Prospectors lured by "cursed" Venezuela gold mine

Fri Mar 27, 2009 9:11am EDT
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By Frank Jack Daniel

LAS CRISTINAS, Venezuela (Reuters) - Four centuries after the lure of Venezuelan gold brought ruin to English explorer Sir Walter Raleigh, the riches at one giant mine some say is cursed still haunt treasure hunters from across the globe.

Located south of the Orinoco river and near a town bearing the name of the mythical golden city of El Dorado, the Las Cristinas deposit captivates miners and prospectors even though no ore has been legally dug there in two decades.

Studies show it may be Latin America's top gold deposit.

But the Las Cristinas saga, involving a ghost town, environmental devastation and fist-sized nuggets, underlines the risks of business in Venezuela, where the draw of natural wealth has been dulled by rule changes and economic turmoil.

A web of legal cases and red tape has so far stopped any big company from extracting the estimated 20 million ounces of gold that lie in Las Cristinas and its sister property Brisas -- together known as Kilometro 88.

Latin America is a major source of minerals but while countries such as Peru push mining with clear rules for investors, the potential is undertapped in Venezuela and Ecuador due to tension between governments and foreign firms.

The view that Venezuela, South America's top oil exporter, offers an unstable business climate has grown under socialist President Hugo Chavez, who has nationalized large chunks of the economy.

Game investors and poor local miners at Las Cristinas hope their luck will change after Chavez, with an eye on record gold prices and falling oil income, vowed to open the mine this year with the help of Russian tycoon Vladimir Agapov.   Continued...

<p>Local miner Cesar Abac uses a wooden bowl and mercury to pan for gold near at the village of Las Cristinas, southern Bolivar State, January 30, 2009. REUTERS/Henry Romero</p>