MAC: Mines and Communities

Venezuela ordered to pay US$1.2 billion to Rusoro Mining

Published by MAC on 2016-08-24
Source: Mining.Com, The Canadian Press

The request for arbitration before the World Bank's ICSID was filed in 2012

For background to Agapov see:

Previous on MAC: 2011-08-30 Venezuela moves to nationalise gold industry

Tribunal orders Venezuela to pay Rusoro Mining more than US$1.2 billion for taking over company’s gold mines

The Canadian Press -

August 23, 2016

VANCOUVER — Rusoro Mining Ltd.  says an international arbitration tribunal has ordered Venezuela to pay it more than US$1.2 billion after unlawfully expropriating the company’s gold mines in that country.

Venezuela took over the Vancouver-based company’s investments in the South American country as part of a nationalization of the gold industry in 2011.

Rusoro had two gold mines as well as other development projects in the country, then under the leadership of Hugo Chavez who died in 2013.

The company attempted for several months to negotiate compensation without success before it filed a US$3.03-billion claim against Venezuela at the World Bank’s International Centre for Settlement of Investment Disputes in 2012.

The arbitration tribunal ordered Venezuela to pay US$967.77 million as of the September 2011 expropriation, plus interest as well as US$3.3 million for Rusoro’s costs in the arbitration.

Rusoro said Tuesday the money is due immediately and said it expects that Venezuela will comply with its international obligations.

“The company looks forward to collecting on the award on behalf of all of its stakeholders,” Rusoro president and chief executive Andre Agapov said.

Venezuela ordered to pay Vancouver miner $1.6 billion

Frik Els

August 23, 2016

Rusoro Mining Ltd (CVE:RML) stock more than doubled on Tuesday after the junior miner announced an international tribunal found in its favour in suit against the Venezuelan government over the South American nation's seizure of its gold projects.

By the close the Vancouver-based company changed hands at $0.345 per share on the TSX Venture Exchange, up 122% affording the company a market worth just over $182 million. Nearly 12 million shares were traded, many multiples of usual volumes for the counter.

In a statement Rusoro said the arbitration tribunal operating under World Bank rules awarded damages of US$967.77 million plus interest which the company estimates would swell the total to more than $1.2 billion (CAD 1.55 billion):

Rusoro filed its request for arbitration before ICSID (World Bank's International Centre for the Settlement of Investment Disputes) on July 17, 2012 under the Canada-Venezuela Bilateral Investment Treaty ("BIT"). In its Award, the Tribunal upheld Rusoro's claims that Venezuela breached its obligations under the BIT by unlawfully expropriating Rusoro's investments without paying compensation and by imposing certain restrictions on the export of gold.

Rusoro operated the Choco mine and owned a 50% interest in the Isidora gold mine that produced some 110,000 ounces annually at the time it was seized. The state held the rest. Rusoro also owned 10 exploration projects in Venezuela and boasts gold reserves of 5,584,000 oz, M&I gold resources of 10,730,000 oz and inferred resources of 6,805,000 oz.

In August 2011 late President Hugo Chavez  embarked on a program to nationalize the gold industry, from mining through to processing, and move the country's bullion reserves held in Europe to Venezuela's central bank. 

Venezuela is outside the top 20 gold producing countries and is the process of selling the gold reserves it repatriated in 2012.

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