Aug. 3 (Bloomberg) -- Newmont Mining Corp.'s Yanacocha unit, the world's second-largest gold mine, was the target of Peruvian protesters, who threw stones and battled police while demanding jobs. One protester died in the clashes a nd two workers were kidnapped, the company said.

Police arrested four people late yesterday at the mine operated by Denver-based Newmont, the world's second-largest gold producer, Minera Yanacocha said in an e-mailed statement. Yanacocha produced 1.55 million ounces of gold through the first half, accounting for about half of Peru's total output.

``This caught us by surprise,'' Yancocha spokesman Ricardo Morel said in a phone interview from the mine, 560 kilometers (350 miles) northwest of Lima. ``Community relations had improved since last year and dialogue was ongoing with local inhabitants.''

Local operations controlled by Newmont, Barrick Gold Corp., Phelps Dodge Corp., BHP Billiton Plc and TeckCominco Ltd. have faced protests over the past two years as Peruvians pressed for a greater share of the country's wealth as copper, zinc and silver prices rose to records.

Peru is the world's fifth-largest gold producer.

The Aug. 2 attack didn't damage installations or affect output at the mine, Morel said, adding police were holding talks to win release of the Yanacocha workers. He said the protesters were demanding more jobs than the mine can create.

The mine suspended construction work on installations at the Carachugo deposit because around 100 protesters remained at the site, Morel said.

Shares

Newmont, which tripled second-quarter earnings on surging gold prices, halted exploration work in the nearby Yanancanchilla area in May 2005 and the Cerro Quilish deposit in November 2004 after environmental protesters blocked roads to Yanacocha.

Newmont shares fell for the first day in three, dropping 40 cents, or 0.8 percent, to $52.39. Shares have risen by about a third over the past 12 months.

Gold futures for December delivery dropped $7.10, or 1.1 percent, to $650.50 an ounce on the Comex division of the New York Mercantile Exchange. Gold prices have jumped by half over the past 12 months.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

Last Updated: August 3, 2006 18:52 EDT