Lupaka Gold skyrockets on arbitration win against Peru

In the arbitral tribunal’s decision this week, the Peruvian government was ordered to pay Lupaka a total amount of $65 million.

Shares of Lupaka Gold (TSXV: LPK) skyrocketed to a three-year high on Wednesday after an international tribunal announced it would award the Canadian miner $65 million (C$88.3 million) in its arbitration against Peru, five years after launching the action.  

The final award from the International Centre for Settlement of Investment Disputes (ICSID) in the case it initiated against the Peruvian government in 2020 relates to a blockade that barred access to its Invicta gold project in the South American country.

“Receipt of the final award is exceptionally good news and a key step in our arbitration proceedings against the Republic of Peru,” Lupaka CEO Gordon Ellis said in a release. “However, it does not necessarily mean that the company will recover the amounts awarded in the immediate future. We may have a few more hoops to jump through prior to the company actually receiving any cash.”

Shares of Lukapa Gold almost tripled in value to 24¢ on the news, its highest since June 2022, for a market capitalization in late afternoon of C$4.1 million.

The tribunal’s decision also marks the first time in Latin America that the actions of a local community are attributable to the state under international law, Lupaka’s Switzerland-based legal counsel Lalive said in a release on Wednesday. 

“This award is the result of years of dedicated work by our team and reflects the importance of legal protections for foreign investors operating in complex environments and how states are responsible for illegal acts by its communities,” Lalive partner Marc Veit said.  

Invicta project blocked

The dispute stems from a protest by the Parán community in October 2018 that blockaded access to Lupaka’s Invicta gold development project, located 120 km north of the capital Lima.

The blockade, which the company regarded as illegal, severely impacted its ore processing operations and limited cash flow generation. A year later, Lupaka lost the project due to its inability to pay back its lender.

Before the situation started, Lupaka had completed 3,000 metres of underground workings, agreements with the community of Lacsanga and a 29-km access road sufficient to handle 40-tonne ore trucks. The project was forecast to produce 185,000 oz. of gold equivalent over a six-year life.

In the arbitration launched in November 2020, the British Columbia-based gold miner alleged that the Peruvian government had supported this protest, thus breaching its free trade agreement with Canada. In its claim, it was seeking compensation of more than $100 million.

Peruvian authorities also failed to exercise due diligence in protecting Lupaka’s investment due to its reliance on an ineffective policy of dialogue, Lalive said.

In the arbitral tribunal’s decision this week, the Peruvian government was ordered to pay Lupaka a total amount of $65 million.