US mining company says mine seized in Venezuela

By RACHEL JONES

posted: 31 DAYS 1 HOUR AGO

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CARACAS, Venezuela -U.S. mining company Gold Reserve Inc. said Tuesday that President Hugo Chavez's government has seized control of its Venezuelan gold mine as socialist authorities assert control over the nation's mineral resources.

Government officials on Monday took control of Gold Reserve's Brisas del Cuyuni project in southeastern Bolivar state — part of its larger Brisas mine, which holds an estimated 10.2 million ounces of gold, the Spokane, Washington-based company said in a statement.

The mine has not yet entered production.

Government officials could not be immediately reached for comment on the takeover, and it was not clear whether the company would be compensated.

The action came days after Gold Reserve filed for international arbitration for roughly $300 million in investments and $5 billion in future profits from its Venezuela properties, which include a second mining project in Bolivar state known as Choco 5.

The takeover is "a further demonstration of the government's earlier decision to expropriate the entire Brisas project," company president Doug Belanger said in the statement.

Private gold mining has become increasingly uncertain in Venezuela as Chavez has vowed to assert greater state control over the nation's mineral resources to supplement the nation's income from the dominant oil industry.

In May, his government refused to renew Gold Reserve's Brisas del Cuyuni concession. The company, which had been exploring and developing the property since its purchase in 1992, had been waiting a year for a final permit to begin construction at the site.

Chavez announced in January that Venrus, a joint enterprise formed between the Russian-financed Rusoro Mining Ltd. and a Venezuelan state holding company, would develop the country's gold deposits, including exploit Brisas del Cuyuni and Las Cristinas — the nation's largest gold mine, whose concession is currently held by Toronto-based Crystallex International Corp.

Chavez's government denied Crystallex a final permit to start digging at Las Cristinas last year, but the company says it has not been informed of any changes to its deal.

2009-10-27 16:31:53