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Gold miner IRL to regain control over Peru subsidiary

Bnamericas Published: Saturday, February 06, 2016

Embattled Peruvian gold miner Minera IRL Limited said it reached an agreement to regain control over its local subsidiary, ending a seven-month power struggle.

The deal comes after a turbulent 2015 which also saw the death of chairman and founder Courtney Chamberlain and the suspension of the company's shares.

Minera IRL Limited reached an agreement "in principle" with Diego Benavides, head of the company's local unit Minera IRL SA, to transfer the one share in the subsidiary not already owned by the company to an independent Peruvian lawyer designated by the board. The lawyer will hold power of attorney on behalf of the board.

"These steps will result in the company regaining control over Minera IRL SA," the statement said.

Benavides, a corporate lawyer who also heads Minera Kuri Kullu subsidiaries and co-founded the company in 2000, has operated IRL's Peruvian unit for the past year without reporting to the parent company. Benavides was not immediately available to comment.

Minera IRL Limited, which posted a US$43.4mn loss in 2014 due to slumping gold prices compared with a US$34mn loss in 2013, added it was unable to pay a US$2.2mn promissory note to Rio Tinto last month and is in talks to extend repayment terms.

IRL, which plans to appoint a new CEO and CFO and review the board, added the agreement established that all litigation will be ended and an independent investigation launched into accusations against Benavides of wrongdoing, a charge he denies.

OPERATIONS

An engineer will also be hired to review operations at the company's depleting Corihuarmi gold mine in Junín region, IRL said. The company, which fired Benavides as CEO of the parent in August and suspended trading in September because of the power struggle, is studying shutting down Corihuarmi, chairman Jaime Pinto said in November.

IRL is pinning its hopes on the start-up of its US$165mn Ollachea gold project to replace dwindling output at Corihuarmi, where production was expected to total 22,000oz gold in 2015 compared with 23,654oz in 2014 and 25,220oz in 2013.

The Ollachea project, in Puno region, has 1Moz in gold reserves and will produce an estimated 100,000oz/y.

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