The key players in the dispute over the stalled Minas Conga copper-gold project are backing the restart of talks on Monday, raising hopes that the conflict surrounding Peru's biggest mining development can be resolved through dialogue.

A high-level government committee, led by Prime Minister Oscar Valdes, traveled to the Cajamarca region on Monday to meet with opponents of Conga.

Valdes is expected to discuss with opponents a proposal to hire international consultants to review Conga's environmental impact study, which was approved by the government in 2010. Valdes said the consultation has to be impartial and start "as soon as possible."

Conga is being developed by Minera Yanacocha SRL, which already runs a large gold mine in the region. Yanacocha is 51.35% owned by Newmont Mining Corp. (NEM), while Compania de Minas Buenaventura SA (BVN, BUENAVC1.VL) has a 43.65% stake and the International Finance Corp. owns the remainder.

The project has come under stiff opposition in recent weeks by residents concerned about its potential environmental impact, particularly its water use. The company denies that Conga will damage local water supplies.

Yanacocha suspended work at Conga on Nov. 29 following days of escalating protests.

The protests led President Ollanta Humala to declare a state of emergency in areas that were paralyzed by the demonstrations. The government's handling of the dispute was partially responsible for Humala's decision last week to replace more than half of his cabinet, including the prime minister.

Humala, a 49-year-old former army officer who took office in July, said Sunday that "we are going to resolve Conga through dialogue," newspaper El Comercio reported.

Omar Jabara, head of Newmont's corporate communications, said the company supports the restart of talks.

"We welcome the establishment of the talks and believe that the rational and responsible way to raise and resolve issues related to Conga is through good-faith dialogue," Jabara told Dow Jones Newswires on Monday. "We remain willing to play a constructive role in the dialogue sponsored by the government, and we will participate as directed by them."

Jabara said Newmont is open to the proposal to review Conga's environmental impact study but added that it has already been "extensively reviewed" during a three-year, public process.

Marco Arana, a high-profile environmental activist who helped lead the protests against Conga, said that dialogue will be key to resolving the dispute.

"I think we've reached a moment where we don't need more demonstrations," Arana said during a recent interview. "What we need are gestures of transparency, serious commitment and respect from both sides."

While Arana said he supports the proposal to use international consultants to review Conga, he added that he still does not believe the project is environmentally or socially feasible.

Arana, a Catholic priest and head of the Tierra y Libertad social movement, said that if dialogue does not resolve the dispute, it could jeopardize other mining investments in Peru.

Mining companies plan to invest more than $50 billion this decade in new mines and expansion projects. Over 18% of those investments are aimed for Cajamarca.

"Cajamarca has a strong mining potential, but we have to discuss how to do it well," Arana said.

Peru is the world's second-biggest producer of copper and sixth biggest producer of gold. It is also a major producer of lead, silver and zinc.

-By Ryan Dube, Dow Jones Newswires; 51-945 043 802; peru@dowjones.com

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