Mining firm gets a boost in Venezuela

Gold Reserve Inc.’s stock price shot up 50 percent Wednesday after the Spokane firm announced that it has received permits to build one of Venezuela’s largest gold mines.

The Brisas project would be the first operating mine in Gold Reserve’s portfolio. The junior mining company’s stock closed at $6.60 per share on the American Stock Exchange.

The company has spent nearly 15 years working on the Brisas project, a gold-and-copper deposit in southeastern Venezuela. According to Gold Reserve’s estimates, the open-pit mine will produce approximately 10.4 million ounces of gold over two decades, worth about $7 billion at current prices.

News about Venezuela frequently focuses on President Hugo Chavez’s leftist administration, including his goading of the Bush Administration, noted Doug Belanger, company president.

But Belanger said that Gold Reserve has found Venezuela’s business climate to be fair.

“We’ve been in Venezuela 15 years — eight of it with the Chavez administration, and we’ve accomplished more under Chavez,” he said. “The perception that Venezuela is not a good place to do business is wrong.”

The Brisas project received its permits in 20 months, which is faster than many countries, he said.

Building the mine will cost about $638 million and take up to 30 months. Gold Reserve expects to begin mine operations in late 2009.

The Brisas deposit is part of the Guyana Shield, a mineral-rich region that lies along the northeast coast of South America. Gold Reserve bought the deposit in 1991 after bidding against Placer Dome, a Canadian firm that owns a larger gold deposit to the north.

For about 30 years, the Brisas deposit was mined by squatters who extracted small amounts of gold from near the surface, Belanger said. Gold Reserve will build a 1,200-foot open pit mine and spend about $250 extracting each ounce of gold.

About 1,000 people will work at the Brisas Mine.