Rusoro Expects Venezuela Production in Second Quarte

Rusoro Mining Ltd., a Russian-funded company buying gold deposits in Venezuela, expects to start producing the precious metal at its Increible-6 mine in the second quarter after securing government approval.

The company will revise its production forecast for next year after Venezuela’s government approved technical and environmental studies for the mine, Chief Executive Officer Andre Agapov said today in a phone interview. Venezuela’s Official Gazette announced the mine’s approval on Dec. 23.

“It’s fantastic news,” Agapov said of the decision. “It changes our projections for 2009,” he said, without providing further information on the Vancouver-based company’s forecasts. Increible-6, an open-pit mine, has almost 3 grams of gold per ton of ore, more than the 1.6 grams the company gets from its Choco10 mine, also in Venezuela, he said.

Rusoro also is the government’s preferred partner to set up a joint venture to exploit Las Cristinas, which has Venezuela’s biggest known gold deposit, Agapov said Nov. 14. The company has a “lot of common ground” with the government, he said.

The company is attempting to take over Gold Reserve Inc., which has rights to exploit the Brisas gold mine adjacent to Las Cristinas. The company wants to create a joint venture with Venezuela to develop the mine, Agapov said. He declined to say whether he would make an offer for Las Cristinas.

Environmental Permits

Development of Las Cristinas and Brisas has been frozen since owners Gold Reserve and Crystallex International Corp. failed to win environmental permits for the mines this year. Brisas will cost $500 million and take four or five years to bring into production, Agapov said. “The way we foresee it is to develop it jointly with the Venezuelan government” in a 50-50 joint venture, he said. “It’s an assumption. Nothing is agreed.”

The government will provide half the capital for the mine, and the company would raise the other $250 million, he said. “It’s not that difficult to raise half the capital expenditure if you have a half already committed,” Agapov said.

Rusoro rose 5 cents, or 8.1 percent, to 67 cents a share today in Toronto. The shares have fallen 58 percent this year. “We’re trying to be very proactive,” Agapov said of the offer for Gold Reserve and other takeovers in 2008. “It looked like we were the only interested party, and we took advantage of it. If 2009 is a similar story, we’ll be even more proactive.”