Rusoro Mining Ltd. said it may file a claim against Venezuela in an international arbitration court if negotiations to resolve the nationalization of its assets aren’t resolved within six months.
Rusoro, a Vancouver-based gold mining company, said a 90-day period to form a joint venture with the government following the nationalization of the gold industry in September has expired. The company hasn’t been told about the status of the venture or any possible compensation.
“Rusoro remains open to continue amicable discussions with the Venezuelan government,” the company said in a statement distributed late yesterday on Marketwire. “However, absent an acceptable settlement with the Venezuelan government during the next six months, Rusoro reserves its right to submit its claims for adequate and effective compensation to an international arbitral tribunal.”
President Hugo Chavez, who has seized assets in the oil, mining, cement, steel, agriculture and banking industries during his 12 years in power, decreed the nationalization of the gold industry this year in an attempt to curtail what he said was illegal activities from “mafias.” Venezuela currently faces about 18 arbitration cases in the World Bank’s investment dispute center, including four for mining projects.
Rusoro said it informed Venezuela that it’s violating investment protection agreements between Canada and Russia over the nationalization decree and the failure to form a venture within the 90-day period.
Andre Agapov, Rusoro’s chief executive officer, said in an Aug. 30 interview that the gold miner was in talks with state oil company Petroleos de Venezuela SA to form a joint venture at its mines in Bolivar state. Since then, Chavez transferred mining activities to the oil ministry, led by Rafael Ramirez.
“The company has not been informed by the Venezuelan government of an extension to the 90-day period, nor does it have information whether its mineral titles and rights have expired and reverted” to the government, the company said in the statement. Since the announcement, “meetings have been held with government representatives in order to try to reach an amicable agreement on adequate and effective compensation for Rusoro, without success.”
The nationalization decree, published Sept. 16, affects the Choco and Isidora mines, and Rusoro’s exploration, evaluation and development properties in Venezuela, the company said on Nov. 30.
Since Chavez’s Aug. 17 announcement to nationalize the industry, Rusoro’s stock has fallen more than 28 percent to 10 Canadian cents. The company’s share price has plunged 75 percent this year.