Rusoro Mining (RML.V) jumps 50% on Venezuela verdict – but don’t be suckered

Rusoro Mining (RML.V) found itself in a bad situation in 2011, when the wackjob-leftist (I’m a lefty, but Hugo Chavez was truly a wackjob lefty) Venezuelan government decided, “Those are nice gold mines you have there. They’ll look good on us, don’t you think?”, and just took them over, along with every other gold mine within reach.


This, obviously, isn’t something that global governments take lying down. No, instead they arbitrate such things for five years and eventually decide that, yes, Venezuela should pay for what they took.

And so, today, Rusoro heard that they’ve been awarded over a billion dollars from Venezuela by a World Bank arbitration panel.

Of course, that shot the company stock price up a bunch, 50% at the time of writing, which is nice. But it’s not something you should chase.

Here’s the thing: In the five years the company has been seeking justice, Chavez died, the government turned over, then the oil industry collapsed, then the country ran out of food.

When do you think that billion is going to show up?

Here’s a clue: Gold Reserve Inc actually got Venezuela to the table on a settlement after their property was taken in 2008. They’re supposed to start seeing dollars in late October of this year – eight years later.

Other companies in similar situations have already had awards given, but they’re not necessarily rolling in dollar bills, Scrooge McDuck style.


In fact, Venezuela pulled out of the World Bank-overseen arbitration program in 2012, a year after it went on its repossession spree, so any settlement now is almost done just for shits and giggles.

Venezuela will need a working government (right now, many ministries are working two-day weeks), a thriving oil sector (hmm), and a whole lot of patience to get to a place where anyone in power thinks, “Okay, we owed some money to that Vancouver gold company, didn’t we? We should probably get on that.”

Being told you’re owed money is one thing. Having that money in your bank account is a whole other issue…

— Chris Parry

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