Vancouver, B.C. – Bear Creek Mining (TSX Venture: BCM) (“Bear Creek” or the “Company”) announces that it delivered to the Peruvian Minister of Economy and Finance, on February 6, 2014, a Notice of Intent to Submit a Claim to Arbitration (“Notice of Intent”), under the Free Trade Agreement between Canada and Peru (“Canada-Peru FTA”). The dispute arises out of the enactment by the Peruvian government on June 25, 2011, of Supreme Decree 032 rescinding the Company’s rights to operate the Santa Ana Project and which resulted in a complete stoppage of activities at Santa Ana and significant damages to the Company. Peru’s actions constitute violations of the Canada-Peru FTA, Peruvian and international law.
The Notice of Intent is necessary in order to preserve the Company’s rights to initiate arbitration should a resolution with the Peruvian government not be reached. The filing of the Notice of Intent also initiates a six-month consultation period between the parties during which time they are to continue to attempt to amicably settle the dispute. If no amicable settlement is reached in that six-month period, the Company may then initiate international arbitration proceedings against Peru in accordance with the Canada-Peru FTA.
Based upon outside counsel’s opinion of the strength of the Company’s legal position, and ongoing discussions with the Peruvian government and local communities, the Company remains optimistic that a settlement of the dispute in relation to the Santa Ana Project will be reached to avoid international arbitration. The Ministry of Energy and Mines recently issued a public statement that Peru wants to reach an amicable solution through dialogue with the Company. The Company’s desire is for both parties to reach a mutually acceptable favorable solution, as evidenced by the numerous proposals submitted by Bear Creek to the Peruvian government to date, with a view to allowing the Company to resume its development of the Santa Ana Project for the benefit of our shareholders, the local communities and the Peruvian nation as a whole. If such a solution is not achieved within the next six months, the Company expects it will have no alternative but to pursue its claims before an international tribunal and seek full compensation for damages the Company has suffered as a result of Peru’s acts.
The Santa Ana Project is located in the Puno Region of Peru and contains Proven and Probable Mineral Reserves totaling 63.2 million ounces of silver. Bear Creek acquired the mining concessions in full compliance with Peruvian law, as is confirmed by Supreme Decree 083, enacted by the President of Peru and the Council of Ministers on November 29, 2007. Bear Creek initiated exploration work in early 2008, and undertook a comprehensive Environmental and Social Impact Assessment (“ESIA”) shortly thereafter. The ESIA, which the Peruvian government suspended on June 1, 2011, remains on standby. The Company has stated its willingness to complete the ESIA process, including demonstration of social license, and carry out the other steps required to reach commercial production as quickly as possible. The Santa Ana Project, which is widely supported by the local communities surrounding the proposed mine site, will create 2,500 direct and indirect jobs in the southern Puno Region, and bring important infrastructure improvements to the area. The Santa Ana Project is also expected to provide US$330 million in federal taxes, much of which benefit local communities.
The Company’s Corani silver-lead-zinc project (the “Corani Project”) enjoys continued strong community support, and remains on track for advancement following the approval of its ESIA in September 2013. Numerous public statements by the President of Peru and Cabinet Ministers have expressed strong support for the advancement of the Corani Project and the government has worked in concert with the Company in order to fund local infrastructure projects. However, the successful resolution of the Santa Ana dispute is a critical component to the Company’s ability to raise financing for, and ultimately the potential success of, the Corani Project.
Recent media in Peru have reported false accusations by an individual distant from our communities wherein Bear Creek Mining officials supposedly paid locally elected officials based on an alleged document showing an agreement between the company and politicians in the Corani District. The alleged document is falsified from our duly registered, official agreement as disclosed in April, 2013 (see news release dated April 14, 2013). Police in Peru are investigating these claims and Bear Creek has both encouraged and is cooperating fully in this process. We continue to work with our partner communities under the legal agreement executed in April 2013 and for which the Company is extremely proud of its transparent foundation structure that delivers long-term benefits to our communities. This is the only agreement to make social payments to our local communities or its members that exists and, in the interest of transparency; we have posted the agreement in both Spanish and English to the Bear Creek website. http://www.bearcreekmining.com/s/corani_project.asp?ReportID=622470
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