Mining firm awaits word on Venezuela

A Spokane firm is waiting for an official letter from Venezuelan President Hugo Chavez’s administration explaining the status of the company’s proposed gold mine in the South American country.

The construction permit for the Brisas Mine was overturned by Venezuela’s Ministry of Environment. Gold Reserve Inc. acquired the gold deposit in 1991, and has spent $300 million on the project.

“It’s all very confusing,” said Doug Belanger, Gold Reserve’s president.

Company officials have discussed the situation with Venezuelan officials by phone, but they are awaiting more details in the formal notification, Belanger said.

The proposed Brisas Mine would be one of Venezula’s largest open pit mines, employing 1,000 workers to extract 10 million ounces of gold from the deposit, as well as copper.

The Brisas deposit is in the Imataca Forest Reserve, a vast region of mineral and timber wealth in eastern Venezuela. The reserve is roughly the size of the Netherlands and home to as many as 19 indigenous populations, according to a 2005 article from Venezuelanalysis.com.

But the forest reserve isn’t a national park, according to Belanger. The Brisas deposit is in part of the reserve that’s been mined for more than two decades. In 2004, a presidential decree reaffirmed mining as an accepted use in that portion of the reserve, he said.

Venezuelan officials cited environmental concerns and the presence of small miners as reasons for overturning the mine’s construction permit, which was issued last year.

Belanger said Gold Reserve has been working to repair damage left by small miners, who extracted gold and copper from the soft clay at the surface of the deposit but didn’t have the technology to deepen the mine. No small miners remain at Brisas, he said.

Gold Reserve’s stock fell this week after news about the permit was announced. The company’s shares closed at $2.29 Friday on the Amex.