US gold firm taps mining veteran Warke for Venezuela project

A US-owned exploration firm has signed a deal with mining veteran Richard Warke’s company to advance a long-stalled gold project in Venezuela, the latest signal of renewed foreign interest in the country’s mineral riches. 

Warke’s Augusta Capital Corp. will have the option to build a 50% ownership in Gold Reserve Ltd.’s stake in Siembra Minera by spending as much as $200 million to develop the asset, according to a memo obtained by Bloomberg News. The earn-in agreement says Vancouver-based Augusta Capital must spend the funds over four years, with at least $25 million within the next year.

Gold Reserve and Augusta Capital did not immediately respond to requests for comment. 

The deal is the latest example of mining companies plotting a return to Venezuela after years of political turmoil and sanctions drove much of the industry away. Gold Reserve, a tiny junior mining company based in Washington, has sought for years to revive the giant Siembra Minera Project in southeast Bolivar State. The company estimates it holds 52.2 million bullion ounces.

Venezuela seized the mining project from Gold Reserve in 2008 under former President Hugo Chávez, with the company retaining a 45% interest in the asset. But the country’s new mining law, enacted by acting President Delcy Rodríguez’s administration in April, removes mandatory state ownership requirements for mining projects, potentially allowing Gold Reserve to reclaim its majority stake.

Under the new agreement, Gold Reserve and Augusta Capital will jointly negotiate with Venezuelan officials as they seek to restart development at the property, according to the memo.

Warke, a Vancouver-based mining entrepreneur, has built a reputation in the industry for developing and selling mining companies at multibillion-dollar valuations. He is the co-founder of Equinox Gold Corp., which agreed to buy Orla Mining Ltd. in a $5.1 billion deal on Wednesday. Warke is also a part owner of a number of sports assets, including the PGA Tour, basketball’s Boston Celtics and Fenway Sports Group, which owns Major League Baseball’s Boston Red Sox and English Premier League soccer team Liverpool FC.

Venezuela boasts vast mineral wealth, including conventional materials such as coal, gold and diamonds as well as critical minerals including bauxite, copper and coltan, a metallic ore that can be refined to extract tantalum and niobium.

Those reserves could support the Trump administration’s bid to reduce US dependence on China for minerals used in mobile phones, batteries, jet engines and other products.

The government has already taken steps — including buying stakes in mineral companies and exploring price floors to support production — to wean the US off supplies from Beijing after a trade spat last year halted the flow of some materials.

(By Jacob Lorinc)