Chavez said on Tuesday that Venrus, a joint venture between the government and Rusoro (RML.V), would begin extraction from the legendary Las Cristinas and Brisas deposits in 2009, but the Canadian-based company's president, George Salamis, distanced himself from that timeline. "If there is going be a development scenario put together for Las Cristinas, or anything in the Km 88 district, it's going to take some time," Salamis told Reuters. "Very little has been discussed in terms of specific moves to advance development scenarios."
Km 88 is a gold-rich region in southeastern Venezuela that is home to both Las Cristinas and Brisas, a neighboring gold concession belonging to Toronto-listed Gold Reserve (GRZ), currently the target of a hostile take-over bid by Rusoro. Containing at least 17 million ounces of gold, Las Cristinas is infamous in mining circles for passing from company to company for decades without ever being developed into a mine. In November, Venezuela's mining minister told Rusoro it would operate Brisas and Las Cristinas, but the government has yet to inform the current owners of the change.
Canadian company Crystallex (KRY) currently holds a license to operate the project, but final permission to start extraction was never given and in recent months the government has made it clear it wants to produce gold with Rusoro. Salamis said Rusoro's bid for Gold Reserve was "step one," but declined to say if Crystallex would be the next target.
Chavez has close relations with Russia, buying billions of dollars of weaponry and offering oil and gas deals to Moscow's leading companies. Russia's Agapov family holds a large stake in Rusoro and the company appears to benefit from the warm ties between the two countries. Socialist Chavez is not averse to joint ventures with foreign firms, especially those from nations he believes help his goal of countering the influence of the U.S. "empire." After years of dithering about whether to exploit its vast gold reserves, Venezuela last year announced it wanted to industrially develop its deposits under a joint venture model already applied to oil, steel and cement companies.
Las Cristinas sits in the Belgium-sized Imataca forest reserve, home to hundreds of small-scale illegal gold miners. Crystallex, the most recent in a string of companies with plans to make a fortune from the deposit, said on Wednesday it had not been informed of any change to its legal status.
Salamis said Rusoro's 50-50 joint venture with Venezuela did not mean it would automatically receive the environmental permits needed to begin production. He said the joint-venture agreement stated the government and Rusoro would share all capital costs related to developing assets.
Salamis, a former Placer Dome geologist who in the past has worked on Las Cristinas, said he was confident Rusoro would convince Gold Reserve shareholders to accept its offer. "They shouldn't consider sitting there waiting and trying to battle with Chavez in international courts," he said. "What should be viewed as a valid strategy is investing in actual gold production in Venezuela."
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