The river that you see in the map is the Rio Santa. It flows from Lake Conococha, through the entire Callejon de Huaylas, and then travels down to the coast to the ocean. Although the Rio Santa is fed from other glacier lakes throughout the Callejon, the source of the River is Lake Conococha. So draining or contaminating the Lake (the fear of the protesters) will affect two regions of Ancash, the Sierra and the Costa. This lake is the first lake that you see from the bus once you arrive at the Callejon from the coast.
Conococha also feeds two other river systems inlcuding the Rio Fortaleza which flows into the national park Parque Huascaran.
The exploration of the mining project is very close to the lake. One of the main problems is that it seems the government has not required the an environmental impact study prior to authorizing the exploration of the area, although in the resolution authorizing the exploration, MEM has stated that the impacts will be "indirect." You can read the resolution here
http://intranet2.minem.gob.pe/web/archivos/dgaam/certificado/CA_068_201. Huascaran is very close and can be seen from Huaraz.
Yungay has been rebuilt but not in the same location. It is about a 10 to 15 minute walk from the original site which has been renamed Campo Santo and is now preserved as a monument to the tragedy of 1970 when the earthquake that had its epicenter in Huaraz caused a part of Huascaran to fall and create an aluvion that killed most of Yungay's inhabitants. Huaraz lost 80% of its buildings as well.
Update: There was a meeting yesterday in Huaraz and protest leaders have agreed to suspend the strike for 5 days to give the government a chance to install a mesa de dialogo. If the Mesa is not installed after 5 days, the protesters will initiate a new paro.
http://www.huaraznoticias.com/titulares/universitarios-a-ancash-se-le-respeta