Re: Rights and claims under the investment treaty between Canada and Venezuela ????
in response toby
Unlocking One of the World’s Most Prolific Gold Mining Regions
Rusoro reports its financial results for the year ended December 31, 2011 and provides update on the Nationalization of its Mining Assets. The Company's audited consolidated financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2011 have been filed on SEDAR ( www.sedar.com ).
All amounts set out in this news release and the Company's annual audited consolidated financial statements and MD&A are expressed in United States dollars, unless otherwise stated.
The following is a synopsis of the year ended December 31, 2011 financial results and related information. For detailed information regarding Rusoro's 2011 year-end results, please refer to the audited consolidated financial statements and related MD&A which have been filed on SEDAR at www.sedar.com , and can be found on the Company's website at www.rusoro.com .
Expropriation of the Company's Mining Assets
On September 16, 2011, the Venezuelan government, through publication in the Official Gazette of Venezuela, enacted a law-decree ("the Decree") reserving to the government of Venezuela exclusive rights for the extraction of gold in Venezuela ("the Nationalization"). The Decree mandated the expiration of all mining concession held by the Company and their reversal to the Venezuelan government together with all related assets and operations. The Decree permitted the Company to reach an agreement with the Venezuelan government to continue operating jointly, in the form of a mixed-interest enterprise ("the Mixed Enterprise"), the mining concessions and mining assets affected by the Nationalization and in which the Company could not own more than a 45% share participation. The Decree provided for a 90-day period from September 16, 2011 for the government of Venezuela and the Company to negotiate the terms and conditions of the migration of the Company's mining assets to the Mixed Enterprise, including the compensation to the Company for the loss of ownership of its assets as a result of the Nationalization. This 90-day negotiation period was subsequently extended to March 14, 2012 by the Venezuelan government through decree No. 8683.
As of March 14, 2012, the Company was unable to reach an agreement with the Venezuelan government upon the terms and conditions of the migration of its mining assets to the Mixed Enterprise within the designated time periods. Therefore, effective March 14, 2012 in accordance with the procedures outlined in the Decree, all of the Company's mining concessions expired by force of the Decree and all related assets and operations reverted to the Venezuelan government who took possession and control in accordance with Venezuelan law becoming the new operator and employer.
In accordance to Venezuelan Labor Law and the Decree, beginning March 15, 2012 the Venezuelan government became the sole and exclusive employer for the workers and employees who provide services for the operations of the mining concessions. The Company is not responsible for the actions or omissions of those workers and employees, by the damages that they may cause or suffer in the exercise of their functions or for the payment of their salaries, bonuses, benefits or any other compensation or benefit generated from the above-mentioned date, as all the workers, starting March 15, 2012, provide their services and run their work daily activities under the exclusive direction, supervision and responsibility of the Venezuelan government.
Also starting March 15, 2012, the Company is relieved of all responsibilities associated to the mining concessions, assets and operations that were subject to expropriation, including without limitation, any contractual, mining, environmental, labor or criminal liability, and for the payment of any tax, fee or contribution of any kind, including any mining or surface tax related to such mining concessions and operations.
As a result of the Nationalization, on December 31, 2011 the Company wrote-down to zero the carrying value of its mineral properties and property plant and equipment and significantly wrote-down its inventories and value-added tax (VAT) receivables giving rise to large non-cash losses during 2011. Concurrent with these adjustments the Company fully reversed to income the total balance of deferred tax liability as at December 31, 2011. These adjustments are quantified below under the caption Results for 2011 and Financial Position as at December 31, 2011.