RPT-FEATURE-Prospectors lured by 'cursed' Venezuela gold mine
LAS CRISTINAS, Venezuela, March 27 (Reuters) - Four centuries after the lure of Venezuelan gold brought ruin to English explorer Sir Walter Raleigh, the riches at one giant mine some say is cursed still haunt treasure hunters from across the globe.
Located south of the Orinoco river and near a town bearing the name of the mythical golden city of El Dorado, the Las Cristinas deposit captivates miners and prospectors even though no ore has been legally dug there in two decades.
Studies show it may be Latin America's top gold deposit.
But the Las Cristinas saga, involving a ghost town, environmental devastation and fist-sized nuggets, underlines the risks of business in Venezuela, where the draw of natural wealth has been dulled by rule changes and economic turmoil.
A web of legal cases and red tape has so far stopped any big company from extracting the estimated 20 million ounces of gold that lie in Las Cristinas and its sister property Brisas -- together known as Kilometro 88.
Latin America is a major source of minerals but while countries such as Peru push mining with clear rules for investors, the potential is undertapped in Venezuela and Ecuador due to tension between governments and foreign firms.
The view that Venezuela, South America's top oil exporter, offers an unstable business climate has grown under socialist President Hugo Chavez, who has nationalized large chunks of the economy.
Game investors and poor local miners at Las Cristinas hope their luck will change after Chavez, with an eye on record gold prices and falling oil income, vowed to open the mine this year with the help of Russian tycoon Vladimir Agapov.
That promise will be hard to keep, but it has caught the eyes of locals who hope the project will bring order to chaotic camps and villages of wildcat miners where drunken machete fights take lives and mercury run-off pollutes water supplies.
"Some people were born here and 20 years on are still waiting for the mine," said Cristina Perez, who has panned gold in the area for a generation and lives in a tidy tin-roofed shack with no running water in the village of Las Claritas.
"It has to start this year," said Perez, who feels unsafe in the lawless village after a gang stole her $12,000 metal detector. "We need sewage disposal, housing and security."
Even Agapov's Vancouver-based company, Rusoro, which Chavez wants to develop Las Cristinas, says the timeline is too short. Chavez has not further explained his plans for the mine, the rights to which are now held by Canada's Crystallex.
Pessimism about the property has reached stock investors, who typically assign big discounts to shares of companies associated with Kilometro 88.
"This quagmire, and the perception of risk that comes with it, continues to be a bit of a drag on our share valuation," said Rusoro's president, George Salamisoro.
Rusoro has had success turning round two troubled gold mines in the same region but a hostile bid to take over Gold Reserve, the U.S. company that owns Brisas, was shot down by a Canadian court last month. Continued...
