Apr.15 (Bloomberg) –Cia. Minera Milpo SA, a Peruvian zinc and lead miner, won the bidding for a copper and molybdenum deposit stripped from Inca Pacific Resources Inc. last year and will invest $400 million in the project, the government said.
Lima-based Milpo will start up the Magistral deposit in the northern Andes in 2015, state investment promotion agency Proinversion said today in an e-mailed statement. Peru canceled Vancouver-based Inca Pacific's concession in October, alleging the company failed to meet investment commitments.
"The objective was to select an investor who offered financial and technical guarantees," Proinversion said in the statement. "One who will finance the necessary investment to start production at the mine as soon as possible."
Inca Pacific, which invested $40 million in the project, is the first miner to be penalized in Peru since the government canceled a development option for Canada's Manhattan Minerals Corp. in 2003. Magistral, which has 113.5 million tons of reserves, will be able to produce 34,100 tons of copper a year, according to Inca Pacific's website.
Inca Pacific sought arbitration in March 2010, a process that may take a year, Chief Executive Officer Michael Winn said in a Feb. 1 interview. Arbitration will provide a "fair solution to this issue," Mining Minister Pedro Sanchez Gamarra said in a March 7 interview.
'A Lot of Mistrust'
"We don't recognize this sale and reserve the right to pursue every legal avenue including internationally," said Andre Gauthier, Inca Pacific's manager in Peru, in a telephone interview from Lima. "There is a lot of mistrust between the government, the community and investors right now."
Deputy Mining Minister Fernando Gala didn't immediately respond to telephone calls and e-mails seeking comment.
Milpo is controlled by Sao Paulo-based Votorantim Metais Ltda.
Inca Pacific fell 2.2 percent to 22.5 cents today on the Toronto Stock Exchange. The stock has plunged by 45 percent since the government seized the company's guarantee in October 2009.