UPDATE 1-Venezuela in advanced talks for $5 bln loan -cenbank president

Fri Feb 26, 2016 7:00pm EST
 
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(New throughout, adds details on loan, context on Venezuela debt)

By Eyanir Chinea and Corina Pons

CARACAS Feb 26 (Reuters) - Venezuela is in advanced talks for a $5 billion loan from international banks and investment funds, the head of the central bank said on Friday, potentially providing an influx of cash for the OPEC member country, which faces heavy debt payments this year.

The operation would provide $3 billion in liquidity for the government and $2 billion to finance a gold mining joint venture with Canada's Gold Reserve, Nelson Merentes said in an interview.

Venezuela's international reserves fell to a 17-year low of on Friday after the government paid in full its $1.5 billion Global 2016 bond, according to central bank data.

On Wednesday, Venezuela and Gold Reserve signed a memorandum of understanding to jointly develop the Las Brisas and Las Cristinas gold mines, ending an arbitration dispute.

"We hope within a month to constitute the company, and in parallel we are seeking the loan," Merentes said. "I can't say for sure if it will be in a month, in two months. But it will definitely be this year. We are moving quickly."

Gold Reserve was not immediately available for comment.

Merentes said the loan would be repaid with gold produced from the mines. The mines would serve as the guarantee for the loan.   Continued...