Please refer to the Company’s news releases for historic updates regarding the arbitration against the Republic of Peru.
AWARD KEY POINTS
On June 30, 2025, the International Centre for Settlement of Investment disputes (“ICSID”) Tribunal rendered its Final Award in favour of Lupaka Gold Corp. (“Lupaka”) in its arbitration proceedings against the Republic of Peru (“Peru”) (ICSID Case No. ARB/20/46)
Award:
In its Award, the Tribunal unanimously found that Peru breached its obligations under the Canada-Peru Free Trade Agreement. The Tribunal held that:
i) Peru unlawfully expropriated Lupaka’s Invicta Gold Project
ii) Peru failed to provide Lupaka with full protection and security; and
iii) Peru failed to accord Lupaka fair and equitable treatment
Peru was also held responsible for illegal actions by the Parán Community which included the blockade, occupation and, eventually, complete seizure of the Invicta mine site – actions which the Tribunal found attributable to Peru.
Consequently, the Tribunal ordered Peru to compensate Lupaka in the full amount claimed, totalling US$40.4 million, plus interest, from 26 August 2019 to the date of final payment at the rate of LIBOR +4% from 26 August 2019 until 30 June 2023 and at the rate of UST+5% from 1 July 2023 to the date of payment, compounded annually.
Costs:
The Tribunal ordered Peru to compensate Lupaka for the entirety of its costs and expenses claimed in the course of the arbitration amounting to US$4,215,956.42, with interest at the rate of UST+5% from the date of the Award to the date of final payment. As of today, the total amount awarded, including interest, exceeds US$ 65 million.
PROSPECTS OF PAYMENT AND ENFORCEMENT
The most recent arbitration award paid by the Peruvian government, according to Global Arbitration Review (May 26, 2025), was a portion of a US$302 million Award to Enagás Peru (a subsidiary of Enagás S.A.) for a gas pipeline dispute. This was an increase from a previous (December 2024) award of $194 million, following Enagás' application for review. ICSID communicated the revised award on May 23, 2025, and it was reported by Enagás on May 26, 2025.
Other relatively recent cases involving miners (then) operating in Peru are:
1. Bear Creek Mining Corporation won an arbitration award for C$31.0 million in an ICSID claim related to the Santa Anna Project in Peru. The award was made in December 2017 and C$32.1 million was paid in November 2018.
2. Inmet Mining Corporation, now owned by First Quantum Minerals, won an arbitration award for over US$44 million in an ICSID claim related to the Las Bambas copper project in Peru. The award was made in 2013, upheld in 2014 and paid in 2015.
Overall:
While Peru generally fulfills its obligations, the enforcement of arbitral awards can be subject to legal processes and potential delays, especially in complex cases. So, what if Peru challenges the Award? It is management’s opinion that this would not be business smart given the associated financial and reputational costs. That is, it could easily cost up to a US$1,000,000 to Peru in legal fees plus additional interest because historically award challenges in this type of situation are seldom successful.
Additionally, the potential harm to Peru’s current reputation of being a safe and viable mining jurisdiction for investors and stakeholders could be significant.
Source (Enagás S.A.): https://www.bnamericas.com/en/news/rectification-of-the-southern-peruvian-gas-pipeline-award
Source (Bear Creek): https://jusmundi.com/en/document/decision/en-bear-creek-mining-corporation-v-republic-of-peru-award-thursday-30th-november-2017
Source (Inmet): “AI Overview” per internet search. After Inmet was acquired by First Quantum in 2013, their SEDI records were purged.
DISTRIBUTION OF AWARD PROCEEDS WHEN RECEIVED
Upon receipt of the Award, the first moneys out will go to our funding partner, Bench Walk LP. They took the risk, put the money up and get the first slice of the pie. By far the largest percentage of the Award will be distributed to holders of Contingent Value Rights (CVR’s).
As announced by the Company on May 3, 2022 (see https://lupakagold.com/news/lupaka-to-issue-contingent-value-rights-and-consolidate-its-common-shares/) , each shareholder of record as of May 18, 2022 (the “Record Date”) would receive a Contingent Value Right (“CVR”), which was completed on or about June 7, 2022, with 160,277,702 CVR’s being issued by the Company’s transfer agent (Computershare Trust Company of Canada).
Each CVR entitles the holder to receive a pro rata portion of any net amount (“CVR Payment”) available for distribution if the Company receives a cash award in the Company’s ongoing arbitration proceedings with the Republic of Peru (the
“Arbitration”).
The CVR Payment will be calculated by deducting from the Award proceeds certain amounts, including the fees of the Company’s Arbitration funder (Bench Walk Advisors (www.benchwalk.com), legal counsel (www.lalive.law), accrued payables, the costs of any CVR distribution(s), withholding and distribution tax costs, and up to C$8 million to be retained by the Company for working capital and other corporate purposes.
The Company anticipates issuing the CVR Payments by way of a one-time special dividend to CVR holders. The CVRs are governed by the terms of an indenture between the Company and Computershare Trust.
The issuance of the CVRs by the Company was done to crystallize the entitlement of shareholders in place when the Company lost its Invicta Project to a portion of any Arbitration award received by the Company and prevent dilution of this entitlement through future share consolidation(s) or issuances of the Company.
NEXT STEP(S)
Lupaka has contacted Peru and its counsel to request payment and is awaiting response and payment.
RELATED ARTICLE(S)
From: Digital Journal of Mining and Energy
3 July 2024 (https://www.dipromin.com/noticias/mineria/lupaka-gold-gana-arbitraje-contra-peru-por-65-millones-y-sus-acciones-se-disparan/)
“……..In November 2020, Lupaka filed a lawsuit with ICSID, alleging that the Peruvian government supported the community that blocked the project, violating the Canada-Peru Free Trade Agreement. It requested more than $100 million in compensation. Now, the court ruling determines that the state must pay $65 million, although Lupaka warns that payment will not be immediate and that there may still be legal proceedings before receiving the amount.
With the final ruling, the enforcement phase begins, during which the mining company may demand payment of the award. However, Peru could file appeals or use diplomatic mechanisms to delay actual collection, which will also depend on political agreements and guarantees to protect Peruvian assets. If Lupaka receives payment, its financial balance will be strengthened, which could boost the reactivation of projects in both Peru and Canada.
This case sets an important precedent for the international mining industry, sending a clear message about legal protection for foreign investment. Although the legal process is not completely closed, the victory represents a significant advance in the credibility and institutional support the sector requires to operate in complex environments.
Furthermore, the ruling affects communities beyond Lupaka, alerting local authorities and communities to the legal and economic consequences of blockades of mining projects. For investors, it reaffirms that a solid legal framework is essential to address operational risks. In the region, this ruling could motivate a review of strategies for managing community conflicts, promoting effective consultations, sustainable agreements, and greater legal certainty for future investments.”
