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
Due to the fact that the Award is rendered by ICSID, Lupaka has good prospects of obtaining payment due to ICSID’s connection to the World Bank which adds institutional credibility and visibility, and can increase pressure on States to comply with arbitral awards. In addition, Peru generally has a good track record of complying with arbitral awards, even though it has in the past used available legal recourse to delay payment and challenge awards.
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.”
