April 29, 2009
Rusoro Expects Production To Top 500,000 Ounces In 2012 Without any
Further Acquisitions
By Charles Wyatt
When last we wrote about Rusoro Mining it was making a bid for Gold
Reserve, another company operating in Venezuela, whose Brisas mine had
been put on hold since Hugo Chavez, no lover of North Americans, revoked
the construction licence. The difference between the two companies is
that Rusoro is looked on as a Russian company and Venezuela and Russia
continue to strengthen political and economic ties. It has been operating
in Venezuela since 2003 with the Agapov family in control, has lived up
to all its promises, and last year was declared partner of choice by the
Chavez government, a declaration of mutual regard consummated by the
formation of the Isidora/Camorra 'mixed enterprise' company for
exploiting any other projects in the country. Rusoro had already made a
friendly approach last year before it went hostile, but Gold Reserve
wriggled off the hook as a result of a 'poison pill' defence allowed under
Canadian regulations.
What was quite clear was that the directors of Gold Reserve were more
interested in their own jobs than the interests of their shareholders,
but this will not be the end of the story. As George Salamis, president
of Rusoro points out, his company has plenty of work on its hands so it
is not in a hurry to acquire Gold Reserve. It will monitor the situation
and as things become more difficult for Gold Reserve in Venezuela it may
make another move, but the price offered is likely to be lower.
When that happens the following statement from the board of directors of
Gold Reserve could be the basis for some interesting complaints from said
shareholders: "We are pleased", said Gold Reserve's board,
"that Rusoro has withdrawn its offer and appreciate the support of
our shareholders throughout this process. As we have said, we have valuable assets and
are committed to ensuring that our shareholders receive full value for
their investment in Gold Reserve".
It is the proven ability of Rusoro to work with the Venezuelan government
that gives it its edge and was the one of the reasons why Peter Hambro
Mining, the UK company with a strong Russian partner producing gold in
Russia, took a stake in the company last year. The other main reason is clearly
the operating potential of the company. In 2008 it produced 100,000
ounces of gold. This year it is looking for over 170,000 ounces, and by
2012 it expects to be producing at an annual rate of 540,000 ounces. The
Choco 10 mine is the mainstay of production at the moment. Production
there shot ahead in the last quarter of 2008 as mill performance
improved.
The outcome was 38,868 ounces of gold at a cash cost of US$358/oz. George
Salamis is confident that it can now maintain a production rate of 14,000
ozs/month which is the basis for the production target for this year.
That last quarter of 2008 was also the first full quarter of positive
cash flow from operations. But production will boosted further when
Increible 6 comes on stream in the second half of this year. Rusoro
acquired Choco 10 from Gold Fields, still a significant shareholder in
the company. Gold Fields had carried out a scoping study prior to the
sale, indicating that production could rise to 350,000 ozs/year based on
a gold price of US$550/oz. Rusoro is now evaluating production
potential well in excess of 350,000 ozs using higher throughput
rates with feed being contributed by Increible 6 and the Isadora
mine. The result of the scoping study will be announced shortly and there
is every reason to believe it will be positive. In this case a
feasibility study will be initiated later in the year.
Full article
For more information please contact:
Keith Schaefer
Vanguard Shareholder Solutions
Tel: 604 608 0824
Toll Free: 1 866 591 0825
www.rusoro.com
|