Newmont Mining Corp. agreed to reopen its Peruvian Yanacocha gold mine, the world's second-largest, after protesters pledged to end roadblocks, Cabinet chief Jorge del Castillo said.

The government will form a commission to mediate between Denver-based Newmont, the world's second-biggest gold producer, and local officials from the town of Combayo, 560 kilometers (350 miles) northwest of Lima, who are seeking more jobs and clean water, del Castillo said at a press conference in Lima. Clashes with police at the mine this month left one person dead and more than a dozen injured.

``We've taken an important step forward,'' del Castillo said. ``Not just to restore order but also for the state to help spur development in the region.''

The Aug. 28 decision to shut the mine cost the government 6 million soles ($1.9 million) a day in lost tax revenue, Newmont vice-president Carlos Santa Cruz said yesterday. Yanacocha, which produced 3.3 million ounces of gold in 2005, is Peru's largest exporter.

Newmont and other international mining companies operating in Peru, the world's fifth-largest gold producer, have faced protests over the past two years as Peruvians pressed for a greater share of the country's profits from exports of gold, copper, zinc and silver.

Water

Farming communities in the northern Andean region of Cajamarca fear the mine will pollute local water supplies, Marco Arana, director of the NGO Grufides, which is representing the protesters, said today at a press conference in Lima.

Newmont shares fell for a second day, dropping 42 cents, or 0.8 percent, to $50.97. Shares have fallen 8.2 percent since July 3. Cia. Minera Buenaventura SA, which holds a 44 percent stake in Yanacocha, fell 10 cents, or 0.4 percent, to $26.82 in New York trading of its ADR.

Gold futures for December delivery fell for the fifth day in six, dropping $4.80, or 0.8 percent, to $613.20 an ounce on the Comex division of the New York Mercantile Exchange. Gold prices have risen by 40 percent over the past 12 months.