Rusoro Mining soars on Venezuela settlement proposal

Rusoro Mining Ltd. [RML-TSXV] rallied on heavy volume Thursday October 11 after the company said it has agreed to a settlement proposal with the Bolivarian Republic of Venezuela, by which Venezuela agreed to pay Rusoro over US$1.28 billion to acquire the company’s mining data and for full release of the arbitral award issued in favour of the company in August, 2016.

The arbitral award was issued by a tribunal constituted pursuant to the Additional Facility of the International Centre for Settlement of Investment Disputes.

Rusoro also said it is contemplated that the parties will constitute a mixed commission to access the current status of Rusoro’s Choco 10 and San Rafael – El Placer gold projects. It said the assessments may lead to a partnership between the parties that will lead to the exploitation of those projects.

In early afternoon trading, the stock was up 75% or $0.09 to 21 cents on volume of just under 7 million. That made Rusoro the most actively traded stock on the TSX Venture Exchange on Thursday.

“We are very pleased that we have agreed on terms of a settlement with Venezuela,” said Rusoro Chairman Vladimir Agapov. “We look forward to the execution of the settlement agreement and towards our continued relationship with Venezuela in assessing two of Rusoro’s former gold projects regarding a potential partnership to restart production of the Choco 10 and San Rafael – El Placer mines,” he said.

The judgement comes after Rusoro recently said it had filed new proceedings to a bid to enforce a US$1.34 billion award against Venezuela.

In May 7, 2018 and May 8, 2018, the company filed lawsuits in Houston and Calgary related to its ongoing efforts to enforce judgements worth US$1.34 billion entered by the courts in the U.S. and Canada following the Venezuela’s expropriation of Rusoro’s gold mining properties in Venezuela.

These U.S. and Canadian judgements recognize and allow enforcement of an international arbitration award issued under the auspices of the World Bank in favour of Rusoro against Venezuela for its illegal expropriation.

In addition to the Venezuelan state, the lawsuits named as defendants Petroleos de Venezuela, S.A. [PDVSA], PDVSA’s U.S.-based subsidiaries PDV Holding Inc., Citgo Holding Inc., Citgo Petroleum Corp., and several of the U.S. companies’ directors.

Each case alleges that Venezuela orchestrated a series of fraudulent transactions, which were undertaken by the defendant corporations to remove Venezuelan assets from the U.S., where they may be vulnerable to judicial seizure and execution, to Venezuela, where they almost surely will be unreachable by Venezuelan creditors.

Thursday’s announcement comes seven years after the Venezuelan government issued a decree which essentially transferred control of all of the country’s mining assets to the government.

In August 2016, Rusoro was awarded US$967.77 million by a tribunal operating under the Additional Facility Rules of the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) in the arbitration brought by the company against the Bolivarian Republic of Venezuela.

The tribunal awarded the company damages of US$967.77 million, plus pre-and post-award interest, which at the time equated to in excess of US$1.2 billion.

Rusoro filed its request for arbitration before ICSID in July 2012 under the Canada-Venezuela Bilateral Investment Treaty. In its award, the Tribunal upheld Rusoro’s claims that Venezuela breached its obligations under the Bilateral Treaty by unlawfully expropriating the company’s investments without paying compensation and by imposing certain restrictions on the export of gold.

In addition to payment of damages, the Tribunal ordered Venezuela to contribute US$3.3 million towards Rusoro’s costs in the arbitration.