“We had a permit and developed the property,” Doug Belanger, president of the Spokane, Washington-based company said today in a phone interview. “We had a permit to construct and they revoked it without a basis in law.”CONTINUES HERE
Meanwhile, if you're long KRY and feeling all shadenwhatnot...big mistake. Fung's funhouse is next.
Here's the beginning of the text translated into English:
October 27: The camp of the multinational Canadian Gold Reserve, Brisas del Cuyuní, located in Las claritas, was taken over by functionaries of MIBAM and hand over to the state run Minerven who from now on will be in charge of the installations. Luis Herrera, president of Minerven, was present at the occupation at which the Correo del Caroní was exclusive media witness.
El campamento de la trasnacional canadiense Gold Reserve, Brisas del Cuyuní, situado en Las Claritas, fue tomado por funcionarios del Ministerio del Poder Popular para las Industrias Básicas y Minería (Mibam) y entregado a la estatal Minerven que desde ahora se hará cargo de las instalaciones. Luis Herrera, presidente de Minerven, estuvo presente en la ocupación a la cual asistió en exclusiva Correo del Caroní.
Wow you guys are simply the best better than all the rest better than anyone anyone I've ever met. There I was expecting a few takers for yesterday's caption competition and I'm bowled over by thirty-two entries! I had no idea this would be a popular thing, so as long as I don't get sued for libel over this week's episode we can make this a semi-regular feature at IKN.
With thirty-two players (some of whom entering multiple captions too) apologies in advance if you don't make the finals page. The standard was high all round but I had to cut it down to a finalists roster otherwise this post would get way long and silly. So I've chosen seven captions as mighty flighty finalists, and winners you all are. We'll go in reverse order. Points were awarded for 1) making me laugh (the most important criteria) 2) shining wit 3) knowledge of mining 4) knowledge of Venezuela. Click on any of the entries to make them bigger.
On with the show!
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Joey comes up with a good one and makes the finals page, showing a clear knowledge of markets and the status quo down in Bolivar State. Nice job, Joey:
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Sixth place goes to reader S, as close as I'm going to get to legal action, methinks. Nevermind...funny...finalist..IN!
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Fifth goes to MM, nailing me a laugh when I saw this. MM is clearly man who knows his audience...
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Fourth place goes to regular reader SM who gets a dig in at the blocked deal with the russkies at RML.v (clearly a cunning linguist):
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MP is in third place and snatches an impressive bronze medal with some subtle mining humour...you really gotta know your Venezuela mining to catch this one.
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The magnificent runner-up is LimeSlime (who forgets to guestpost about Brazil these days but has time for caption competitions it seems...dude we gotta talk). Anyway, nice bizarro OT stuff from Otto's Brazil expert and pal:
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But the winner, and top prize (a night's worth of ice-cold Molson) goes to SM, who manages to combine one of IKN's little ditties about Venezuelan miners into his caption. You rule, SM, the prize is yours:
Yesterday, Doug Belanger of Gold Reserve (GRZ) and his managerial team sent out this PR that informed its shareholders that it is now "in dispute" with the government of Venezuela and made clear noises to the effect that if they weren't allowed to move forward with their 'Brisas' gold project they'd take Venezuela to court and claim U$5Bn (yep, with a B) in damages. GRZ stock rose this morning on the news, which can only mean that people holding shares in this company are among the top echelons of stupid in the world of stock market investment. Really and truly stupid, stupid, stupid.
The word to understand here is "never". Be clear of its meaning and definition as used in the English language, as you can now be assured, once and for all, that GRZ will never mine or even get close to mining Brisas. GRZ shareholders are quick to point out the (dwindling) cash pile at the company. Well what's the point of having a whole bunch of money when you will never...repeat never...use it? Belanger understood this last year and decided to cancel the ordered equipment. He knows he'll never ever get to use it, so it's better to have a whole stack of money to pay his own salary and benefits for the next five years until he retires.
As for threatening Venezuela with court action...over a concession sitting in the middle of Venezuela? LOL!!!! To begin with any case would take forever to be heard. For seconds Venezuela would never (repeat never) recognize any ruling and for desserts all they need to do is take an army unit down there with one guy holding a piece of paper with "expropriate" wriiten on it and it's all over anyway. Ask Freeport about its claims on Cuba's nickel concessions to get some context about the chances you'd have of ever seeing any of the money.
In the weird world of Belanger, GRZ is currently worth far less than even the cash it has at bank as it's already clear as a bell that the only publicly listed company in the world in a position to buy it out will be blocked at everyturn by the self-serving management at GRZ. There is no point in holding stock in this company. None whatsoever. Why hold a speculative and high risk stock such as a junior gold miner in Venezuela when there is no reward possible? Truly a stock for the stupid.
Oh this is fun, I get to break an exclusive! After hitting "publish" on the trading post underneath I got in touch with George Salamis, President of Rusoro (RML.v) and asked him his views. He told me about what was going on with the courtroom appeal application reported today and I said, "Hey, that's good copy, mind if you go on the record with that?" Here agreed and here's the result. Salamis exclusively told Inca Kola News;
"It's hugely unfortunate that investors view (according to the share price of today) that this appeal represents new life for the bid.
"A couple of things to make clear. One, the bid is dead. We are not entertaining any discussions with, or about, Gold Reserve whatsoever. Two, we were extremely disappointed wth the findings of the court on matters of both fact and law. Accordingly, we have followed through with our public commitment to our shareholders to vigorously defend ourselves. Any success in the appeal will clarify our legal position, but we should be clear; success on this appeal will not trigger the revival of the bid." UPDATE: Reuters playing catchup
Otto has managed to get his grubby hands on a copy of the ruling today and the scanned copy of said 19 pages of fascinating legalese can be yours by clicking right here. As it turns out, no surprises that Endeavour Financial was the spanner in the works, but more interest is the role a certain Frank Giustra (yeah him...PIK.v, Clinton's pal, partner in crime of Casey in the Uranium pump-of-the-century) whohad his fingers in the pie all along.
Meanwhile, Rusoro (RML.v) did the only thing left to do and withdrew its bid for Gold Reserve (GRZ) after the bell today. For the record I managed to unload my small amount of GRZ at U$1.07 this afternoon so the whole thing has cost me zero dollars and zero cents. I was pretty surprised that Mr. Market allowed me to get out so well today. Let's see what happens to GRZ tomorrow morning when the world wakes up and realizes that nobody wants them and their negotiation position in Venezuela is just the same as it was the day before RML.v made a bid for the company. A Pyrrhic victory if ever there was one (for shareholders at least).
Y'know, just for a minute there I thought that some serious goldmining would get done at Brisas/LC. Back to hibernation mode for the long-sufferers. Meanwhile, RML.v shareholders will have their new 100,000oz/year facility at Increible to soften their blow at the end of this year. Precisely 100,000oz more than Doug Belanger has ever mined in Venezuela over the last gawdknows how many years.
An Ontario judge has halted a hostile takeover bid by Rusoro Mining Ltd. for rival Gold Reserve Inc., ruling that the offer is tainted because Rusoro had access to confidential information from a financial adviser who acted for both companies.
Justice Peter Cumming granted an interlocutory injunction restraining Vancouver-based Rusoro from proceeding with an all-stock offer for Gold Reserve, pending the outcome of a trial.
Rusoro's financial adviser on the offer, Endeavour Financial, is prohibited from acting on behalf of Rusoro regarding a potential takeover until the trial concludes.
Lawyers for Gold Reserve had argued that Rusoro had an unfair advantage over other potential bidders because Endeavour possessed confidential information it acquired when it was an adviser etc etc here
...today's the day we find out if Gold Reserve's attempt to block the Rusoro hostile take over via the courtroom gets a judgment. My head might still be full of sand and saltwater, though (well, beer really).
GRZ has continued its defensive PRs, it seems. Y'know, for a company that was trumpeting about how few people had tendered by the first deadline GRZ seems to be protesting rather a lot, methinks. Also, from what Otto is picking up from his NYC contacts RML.v is likely to get a lot more love from larger holders if any court decision goes its way.
I'm still holding my few GRZs here and FWIW they are UNCH since purchase. The only reason to like GRZ now is the possible buyout, though. If it's blocked the PPS will sink quickly.
In his national assembly speech, Hugo Chávez said the following:
"In 2008 we created the mixed company (joint venture) VenRus with Russia, a Russian and Venezuelan company. A JV for the deposits of Las Cristinas."
So come on everybody, one last chorus with me. We're not going to get the chance to sing this one again..............
"19 bottles of beer on the wall, 19 bottles of beer...take nineteen down and pass 'em around, there's no more bottles of beeeeeer on the waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaall."
An Interview with George Salamis, President of Rusoro Mining (RML.v)
Mickey Fulp is a very connected guy. Thanks to The Mercenary Geologist (check out his website here) your humble correspondent recently got in touch with Mickey's friend George Salamis, the President of Rusoro Mining (RML.v). After some banter about how I didn't seem to like RML.v so much, I asked Mr. Salamis (I called him Mr. Salamis...kept it all formal y'know) if he'd be good to answer a few questions.
"Sure!", he said "ask me anything you like!".
"What, on the record?", I asked.
"Yep...anything you like. On the record, no problem."
Well an offer like that doesn't come around every day, so I did just that and here below is the resulting long interview. I hope you enjoy. Otto.
PS, if you want to know what "salami" means in Spanish slang, drop me a line.
Otto:Hello, Mr. Salamis and thanks for agreeing to do this interview.
George Salamis: Hi Otto, thanks for inviting me to a chat on Inca Kola News. I have been reading it with interest for a few months now.
Otto:So on with the show. Can you tell us a bit about your background as a miner and how you became President of Rusoro?
GS: Well to use an over-used cliché, I guess mining is in my blood. My Father is an accomplished mining engineer and prospector who worked extensively overseas in mine development, often dragging us with him to live in some fairly exotic and remote places. Central America, Africa, Northern Quebec, you name it. Rock and mineral “pop-quizzes” were part of everyday life in our household.
Much to my Mother’s alarm I chose a life in mining as well, graduating as a Geologist in 1989 and going on to work overseas for the likes of Placer Dome, Cameco and others. In 1999, feeling a desire to unleash that pent-up inner entrepreneur, I made the leap from major mining companies to junior mining and have never looked back. Its been great fun and I’ve had the chance to be part of some great mineral discoveries, been part of advancing some great deposits into production and have been involved in some successful M&A transactions – some friendly, others not so friendly.
How did I get involved with Rusoro as President? Well, in mid 2007 a friend of mine rang me up mentioning that he knew of a newly listed company (Rusoro) that appeared to have a strategic edge on developing big gold assets in Venezuela. Rusoro was in need of a President. He mentioned this knowing full-well that I had spent a fair bit of time working for Placer Dome, the previous owners of the gargantuan and infamous Las Cristinas gold project. I walked away from Placer in the mid 1990’s saying to myself, “this place (Venezuela) has probably the best gold potential of anywhere in the world, however working down here is a bureaucratic nightmare. I shall NOT return unless the circumstances have changed”.
Roll the clock forward to 2007; when asked to consider the Rusoro posting I did a lot of due diligence on the Company, the Agapovs and their track record in Venezuela, Rusoro’s in-country management ability, etc. and quickly concluded that if any outfit had a remote chance of working through the bureaucracy, it was Rusoro. They had a track-record of success and if anyone had a valid shot at gold mining in Venezuela, and working cooperatively with the Venezuelan government, it was (and still is) the Agapov’s.
And Otto, “yes”, as you have rightly pointed out on your Blog in the past, the family name "Salamis” does attract the odd snicker down in South America. I tell you, it’s a great ice-breaker when meeting a Venezuelan government person for the first time!
Otto:Ok, so now can you tell us something about the background of your boss, André Agapov? I’m asking you this because on the gossip mill circuit you hear all sorts of things about the Agapovs, both father and son. Can you tell us more about their background and how they’ve become gold miners in Venezuela, maybe laying to rest a few of the rumors along the way?
GS: Here's what I know about them after becoming close friends and working colleagues with both father and son and have confirmed from them personally, corroborated by those who know and have worked for them in the past, etc. Vladimir Agapov, our Chairman, is an aeronautical engineer by training and used to run Aeroflot's North American operations in the bad old days of the Cold War (1980's and early 90's). Based in Montreal, he fought hard to keep Aeroflot’s transatlantic flight routes open in the face of some fairly serious sanctions that were on the go at the time against Mother Russia. This was not exactly a cushy job. Montreal: nice place, however think Siberia in winter, with OK baguettes, good beer and great hockey. In spite of the obstacles Vladimir kept the flight routes open and his planes fueled, even when they didn’t want to sell him fuel for his fleet of Ilyushin’s. A true story of perseverance in my view.
Son André was sent from Montreal to Moscow to school in aeronautical engineering, following in his. Dad's footsteps. Fresh out of school, Andre started a computer business for a brief time then moved to New York and into stock brokerage, owning the first licensed Russian owned/managed brokerage firm with a trading ticket on the NYSE in the 1990's. André sold the business off, did well doing so, and then he and Vladimir headed off to Venezuela to look at resource investment opportunities. He was one of the first Russian business people through the door in 2002-2003 which, by the way, is well before the Kremlin started to show up on the doorsteps of Hugo Chavez’s digs at Miraflores. they invested in a small, private Venezuelan gold mining operation in Bolivar State and actually delivered on promises made to the government regarding mine development, jobs and community support. All of this coming at a time when lawsuits were flying thick and fast with Vannessa Ventures and others on Km88. North American mining companies were fighting things out in international courts to no avail, rather than building mines down there. Along the way the family acquired other interests in other resources (Kaolinite, for example) in Venezuela.
On one of our first encounters, André shared a story with me about how he had spent days and sweated off many kilos of weight in the jungle looking for the original late 1800’s, British constructed mine shaft accesses in El Callao (next door to our Choco 10 Mine). Decades earlier, as a field geologist, I had spent some time looking around for those same old gold workings and shafts. I knew what he was talking about and said to myself “how many CEO’s do you know of who actually spend time in a jungle doing this sort of thing?”. At that moment, I was sold.
I’d like to dispel another popular misconception regarding the Agapovs. They were not given the “silver spoon treatment” in Russia like many of the oligarchs in Russia when the iron curtain fell. They are, in fact, not oligarchs at all. They are simply hard working and serious businessmen with a desire to build mines in Venezuela. Their success has come as a result of hard work and perseverance, a common theme in everything they have done. Ok Otto? So you can put away the John Le Carre novels and toss aside that copy of “Eastern Promises” that you got for Christmas! Does not apply here.
Otto:Wow, that’s a lot of background. So what’s the bottom line here with the Agapovs?
Seriously, if I have to sum up the situation with the Agapovs and the Venezuelan government I’d have to say that they have solidly won the trust of the government, at all levels, because of their history of delivering on promises. Do they benefit from the recently accelerated cooperation between the Russian and Venezuelan governments? Absolutely. However their reputation was solid before the Kremlin ever started sending their sailors to La Guaira for a bit of shore-leave. Do the Agapovs often dialogue with the government? Yes, Rusoro is a JV partner with the government and they have come to us frequently in the past when they have had problems to be resolved in Bolivar State in and around the various mining communities. For example, regarding labor and community unrest at the Choco 10 and Isidora mines under different ownership, we worked hard to overcome these issues under Rusoro ownership and have been successful doing so.
Otto:So let’s talk a little about the company, Rusoro (RML.v). What has happened to RML.v in 2008 and where does it stand as a producing miner today?
GS: 2008 was a hugely important year for Rusoro. It marked a major turning point for the Company and its investors, in terms our transformation from explorer and developer to gold producer. We’ve successfully turned around not just one struggling mining operation after we bought it, but two separate mines in less than 12 months. None of this was easy and we did hit a few speed-bumps along the way in terms of production cost blow-outs which are now behind us. Our last few months of production numbers have hit record levels, November alone was 13,475 ounces, and our per ounce cash costs have gone from the mid $700s in the summer of 2008 to under $400 per ounce. A lot of the turn-around strategies that we implemented in mid-2008 are just now kicking in. Otto, we think these production levels and low costs are sustainable.The new mine fleet is delivering more tonnes to the mill than ever before, the mill is behaving better than ever before, the union bosses are happy, the workers are happy, there is relative peace in the towns around our mines in Venezuela.
Alongside all of this work of successfully turning around a few failing or problem plagued mines, we’ve also been very busy building two new mining operations, San Raphael-El Placer and Increible 6. Both are expected to come on-line in 2009 giving us a further significant bump in our production.
Otto:On the subject of social and work relations, there were news reports about a land invasion by locals on to your Choco IV property just before Christmas that was affecting production. Can you bring us up to date on the situation there?
GS: I wouldn’t necessarily call a few dozen or so small miners moving into an area of Choco 4 to earn a bit of pre-Christmas pocket money a “land invasion”. This sort of thing happens all the time down in Bolivar. Not a material event, not newsworthy especially when compared to the thousands of small miners that have overrun the Km88 area in the past.
The best way to ensure that land invasions of any sort don’t occur is to give these small miners permanent employment and job skills which is something that we do at our mines in the El Callao and El Dorado areas, employing over 1000 people. However, this is something that has been sorely lacking in Km88 and deserves to be fixed. The locals are tired of waiting for something to happen, perhaps even more so than the Gold Reserve investors. This is a situation that we think we can resolve quickly to everyone’s benefit.
Otto: Rusoro of today is all very well, but in the last month the company has been making headlines with its move to buy out Gold Reserve (GRZ). So the question here is more about the Rusoro of tomorrow. What’s your vision for RML.v going forward, Mr. Salamis and how do the GRZ assets fit in?
GS: Shareholders in the gold sector have been ill-served by excessive turf battles for as long as you and I can likely remember.The starkest testament to this folly, especially for those who worked in the mining sector through the 1980’s and 90’s in Canada,is the three shafts sunk into the Hemlo orebody; three companies couldn't find a way to work together and shareholders paid the price.Some strange mix of ego and greed.You don't see this nearly as much in the oil patch, in passing.
It makes eminent sense to put these two companies together.The potential for operational rationalization is obvious. I also believe we could make a contribution towards moving Brisas forward.The project is world class and an excellent compliment to our existing assets in Venezuela. It deserves to move forward.We think we can help here.
I want to say at this juncture that we made determined efforts to do this in a friendly way. Several times during my tenure and, from what I understand, a few occasions before my time.The last thing we wanted was a bun fight. Unfortunately, the management at GRZ did not see things the same way. Now it us up to us to earn the trust of GRZ shareholders. They, the GRZ shareholders, have sunk a lot of money and time and effort into the venture. We firmly believe it makes a lot of sense to combine forces and just get it done. We just as firmly believe we can help and we hope and expect the shareholders will come to view things likewise. There is a huge opportunity to build something here. That's the 30 second soapbox appeal.
Otto: Many Venezuelan mining market watchers have noted the way Rusoro seems to get the permits it needs to operate from the Venezuelan government fairly easily while at the same time companies such as Gold Reserve and Crystallex have languished for quite literally years while waiting for the paperwork to go their way. Why do you think that is so, Mr. Salamis?
GS: Well, I can't speak to the particular situations of GRZ and/or Crystallex; I haven't been privy to the correspondence. But I acknowledge it's been a dreadful trip for most investors in Venezuela’s gold sector.For an exploration destination so endowed as Venezuela, surely there's a way for investors to see a return. A strategy that’s neat and tidy, one that “de-risks” the place in the eyes of the investors. Now there’s an idea!
As for ourselves, speaking very generally, I think cultural affinities have something to do with the way we're seen and accepted. People have a natural tendency to do business with people they feel comfortable with. And so far we feel there is a fairly high degree of mutual comfort between ourselves and the various permitting authorities, the government, etc.
I should also add that we are not unique in this respect. Before us, Gold Fields was also welcomed in-country. Why would that be? Recent South African history helps shed light here. The Company (GFI) had demonstrated its willingness to work with constituencies traditionally left out of the decision making process and was, more generally, alert to sensitivities in-country. This sort of thing makes a difference.
So Rusoro is not unique and there is nothing magical about our success at getting projects moving down there. When in Rome, as the saying goes, do as the Romans would do. And that's what we try to do. So far, so good.
Another question that has come up frequently in conversations over the last few weeks is how we are going to finance Brisas. We shall cross that bridge when we get to it. What is clear from this vantage point, however, is that is will be a lot easier to finance a land position under management with a proven track record in working successfully with relevant permitting authorities than it will be to finance a land position under management with a proven track record of working quite unsuccessfully with relevant permitting authorities. That's what we know right now.
And done correctly, it's an attractive proposition. If we can marry big ounces with a viable framework, that is a framework that gives comfort and confidence that the ounces will in fact get developed, and we think we can, well, that's a nice meal for investors and solves the environmental woes caused by the small miners and rampant unemployment that’s plagued that area for decades. How many gold ore bodies with seven digits of metal are left out there, besides those in Km88 and the ones Rusoro already owns to the northwest in El Callao and El Dorado?
Besides, it not as though there's no bad news in our share price already, yes? The markets could triple and the shares would still trade as though we killed our grandmothers. So some constructive developments on the ground against a backdrop of shares that are already priced for nuclear winter make us think we won't have a problem raising money, debt or equity, and on favorable terms at that. With the government on-side and a partner with some skin in the game, plus our track record of production, one would think that raising debt would be feasible.
Otto: One of the things investors and potential investors always want to know about Venezuela is what it’s really like working there. Is the bureaucracy as difficult as people make it our to be? Is the country so socialist in nature that it’s difficult to make a capitalist-style profit? How do you see political risk going forward? What insights can you give us about doing business in the country?
GS: I wish that I could paint a tremendously rosy picture about operating in Venezuela, this isn’t so. Building and operating mines in Venezuela is not for the faint of heart nor the impatient. Importing equipment and spare parts into the country is doable but slow, as we witnessed during the summer of 2008 causing us a bit of a cost blow-out. That’s when the new haulage fleet that we ordered didn’t exactly show up on time and equipment availabilities were fairly dismal over those months. The bureaucracy is problematic at times and the time factor involved in dealing with this bureaucracy must be built into everything we do when we make plans down there. However, we manage and have succeeded in working within the framework of Venezuela’s socialist development agenda and bureaucracy. And in the last few months we have done so very profitably. In reality these types of issues are not unique to Venezuela in Latin America or other mining regions in less developed countries around the world.
The perception of political risk, for us, resides only in the market and is obviously impacting our share price and that of Crystallex and Gold Reserve, equally. Resolving the Km88 situation in a positive way, having the projects move forward with the Government’s involvement and blessing, would go a long way to lifting the black cloud that has plagued the market’s perception of an incredible gold deposit in what is geologically a world class environment for gold.
Otto: One issue that concerns me about miners in Venezuela can be summed up in the quick phrase “dollars in dollars out.” By dollars in I mean the difficulty many companies have in accessing the official VEF2.15-to-USD1 exchange rate via the government CADIVI body. The result is they have to buy their currency on the more expensive parallel market. The dollars out part refers to the possible hitches you as a gold miner might have in obtaining the full market price for your metal on the world market. Does Rusoro suffer from either “dollar in” or “dollar out” problem, and if so how much of a problem is it for you?
GS: The system in Venezuela is actually beneficial for companies who are able to exchange currency through official channels thereby effectively covering those costs associated with the milling and mining operations paid in local currency.
All gold is sold based on the daily world spot price for gold. We are subject to all applicable taxes and sales charges as in any other country and some of those are recoverable. As for the movement of currency out of the country, mechanisms exist and are in place to allow the transfer of funds out of the country.Like us, many significant foreign companies in many industries use these mechanisms on a regular basis.
You mentioned CADIVI; however sluggish this system might be CADIVI is a huge benefit to us in terms of using in-country exchange rates to benefit the low-cost purchase and importation of goods that cannot be manufactured or bought in Venezuela. Do we suffer at all from “dollar in and “dollar out” problems? No.
Otto:I’ve mentioned my doubts about Rusoro as an investment several times on this blog. In fact, one of the things you and I talked about before you kindly agreed to do this interview was how you’d like to convince me that I’m wrong about my “avoid” call on Rusoro. So here’s your chance, Mr. Salamis! I’m a doubter, make me a believer. Why is Rusoro a good investment today?
GS: Yes Otto, well I’m still debating whether I include you on my Christmas card list or not for being such a pessimist. Essentially you have a company with an exceptional production growth profile, having grown from no production to producing at an annualized rate 150,000/yr in two years. Upon the completion of the current studies for production expansion at the Choco 10 mine and mill, Rusoro foresees this number more than tripling in the future. In the last 12 months the Company has acquired two mines that were struggling in terms of labor issues and in the case of the Choco Mill efficiency issues and turned them around to the point where not only are labor and the Unions happy, but the mill will operate in positive cash flow for the first full quarter in Q4 of 2008 with cash costs well under $400/oz Au. All good.
Add to this that the company will bring two additional mines on stream in late 2009 or early 2010 which will likely add approximately 100,000oz/yr Au in the near term and you get a feel for the production growth profile near and mid term. Longer term Rusoro will continue its exploration and asset consolidation efforts in this enormously gold rich region, hopefully with Brisas as the next addition.
Without the political risk that has plagued us in the market, where should the company trade?You can decide this based on you own comparative analysis, but the answer is certainly higher. We feel we are making headway on the extent of the perceived political risk by embracing the JV model preferred by the Venezuelan Government.Resolving the Brisas situation goes a long way down the track of “de-risking” Venezuela in the eyes of the investment community. We now have several JVs with the Government, the most significant being at the Isidora Mine. In our minds the best way to significantly lessen the perceived risk moving forward is to lift the black cloud that is Km88 and in the last month we have become proactive on that front, rather than sitting back to watch the situation worsen.
Certainly the quality of Rusoro’s assets are not fully realized in the market. If you are an investor who likes to rely on underlying fundamentals and growth potential you have a company whose fundamentals are improving on a monthly basis and that has a production growth profile and resource portfolio which leads its peer group. We are certainly not a one-asset Company. For speculators who wonder “what if” concerning the Km88 region you have a company, Rusoro, that is committed to consolidating a world class gold region and that has had success so far in doing just that.
You are essentially asking me how you can eliminate the political risk for you and the truth is you can’t completely eliminate it in any developing region in the world.We do believe however, that we are on the road to significantly lowering it and I can best sum up where the Company is at as follows; Rusoro is a company with exceptional production and growth prospects, with improving fundamentals and significant blue sky in partnership with the ultimate decision maker in the region.Can I take my Bay St. Howe St. beret off now, Otto?
Otto: You sure can. Thanks again for agreeing to do this interview with IncaKolaNews, Mr. Salamis. Are there any final words you like to say to our audience?
GS: Enough said for now, Otto. Many thanks for letting me bend your ear!
........in a hostile bidding war to take over a company, and the stock of the company I wanted to buy out was fairly tightly held but still at an ostensible discount to the price I was offering, I'd probably run the stock up some, buying small bits wherever posisble, then let the stock dump from a short-term high to rattle holders into either selling to me or submitting to my bid.
Just thinking out loud during the last hour of the trading year. Move along now, nothing to see here.
Dec. 30 (Bloomberg) -- Rusoro Mining Ltd.,a Russian-funded company buying gold deposits in Venezuela, expects tostart production of the precious metal at its Increible-6 minein the second quarter after securing government approval. The company will revise its production forecast for nextyear after Venezuela´s government approved technical andenvironmental studies for the mine, Chief Executive OfficerAndre 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. “Itchanges our projections for 2009,” he said, without providing further information on the Vancouver-based company´s forecasts.
Rusoro is the government’s preferred partner to also setup a joint venture to exploit Las Cristinas, which hasVenezuela’s biggest known gold deposit, Agapov said Nov. 14.The company already operates the Choco10 mine in Venezuela andhas 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 in the LatinAmerican nation. The company wants to create a joint venturewith Venezuela to develop the mine, Agapov said.
Rusoro rose 6 cents, or 9.7 percent, to 68 Canadian centstoday in Toronto. It has fallen 58 percent this year.
“We’re trying to be very proactive,” Agapov said of the offer for Gold Reserve. “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.”
"Next year, we are going to duplicate gold production. We are taking back some concessions that were given out by previous governments and are still valid for some rich guys that take the gold away, exploiting the miners."
He's making a big speech on Thursday January 1st to commemorate the 50th anniversary of the Cuban revolution. It's gonna be a doozie, methinks.
Venezuela's basic industries and mining ministry (Mibam) plans to install a gold refinery near the Las Cristinas gold project, a ministry official told BNamericas.
"The idea is to industrialize gold production because the Venezuelan state is taking over those areas along with [the industrialization] that Rusoro will carry out," the official said.
The initiative came about because the Venezuelan government estimates that the area holds reserves of close to 41,700oz of the yellow metal, according to the official.
The refinery calls for the creation of Minera Venrus, a JV with Rusoro Mining (TSX-V: RML), that will be in charge of exploration, mining and marketing the gold, and will also be responsible for building facilities and the metal processing plants, the official said.
Las Cristinas has 464Mt grading 1.13g/t gold or 16.9Moz contained in proven and probable reserves, in addition to 629Mt grading 1.03g/t gold or 20.8Moz contained in the measured and indicated categories.
On Wednesday (Dec 17) an official with Venezuela's mines and basic industries ministry (Mibam) told BNamericas the ministry has finally decided to rescind the mining concessions of Gold Reserve on Brisas and Crystallex International's (TSX: KRY) rights for Las Cristinas in order to develop the two projects with Rusoro.
"I can't confirm that," Rusoro president George Salamis said in a Wednesday telephone interview following the report. "All I can say is that the government is very happy with what we have done on other projects." As Russian company Rusoro Mining (TSX-V: RML) enters litigation against Gold Reserve (TSX: GRZ) over a recently launched takeover bid by the former, the company said it is eager to one day develop Gold Reserve's Brisas project in Venezuela and the adjacent Las Cristinas property together, and ultimately become the premiere miner in the country.
He added, however, that developing Las Cristinas and Brisas together "would make sense from an operational perspective. It's the same ore body."
Salamis specified, however, that for the time being Rusoro is concentrating on taking over Gold Reserve and only then would turn its attention to developing Brisas.
Rusoro launched an unsolicited all-stock takeover bid for Gold Reserve on December 15 after having sent a non-binding letter of intent to acquire the miner in August, which was rejected.
"We tried to do things in a friendly manner but enough is enough," Salamis said. "We have to resolve the situation in kilometer 88 [the so-called mining district where Brisas and Las Cristinas are located]."
"We will be the premiere mining company [in Venezuela] and that's why we started the company in the first place," he added.
Las Cristinas has 464Mt grading 1.13g/t gold or 16.9Moz contained in proven and probable reserves, in addition to 629Mt grading 1.03g/t gold or 20.8Moz contained in the measured and indicated categories.
The Brisas project holds proven and probable reserves of 10.2Moz of gold and 1.39Blb (630,039t) copper.
To read the full interview with Salamis, see this week's Perspectives, to be sent to subscribers on Friday
Just when you thought it couldn't get any weirder, it did. Here's Globe&Mail's Andy Hoffman on the contents of the Gold Reserve suit filed against Rusoro (RML.v). Note the highlighted part for the Kafka input.
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$550m? LOL! Scorch my earth, baby. Gotta love this Belanger guy! My thanks to reader 'BF' for the headsup.
Andy Hoffman 00:00 EST Wednesday, December 17, 2008
Rusoro Mining Ltd.'s ambitions to become a major gold producer in mineral-rich but politically challenging Venezuela hit a potential roadblock yesterday when takeover target Gold Reserve Inc. launched a $550-million lawsuit against Rusoro and its adviser Endeavour Financial International Corp.
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The statement of claim, filed in Ontario Superior Court,alleges that Rusoro trespassed on Gold Reserve's property in Venezuela to take drill samplesand accuses Endeavour of having a conflict of interest because it acted as an adviser to both companies and had access to Gold Reserve's proprietary and confidential information. None of the allegations have been proved in court. Gold Reserve wants the court to grant an injunction preventing Rusoro from proceeding with its three-shares-for-one hostile takeover offer valued at $47-million. GRZ (TSX) rose 1 cent to 74 cents; RML (TSXV) rose 2.5 cents to 28 cents.
VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Dec 15, 2008 -- Rusoro Mining Ltd. (CDNX:RML.V - News) ("Rusoro" or the "Company") today announced a take-over bid (the "Take-Over Bid") for Gold Reserve Inc. ("Gold Reserve") (Toronto:GRZ.TO - News)(NYSE-A: GRZ). Rusoro is offering Gold Reserve shareholders and equity unit holders (collectively, the "Gold Reserve Equityholders") 3 Rusoro common shares for each Gold Reserve Class A common share and each Gold Reserve equity unit (collectively, the "Gold Reserve Equity"). The offer values Gold Reserve at C$1.08 per each Class A common share and each equity unit, and represents a premium of 140% based on the December 12, 2008 closing prices for Rusoro and Gold Reserve on the TSX Venture Exchange ("TSXV") and the Toronto Stock Exchange ("TSX"), respectively, and a premium of 209% based on the volume-weighted average trading yada yada continues here
UPDATE: Just looking back at previous posts. In this one dated August 28th I actually mentioned that RML.v would offer three shares for every GRZ. Weird world, no?
UPDATE 2: GRZ has just released its own PR on the subject, linked right here. Nothing unexpected (and expect the company to reject this offer) bar this cute little wrinkle in the story:
On Friday, December 12, 2008, the Board of Directors received a non-binding proposal from Rusoro and received calls from representatives of Rusoro’s legal counsel and its financial advisor Endeavour Financial Corporation (TSX:EDV - News) (Endeavour”) regarding the proposal. On Sunday, December 14, 2008, Gold Reserve sent letters to each of Rusoro and Endeavour expressing concerns about the role of Endeavour in Rusoro’s Offer. Endeavour also provides advisory services to Gold Reserve and has in depth knowledge of confidential and proprietary information about Gold Reserve. In the circumstances, Gold Reserve believes that the Offer cannot proceed and, together with its financial and legal advisors, is considering its options to protect shareholder interests.
Just out of snarkygossipy interest, a couple of weeks a go a guy from Endeavour (who will remain un-named) tried to join the IncaKolaNews e-mailing list, a request that was rejected, FWIW. Now why on the Lord's little planet would a EDV.to be interested in this lil' corner of cyberspace? LOL!
Yeah, a whole range of fave raves in the title line, and all because of this little report out of (the rapidly improving) Bloomie Venezuela. They even get to name a decent source of information for once. I may have missed on the Ecuador story (and I'll write a longer post on that tomorrow), but this one is coming to pass as seen.
This is off the wires, so no link as yet (but it's kosher). Once the story makes it to the open internet I'll add.
Venezuela Gold Projects May Be Joined, Rusoro Says (Update1) 2008-12-12 23:42:33.830 GMT
(Adds Gold Reserve comments from 11th paragraph.)
By Steven Bodzin Dec. 12 (Bloomberg) -- Two Venezuelan mines containing about $25 billion worth of gold most likely will be developed as a single project, according to Andre Agapov, chief executive officer of Rusoro Mining Ltd.
The projects, known as Las Cristinas and Brisas and controlled by Crystallex International Corp. and Gold Reserve Inc., are “one ore body, and it would be naive to think it would be more than one company” involved in development, Agapov said in a telephone interview from London. He suggested a Russian miner would get the job.
The mines have been in limbo since both Toronto-based Crystallex and Gold Reserve of Spokane, Washington, failed toget needed environmental permits in April. On Nov. 14, Agapov said that Rusoro was Venezuela’s “preferred partner” to develop the site. Agapov considers his Vancouver-based company Russian because he and the other founders are Russian.
“Only a Russian mining company can afford” to remedy problems at the site, Agapov said today. “Which company, I don’t know, but it’s the only way it’s going to be resolved,” he said. “I see resolution in the first half of 2009.”
Government Take-Over
Venezuela’s Mining and Basic Industries Minister Rodolfo Sanz said Nov. 5 that the country would take over the mines and administer them.
Rusoro, which has taken part in Russian diplomatic} missions to Venezuela, already operates the country’s Choco10 mine.
At Las Cristinas and Brisas, “it would be naive to believe it will be two ownerships, two permits. That will never work” for Venezuela’s mining and environment ministries, Agapov said today.
Together, the two mines contain more than 31 million ounces of proven and probable reserves, valued at more than $25 billion at today’s price.
Gold futures for February delivery fell $6.10, or 0.7 percent, to $820.50 an ounce in New York. The price reached a record of $1,033.90 on March 17.
Rusoro gained 5 cents, or 16 percent, to 36 Canadian cents in Toronto Stock Exchange trading.
Agapov declined to comment on a report on mining blog Inca Kola News that his company may try to take over Gold Reserve after being rebuffed in September. “They’re perfectly positioned for some transaction,” he said. “I don’t know if it will happen or not. It’s the end of the year. Maybe some brave ones will step in.”
Shares Jump
Gold Reserve President Douglas Belanger said he knew nothing about any attempt to take over his company and said today’s 30 percent surge in the share price was most likely the result of rising gold prices and the stock being worth half the company’s breakup value.
“There are no bids, not that we’re aware of,” he said. “We wouldn’t comment anyway.”
Gold Reserve rose 9 cents to 39 cents. It has plunged 92 percent in the past year.
Belanger said he recently converted non-trading Class B shares into sellable Class A shares because the stock’s value had dropped enough that he could trade out of the Class B stock without tax liability.
“It was just simple accounting, a chance to clean something up that had been around for years,” he said in a phone interview. “If I had converted them at $10, I would have had about $9.70 taxable income. I just took advantage of the low price.”
He also said the company’s debt remains outstanding and hasn’t been bought back. Crystallex spokesman Richard Marshall didn’t immediately return a call seeking comment. The stock declined 1 cent, or 7.1 percent, to 13 cents in New York. It has fallen 94 percent in the past year. Related Post Why Gold Reserve (GRZ) may about about to sell out to Rusoro (RML.v)
