UPDATE 1-Gold Reserve seeks agreement with Venezuela despite demand
Monday, 26 October 2009 15:24 EDT

CARACAS (Reuters) - Canada's Gold Reserve said Monday that seeks an amicable agreement with Venezuela to develop the Brisas gold project, although the country sued in a court of international arbitration to seek compensation for 5,000 million dollars.

President Hugo Chávez said gold projects that exploit the southeastern state of Bolivar with Russian partners, instead of the Gold Reserve and Crystallex Canadians who have rights in the Brisas and Las Cristinas deposits, respectively.

Both companies have waited for years to undertake the projects, which are separated by the river Cuyuni and together would have reserves of more than 20 million ounces of gold. Currently only illegal miners operating in the area.

"We have stated in numerous letters to the Government that our priority has always been to reach an amicable agreement. Unfortunately there has been no response yet," he told Reuters of the local unit president of Gold Reserve, Arturo Rivero, in a telephone interview.

However, the company sued to Venezuela last week at the International Center for Arbitration of Investment Disputes (ICSID), World Bank, calling for investment in the concession Brisas and Choco 5.

The miner said in a statement it has invested about U.S. $ 3,000 million which, together with estimated earnings, would secure a compensation of 5,000 million.

Gold Reserve received an environmental license to exploit the breeze, but soon after it was removed, and this year was not renewed part of the concession.

ATTRACTIVE MARKET

The gold price remains attractive, since investors often seek refuge in the metal to reduce the ravages of the international economic crisis.
According to Rivero, an agreement would shorten the development time and seizing the project.

"The friendly settlement would produce benefits to all. Do everything that the company has made the Government would take three or four years and higher costs from inflation," he said.

In addition the court held that fail in three years, the same time it would take the company to develop the project.

Chavez said earlier he would develop the mine with Russian partners, including Canadian-based Rusoro but Russian capital, which attempted a hostile takeover of Gold Reserve.

"Rusoro has no financial capacity nor the technical muscle to pursue a project like Breezes," Rivero said.

The company said Thursday in response to demand that began in the evening before, a group identified as the Government sought to take the camp Brisas in Bolivar.

In his decade of power, Chavez has nationalized large sectors of the economy, including oil projects, cement, electricity and telecommunications firms.

Currently oil companies ConocoPhillips and Exxon Mobil maintained trails claims against Venezuela before ICSID for the nationalization of two heavy oil projects in the country, like the Holcim cement.

(Additional reporting by Rebekah Kebede. Edited by Anthony Barker)

http://lta.reuters.com/article/businessNews/idLTASIE59P1LD20091026?sp=true