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.
Shares in TSX Venture Exchange-listed Rusoro leapt 12,38% on Thursday, to C$1,18 by 13:32 ET, after rising as high as C$1,28 earlier in the day.
Rusoro, whose main shareholders and management have Russian ties, would form a 50:50-owned “mixed enterprise” with a subsidiary of the Venezcrushing of quartz lumpsuelan Ministry of Mines and Basic Industries, which would initially operate and own the assets being acquired from Hecla, the firm reported.
“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,” Rusoro said.
The move appears to confirm speculation that Venezuelan President Hugo Chavez wants a vehicle with State involvement to consolidate the counstone crusher industry field in russiatry’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.
The company said in January this year that it had resolved production issues, which had made Choco 10 an operational headache for Gold Fields, and experock crusher manufacturer francected the mine to produce 120 000 oz of gold this year.
Part of Gold Fields‘ trouble at Choco 10 stemmed from problems with securing water permits, which Rusoro was able to arrange a couple of months after taking ownership of the mine.
The company paid Gold Fields $532-million in cash, shares and convertible debt for the asset, which gave the Johannesburg-based gold major a 38% stake in Rusoro at the time.
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.
After struggling with labour relations, Hecla has now exited the country with the sale of the Isidora and La Camorra assets to Rusoro.
Workers halted operations at the mine and plant in May, and demanded that the operation be nationalised after a dispute in which they claimed Hecla had infringed on their rights.
At the time, Basic Industries and Mining Minister Rodolfo Sanz warned in a statement that the government had not ruled out revoking Hecla’s concessions.
Also this year, 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.