LONDON (Thomson Financial) - A Peter Hambro Mining Plc.-led syndicate has made an $80 million strategic investment in Rusoro Mining Ltd., a junior gold producer and exploration company in Venezuela, via a loan that is exchangeable into shares at C$1.25 each -- a 25 percent increase on Rusoro's closing price on Monday.

The investment is the first move by Peter Hambro outside Russia, although Rusoro was founded by Russian nationals Andre Agapov, now chief executive, and his family.

Peter Hambro, chairman of Peter Hambro Mining, said his company was approached by Rusoro.

"We have always said that any investment outside Russia would need to have a Russo-centric rationale and the Rusoro investment is just such an opportunity," said Peter Hambro.

The exchange of Peter Hambro Mining's $20 million portion of the loan would give the Russian gold producer a 4.0 percent stake in Toronto-listed Rusoro. It also has the option within two years to acquire the holdings held by other lenders in the consortium at C$2.20 per share to give it 14.2 percent.

Peter Hambro declined to comment on his group's future plans for Rusoro and on whether it is looking to acquire Rusoro outright. Depending on market and other circumstances, Peter Hambro Mining said it may increase or decrease its interest in Rusoro in the future.

South African gold producer Gold Fields Ltd. remains the largest shareholder in Rusoro with a 36 percent interest.

"The transaction also provides an opportunity to develop a closer relationship with Gold Fields," said Peter Hambro Mining.

Peter Hambro said Rusoro will spend most of the $80 million loan on acquisitions but he declined to say whether the Venezuelan company was looking to buy further gold deposits or companies.

Rusoro has 12.8 million ounces of gold resources and expects to achieve an annualised production rate of 120,000 ounces per year by the end of 2008. Peter Hambro Mining produced 297,000 ounces of gold in 2007 and has previously said it anticipates producing between 350,000 ounces and 400,000 ounces this year.

"Overall we see the transaction as a low cost option on a potentially large resource with a partner who can navigate the Venezuelan operating environment thereby opening up new growth potential for the company," said Fraser Jamieson, an analyst at Cazenove.

The investment is relatively immaterial from a financial perspective to Peter Hambro Mining and can be funded out of existing cash resources, Jamieson added.

"The investment appears to be of good value and reasonable strategic sense," said Fairfax analyst John Meyer.

Under the two-year exchangeable loan, GLG Partners LP and Lansdowne Partners Ltd. will also take up $20 million each and BlackRock and Endeavour Mining Capital Corp. will each take up $10 million.

The loan will be drawn down Tuesday and be made in two tranches. The first $28 million will be available immediately with the remaining $52 million becoming available once certain strategic milestones are met.

The loan will carry an annual coupon of 10 percent, payable semi-annually.

Andre Agapov and Vladimir Agapov, chairman, together hold 16 percent of Rusoro.

At 12:27 a.m., shares in Peter Hambro Mining were up 20 pence, or 1.5 percent, at 1,319p. julie.crust@thomsonreuters.com jc/ejb

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