OK - Now where are we.. Let's see if we can't cut through the crap and distill the problems to the basics.

1. It is pretty obvious that the current Venezuelan government has decided it does not want KRY and GRZ to mine for gold in the country.

2. It is also obvious that they realise that they have a legal liability if they simply throw KRY and GRZ out without due cause.

3. In KRY's case they are attempting to dredge up old transactions which may or may not have occurred in order to put the company into disrepute and create an excuse for breaking their contract.

4. In GRZ's case they are creating a public impression that GRZ is just sitting on the project and is refusing to progress while carefully avoiding the fact that it is the lack of government issued permits which has caused the delays.

5. The government has recruited Rusoro to do an end run around the legal liability by attempting to take over GRZ. Obviously Rusoro has been offered inducements or assurances to take on this task. Once GRZ is neutralized Rusoro will almost certainly take on KRY in a similar fashion. GRZ is the first target because it will provide additional cash to keep Rusoro running while they make their play. For Rusoro it is a win win proposition. If it gets control of KRY and GRZ it has their properties for a huge discount to their real value and it has accumulated huge reserves even if it does a JV with the government.

6. With its current structure Rusoro hasn't the financial clout to develop Brisas and Las Cristinas, but once it has control it can then do further deals with other companies (probably Russian in origin) to dilute out the North American shareholders that the takeover created. Rusoro will be a very weak company with proven gold reserves equal to the biggest companies in the world. However their trump card is the fact that they control the permit issue through their relationship with Hugo and his ministers. No reputable company could make a bid for them and be assured of mining a single ounce of gold.

7. Ultimately both KRY and GRZ shareholders would be better served by rejecting all of RUsoro's offers and forcing the Ven authorities to show their hands and take back full control of Brisas and Las Cristinas and award them to Rusoro or a government entity. In this event the case for an ICSID action is unambiguous and a strong claim for full compensation is a given. It is this scenerio that Hugo and his minions are anxious to avoid (it could be VERY expensive) and the reason why Rusoro has been given a free reign as a willing participant and a "favoured partner".

8. While oil prices were high, the pressure on Chavez was slight but he now sees things getting tougher and jobs for the people of Venezuela will be critical in retaining his hold on power. Six months ago he could simply withhold permits and let time and attrition wear down GRZ and KRY. His window of opportunity is closing as economic pressures increase and turn into political pressure.