Friday, June 20, 2008

Wow! What a kick in the teeth for Caracas! Hecla sticks a middle finger in the air at the Venezuelan government and leaves...

VHeadline editor & publisher Roy S. Carson writes: Wow! What a kick in the teeth for Caracas! If one were to be any way invictive -- honestly we aren't! -- we'd be rolling over on the floor in gales of laughter at the "beautiful" way in which Couer d'Alene (Idaho, USA) based Hecla Mining has stuck a solid middle finger in the air at the Venezuelan government and preempted the inevitable by selling its troubled involvement in Venezuela to the Russian Agapov group's Russoro Mining Ltd for a cool US$25,000,000...

While Hecla CEO Phillips S. Baker, Jr., cooly says "the sale of our Venezuelan properties is part of our strategy to reduce the financing put in place" elsewhere, its clear that he really means he's overjoyed to get shot of the whole caboodle having repatriated approximately $39 million in cash, admittedly generating a $14 million foreign exchange loss, but still a lot more if he had dallied longer with dithering government officials who are caught in a bureaucratic morass of their own making.

He says that the La Camorra goldmine in southeastern Bolivar State only contributed 3% of the company's annual gross profit on approximately 70,000 ounces of mined gold (down from an earlier estimate of 115,000 ounces) but he says Hecla will continue to consider gold properties "in politically secure countries that leverage our expertise!"

Obviously they don't just grow potatoes in Idaho ... for isn;t that the key? Venezuelan officials have been screwing themselves by stone-walling expertise that could be coining them $ millions to feel the country's poor and resolve social-economic woes at a rate of knots, but a variety of Ministry officials are so much caught up in their own navel-watching that opportunities are just flying out the window.

Just imagine what signals are flushing through the international financial markets already this morning on the overnight news that Hecla is ditching Venezuela and turning over the toss to the Russians ... who are already in deep dooh-dooh with the miners unions as 'gringo' capitalists in disguise!

Even Venezuela's Mining Chamber (Camiven) is somewhat askance over the incredible mismanagement of Venezuela's mining sector and is urging the Chavez government to cut the strings loose and to reactivate mining to generate social and economic benefits, since mining is currently enjoying a globally recognized "healthy period" for investors and workers alike.

Camiven's executive director, Luis Rojas is quoted as saying that larger, transnational mining companies operating in Venezuela "are not doing much because of delays on environmental permits and a concession system that's being threatened ... when a concession-based system is threatened, it's tough to make investments or to consolidate mining operations, let alone explore, which requires venture capital!"

The simple fact is that there are no clear signs from the Venezuelan government about the future of mining and there's an almost criminal lack of any long-term mining plan ... quote simply the Chavez government is caught up in flim-flam rhetoric with headless chicken officials running around promulgating policies that are not not yet developed.

There is mush talk but little action with regard to a national mining plan that would perhaps recognize the rights of investors and allow the projects currently on hold to be developed efficiently, but back-tracking government hacks are shooting short-term measures in the knowledge that one or another in a badly-prepared ministerial team could slam their best laid efforts into unconvincing reverse to the detriment of all concerned.

Russoro is already involved in Venezuela with the Choco 10 gold mine, among others, and Canadian Crystallex International is still sidelined in its already multi $-million investments preparatory to kickstarting an exclusive mine operating contract at the Las Cristinas (20.8 million ounce) project; while Spokane (Washington, USA) based Gold Reserve still clings to a claim of a concession at Las Brisas del Cuyuni (10.4 million ounces) still waiting for word on whether or not it will be forced into a Venezuelan State majority shareholding arrangement or 100% revocation of its claim.

Whichever way ... Hecla has loudly and clearly sent signals wafting though the corridors of power in Caracas this weekend to get off the pot and start getting its act in order.

It goes without saying that one of the best advices proffered so far is to begin with flushing Environment Minister (Minamb) Yubiri Ortega de Carrizales down the ministerial toilet before ... as seems highly likely ... the whole administration follows down the proverbial tube with her!

Roy S. Carson
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