Rusoro says Venezuela will likely nationalise its gold assets, shares fall 12%
Vancouver-based Rusoro Mining is preparing to seek international arbitration to obtain compensation for the assets it expects to be nationalised after a deadline to negotiate with the government lapsed.
Posted: Friday , 16 Mar 2012
VENEZUELA (Bloomberg) -
Rusoro Mining Ltd. (RML), the last remaining publicly traded gold miner in Venezuela, expects its gold assets in the South American country to be taken over after a deadline to negotiate with the government lapsed, Chief Executive Officer Andre Agapov said. The stock slid 12 percent.
Rusoro is preparing to seek international arbitration to obtain compensation for the assets as the Venezuelan government's joint venture offers undervalue the company's gold resources, Agapov said today in a phone interview from New York.
"As of today, all the assets will be nationalized and they will take control of operations," Agapov said.
Rusoro, based in Vancouver, began talks to form a joint venture with state oil company Petroleos de Venezuela SA and transfer 55 percent of its gold assets to the government in August after President Hugo Chavez nationalized the industry. Rusoro would be the fifth mining company seeking compensation from Venezuela through the World Bank's arbitration court following nationalizations.
The government made two verbal offers, including one presented two days ago, to compensate Rusoro for a reduced holding and didn't put any value on its gold resources or reserves, said Agapov. Yesterday was the negotiations deadline.
"In the past 180 days, we never saw an offer presented to us in writing," said Agapov. "There were several meetings and several proposals from their side and none of them were acceptable to Rusoro shareholders."
Rusoro fell 12 percent to 11 Canadian cents in Toronto trading as of 2:05 p.m. The stock has dropped 65 percent in the last year.
The company has the potential to produce a half million ounces of gold a year in Venezuela, Agapov said.
Rusoro officials met with Venezuela's Oil and Mining Minister Rafael Ramirez shortly after the gold nationalization law was passed and he promised to pay the company a fair value so capital markets would see that the Venezuelan government was willing to seek an adequate level of compensation, said Agapov.
"It was a very optimistic start, and then all the people who started to work with us on the settlement were proposing completely different things and much lower valuations," he said. "There was no way we could have accepted their numbers or conditions."
The company has until June 15 to file for arbitration with the ICSID, as the Washington-based arbitration court is known, said Agapov.
"If they would like to continue negotiations and reach an acceptable deal, of course we are willing," he said. "We have 90 days until we have to file for arbitration."
President Chavez in January said that Venezuela wouldn't accept ICSID rulings. The agency is overseeing about 20 cases filed since Venezuela in 2006 began nationalizing assets in industries including oil, mining, cement and telecommunications.
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