Gold Reserve holds talks with Venezuelan leaders
Informal October meeting holds promise amid fight over seized Brisas depositDecember 16th, 2010
Gold Reserve Inc., the Spokane-based mining exploration company that's fighting Venezuela in arbitration after that South American country seized its promising Brisas gold deposit, says it has had informal but "constructive" talks recently with Venezuelan officials, outside of the arbitration process.
Company President Doug Belanger told stock analysts in Gold Reserve's third-quarter earnings conference call early this month that he attended a meeting in Venezuela on Oct. 15 with government officials there, during which they talked about "a constructive solution to our dispute," but not directly about the arbitration.
In the fall of 2009, Venezuela took over Gold Reserve's Brisas property, which is located in the southeastern part of the country and in which the company had invested nearly $300 million so far in exploration and engineering. In September of this year, Gold Reserve filed an arbitration claim against Venezuela with the World Bank's International Centre for Settlement of Investment Disputes, seeking at least $1.93 billion, including its future value as a mine.
Gold Reserve has estimated the property contains about 10.2 million troy ounces of gold and 1.4 billion pounds of copper, and had been planning to spend $731 million to construct the mine and put it into production.
Though Belanger said in the conference call that he is unable to talk specifically about the legal proceedings surrounding the arbitration, which could take years, he told analysts that, generally, Venezuelan officials are eager to have mining begin in the district in which the Brisas property is located and were willing to discuss ways that could happen.
"Venezuela's desire is to get the project moving," he said. "We talked about what assistance we might provide should an acceptable solution be found."
He described the talks as "preliminary, constructive, and positive."
Belanger said in the call that he believes Venezuela has settled a handful of similar arbitration suits in recent months.
"There seems to be a desire on the part of Venezuela to deal with these issues," he said.
Belanger told analysts that, "We bear no illusions that we're the only people who could do this (project)." He added that Gold Reserve would share the data and knowledge it accumulated in years of work on the project if Venezuela provides it with "full and fair compensation."
He argued that someone could use Gold Reserve's work there to begin construction of the mine within a matter of months, but that it might take them years to start the process from scratch.
As for the arbitration process, Belanger said the current schedule is for Venezuela to respond to Gold Reserve's arbitration claim by March 7, but that schedule could change.
Meanwhile, Gold Reserve posted a third-quarter net loss of $6.9 million, or 12 cents a share, compared with a loss of $5.6 million, or 10 cents a share, in the year-earlier period. The company has mining operations. It lists assets of $107 million, including about $55 million in cash or cash equivalents.
Gold Reserve says it spent $5.8 million on the arbitration claim during the first three quarters of this year, but says those expenditures should slow now that the claim has been filed.