Year-to-date gain: 700 percent; market cap: C$252.93 million; current share price: C$0.40
Gold-focused Rusoro Mining used to have interests in Venezuela. Up until 2012, the company was operating two mines and two mills in the country, along with two additional projects that were nearing the production stage.
However, in March 2012, the Venezuelan government nationalized Rusoro’s operations without compensation. Following the appropriation of its operations, the company entered into arbitration proceedings before the World Bank’s International Center for the Settlement of Investment Disputes; over four years later, in August 2016, Rusoro was awarded US$967.77 million, plus pre- and post-award interest, for a total of more than US$1.2 billion.
Over the next two years, Rusoro filed multiple rounds of proceedings to enforce the award. Finally, in October 2018, the company announced it had come to an agreement in which Venezuela would pay Rusoro US$1.28 billion incrementally and in return Rusoro would give Venezuela its mining data. In this agreement, an initial payment of US$100 million would be issued in November 2018 and the balance was to be paid in monthly installments over five years starting in January 2019.
Venezuela issued the November payment as agreed, but Rusoro announced in December 2018 that a portion of the funds had been frozen by its Canadian bank due to concerns about US sanctions against Venezuela.
The company announced more negative news in January 2019, when the Paris Court of Appeals partially annulled the arbitration award for the company. The court upheld the original tribunal’s findings that Venezuela was liable for unlawful expropriation of Rusoro’s investments, but annulled the findings on damages. Following lengthy court proceedings, the French Supreme Court reinstated the arbitration award in March 2021.
Shares of Rusoro began rising this year following a series of positive announcements beginning on April 11 that point to a possible end to legal proceedings, and show the company could be getting closer to obtaining compensation for Venezuela’s expropriation of its assets. The US District Court for Delaware found that Rusoro has proven that oil company Petroleos de Venezuela (PDVSA) is a corporate alter ego of Venezuela, which means that the now US$1.4 billion award could be enforced through the seizure of PDVSA assets.
Another announcement came on July 10, when Rusoro shared news that a three judge appellate panel had rejected Venezuela’s argument that political turmoil warranted a different outcome when deciding that PDVSA was controlled by the government. “Even accounting for those differences (regarding political turmoil), the district court correctly concluded that PDVSA remains the alter ego of Venezuela,” the panel determined.
Rusoro stated in the release that it hopes “the Republic will voluntarily pay its obligation to the Company and allow the parties to bring this longstanding dispute to its overdue conclusion.” Shares in the company have gained 700 percent this year, reaching a year-to-date high of C$0.51 on August 2.
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