Rusoro stock rises on Venezuela joint venture plan
OTTAWA (Reuters) - Rusoro Mining (RML.V: Quote) said on Thursday it will strike a joint venture with Venezuela's mining ministry to explore, develop and mine gold properties in the mineral-rich country, news that pushed the junior mining company's shares sharply higher.
The Canadian-listed and Russian-owned producer said it hopes the venture will be formalized within six months. It said that until the terms are finalized it will continue operating its own assets.
Once established, the joint venture will focus first on properties Rusoro purchased from Hecla Mining Co (HL.N: Quote) for $25 million last month. It acquired the Isidora mining leases and La Camorra mill in Bolivar state in southeastern Venezuela.
Shares in Vancouver, British Columbia-based Rusoro rose as much as 22 percent on the TSX Venture Exchange before edging back. The stock was up 17 Canadian cents, or 16 percent, at C$1.22 in heavy trade at midsession.
None of Rusoro's existing properties, such as the Choco 10 mine in Venezuela, are included in the new enterprise. The company has 12.8 million ounces of gold resources and told Reuters it is targeting annual production of about 180,000 ounces of gold this year.
Venezuelan President Hugo Chavez's nationalization campaign has swallowed energy, steel and cement companies and many investors fret the mining sector will be next.
In April, the environment ministry ruled that no new gold mines would be allowed in an area being developed by Crystallex KRY.TO and Gold Reserve GRZ.TO. Days after that ruling, a group of workers stopped operations at Hecla's Isidora gold mine, demanding it be nationalized.
Crystallex and Gold Reserve said in June that the government was reconsidering its denial of their permits to mine on the Imataca Reserve.
(Reporting by Susan Taylor; Editing by Peter Galloway)
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