Bear Creek and Rio Alto shares drop on Peru protests

Mon May 30, 2011 2:51pm EDT
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TORONTO (Reuters) - Shares of junior Canadian miners Bear Creek Mining and Rio Alto Mining fell on Monday, following anti-mining protests in southeastern Peru, just days ahead of a presidential run-off election.

Aboriginal protesters opposed to Bear Creek's Santa Ana silver project had blocked roads and trapped hundreds of tourists in the town of Puno on the shores of Lake Titicaca, according to recent media reports.

Aymara Indians continued to demand on Monday that all mining activity be halted, even though the government has offered to set aside big swaths of land in what would become a national park.

Protesters fear the project will pollute their water and harm their lands. The protests come just ahead of the June 5 presidential run-off election between right-wing candidate Keiko Fujimori and leftist Ollanta Humala.

Both candidates have pledged to resolve social conflicts over natural resources. The protests reflect the widespread sentiment within rural Peru that the country's mineral wealth and decade-long economic boom has not benefited those communities, analysts say.

Shares of Bear Creek were the biggest losers on the TSX Venture Exchange on Monday, down 6.7 percent at C$6.51 at midday.

"These protests come amid a very highly charged political climate, with the upcoming election being more rancorous than the one we even saw in 2005," Bear Creek Chief Executive Andrew Swarthout said in an interview with Reuters.

The protests also dragged down shares of Rio Alto, which owns the La Arena mine in Peru. The Rio Alto shares were off 8 percent at C$2.42 on the TSXV, even though Rio Alto said the recently commissioned operation has strong support from local communities and it was not a target of protests, the company said.

"La Arena is located in the center of a pro-mining mining district in the central La Libertad province," Chief Executive Alex Black said in an e-mail.

(Reporting by Euan Rocha in Toronto and Terry Wade in Lima; editing by Frank McGurty)