Spokane Journal of Business

Sanctions against Venezuela hit Gold Reserve hard

Sanctions block company from its operations there

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A cloud of uncertainty once again hangs over Gold Reserve Inc., a Canadian mining company with executive offices in Spokane.

A quarterly earnings report the company released last month claims a recent escalation of international sanctions bars Gold Reserve from working on mining operations in Venezuela and from collecting payments the company is owed.

Gold Reserve President Doug Belanger couldn’t be reached for comment.

In the Q3 2019 earnings report, Gold Reserve reported a net loss of $4.8 million for the nine months ended Sept. 30, down from net income of $68 million for the year-earlier period.

The company now owns 45% of the Siembra Minera mine in Venezuela, while the Venezuelan government owns the majority 55%.

Troubles for Gold Reserve began more than a decade ago, when the government of Venezuela seized control of the mine. Following a lengthy legal battle, a World Bank tribunal ruled against the Venezuelan government in 2014 and awarded $740.3 million to Gold Reserve to compensate for the loss of the mine.

In 2016, Venezuela agreed to pay Gold Reserve $1 billion to settle the award and purchase mining data from the company. The agreement also recognized Gold Reserve as a minority owner of the mine and called for joint development of the project.

Since then, however, Gold Reserve has received only $254 million and still is owed $872 million, including $92 million in interest.

Any further payments appear to be blocked by the recent ramp-up of international sanctions against Venezuela’s Maduro administration. In August, the U.S. issued an executive order prohibiting transactions with certain industries tied to the Venezuelan government, including its gold and banking industries.

The additional sanctions were imposed due to the Maduro regime’s usurping of power earlier this year from Venezuela’s elected national assembly, creating a “fundamental break in Venezuela’s legitimate constitutional order,” according to a White House statement.

Gold Reserve’s earnings report says the executive order “adversely impacts our ability to collect the remaining balance of the award plus interest from Venezuela, and until the sanctions are lifted, significantly impedes our ability to develop the Siembra Minera project.”

Mike McLean
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Deputy Editor Mike McLean has worked his entire journalism career in the Inland Northwest. Mike, who also lives to reel in fish and crank up music, has worked for the Journal since 2006.

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