July 30, 2008 in Business

Venezuela pulls gold concession

Hecla Mining had just sold it to B.C. firm
From staff, wire reports

Venezuela is officially taking away a gold concession that Coeur d’Alene-based Hecla Mining Co. recently sold.

The company last month sold its Venezuelan subsidiaries to Rusoro Mining Ltd., of Vancouver, B.C., for $25 million.

Hecla spokeswoman Vicki Veltkamp said the new action will not affect company assets.

The Mining Ministry resolution published in Tuesday’s Official Gazette says that Hecla may still have to pay taxes, fines or interest. Veltkamp said she is unaware of any outstanding payments.

The ministry was reviewing the concession after a labor dispute at the Isidora mine when Hecla announced the sale.

Rusoro paid Hecla $20 million in cash and $5 million in stock.

A Rusoro news release says the ministry has agreed to form a mixed enterprise with the company.

Hecla’s decision to sell was prompted by rising costs at its Venezuelan mines and investors’ concerns about President Hugo Chavez’s leftist government, company officials said.

The Venezuelan gold mines were important to Hecla’s bottom line early this decade when the company struggled through a period of depressed metals prices, CEO Phil Baker has said.

But with revenue from the company’s domestic silver operations growing, Venezuelan operations accounted for just 3 percent of Hecla’s gross profits last year.

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