Gold Fields’ decision to restructure its exposure to Venezuela last October is starting to look very smart

Gold Fields’ decision to restructure its exposure to Venezuela last October is starting to look very smart, given what’s now taking place in that country. Not only did the group recover US$150m in cash but also retained a significant stake in the one gold mining company that may actually benefit from the mayhem being caused by Venezuelan President Hugo Chavez. Gold Fields’ management was initially unconcerned about Chavez’s firebrand style of political rhetoric when it bought the Choco 10 mine for $330m late in 2005. Its view changed radically when Chavez began ruling the country through presidential decree and set about nationalising various sectors, starting with the oil producers. Gold Fields sold Choco 10 to Toronto-listed Rusoro Mining for $532m, of which it received $150m in cash, $30m in convertible debt and the balance in Rusoro stock, giving Gold Fields a 38% stake in the company. Rusoro seems to be the one gold mining company that Chavez can live with, unlike North American operators Crystallex and Gold Reserve Inc, which both hit a brick wall on 30 April with regard to their respective Venezuelan gold projects.

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Venezuela is facing the most difficult period of its history with honest reporters crippled by sectarianism on top of rampant corruption within the administration and beyond, aided and abetted by criminal forces in the US and Spanish governments which cannot accept the sovereignty of the Venezuelan people to decide over their own future.

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