Rusoro to Transfer Gold Assets to Venezuela Venture After Nationalization
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By Nathan Crooks -
Aug 30, 2011 11:20 AM ET
Rusoro Mining Ltd. (RML), the only publicly traded gold miner left in Venezuela, said it agreed to transfer its assets to a joint venture with a state-owned company after President Hugo Chavez nationalized the industry.
Rusoro, based in Vancouver, will transfer its gold assets in Venezuela to the venture with Petroleos de Venezuela SA and hold 45 percent of the new company, Chief Executive Officer Andre Agapov said today in a telephone interview. PDVSA, as the Caracas-based state oil company is called, will own the rest.
"Now, finally there is policy clarity," Agapov said. "We will be compensated, and the formula for compensation will be identical to the way they compensated the petroleum companies in 2006 and 2007. It’s basically book value with some premium."
Chavez on Aug. 23 said that PDVSA would begin gold mining operations in the country after the industry was nationalized this month. PDVSA will be responsible for paying its share of capital expenditures in the venture with Rusoro, and the new company may be able to increase annual production to 500,000 ounces from 100,000 ounces now within two years of funding, Agapov said.
Rusoro fell 11 percent to 12.5 cents in Toronto trading as of 10:27 a.m. New York time. The stock has plunged 69 percent this year.
-- With assistance from Charlie Devereux in Caracas. Editors: Jessica Brice, Robin Saponar
To contact the reporter on this story: Nathan Crooks in Caracas at ncrooks@bloomberg.net
To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net
