Venezuela govt forms gold-mining venture with 'partner of choice' Rusoro

Vancouver-based Rusoro, which has bought gold-mining assets in Venezuela from both Hecla Mining and Gold Fields over the last 12 months, has been named as the country's “partner of choice” in the gold-mining industry, the firm revealed on Thursday.

The company also reported that it had received government approval for and completed the acquisition of the assets from Coeur D'Alene-based Hecla, which include the Isidora mine and La Camorra mill in Southern Venezuela.

Rusoro, whose main shareholders and management have Russian ties, would form a 50:50-owned “mixed enterprise” with a subsidiary of the Venezuelan Ministry of Mines and Basic Industries, which would initially operate and own the assets being acquired from Hecla.

“The mixed enterprise also creates an operating gold company for Rusoro and the Venezuelan government to examine further gold mining and development opportunities in the country,” the Rusoro said.

The move appears to confirm speculation that Venezuelan President Hugo Chavez wants a vehicle with State involvement to consolidate the country's gold industry.

The joint venture, with government-owned Empresa de Produccion Social Minera Nacional, would be formalised within six months, Rusoro said.

Rusoro would not contribute any other assets, including its Choco 10 mine acquired last year from Gold Fields, into the joint-venture with the government.

OUT IN THE COLD

While Rusoro is going from strength to strength, other foreign miners and hopefuls in the country have had a much rougher ride of late.

Toronto-based Crystallex International, which has been waiting for years for permission to build its Las Cristinas gold mine in Venezuela, more than halved its market value in April when it reported that a key permit had been denied.

Venezuela's Environment Minister said a month later that the country would not issue permits for any openpit mines in the country because of environmental concerns, and would also not grant exploration permits for companies wanting to look for gold in its Imataca Forest Reserve, where both Crystallex and fellow Canadian Gold Reserve hope to build mines.

Crystallex offered the market a glimmer of hope in June, however, when it reported that the Venezuelan government had told the Ministry of the Environement to reconsider the disallowed permit, and to hold discussions with Crystallex on possible modifications to the project which would make it more acceptable.

Gold Reserve said at the time that it had also held talks with government officials, and had received indications that it could still receive the approvals it needs for its Brisas project.