Mayor Marco Ortega estimates more than 22,000 people have left Huepetuhe since the government halted gasoline shipments in April and sent troops to destroy heavy machinery used in mining that it deemed illegal.
He says only about 3,000 people remain.
"The economy has collapsed," says Ortega. "The gold buyers, the hardware stores, hostels and all kinds of businesses have shut down. We are nearly a town without people."
The brothels that flank a broad mud flat of mining runoff are now all but idle, as are most gas stations.
The government official overseeing the crackdown has said authorities plan to provide work for miners rendered jobless, but Ortega says no assistance has arrived.
According to official figures, wildcat miners have extracted 159 million metric tons of gold worth $7 billion over the past decade from the Madre de Dios region that includes Huepetuhe.
The environmental cost has been high, with huge scars gouged out of the rainforest that are visible from outer space and tons of mercury, a toxin used to bind mined gold flecks, released into the environment and contaminating the food chain in a region of rich biodiversity where several indigenous tribes live in voluntary isolation.
The miners who stayed behind are reduced to rudimentary gold extraction using pickaxes, shovels and small motors.
The government gave informal miners until April 19 to formalize any claims they might have, but the vast majority didn't have any.
One lingering miner, 25-year-old Joel Maceda, had been earning $1,071 a month as a heavy machinery operator. The father of two says he now struggles to earn a quarter of that, and his wife now pitches in.
"She works with me because we have nothing to eat," says Maceda, his 2-month-old on a blanket on the ground.
Rather than return to his native highlands city of Cuzco and start over, Maceda hopes the government will let some mining resume in Huepetuhe. Not all operations there were illegal.
"The government may be doing things right by ending illegal mining, but they should have thought of us, the lowliest workers."
Associated Press writer Franklin Briceno in Lima contributed to this report.
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