According to municipal officials in the northern valley of Tambogrande, a prime area for mango and lime production, 98.65 percent of residents voted against the controversial mining project in a nonbinding referendum organized by the local municipal government on Sunday.

Only 1.35 percent of voters backed the project, on which Manhattan has already spent $58 million on exploration since 1999, though 26.86 percent of the 36,000 eligible voters stayed away from the referendum, which the government has not recognized.

Officials at the Energy and Mines Ministry and at the National Mining, Energy and Oil Society were not immediately available for comment.

Mining projects like Tambogrande, on which Manhattan has until 2003 to exercise a development option, are seen as key to helping this minerals-rich nation attract investment.

Peru - where more than half the 26 million population lives on $1.25 or less a day - is Latin America's leading gold producer and the world's No. 5 copper producer.

But some in Tambogrande - a fertile jewel amid the vast coastal desert of Peru - fear blasts from the open-cast mine would shake fruit from trees and hurt an industry worth $105 million a year. They also fear the mine will follow in the footsteps of past projects and damage the environment.

"Mining has a very bad reputation in Peru. At one time, mining was very harmful, but we can't head off development and progress because of that stereotype," Obradovich said.

He said Manhattan would use high-tech explosives that would not produce vibrations, noise or dust, and that it would use an environmentally-friendly covered leaching process to process the minerals. He added the company would pay immediate compensation for any damages incurred.

He said the company had abided by Peruvian law and had invested in social projects. "We have tried to explain in an impartial manner that mining and agriculture can exist side-by-side in harmony," he said.

"A lot of people in Tambogrande do think the project will bring jobs and development and will help farming," he said.

'NOT FORCING ANYONE'

But Obradovich said Manhattan's efforts had been undermined by nongovernmental groups and others leading a campaign to sway residents with "irresponsible claims." Both sides have traded charges of manipulation and unconfirmed media reports say some locals who back the project have complained of intimidation.

Charity Oxfam America and the Global Mining Campaign, a group of rights and environmental activists, have launched an online campaign arguing the mine would force half Tambogrande's residents from their homes. Oxfam Great Britain told Reuters it had funded the vote, at a cost of some $20,000.

Obradovich criticized reports that the project would create a giant pit mine of around 3,470 square miles (900,000 hectares). He said the area needed for an initial gold and copper mine would be some 2.7 square miles (700 hectares).

He said the company would offer new houses to around 2,000 families now living on land targeted for that initial mine - but that residents would not be forced out. "We're not going to force anyone to do anything," he said.

Obradovich complained that Sunday's vote was held before a much-awaited environmental impact study is published in July, saying people did not have the facts to make a real decision.

"The company is determined to carry out this project once it has explained things to people with solid and technical arguments - not with speculation. We are sure that they will understand," Obradovich said.