VHeadline editor & publisher Roy S. Carson writes: According to a December 24 press release from Spokane (USA-Washington State)-based Gold Reserve, GRZ directors have amended a shareholder rights plan without obtaining shareholder approval.
Whether or not this is a legitimate move or just another attempt by GRZ president Doug Bellanger to fend off the inevitable remains to be seen, but from this reporter's point of view it's a desperate attempt to clutch at straws in the knowledge that Gold Reserve's future in Venezuela is somewhat less than zero!
According to the Gold Reserve PR ... which we have traditionally treated with suspicion even at the best of times ... Belanger is playing semantics in the hope that he can extend a definition of 'Permitted Bid' to exclude "a bid from an entity which has confidential information about Gold Reserve that hasn't executed a confidentiality and standstill agreement within three months prior to the commencement of that bid."
Excuse me! But doesn't that just about imply that the World and his/her uncle is excluded by deft management of verbage?
In Guasipati -- a bus timetable gives the distances to El Callao, Tureremo, El Dorado and Km 88
As prime bidder, Russia's Agapov Group's Rusoro Mining CEO Andre Agapov has just highlighted in a response PR, "Rusoro does not, and at the time of the Bid did not, have confidential information about Gold Reserve!"
So where does that leave Belanger, other than up a convenient creek without a paddle?
Agapov somewhat succinctly put it as appearing to be "another drastic attempt by entrenched management at GRZ to prevent Gold Reserve's own shareholders from deciding to tender to the Bid!" He adds "We are disappointed at these tactics ... but we are determined to ensure that Gold Reserve shareholders are not disenfranchised."
Agapov further points out that: "as of December 12 (the last trading day before the Bid was announced), the Bid represented a value of Canadian $1.08 per GRZ share equaling a premium of 140% on closing prices and 209% on the 30-day volume weighted average prices, using Rusoro's and GRZ's share prices for the relevant trading days on the TSX Venture Exchange and the Toronto Stock Exchange respectively."
- Subsequently, "to allow GRZ shareholders to consider the Bid on its merits, Rusoro intends to seek an order cease trading the rights under the GRZ Plan prior to the expiry of the Bid which is set to expire at midnight on January 21, and that Gold Reserve shareholders are free to tender their shares at any time prior to that date!"
- That, however, hasn't stopped Belanger from making spurious claims of total ownership over a spate of years ... which is perhaps why, when we first queried the legalities of his fondly-held concept some 12 years ago, we were treated to a foul-mouthed telephonic lecture on journalistic principles i.e. that we should unquestioningly re-reprint GRZ' wilder PR claims as FACT even when we knew them to be untrue! NO WAY!
So why should Gold Reserve shareholders trust Belanger now, any more than they should have distrusted him more than a decade ago?
From a highly-personalized and an obviously personally-partisan point of view, with loyalties to Venezuela and the Venezuelans most affected by Belanger's cowboy transnational traits, I can quite simply find NO REASON why anyone should trust Belanger further than they would be willing to throw him ... even from a very long barge-pole's perspective at the best of times!
Thoroughout my recent visit to the gold fields of southern Bolivar State, I was constantly reminded of the contempt with which Gold Reserve is held by local miners and indian tribes alike. Arawak chief Daniel Gomez' description of the gringos as "cowboys" certainly holds sway as far as Belanger's mob is concerned, despite the plethora of wayside hoardings proclaiming this-and-that of supposedly charitable initiatives to persuade the Basic Industries & Mining (Mibam) Ministry that they (Gold Reserve's management) are the "good guys" and the indians are, just that! WRONG!
Roadside hoardings are to be found everywhere -- this one proclaiming
"with CVG-Minerven the gold is Venezuela today!"
Small wonder then that people living in southern Bolivar State are looking with expectancy towards a 2009 dominated in the region by the socialist 50/50 joint venture system initiated by the Russians.
Despite Cold War paranoia of gringos in the field, the Russians have made tremendous inroads with the Venezuelan government to the extent that they concur on the absolute necessity of dual responsibility for corporate management and investment in Venezuela's gold mining industry. In that respect, Gold Reserve's shareholders are on a Win-Win streak if they accept Rusoro's offer ... even if greedy Doug Belanger sees otherwise. It's not surprising though since Venezuela's and Venezuelans' concerns were never uppermost in his mind!
The situation with regard to Las Cristinas and Crystallex, however, remains open though still unclear. Concerns raised by various government officials and sector analysts in Venezuela have, however, indicated that the status quo cannot remain paralyzed for much longer. The Venezuelan government is keen to get its gold industry up and running efficiently as soon as possible and President Hugo Chavez Frias has set his heart on a doubling of production in 2009. Time and opportunity has run out already for Gold Reserve's Belanger although his shareholders can profit from his personal demise. Crystallex' negotiations with the government are, however, not yet concluded and it's firmly in their (Crystallex') home field which way they wish to come out to bat in 2009.
- If they choose to follow Belanger's perennial obfuscation, however, they'll find themselves quickly at a disadvantage...
Crystallex' situation is that of a contractor employed to mine gold under a long-standing contract -- which is well and good! But the Venezuelan government is the owner of the property and holds the keys to the ignition inasmuch as even if the EIS permit has already been signed, sealed and delivered to the Venezuelan Guayana Corporation (CVG), it is up to the management of the state-owned heavy industry conglomerate to decide IF or WHEN they're going to hand over the final paperwork ... if at all!
The massive Rio Cuyuni wends its way through the jungles of Venezuela's
southern Bolivar State over the border into the Essequibo territory of neighboring Guyana
Maniac investors on Internet chat forums can shout and scream all the abuse they like, but it's Venezuela's sovereign right to decide what happens to its own sovereign precious metal reserves and no amount of stomping of arrogant gringo feet is going to change things.
Wilder speculation of Crystallex dragging Venezuela, the CVG and/or Mibam through international courts is pure fantasy since the contract stipulates that any legal twist must necessarily and exclusively be decided under Venezuelan jurisdiction, which again is Venezuela's sovereign right. So, either Crystallex confirms to the Venezuelan government's expectations for the future or, hey ... there's the exit door!
Illegal garimpieros have stripped huge chunks of virgin jungle to get at the gold
Illegal garimpieros/miners leave a trail of destruction behind them
Illegal garimpieros/miners work under extremely primitive and dangerous conditions
Most assuredly, Crystallex is in an infinitely better position than Gold Reserve as the end-game is enacted! The model of socialist 50/50 joint venture with the Venezuelan government, of course, scares the pants of uninformed and sadly disinformed Crystallex shareholders but, seen against the current situation where they OWN nothing (the Venezuelan State owns it all!), regaining 50% of the legal claim of ownership, that then-CEO Marc J. Oppenheimer signed away in 2004 as part of the operator contract, is surely a sweetener to the whole?
Such a deal is on the cards although this reporter is absolutely sure that a final agreement, releasing a flood of paperwork, will include a management cull that Toronto may find distasteful but may reluctantly be forced to accept.
Certainly, in an interview with Rusoro Mining's CEO Andre Agapov a month ago, the interest was initially focused on the then-upcoming announcement of a buy-out offer for Las Brisas del Cuyuni and Gold Reserve. Agapov scarcely shielded his (and the Venezuelan government's) desire for a Kilometer 88 encompassing deal including Las Cristinas, but the prospect was distinctly held to be in the future after all the complex legalities of the situation had been sorted out.
Which leaves us where, exactly?
- Crystallex can continue to negotiate with MinAmb, Mibam and whomsoever they please until the cows come home; or
- Crystallex can begin fresh negotiations with the Venezuelan government towards a direct socialist 50/50 joint venture in which the Venezuelan government will have a decisive say on management and implementation; or
- Crystallex can sit on its duff and wait for Agapov (or whatever other entity!) to make a buy-out bid for its shares at some juncture int he not too distant future before it runs out of available cash (the company says by Q3 2009) ... and then what?
All three scenarios have different outcomes:
- ZILCH!
- possibly more profitable to investors than the 3rd alternative but combined with a perhaps unsurmountable executive loss of face!
- a lengthier alternative depending on whether or not Crystallex itself is weakened in the game of derring-do!
Frankly, I wouldn't want to be faced with executive decisions in such a dilemma! Which is probably why those execs get paid obscene salaries and why I can, personally, thank God that I'm only a reporter who finds it quite incredible the lengths to which some people are still prepared to go in their lust for gold...
Roy S. Carson
vheadline@gmail.com
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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