VANCOUVER – Rusoro Mining Ltd. (TSXV:RML) says Venezuela’s government intends to form a “mixed interest enterprise” with the company for the development of gold assets in the South American country.
It said the message was delivered to Rusoro’s president and chief executive Andre Agapov and chairman Vladimir Agapov by Rafael Ramirez, who is president of the Venezuela state owned oil company and minister of energy and petroleum.
Ramirez said Rusoro would be compensated for the decrease in its ownership but the company didn’t disclose details of the compensation.
The announcement comes a month after Venezuela’s supreme court approved a decree by President Hugo Chavez that gives the government exclusive rights for the extraction of gold in that country.
The law says anyone involved in small-scale mining operations as well those with contracts to mine should form new joint companies with the government within the next three months. The government is to have a 55 per cent stake in each of the joint ventures and it will also receive 13 per cent royalties under the terms laid out in the law.
The new measures are to take precedence over those in a 1965 law that nationalized gold mining in Venezuela.
Another change is that the new law stipulates that any legal conflicts may be resolved only in Venezuelan courts, eliminating the route of international arbitration.
In February, a Canadian mining company, Crystallex International Corp. (TSX:KRY), sought international arbitration after Venezuela rescinded its contract to develop a major gold mine. The company claimed it was due $ 3.8 billion in compensation.
Chavez launched the changes in the mining sector last month while also announcing that Venezuela would repatriate about $ 11 billion in Venezuelan gold reserves, more than 211 tons of gold currently held in U.S. and European banks.
Rusoro’s shares, which had been halted prior to the announcement, traded at 12 cents early Thursday. It had also last traded at 12 cents prior to the halt on Wednesday morning.
Local news from metronews.ca/vancouver
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