Southern Copper, a leading global producer of the red metal, plans to move into gold mining and exploration in Peru at a time of high prices, the firm's chief executive said on Wednesday.

The company, which is controlled by Grupo Mexico operates in Peru and Mexico, hopes to start production at the Tantahuatay copper-gold project in the South American country in mid-2010.

"We're associated with the gold- and silver-miner Buenaventura on the Tantahuatay project. At the moment, we're working on the feasibility study and the environmental impact study," Southern Copper Chief Executive Oscar Gonzalez told Reuters at a gold mining conference in Peru.

Buenaventura is one of Peru's biggest producers of precious metals and holds a minority stake in the Yanacocha gold mine, Latin America's largest gold mine. U.S. miner Newmont Mining Corp controls Yanacocha.

"The feasibility study (for Tantahuatay) should probably be finished in the third- or fourth-quarter of this year, with construction beginning in 2009. It would then take a year-and-a-half to start producing," Gonzalez said.
He said Tantahuatay, located in the northern Cajamarca region, had resources of about one million ounces of gold and an estimated mine life of 10 years.

"The gold lies in the upper-part of the site and the lower part is copper. Buenaventura would mine the top bit and we'd extract the copper, if everything goes to plan," he added.

In relation to the miner's gold exploration plans, Gonzalez said geologists would be working in the northern La Libertad province, the southern region of Moquegua and the central Apurimac province.

"We're going it alone on these projects, except for Apurimac which we've got with a junior. If we find something and we see that it's viable, we'll look for a partnership so that the people who know more about gold do the mining and we'll be the main shareholders," he added.

Southern Copper, which operates the Toquepala and Cuajone mines in Peru and Mexico's La Caridad and Cananea, is also investing some $2 billion to develop the Tia Maria and Los Chancas in southern Peru.
Peru is the world's No. 5 gold producer and the second-largest copper miner.