Rusoro Mining, a junior gold producer, knows the ins and outs of mining in southern Venezuela, knowledge that has helped them discover more than 5 million ounces of gold in the Bolivar State mining region.
We interviewed geologist George Salamis, President of Rusoro Mining.
Salamis graduated from the University of Montreal in 1989. For more than eight years he worked on all the famous and infamous deposits that Placer Dome developed from the late 80s through the mid 90s.
“It was a great training ground for me. It taught me, as part of the evaluations team, to look at assets quickly, evaluate them quickly and assess whether they were of economic worth or not," said Salamis.
Salamis then worked for the gold division of Cameco Corporation from 1996 until 2000. At that point, he transitioned from the world of major mine producers to junior mining. Here, Salamis learned how to build up small resource bases into larger ones, skills which have been his forte ever since. “Ever since I left the majors, I’ve been building up assets and passing them on to those mining companies who have the expertise to develop them,” he said.
Salamis joined Rusoro Mining as president in September 2007
It was his stockbroker who headed him down that path, having steered Salamis toward Mena Resources as an investment. When Mena agreed to sell its assets to Rusoro, he was intrigued by the combined holdings of the companies in Venezuela, having experienced the country in the early 90s, while working for Placer Dome
“I had spent a short period of time there but I saw the tremendous mineral potential of Venezuela, and from the very beginning Rusoro’s aggressive style appealed to me” he said.
At the time, Rusoro was an advanced exploration company with a very large portfolio of gold assets in Venezuela: at the time a total of <4 million ounces. “In 2007 we really got aggressive and drilled well over 220,000 metres on our projects, while initiating a major upgrade to the company’s small production facility at Emilia, in El Dorado. The goal is to have the facility to 100,000 oz/yr capacity in 2008,” he said. The 2007 drill campaign was very successful as the original gold assets have grown to between 5.5 and 6 million ounces.
Exploration Overcomes Challenges
The potential for mining revenues in Venezuela persuaded Rusoro’s management to persist in exploration and production, despite bureaucratic challenges.
“From an endowment perspective, I think Venezuela is far and away the best place on the planet. It’s just barely been picked over from a gold exploration perspective. There’s tremendous potential in Venezuela. It’s one of the last places left where one can walk up and drill off large gold deposits fairly rapidly,” Salamis said.
However, he conceded that it is very difficult for companies to obtain permits to move from exploration into exploitation, an angle Rusoro has well covered
“I saw that Rusoro had a very strong relationship with the government in Venezuela at all levels and that they really had the ability to get things done,” he said. “I witnessed it myself, prior to signing on”
It doesn’t hurt that the current primary management and major shareholders of Rusoro are Russian. With the very fertile climate for doing business between Russia and Venezuela one could surmise that Rusoro was at a distinct advantage working in Venezuela, but Mr. Salamis, while conceding that the Russian aspect was an asset, was quick to point out that Rusoro has to go through all of the permitting processes and appropriate filings as set out by the laws and the ministries of Venezuela for any aspect of exploration or mining. “Rusoro has developed a very effective infrastructure in the country and works very hard to maintain strong relationships with the people in the areas where we are working” he added.
The firm’s officers are:
- Vladimir Agapov, Chairman
- Andre Agapov, Chief Executive Officer
- George Salamis, President
- Omar Salas, Chief Financial Officer
- Corey Allen, Chief Operating Officer
- Gregory Smith P. Geo, Vice-President, Exploration
- Michael Kennedy, Corporate Secretary
Choco 10 Reaches Record Levels
In June 2007, Rusoro started to look at Gold Fields’ assets, specifically the Choco 10 property in Venezuela that had been producing gold for the last two years. “After months of due diligence and negotiation, we ended up doing a deal with Gold Fields which closed Dec. 1, 2007. With that transaction, Rusoro moved from advanced explorer into junior gold producer in one leap,” Salamis said.
The deal gave Rusoro all of Gold Fields' Venezuelan assets, including the Choco 10 mine in the El Callao district of Bolivar State, Venezuela, just four kilometers from Rusoro's Increible 6 development property. This gives them 25,000 hectares of highly prospective exploration properties in the region.
The Ceiba Project is located 40 kilometers south of El Dorado
The Company currently has 12.8 million ounces in gold assets. According to Salamis, the strategy for the near future plays out this way:
Prove that the production levels of 10,000 ounces per month are sustainable over the next several years.
Aggressively pursue ore development and feasibility studies to facilitate the staged expansion of the Choco mine from 120,000 oz/yr to 250,000oz/yr over the next 36 months.
Salamis expects that Venezuela will always remain challenging in terms of bureaucratic hurdles and political challenges. “We have the infrastructure to deal with a lot of issues better than other Companies and this has given us a competitive edge,” he said. “We plan to prove to the market that we can sustain and ultimately expand production in Venezuela.”
More important is the Company’s growing gold portfolio. With many samples still in the lab and a 300,000m drill program for 2008 the Company feels it is on target to get to 15 million ounces discovered by mid-2008.
“We’ll also have production coming out of Venezuela to the tune of 10,000 ounces a month,” said Salamis. “It’s a great situation. Even with our significant gold production, we’re currently valued at about $40.00 an ounce in the ground which is very low.”
“In late January we plan to present our operational plan for production, and throughout the year we’ll be announcing incremental changes to our resource and reserve situation that will see our total gold portfolio build up significantly. In addition, we’ll be doing quarterly updates of our overall gold production and announcing development strategies on some of our other assets.
Other Assets in Production
The Increible 6 Project (in the El Callao District near Choco 10 mine) has been the subject of 100,000 meters of drilling in over 400 drill holes since late 2004. With 1.6 million ounces indicated and 1.1 million ounces inferred, the project has excellent access via well maintained roads from the town of El Callao. An aggressive 79,000m drill program is underway to expand and upgrade the current resources and the Company is on target to reach its goal of 3.0 million ounces by Q2 2008.
Rusoro’s three El Dorado properties are near Hecla's La Camorra mine. They include San Rafael/El Placer (SREP), which has seen over 75,000 metres drilled in the past 11 months. Current development is via underground methods, with a ramp scheduled for completion by the end of 2008, targeting development and production on two major high grade gold veins. The Ceiba Project is located 40 kilometers south of El Dorado. The current NI 43-101 compliant inferred resource is 1.6 Mt grading 9.2 g/t Au for 459,000 ounces of gold.
High grade ore from all El Dorado projects will be trucked to the Emilia Mill for processing. Expansion of the Emilia Mill Facility is a priority for 2008.
Located near the Cuyuni River the Valle Hondo Project encompasses more than 25,000 hectares. With limited drilling of 13,000m in 114 drill holes, the project contains a current NI 43-101 compliant resource of 103,000 ounces indicated and 1,344,000 ounces inferred. There are several kilometer-scale targets that have excellent potential to expand the near surface zones and define the higher grade results received to-date (up to 100 g/t). A significant drill program is currently on-going at Valle Hondo, and the company expects to report several large resource increases on the project, over the course of 2008.
Rusoro’s managers are experienced operators, familiar with the government regulations in Venezuela. With CND$50 million in cash, the company seems well able to meet its commitments and future plans.
Head Office:
Suite 2164 - 1055 Dunsmuir Street
Four Bentall Centre
Vancouver, BC
V7X 1B1
Ph: 604.632.4044
Fax: 604.632.4045
www.rusoro.com info@rusoro.com