TORONTO (miningweekly.com) – Spokane, Washington-based Gold Reserve plans to file a claim for international arbitration in a dispute with the government of Venezuela in late October, president Doug Belanger said on Tuesday.
The firm has said it could claim more than $5-billion, “but no matter what discount factor you employ, you are still talking about big numbers,” he commented.
In May last year, the Venezuelan Ministry of Environment revoked a key permit for the company’s flagship Brisas gold project, in the Latin American country, and Gold Reserve has been trying ever since to get the approvals it needs to move forward with the mine.
Another firm, Toronto-based Crystallex International, has also been fighting to try get approval for its nearby Lvertical mill supplieras Cristinas project, after being denied a key permit last year.
But Belanger’s tone on Tuesday suggested that the focus has now shifted to simply recouping the money already spent on the project and, hopefully, some of the lost profits the firm would have made mining the ten-million ounce deposit.
“To be blunt, while we are always looking for an amicable conclusion…this is no longer a rescue operation, it’s more a recovery of the body – which is dead.”
“So we wouldjaw crusher in germany be looking to recover our investment and our profits.”
Belanger said that the policy shift in Venezuela appears headed away from the current system of contracts and concessions, and towards creating joint ventures where the government holds the majority position – at least 51%.
“We don’t see a situation that is financially viable,” he said.
Last year, the government formed a joint venture with Vancouver-based and Russian-owned Rusoro Mining (which incidentally launched a failed ball mill price supplier and price egypttakeover bid for Gold Reserve) on assets that Rusoro bought from US miner Hecla Mining.
Belanger said Gold Reserve has hired a top Washington-based international arbitration firm and, unless there is a change in the situation, plans to file the claim in late October.
It had to wait six months since notifying the Venezuelan government in April of a dispute under investment agreements signed by Venezuela with Canada, over the State’s failure to grant a mining permit for the Brisas project.
Once the claim is filed, it will take two to four months for the arbitration panel to be constituted, and then another couple of months before the first hearings are held.
If things go reasonably well, a ruling could be made by late 2011 or early 2012, Belanger estimated.
The arbitration “is going to take time and effort”, he conceded.
“But, we have prepared for it, we are very confident of our case, and we believe that, if we are diligent, we should prevail.”
The Brisas mine was expected to produce a yearly average of 457 000 oz of gold and 63-million pounds of copper over an estimated life-of-mine of approximately 18,25 years, according to a technical report update completed in March last year.
MOVING ON
Meanwhile, Gold Reserve is looking for opportunities to acquire new assets, and is looking mainly in North and South America, although obviously in less politically sensitive countries than Venezuela.
“Canada, the US, Mexico, Brazil, Peru and Chile are obvious candidates,” Belanger said.
The company does not plan to get involved in any hostile bids, choosing instead to sign confidentiality agreements with prospective sellers or targets.
The firm has already signed more than 20 such agreements, and there are probably two or three that it is currently looking at seriously, although it has not approached the other parties with any proposals yet.
As of the first week of August, the company had a cash position of just under $95-million.