how many Canadian companies operate there

already. A local presence in the market is of the utmost importance in understanding the needs of Peruvian

clients and understanding the business climate. She recommends employing an agent or official representative

to pursue market opportunities with the private and public sectors, as it will help in terms of language barriers,

customs clearance and servicing requirements.

―Peru continues to be a very important market for Canada. We expect the free trade agreement to do a

lot for Canadian companies and for Peru, resulting in prosperity for both countries.‖

The Canada-Peru Agreement on the Environment, signed concurrently with the Canada-Peru FTA, commits the two

countries to pursue high levels of environmental protection and corporate social responsibility, and to develop and

improve their environmental laws and policies. The agreement includes key environmental obligations which require both

parties to enforce their domestic environmental laws effectively and to refrain from relaxing those laws in order to

encourage trade or investment. Through this agreement, Canada is also committed to working with Peru to help protect

and conserve biological diversity in a way that respects the interests of indigenous peoples and local communities.

Submit

Posted on October 11th, 2010

Peruvian Mineral Potential Attracts Investors From Around The World

Peru’s great mining potential is increasingly awakening interest in world investors.

―Early this year we had a $34 billion mining project portfolio; however to date they exceed $41

billion,‖ Mining Vice Minister Fernando Gala, said last week. At the opening of the Expomina Peru

2010 fair, with exhibitors from over 15 countries, Gala said that investment announcements by

exploration companies in search of new finds are increasing by the day.

The vice minister said the increase of investment expectations are based on new projects considered for

this year, like the copper and molybdenum deposits at Los Calatos, and gold deposits found in

Chucapaca, both located in Moquegua. At the worldclass Los Calatos project, Australia’s Metminco

foresees a $2.2 billion investment, whereas in Chupaca, discovered in March of this year, Buenaventura

calculates it has 5.6 Moz in gold deposits.

The vice minister said that the investment projection increase will easily keep Peru in second place in

copper investment, considering that Chile (first copper producer worldwide) has a $50 billion project

portfolio.

About the projects in the portfolio, Gala said they are ready to be launched because they have social

viability, and amount to some $14 billion.

Six years is the estimated time for these projects with social viability to become reality. Among them

are Las Bambas, for $4.2 billion; the expansion of Antamina, exceeding $1 billion; Toromocho at $2.2

billion and Antapacay $1.3 billion. Further, there is Minas Congas at $2.8 billion, Quellaveco at $2.2

billion and Tía María at $1 billion.

Indian mining companies Hindustan Copper and National Aluminum Co (Nalco) have joined forces to

acquire a copper mine concession in the central zone of Peru. Hindustan Copper is a public sector

enterprise of the Government of India; a producer, smelter and refiner of copper. The joint venture

efforts with Nalco could see an investment of $450 million.

Insights into the Peruvian Gold and Metals Mining Industry

The_Gold_Report Oct 20, 2010 - 03:07 AM

Mining is big in Latin America. The mining sector represents the lion's share of the main Peruvian indexes, and

Chile and Argentina have significant mining operations as well. Kallpa Securities CEO Alberto Arispe talked

exclusively with The Gold Report about some of the most promising small-cap plays in the area and the

prospects of Peru, Chile and Argentina trading under a single exchange and what that might mean for the

future of mine financing and investment opportunities.

(TGR) The Gold Report: Why did you choose to specialize in the mining industry?

Alberto Arispe: It's not so much that I chose to be in the mining sector; it's that here in the Lima market you

have to be in the mining sector. Peru is a mining country. The mining industry is around 15% of the Peruvian

GDP. On the Lima Stock Exchange, mining stocks comprise between 60% to 65% of the main Peruvian

indexes, a very high percentage compared to other exchanges. For example, in Chile, which is a country where

there's a lot of mining activity, only 3% to 8% of the index is composed of mining companies. Companies that

list and trade in the Peruvian market produce gold, copper, zinc, tin and other metals.

TGR: The Peruvian Finance Minister Ismael Benavides recently said that he expects mining companies to

invest more than $40 billion in Peruvian mining projects over the next 10 years or so. What are the crown

jewels among Peru's mines and mining projects?

AA: There are several projects that are pretty big in Peru, and they require huge investments. One of the most

important is Las Bambas, a huge copper project that Xstrata PLC (LSE:XTA) is operating. Candente

(TSX:DNT, TSX:CDG) also has big reserves of copper, zinc and gold, which require huge investments.

However, not all of them will be financed through capital markets. Most of them are done through subsidiaries

of big public companies that list and trade in markets in the U.S., Canada or London.

TGR: How many people does the mining sector employ?

AA: That's difficult to say, but it is a significant number of people. However, that's one of the criticisms that

some people have expressed in Peru. Mining is not that labor intensive, it's more capital intensive. That is why

the government is trying to attract more foreign investment.

TGR: One of the things that the minister was trying to fend off was a call for a larger tax on mining companies,

correct?

AA: Yes. Two or three years ago there was a debate about that. In the end, the Congress did not approve higher

taxes for the mining industry. About four years ago, there was an agreement between the mining companies and

the government for the mining companies to "donate" a small percentage of their net income. These "donations"

would go into a fund that would invest in the communities where these mining companies operate—which tend

to be in the mountains and tend to be poor. This "voluntary donation" has been working OK so far. Now we

have to remember, there will be elections in April 2011 for Congress and for president. Things could change. I

think a lot will depend on the results of the elections.

TGR: What are some issues and challenges facing the industry in Peru?

AA: Peru has been growing at a very fast rate for the past 20 years, about 5% per year on average, with very

low levels of inflation, with reserves accumulating and with a lot of indirect foreign investment in the country.

Poverty is down from around 65% in 1990 to 33% now. In the rural areas in the mountains—where most of the

mining activity is—the rate is even higher. So it is necessary to find a way to have the people who live around

these communities be happy and feel part of the mining companies' success. These communities need to feel

part of the success because if there are no arrangements with the communities, some of these communities

could stop projects that could be very profitable. This has happened before. If the local communities and the

companies can work together and succeed in producing copper, gold or zinc or whatever metal is there, both the

community and the company will be profitable. When the companies don't do their job correctly, and think they

can go into the communities and just do whatever they think is right, things don't work out.

TGR: Do you have any ideas of how that can happen?

AA: There's a saying in Peru, "you don't have to invent dynamite." In English that would be, "you don't have to

reinvent the wheel." It's just getting a good team and going to talk to these people and telling them what you're

going to do. Let them participate. Give them jobs in the projects. Help them out with basic things like schools.

Some companies just think, "Well, it's not our job to do this. We pay our taxes and the government should take

care of these things." That's true, but sometimes things don't work as they should. It's in the companies' interest

to get things to work in their projects.

TGR: What's the state of mining finance in Peru and in South America in general?

AA: The Peruvian Bolsa is the only regulated market in Latin America that has a junior market, a venture

capital market for junior companies. Given that they are juniors, they have very little or no access to

commercial banks, so they tend to raise capital from the Peruvian capital markets. Most investors here know

how the mining industry operates and how to invest in these types of investments and what their inherent risks

are. So even though in Peru we haven't had an IPO for a mining company in a long time, we do have a lot of

private placements where junior mining companies can obtain funds, with 100% of the funds coming from

Peruvian investors.

This is an important part of our business. Right now for example, Kallpa Securities sponsors 10 of the 11 junior

companies in the market. A sponsor is the broker that represents the junior company. We present the company

to the Exchange and then represent the company and the issuer before the Lima Stock Exchange, and of course

when there are placements. A sponsor is like a "nomad" on the AIM Exchange in London.

TGR: I understand there is a movement afoot to combine the Bolsas of Argentina, Peru and Chile. Can you talk

about that?

AA: Yes, the regulators and the Bolsas of Peru, Colombia and Chile want to integrate these markets. The first

stage would integrate the markets and in the second stage, the three Bolsas would merge to increase liquidity in

the three markets.

TGR: What are the hurdles to that merger?

AA: We don't have any big hurdles, but there are things we have to work on. For example, taxation is not the

same in the three countries. And the private pension funds of some countries cannot invest in certain markets.

The private pension funds are the main players in Colombia, Chile and Peru. For example, private pension

funds in Chile cannot invest in countries that have a lower risk classification. Since Colombia and Peru are

riskier than Chile, the Chilean private pension funds cannot invest in some of these countries. So we're working

to change that. I think that the first stage will be ready to begin in the first quarter of 2011.

TGR: You mentioned needing to change some rules to allow Chilean pension funds to invest. Does this mean

that the pension funds just can't find enough to invest in?

AA: Exactly. The four private pension funds in Peru have assets under management around $32 billion. That's

around 25% of GDP. By law, private pension funds can only invest 28% to 30% of their assets abroad. They

can only invest the rest in Peru, but there are not enough regulated companies to invest in.

I was just talking to a private pension fund manager, who said that the private pension funds in Peru receive

around $145 million every day. If this continues, they will need more securities to invest in. If the integration

goes forward, we will have to see if an investment in Colombia or in Chile would qualify as a foreign

investment. Maybe any investment in the integrated market could qualify as a domestic investment.

TGR: What are the people behind some of the large mining companies there like Xstrata and Tech saying about

the merger idea?

AA: For companies like Xstrata or Altadena, which is privately held, the more access they have to funds, the

better it is. In the future, some of them, if there's enough liquidity, could think about going public. You never

know.

Integration will help us because Peru could become a small hub of mining capital markets for Latin America,

because Peru is where most of the knowledge is about mining and capital markets.

TGR: Well I'm sure the TSX doesn't like the idea.

AA: You know, the Bolsas compete among themselves. In the past 11 months, we've had a couple of interesting

plays totaling around $25 million in placements from junior companies. The managers of these companies were

pretty happy because sometimes in Canada there's much more access to capital, but there are a lot companies,

too. In Peru you have very few companies, so you have more exposure.

Of course, if you need to raise $30, $40 or $50 million, it's difficult to do it in Peru. But you can raise $5 or $10

million here. What we're doing, for example, is placing shares using syndicates. We lead the syndicate and we

do it with five or six brokers. So that's something new for Peru that works very well because the brokers make

their commission and more people have access to this type of risk. The company issuer is able to raise more

funds. Everybody makes money and if things go right, more investors make a nice profit.

TGR: What are some small-cap plays in Peru that you think have some promise?

AA: Rio Alto Mining Limited (TSX.V:RIO; BVL:RIO; OTCQX:RIOAF) is a good example. They have a

project called La Arena in the northern mountains of Peru. It was explored by IAMGOLD Corporation

(TSX:IMG; NYSE:IAG) and they did a deal with IAMGOLD to obtain the rights. It's like an option agreement,

at a very low price.

In the fourth quarter of 2009, Rio Alto contacted us and we listed the company on the Lima Bolsa. They also

are listed on other markets, including the Toronto Venture Exchange. Basically, we did a private placement for

them: 100% Peruvian investors for around $5 to $6 million when the stock was at $0.33.

At that time, management owned around 30% of the company. There were no big funds owning the stock. They

needed to raise around $25 or $30 million in 2010 to build the plant and start producing gold. They have a

reserve of gold and a reserve of copper. Some people bought it. Others of course didn't.

The company delivered what they promised investors. They got a loan with a prepayment of gold agreement

with a U.S. hedge fund, Red Kite, for $25 million. Then we raised another $8 million. Afterwards, J.P. Morgan

asked the management to participate and there was an issuance of another $8 million. The stock is trading now

now $1.34—a 200% profit. It's the most profitable stock on the Lima Stock Exchange.

Now we are four months away from production. Everything is on track. We have the permits from the

government, the environmental approval and the communities have approved. Everything has gone as expected.

They have already everything fully financed for the first part of the project. We expect them to be producing

around 90,000 ounces of gold next year. Cash costs will be around $500 per ounce; you know where the price

of gold is right now. That project will last around eight years.

So the story is that through capital markets these guys were able to finance basically 100% of all their cash

needs. A good part of it was done in the Peruvian market and in the U.S. Now, Rio Alto is a $128 million

market-cap company. When we started this a year ago it was a $35 million market-cap company. So it's a

success story. Of course, not all stories have happy endings.

TGR: Rio Alto recently announced reserves of 2.57 million ounces of gold and 1.57 billion pounds of copper.

AA: Correct. So this is basically a copper operation. But the good thing that management has done is that here

in Peru you have four or five junior companies with very big copper deposits that in three or four years can be

huge unit producers. But the problem is that to get these things into operation, the companies need to invest

$300, $400, $500 million and these companies have a market cap of $30, $40 million. It's impossible for them

to develop these projects. So they have to sell sooner or later, or they can joint venture.

What Rio Alto has done, which is very smart I think, is say, we have this big copper project, but we also have

the oxides on the top of the hill. We have a small gold project. They are going to concentrate on the small gold

project, which is easier to develop. They will start producing gold and use those cash flows for two or three

years. That will make the market cap of the company go up from $40 million where it was a year ago to maybe

$150 million. It's different to try to get a joint venture or raise money or even sell the company for the big

copper project when you're worth $150 million and when you have a cash flow, than when you are $30 or $40

million and you don't produce anything.

TGR: And you can raise much more money with less dilution when you're financing at $2, $3 or $4 a share

versus $1.25.

AA: Exactly. So I think there Rio Alto has played it smart. If not, they would be another junior with a lot of

potential, and maybe in three or four years you could see that unit producing. For that you need a joint venture

or to sell to somebody or huge dilution. So far management has delivered and I have a lot of confidence in

them. We have a pretty good relationship. They have an open-door policy. When the stock came down at one

time, we had a lot of investors visiting them and I think that says a lot about management.

TGR: Can you give us an example of a company that could see significant share appreciation?

AA: The other one that I like is Minera IRL Ltd. (TSX:IRL). These guys trade in Lima and AIM, and just

started trading in Toronto. IRL is the only company in Peru that has passed from the junior segment to the main

board. In 2007, when their mine called Corihuarmi started producing, they were in the junior segment. They

started producing gold as well, around 40,000 to 50,000 ounces, in a smaller mine. They also have projects in

Argentina. In two or three years, they probably will be producing 120,000 or 130,000 ounces of gold per year

when these new projects come into production. The company's worth around $90 million, maybe a little bit

more because the market is up. It has around a $100 million market cap. Their Don Nicolas project in Argentina

needs an investment of around $30 million and will start producing in 2012. Another project called Ollachea in

Puno, Peru, is bigger. That will require a higher investment, around $120 million.

Their plan is to go first to Don Nicolas to make the market cap bigger and then to finance Ollachea. I think

that's the right way to go because as you start producing and risk goes down, the market cap goes up. It's much

better to raise money at a higher price.

TGR: Any parting thoughts?

AA: Macro-economically, Peru is doing really well. In the U.S., Canada and London, the money is on Brazil,

Russia, India and China (BRIC). That's the right thing to do because these are emerging markets. They are huge

countries that are growing, with great potential. But Peru has better numbers than these countries. The only

difference is that Peru is small, but GDP is growing 7%, 8% in the past few years, with the exception of '09

when GDP was flat. It is one of the countries that's growing the most in Latin America, with the lowest levels of

inflation. There are no fiscal structural problems at all. We have a free market. We have free trade agreements

with the U.S. and several countries. The poverty rate is going down and there is a lot of stability.

There's a lot of direct investment from big companies that operate in other parts of the world, as well as from

Peruvian companies and from smaller investors that are forming junior companies. That is something very

interesting.

The mining industry in Peru is doing very well. The Peruvian capital markets specialize in mining. All of our

analysts are basically focusing on that. The private pensions know about mining. The hedge funds in Peru know

about mining. The brokers in Peru that do equity research know about mining. And investors that buy these

stocks get more familiar with these types of risks because they discuss it with the analyst and with the broker.

There is deep knowledge about the mining sector in the Peruvian capital markets. That's a competitive

advantage for companies that want to raise money in the mining sector in Latin America. If you go to other

countries like Chile or Colombia, there's very little knowledge of the mining sector.

TGR: Alberto, this has been very informative. Thanks very much.

Alberto Arispe is CEO of Kallpa Securities SAB, a Peruvian brokerage and boutique investment house. He has

an MBA from the Stern School of Business at New York University and a Bachelor degree in economics from

the Universidad Catolica del Peru. Arispe previously worked as a vice president of emerging markets

institutional equity sales at Fox-Pitt, Kelton, Inc., in New York City, In the mid-'90s he was a mining analyst at

the Peruvian brokerage house Macrovalores. Arispe has more than 18 years' experience in capital markets. He

also is a professor of finance at Universidad de Lima.

Peru, First Attractive Destination For

Mining Exploration Investment in Latin America

Lima, May 13, 2010 (ANDINA).

In 2009, Peru ranked first as attractive destination

for investment in mining exploration in Latin

America concentrating 25% of the total

investment in the region, according to a report

released Thursday.

The report, elaborated by the Mining and

Economy School (Gerens), is based on a survey

by the Fraser Institute of Canada and 2002-2009

statistics by the Metal Economic Group.

Peru topped the Latin American table after three

years of being in the second place, and despite the

global financial crisis, Gerens President Armando

Gallegos said.

The Andean country has improved its competitive advantages which allow investors to increase their

expectations on investing in new projects in Peru.

Mining exploration investment in Peru hiked due to the country's geological attractions, high international

mineral prices and positive investment environment.

Finally, Gallegos said though, Peru ranked among the 10 first places in the last years, it could improve its

position if more long term sustainable and equilibrated policies are executed.

Copper mining company in Peru. Photo: ANDINA/Archive.

Peruvian Mining Exports, Project Development Thrive

Mining exports comprised the lion's share of Peruvian exports last November. More

production is planned as Peru reported a current project portfolio of $300 billion.

Author: Dorothy Kosich - Thursday, 14 Jan 2010

RENO NV -

Peru’s Energy and Mines Ministry said the country’s mining exports totaled US $14.51 Billion in the first 11

months of last year, the Central Reserve Bank of Peru reported.

Meanwhile, Fernando Gala, Deputy of Energy and Mines Minister, told reporters mining investment in Peru

could reach $5 Billion this year, or double last year’s project expenditures.

In November, Peruvian copper exports totaled $707 million, rising nearly 7% over the previous month. Peru’s

official news agency, Andina, said the increase in value was attributed to a higher average price.

Mining exports for November 2009 grew 5.1% for US$1.71 billion. Peruvian mining exports represented 61.2%

of total Peruvian exports for November.

Peru's November minerals exports had been the highest achieved in a year of global financial turmoil.

Andina said mining exports were reported at $1.58 billion in September 2009 and $1.63 billion in October

2009.

MINING INVESTMENT

Deputy Minister Gala said some $5 billion will be invested in different mining projects this year. He estimated

the country's current project portfolio at more than $300 billion to be implemented within a six-year period.

Chinese miners are among those funding mining projects now under development in Peru including a $2 billion

Chinalco copper mining project planned to begin production in the Peruvian Andes by 2011. Zibo Hongda

Mining subsidiary Jinzhao Mining Peru just completed the $100 million purchase of the Pampa de Pongo iron

ore deposit from Cardero Resource.

Gala estimated regional governments have received 15 billion soles (US$5.190 billion) on mining royalties,

concession rights and voluntary contribution. He added that the challenge this year will be to execute mining

projects development that will generate revenues and reduce poverty in Peru.

Peru Has the Midas Touch For Gold Investors

Fiona Bond - April 28, 2010

For centuries, explorers have come to Peru in search of gold and today

the country shows no signs of losing its Midas touch.

Peru, currently the number one Latin American gold producer and ranked sixth in the

world, is on a mission to become one of the world's top five producers by 2015.

Last year, gold became Peru's main export worth $6.8 billion, representing 42% of the

value of all mining exports and a quarter of the country's total exports.

Growing production levels and rising investment in the Andean country's resources prompted President Alan

Garcia to hail the country an ideal destination for international gold investors at the Gold Symposium in Lima

earlier this month.

Justification for Peru's bullish attitude can be found in the figures, with the country's mining GDP shooting up

260% in the past 20 years, compared to the country's overall GDP growth of 135%.

President of the National Society of Mining, Petroleum and Energy, Hans Flury, says that over $18 billion has

been ploughed into the mining sector in the last 15 years.

And it shows no signs of stopping:

The price of gold has increased 50% over the past two years and tripled over the past five years, with

expectations rife that it is set to breach the $1,300 mark in the near future.

The precious metal's soaring rise has not gone unnoticed, enticing several large names into the country

including the world's number one gold producer Barrick Gold (ABG) and British company Hochschild

Mining (HOC).

The FTSE 250-listed Hochschild Mining operates three underground epithermal vein mines in Southern Peru

and has seen its star rise over the past year with a 10% rise in share price over the past month alone.

Chief executive Ignacio Bustamante told Interactive Investor: "Hochschild has been working successfully in

Peru since 1925 and today we operate three high grade, underground operations in the south of the country. We

also have numerous exploration projects throughout Peru reflecting the country's enormous mineral potential

and significant prospects for growth."

Bustamante went onto say that Peru's mining-friendly regulatory framework and stable economy help to make it

an appealing destination.

Miners elect for Peru's political stability:

Metals analyst David Wilson at Societe Generale agrees with the sentiment, noting that Peru has managed to

stave off the troubles plaguing other Latin American countries.

"The key attraction for mining companies is political stability and royalties which Peru seems to offer. When

dealing with Latin America, there is the fear that you can get caught in political price cycles; wishing to

nationalise projects when prices are high and engaging in a sell-off when prices fall. However, Peru seems to

have largely avoided this trap which creates a more solid environment for investors.

"Some of the big mines are depleting which means there needs to be a lot of investment in the area, but with its

political stability and mining laws it looks likely that it will continue to secure this," he added.

AIM-listed Minera IRL (MIRL) recently signed an option to purchase the Quilavira gold exploration project in

southern Peru earlier this year.

The group hailed the project a "strategic, longer term exploration opportunity in a highly prospective area",

following on from better-than-expected production results at its Corihuarmi gold mine in Peru in the final

quarter of 2009.

Fellow UK-listed company Horizonte Minerals (HZM) is developing in tandem with Barrick Gold the 2,147

hectare Pararapa gold property in South Peru.

The AIM-listed group, which has seen its shares rise by 100% in the past year, said Peru's "democratically

elected government and favorable mining codes" make it a hotbed for large mining companies to operate there.

Indeed, Peru has been awarded investment grade status of BBB- by three of the main international credit ratings

agencies; Standard & Poor's, Moody's and Fitch.

The Ministry of Mining and Energy said Peru continues to work to consolidate an adequate regulatory

framework to foster foreign investment.

Peru is a member of the Multilateral Investment Guarantee Agency, among others, and has subscribed to several

bilateral agreements including Free Trade Agreements with the US, Canada, China and Singapore, it hastens to

add.

The country, made up of 128 million hectares, has granted 14.89 million hectares, or 11.6%, to mining

activities. However, only 891,367 hectares are currently under mining exploitation and 813,626 hectares under

exploration.

"There is a vast and diverse geological wealth recognized by the international community,

most of which has not yet been exploited or explored," the Ministry said.

Peru came in the top 30 global jurisdictions for the strength of its mining policy in the 2008-09 Fraser Institute

survey.

Precious Things in Peru: The Search for Gold

By Sagev on August 4, 2010

Peru is an interesting country in that it has been forged by the Conquistadors, brought into modern times by the

Japanese (including a famous Peruvian leader with Japanese DNA) and may fall into the orbit of Mainland

China. Peru, like many Latin American countries, can indeed be seen as a natural resource colony for Asia’s

emerging power houses. According to an NGO worker based in Costa Rica, ―America is losing power by the

day and is no longer able to keep China out of Central and South America, nor Russia for that matter.‖

In the wake of these erstwhile geopolitical changes, astute Latin America watchers may well ask what’s going

on in Peru? According to Linda Dixon, an American gold entrepreneur now based in Peru, that South American

nation ranks high in both silver and gold production. Corporations which may or may not adhere to

environmentally-sound mining procedures are assessing the risks in the marketplace in regard to the terms of

capital investment, borrowing and the rate of return.

Opportunities exist in abundance for the small to medium scale investor. Fifty-plus percent returns are

possible on small mining concession in Peru. This is something American and Western investors may well

want to consider for their portfolio.

US$ 50 to $60,000 investments might be considered prudent, as a sort of micro-lending on steroids. Dixon

might well take note of the fact that roughly 15 million artisanal gold miners are digging for gold right at this

very moment to the four corners of the Earth.

Again we must ask ―Why all the fuss about gold?‖ Almost everything in America that can be monetized (from

AIG and major bank debt to stay at home mothering vs. day care) has already been monetized. After the

housing and IT bubbles burst, there is no new source of wealth creation. America has been systematically de-

industrialized. In times of bust and fear gold reigns supreme.

Gold mining in Peru offers low overhead and no shortage of buyers (in Latin America, North America, the West

and the world.) On-line, vertically integrated real time data on gold extraction, procurement, spotting, selling,

acquisition as well as personal and industrial use is not far off. Analyzing and profiting from extraction, refining

and selling of gold directly to buyers with a ―premium to spot‖ is the order of the day for entrepreneurs like

Dixon.

Digging Deeper in Latin America

Surely there is a great global hunger for gold – but whom do you listen to and where to you go to follow the

process of gold’s ―liberation‖ from the ground?

With on-line data becoming available, from A to Z and every stop of the gold process along the way will be as

convenient as reading the box scores of Major League Baseball on your laptop during the Fourth of July. And

make no mistake –

Latin America, especially Peru, Argentina and Chile, will be a part of the 21st Century gold rush. There

is more mineral exploration going on in Latin America than any other region in the world. One out of

every four mineral exploration dollars these days is being spent in Latin America.

Many of the miners operating in the region are global companies such as Barrick, Falconbridge, Newmont,

BHP Billiton, and Phelps Dodge. Toronto-based Barrick, which operates 14 mines including projects in Peru,

Chile, Argentina and Tanzania, is worth a mention because last year it produced almost 5.5 million ounces of

gold, at a cash cost of just $227 per ounce, the lowest cost of all major producers.

―For a pure Peruvian play, Antamina is the country’s leading producer of zinc and the second largest of copper

and molybdenum. The company increased its output by over 20% last year. Southern Copper Corporation is a

producer of copper, molybdenum, zinc and silver located in Peru and in Mexico. Quoted in New York, the

company acquired Minera Mexico last year, and now has a range of operations, including the Toquepala and

Cuajone mine complexes in Peru, and both open-pit and underground operations in Mexico which produce zinc,

lead, copper, silver, gold and coal.

―One of the most admired miners is Peru’s Buenaventura, a precious metals specialist with a shareholding in

Minera Yanacocha. Quoted in Lima and New York, Buenaventura has two growing underground goldmines and

the fourth largest silver mine, and a reputation for the best geological information in Peru.

―For instance, Antamina in Peru employs 1,400 workers and is one of the main sources of well-paid work in the

country, particularly in Ancash. In five years, per capita income is expected to double in the area. In fact, Peru’s

economy grew at its slowest pace for two years in April as fishmeal, natural gas and manufacturing output

declined, leaving the economy remaining buoyed only by its $10 billion mining exports and $1.5 billion in

natural gas sales.

Jones salutes Invesco which is a ―Perpetual Latin American fund, run by Dean Newman, has performed well, up

36.6% on the year and 194.5% over three years against sector rises of 17.8% and 62.1% respectively. Other

specialist trusts include Scottish Widows Latin America fund, and Threadneedle Latin American fund, which

have both made around 35.5% over one year and 163% over three years, although the latter has a higher

minimum investment at £2,000. The UBS Global Emerging Markets fund has around 18% in Latin America,

and Axa Emerging Markets fund and First State Global Emerging markets both have around 16% in the

region.‖

An Ancient Quest for Gold:

During the days of Ancient Rome, a military general and fire department chief named Crassus was worth almost

US$ 170 billion in today’s paper denominated world. (As ranked by Forbes). Crassus, seeking to imitate

Alexander the Great and conquer India, took his expeditionary legions into Turkey. There he hoped to fight and

defeat the Parthians and capture Mesopotamia and Persia. Crassus ignored the advice of his advisors who

though he should invade through Armenia and saw his son killed. Crassus himself had liquid molten gold

poured down his throat and was decapitated. His head was used in a theatrical play by those who slew him.

Today’s modern English dictionary contains the word ―crass‖ as a reminder to those whose thirst for gold

bullion may well be as unquenchable as Crassus’ was. Such a lessen cannot be lost on those readers in tune with

the de facto paradigm of the post-American world of oligarch-led finance capitalism. Acting in the face of the

conundrum driven by exotic financial instruments like derivatives and the securitization of the so-called sub-

prime mortgages, the Fed has printed up Monopoly money out of thin air and bought off/rescued revolving door

cronies on Wall St. via their ―good old boy‖ network.

Meanwhile ordinary Americans have no choice but to watch helplessly as American manufacturing, off

shoring, 20 million illegal immigrants, legal immigrant visas and other economy destroying phenomena

have combined to set up ―the perfect storm‖ of the economic Armageddon we now find ourselves in.

Inflation and the threat of inflation, massive U.S. Dollar devaluation and efforts to resuscitate the

economy will be among the factors affecting the price of gold through the rest of 2009. The rigged stock

market, regulators who should be wearing orange prison coveralls, low rates of return on U.S.

Treasuries, trillions of Dollars of un-payable debt and cronyism do not inspire confidence in the average

thinking American.

Therefore look for gold to continue its ascent, despite insider manipulation on the price of gold as organized by

Central Banks — who not only have a monopoly on the creation of paper money, but on the martial violence

that money pays for via modern, conquering armies that would make Crassus blush.

Countering the implosion of paper and digital money is the fact that only 160,000 + tons of gold have been

mined in all of human history. As such, one gold bar weighing 28 pounds is worth US$ 333,000+. At 1000 per

ounce, gold as they say, is still ―money in the bank.‖

The question remains, where will all of this lead the world in terms of the price and demand of gold?

Why the obsession with this metal?

Some years ago, the well-known economist Milton Freidman lamented the idea of mankind placing so much

value on something you merely dig up from the ground. There isn’t that much gold in the world to begin with.

What can you really do with it beyond jewelry and dental work? The answer – plenty.

The people of Burma wear gold medallions around their necks as a hard currency 401 K. Gold sales are up

while the American Dollar is down, Brazil just won the right to host the Summer Olympics, a gold-back Dinar

may be in the pipeline and a basket of currencies may well be replacing the U.S. Dollar as the major global

reserve currency. Digital gold, gold stocks, global gold mining and Latin American gold mining, as well as gold

demand in India (which consumed more than 770 tons of gold in 2007) and China (360+ tons in 2007) are key

issues which deserve vigilant monitoring.

The world’s thirst for gold is sure to continue.

According to writer Siddharth Pani, ― Most of the Central banks, including India’s are holding gold reserves as

a hedge against any fiscal crisis. In 1991 the then-Narshima Rao government had taken loan against gold to tide

over the Indian fiscal crisis, which ultimately led to the opening up of Indian economy.

Unless new gold mines are found in the coming years or some major Central banks sell gold, there will be

shortage of Gold. Further, the cost of extracting gold is also rising.

―At this point there is a marginal surplus as far as Gold and supply and demand is concerned. This may change

rapidly as more and more investors are diversifying into Gold, particularly in developed nation where gold’s

penetration as an investment option is still low. Jewelry demand from countries like India and China is expected

to rise over the next few years. Demand pressure will continue to increase while goldmine supplies are expected

to remain steady.

It is worth noting here that it takes at least a few years for a newly discovered mine to be fully

operational. Even if new mines are discovered new gold supplies will take time to materialize.‖

Peru has 3.88 billion silver ozs, 66.3 million gold ozs in

reserves - Peru mines ministry

Fantastic reserves of silver, copper, gold and zinc keep Peru at or near the top as a favorite

Latin American mining powerhouse, according to the Ministry of Energy and Mines.

Author: Dorothy Kosich - Posted: Thursday, 26 Aug 2010

RENO, NV -

Peru's Ministry of Energy and Mines (MEM) reported Wednesday that Peru remains the world's largest silver

miner with about 30% of global reserves while the nation ranks second in copper and zinc reserves,

respectively, with 16% and 11% of the total.

During a talk to a seminar on production, metallurgy and jewelry at the College of Engineers of Peru, MEM's

Director of Mining Promotion Henry Luna Cordova said Peru's reserves include 120,532,294 kilograms (3.88

billion ounces) of silver.

He also estimated Peru has 90,814,530 metric tons of copper reserves and 22.257,995 metric tons of zinc

reserves.

In his speech Luna also discussed Peru's gold production in 2009 which he said was 182,403,000 grams (5.7

million ounces), an increase of 1.4% over the prior year. He said this growth means Peru remains the top gold

producer of Latin America and is ranked sixth in global gold production, a feat which is largely the result of

gold production in northern Peru.

"Our gold reserves are altogether 1,968,878,828 grams fine (66.3 million ounces) and are equivalent to

4% of the existing reserves in the world," Luna noted.

Peru's mines contribute 42% of the financial revenues which are allocated to the regions of Ancash, La

Libertad, Arequipa, Puno, Tacna, Moquegua and Caramarca among others, according to Luna.

Peru can keep mining gold at the current rate for 11 years

As billions are invested in Peruvian gold mining, Deputy Mines Minister Fernando Gala

estimated the country's gold reserves can fuel production at least for the next decade.

Author: Dorothy Kosich - Monday, September 20, 2010

RENO, NV -

Perru's Deputy Mines Minister said Peru has gold reserves for almost 11 years at the current production rate of

182 tons per year.

Deputy Mines Minister Fernando Gala said about US $5 billion has been or will be invested in gold exploration

and gold mining projects in Peru, accounting for nearly 13% of the estimated total of $41 billion in Peruvian

mining investment.

While major gold discoveries have been found in northern Peru, primarily in the regions of Cajamarca and La

Libertad, Gala noted big gold discoveries have also been reported in southern Peru during the last few months.

Gala highlighted the $1 billion Chucapaca project, a major gold-copper-silver deposit discovered by joint

venture partners Gold Fields and Compania de Minas Buenaventura in southern Peru's Moquegua region. The

project's Canahuire deposit has a mineral resource estimate of 5.6 million gold equivalent ounces.

"The idea is to demonstrate that there are significant gold deposits in the southern region of Peru," Gala sai

Peruvian Mining Boom Continues

Part of the Yanacocha mine in Cajamarca, to the north of Lima. Mining accounts for

59 percent of Peru’s exports and 6.4 percent of its annual GDP.

LIMA, Peru – Wednesday, Sept. 23, 2010 by Omar Bonilla: The outlook for

the Peruvian mining sector could not be better. The negative figures of the crisis

period have turned around, and executives from the sector are projecting that

medium-term investment in the country could reach US$30 billion.

Local and foreign mining companies, along with economists and government

employees, took part in the 29th Mining Convention of Peru, held in Arequipa.

During the event, Foreign Trade and Tourism Minister Martín Pérez told El

Comercio that, according to official figures, the pace of multi-million dollar

investments will remain steady over the coming decade.

Pérez confirmed to EFE that ―the estimated portfolio for mining investment

comprises 31 macro-projects. The main ones include exploration, while others are focused on expanding

already existing mines. In this regard, investments of around US$30 billion are projected.‖ President Alan

Garcia’s government recently announced that mining investments in Peru amounted to US$1.7 billion in 2008.

Los Andes quoted Peru's Mining Convention President Félix Navarro-Grau as saying, ―Peruvian mining

has not just withstood the effects of the global crisis, but is enjoying good health,‖ during his closing

speech.

Navarro-Grau acknowledged that the global financial crisis hit the sector during the first six months of 2009,

with an average fall in prices of 30 percent. However, positive projections are surfacing based on expectations

of a new cycle of high metal prices over the coming months.

Alluding to social conflicts that dodge the sector, National Society of Mining, Oil and Energy (SNMPE)

president Hans Flury told Gestión that it is necessary ―to establish tasks for the government and companies to

drive the sector forward and generate greater tax revenue, allowing the State to attend to the people’s demands.‖

Communities accuse the mining companies of harming the environment and not contributing to any sustainable

development projects.

Mining companies paid US$8.3 billion in taxes between 2006 and 2008. During this period, the mining sector

contributed US$452 million in royalties to the State for the right to exploit mining resources, added Flury.

Mining accounts for 59 percent of Peru’s exports and 6.4 percent of its annual Gross Domestic Product

(GDP).