Newmont Mining Corp. (NEM) was allowed to resume its $4.8 billion gold project in Peru after pledging to build reservoirs to ensure water supply for farming in the region following protests that halted construction last year.

The Minas Conga project will be subject to environmental monitoring by the government, President Ollanta Humala said in a statement posted on the presidential website.

Peru suspended the project and commissioned an environmental review after Andean farmers concerned that the project would dry up water supplies blocked roads and destroyed Newmont’s installations in November. The reservoirs, which aim to increase water supply 10-fold for farmers in the northern Andes, will take 18 to 24 months to be built, Environment Minister Manuel Pulgar told Lima-based Radioprogramas today.

“The government has been clear that we must have the water first,” Energy and Mines Minister Jorge Merino told reporters in Lima today. “Now we have to insist on dialogue and work more closely with the communities.”

Humala also ended a 25-day state of emergency in the southern Andean region of Cuzco as government-brokered talks began with opponents of Xstrata Plc (XTA)’s Tintaya copper mine.

Conga Protests
Protests against the Conga project continued for a fourth week in the northern city of Cajamarca as opponents staged marches and hunger strikes. Protests won’t cease until the company pulls out, Wilfredo Saavedra, head of the Cajamarca Environmental Defense Front, told Lima-based television Canal N.

Newmont, which has invested $800 million in Conga to date, will spend $95 million on the construction of four reservoirs, according to Conga Project Manager Luis Arguelles.

“The project represents a great opportunity for the country for the commitment to bring water first, and in terms of jobs,” Arguelles said today at a press conference in Cajamarca broadcast by state-run Peru TV. “We estimate $3 billion in tax payments” over the life of the mine, he said.

Newmont rose 1.7 percent to close at $48.79 in New York. Its partner in the project, Cia. de Minas Buenaventura SAA, gained 1 percent to $38.16.