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Gold Fields tightlipped on Venezuelan strategy Posted: Mon, 04 Aug 2008 [miningmx.com] -- GOLD FIELDS is the largest shareholder in Canadian-listed junior Rusoro Mining which has now openly embarked on a consolidation of the Venezuelan gold industry but CEO Nick Holland remains vague about his group’s future role in Rusoro’s strategy. At last week’s June quarterly results presentation Holland omitted any mention of Rusoro from his otherwise comprehensive round-up of Gold Fields operating and exploration activities in South America. When asked whether Gold Fields might invest new funds in Rusoro’s acquisition plans Holland replied, “that’s not a question I can answer today. “We believe we will get some value uplift from our 38% stake in Rusoro but we are passive investors. Rusoro has a unique operating capability in Venezuela and good luck to them.” Rusoro’s “unique operating capability” lies in the fact that it is the one mining company which appears to be on the right side of Venezuela’s firebrand president Hugo Chavez. That has everything to do with Rusoro’s strong Russian links because Russia is the main supplier of arms and military equipment to Venezuela. Chavez has already nationalised much of Venezuela’s oil industry and seems intent on a similar strategy for the country’s mining sector. Two Canadian juniors with major gold projects in Venezuela – Crystallex and Gold Reserve – have been left in limbo ostensibly because of government opposition to their proposed mines on environmental grounds. Their share prices have tanked - as has that of Rusoro - but, in a major development on June 10, a large chunk of “smart” money went into Rusoro from Peter Hambro Mining (PHM) and a syndicate led by UK fund BlackRock. In total, US$80m was made available through loans which may be converted into Rusoro stock in future. The money is to be used for “regional consolidation opportunities.” Rusoro is headed up by chairman Vladimir Agapov and CEO Andre Agapov while “management and insiders” control 27% of the company. It’s significant that PHM is the second largest Russian gold mining company. PHM chairman Peter Hambro commented at the time, "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. “ With it we have a strategic investment in a growing gold producer that is backed by proven reserves and resources and a successful management team." On July 10, Rusoro was confirmed by the Venezuelan government as its partner of choice for “gold mining opportunities in Venezuela.” So far, Rusoro has picked up Gold Fields’ former Choco 10 mine and it has also bought the Venezuelan operations of Hecla Mining. Click Here to subscribe to our daily newsletter
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