Rusoro bucks trend in Venezuela

Only Foreign Player

Peter Koven, Financial Post
Published: Saturday, June 21, 2008

Venezuela has scared away most of the world's top resource companies, but a little Russian-Canadian miner called Rusoro Mining Ltd. is bucking the trend and actually growing in the ultra-high-risk country.

Late Thursday, the Vancouver-based company said it bought high-grade Venezuelan gold assets from Hecla Mining Co. for $25-million. The move makes Rusoro the only foreign gold producer in the entire country after effectively consolidating the industry with two deals, and it hopes to partner with the government on more deals.

Under Hugo Chavez, Venezuela has nationalized multiple industries and made life impossible for many of the companies hanging around. Mining investors learned this the hard way last month, when Crystallex International Corp. and Gold Reserve Inc. were blocked from building mines in an abrupt decision that baffled everyone.

But Rusoro claims to have figured out exactly how to do business in Venezuela.

Naturally, it starts with government relations -- Rusoro was founded by Russia's wealthy Agapov family, and they continue to own a major stake. The Agapovs have a tight relationship with the Venezuelans and have capitalized on the growing ties between the two anti-American countries.

"Russia is Venezuela's favourite trading partner these days, for obvious reasons. So that opens a lot of doors," said president George Salamis.

pkoven@nationalpost.com