Week-long hearings over Bear Creek’s Santa Ana arbitration claim get under way

VANCOUVER (miningweekly.com) – Oral representations regarding Bear Creek Mining’s international arbitration claims against the Peruvian government and its 2011 expropriation of the Santa Ana silver project have gotten under way in Washington, DC.

The hearings started Wednesday and are expected to continue until September 14 at the headquarters of the International Centre for Settlement of Investment Disputes (ICSID).

Bear Creek has requested the ICSID tribunal to award it the sum of $522.2-million in damages.

During the hearings, witnesses and experts called by both the company and Peru will provide oral testimony, will be cross-examined by counsel for the opposing party and the tribunal of three arbitrators will have the opportunity to ask questions.

After the hearings, the tribunal will likely request the parties to submit final written post-hearing memorials in support of their respective positions, after which it will officially close the proceedings and commence deliberations.

As such, the hearings are a key milestone in the arbitration, Bear Creek commented.

The company expected a decision by the tribunal to be announced in the second half of 2017.

Bear Creek said it and its legal counsel remained “very confident” in the merits of the company's claim that the Santa Ana project was treated unfairly by Peru and ultimately expropriated in June 2011 through Peru's issuance of Supreme Decree 032, which revoked without notice or an opportunity to be heard, the company's rights to advance the project.

According to a January 2011 feasibility study, Santa Ana held proven and probable reserves containing 63.2-million ounces of silver, with additional measured and indicated resources of 72.8-million ounces and inferred resources of 28.2-million ounces.

The $70.8-million project has an estimated 11-year mine life, producing 47.4-million ounces of silver with an average yearly saleable silver output of five-million ounces a year for the first six years.

Using conservative estimates of $14.50/oz silver, Santa Ana has a pre-tax internal rate of return (IRR) of 29.9% and a net present value (NPV) of $106.9-million at a 5% discount rate.

Bear Creek had said in 2011 that the project would provide 1 000 direct jobs, 1 500 indirect jobs and contribute more than $330-million in royalties and taxes for the Peruvian people and surrounding communities.

Meanwhile, Bear Creek also announced this week that partner Japan Oil, Gas & Metals National Corporation had withdrawn from the joint venture agreement on the company's La Yegua copper/gold/molybdenum project, a noncore asset in central Peru. Bear Creek would maintain the La Yegua mineral claims covering the low-grade copper mineralisation at La Yegua, but had no plans to work further on the project at this time.