“Daily updated mining exploration news on gold”—-CARACAS — Venezuela plans to build mines at its largest gold deposits with Russian help, the mining minister said on Thursday, apparently killing a years-long bid by two Canadian companies to develop the projects.
The decision reflects leftist President Hugo Chavez efforts to boost ties with Russia, increase state control over a key sector and speed up stalled mining development as tumbling crude prices threaten to crimp the OPEC nation’s finances.
An accord will be signed on Friday with Russian-owned Rusoro to operate the Las Cristinas and Brisas projects with Venezuela, mining minister Rodolfo Sanz told a Russian government delegation during a presentation observed by Reuters. Rusoro’s share price soared after the news.
Las Cristinas, one of Latin America’s largest gold projects, is currently operated by Canada’s Crystallex, which waited in vain for years for an environmental license to start mining.
Nearby Brisas is operated by Gold Reserve, which has a concession for the mainly gold project but was also waiting for environmental permits.
While it appeared that Sanz will replace Crystallex and Gold Reserve with Rusoro, he did not mention their names.
He said the memorandum would not mention Las Cristinas and Brisas by name for legal reasons but assured the Russians they would have access to the projects.
“You can be sure that those will be the deposits,” he told the delegation.
“We have to rescind our relationship with a company that has been working in the zone,” Sanz also said, apparently in reference to Crystallex. “We have a legal problem there.”
Approached after the presentation by Reuters, Sanz said Rusoro’s involvement in Las Cristinas had not yet been decided.
The statements came a day after Venezuela, which frequently warns against building reserves in U.S. dollars, said it wanted to recover control over its gold to boost its gold reserves as a shield from global financial crisis.
Chavez in recent years has wrested control from the private sector of the oil, electricity and telecom industries.
Rusoro’s stock jumped by as much as 38 percent to C$0.65 following Thursday’s news, while shares of Crystallex edged down. Gold Reserve shares were up slightly.
A Crystallex spokesman told Reuters that Venezuelan officials have said the project remains on track. A Rusoro spokesman did not comment on the situation but said CEO George Salamis was on his way to Venezuela.
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