LATIN AMERICA — Peruvian court examines Yanacocha

The Supreme Court of Peru has notified Newmont Gold (NGC-N) and Buenaventura (BVN-N) that it will examine a lower court’s decision concerning ownership rights to the Minera Yanacocha, the largest gold mine in South America.

In February 1997, the Superor Court of Lima affirmed Newmont and Buenaventura’s right to exercise their pre-emptive rights to acquire the 24.7% interest in Yanacocha originally held by Bureau de Recherches Geologiques et Minires (BRGM).

The court set a purchase price of US$109 million, of which Newmont’s share was US$59 million and Buenaventura’s, US$50.3 million. The purchase lifted Newmont’s interest to 51.3% from 38% and Buenaventura’s to 43.7% from 32.3%.

Afterwards, BRGM filed a petition to persuade the Supreme Court to examine the case. The court has agreed to do so, but only on matters related to the due process of law or the correct application of Peruvian law.

Newmont says it is confident in a favorable outcome. “We had hoped the case would be closed, but a decision to examine it does not overturn previous court rulings in our favor,” says company spokesman Douglas Hock.

He adds that the implications of this case are important, as it is the largest commercial litigation in Peruvian history.

Output at the Yanacocha gold mine rose to 811,400 oz. gold in 1996, up 47% from 552,000 oz. in 1995, making it Latin America’s largest gold producer for the second consecutive year. At the same time, cash costs declined to US$107 per oz. from US$119 per oz.

Future production may increase further, as year-end reserves rose to 6.1 million contained ounces. The surface deposits are easily mined and ore does not require crushing.