Rusoro secures $80 million

Vancouver – Rusoro Mining (RML-V) is the exception that proves the rule. While most mineral exploration in Venezuela has ground to a halt, Rusoro just arranged a US$80-million exchangeable loan to fund its activities in the South American country.

The entirety of the loan is exchangeable into Rusoro shares but major investor Peter Hambro Mining could end up with a large chunk of the Vancouver-based company. The London Stock Exchange AIM-listed company is providing US$20 million of the loan, exchangeable into Rusoro shares at $1.25 a piece.

The remainder of the loan will be financed by a syndicate; each lender can also exchange its portion of the loan into Rusoro shares at $1.25 each. Peter Hambro has entered into an option agreement with those lenders for the right to acquire their shares at $2.20 per share.

If Peter Hambro exchanges all of its initial US$20 million investment into Rusoro shares the Russian company would hold 4% of Rusoro’s partially-diluted shares. Should Peter Hambro exercise the option agreement fully the company would acquire 14.2% of the junior.

The loan was to be drawn down immediately. The initial US$28 million are available immediately; the remaining US$52 million will be made available once pre-agreed milestones are met.

Peter Hambro, the second-largest Russian gold mining company, operates two mines in the Amur region of Russia’s Far East. In 2007 the company produced 297,000 oz. gold. In a statement executive chairman Peter Hambro said, “We have always said that any investment outside of Russia would need to have a Russo-centric rationale and the Rusoro investment is just such an opportunity.”

Rusoro owns the Chco 10 mine in Bolivar State, southern Venezuela, and holds a large land package in the area. The mine is expected to produce 120,000 oz. gold in 2008, provided Rusoro continues to avoid the pitfalls into which other Venezuelan mining projects have fallen.

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