The young man who greeted me in the foyer of the Lainsborough Hotel on Hyde Park Corner in London was NOT your stereotypical James-Bond type Russian ... in fact he gave a favorable impression as "just an ordinary sort of guy" although after a few minutes conversation, it was obvious that he is something more than just a company executive.

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VHeadline editor & publisher Roy S. Carson writes: The young man who greeted me in the foyer of the Lainsborough Hotel on Hyde Park Corner in London was NOT your stereotypical James-Bond type Russian ... in fact he gave a favorable impression as "just an ordinary sort of guy" although after a few minutes conversation, it was obvious that he is something more than just a company executive ... something approaching the quiet confidence of a political power-broker, perhaps passed down from his father, Vladimir Agapov, who had been a top executive at Russian Aeroflot in the 1980s and '90s.

...and looking at the first digital photographs of himself, Andres Agapov is forced to admit that he is "beginning to look more like his father each day!"

Both are aeronautical engineers: Andres (now 40-ish) graduated in Moscow and, after a spell in Montreal (Canada) and New York, began to carve a career for himself closer to the ground, as CEO of the Agapov Group-owned Rusoro Mining which, at first sight, is set to take over most if not all of Venezuela's gold mining sector in a novel socialist 50/50 joint venture with the Venezuelan government.

Trying to find pictures of Andres Agapov on the Internet was a daunting task since you could almost describe his as reclusive by the lack of personal information available on the www ... but he says the explanation lies in the fact that Rusoro is a very small company with basically zero public exposure and that the only press he has had, has been since Rusoro's very public involvement in Venezuela last year -- with the ground-breaking deal on Hecla's former Isidora mine -- and RusKaolin which was set up to exploit China clay from an open-pit deposit between Las Brisas del Cuyuni and Las Cristinas.

It's Rusoro's approach to buy-out failing Gold Reserve at Las Brisas del Cuyuni that rocketed Agapov onto the radars of puzzled gold investors in North America who reeled at the prospect of first Las Brisas, and probably Las Cristinas, being swallowed up by what they perceive to be a Russian midget which is most definitely making further headway with the Venezuelan government that either of the aforementioned two have seen in years of basic paralysis.

Agapov explains: "In fact we have been in Venezuela for more than six years now and we have formed excellent relationships with the government, the Basic Industries & Mining Ministry (Mibam) and the Environment Ministry (MinAmb) ... it is scarcely a secret now that we are all singing from the same hymn sheet as evidenced in the deal we completed earlier in 2008 to buy the Venezuelan assets of (Idaho-USA-based) Hecla Mining at La Camorra, the concession the plant and also a producing mine in Block B, Isidora where we formed a joint venture with the government on a 50/50 basis to put the mine back into a much higher production in 2009 and where we may be reaching a hundred thousand ounces of gold annually."
"We established a very good relationship with the Venezuelan government on different levels ... we are very well-known at the Mining Ministry (Mibam) ... I guess they saw us growing as a company ... now we are basically the only gold mine operator in the country that produces gold. We have a proven track record and the government is happy about the way we do things in Venezuela. There is definitely potential to grow and to develop a larger partnership on the given socialist 50/50 joint venture basis."

"This assumes that the Venezuelan government is the participating partner and that we both have to contribute half although, essentially, we do all the work ... all the studies and all the engineering work, and then, eventually, the mining and production of gold will be done by our company ... so they (the Venezuelans) stand to benefit financially and I think it is a fantastic business formula for Venezuelan government!"

"The idea to make a bid to take over Gold Reserve came in the summer of 2008 ... we see a lot of synergies in acquiring Gold Reserve and by combining the resources of the two companies and developing Las Brisas mine, the potential is there and with our relationship in Venezuela and our expertise, we can deliver
... of course, first the main objective is to permit the mine and then to take it into production!"

"If our takeover bid is successful, Gold Reserve shareholders get immediate exposure to gold production since Rusoro is a production company and growth is definitely there ... we're expecting to put another mine into commercial production in 2010 ... the El Placer mine in the El Dorado area, and we just received notice that Increible 6 has been approved and that means that in the second quarter of 2009, the La Increible open pit mine will go into production very close to El Choco and that, of course, will give us a significantly higher production."

VHeadline: Doug Belanger at Gold Reserve appears to be very much against bid and is taking action to try to prevent it! Is that sensible from his shareholders' point of view?

"Well, I think his idea is just to make it difficult and, basically, to deprive Gold Reserve shareholders of the opportunity to tender their shares and eventually get the benefit of becoming shareholders in a mid-tier producing company -- his claim based in Rusoro getting confidential information from our financial adviser, Endeavor Financial is so absurd. I'd like to make it clear to everyone that we never asked for any confidential or any other sort of information about Gold Reserve; simply because we don't need it ... there's no need to have that kind of information. In September/October 2008, I listened in on a Gold Reserve conference call and Belanger's presentation made it clear to me what needs to be done ... because Gold Reserve's existence and their behavior in Venezuela really makes it difficult for Rusoro Mining to operate since they cast a very bad light on the whole gold mining sector in Venezuela. By merging the two companies, I think that we'll provide a solution to Kilometer 88 as quickly as in 2009."

In the inevitable war of words there has been wider speculation that Andres Agapov is in reality an ex-KGB (SSB) and that that's where the alleged confidential information comes from ... directly from the KGB, or the SSB as it is now known...

"No! Unfortunately, I was never part of those organizations ... I am just a graduate of Moscow Institute and I have no affiliation with the organizations that you mention ... but, again, back to the (allegedly) sensitive information: there has been absolutely no need for Rusoro to have any confidential information, we know exactly where Las Brisias del Cuyuni is located , we know what assets are on the Gold Reserve's balance sheet and that's sufficient enough for us to make our determinations!"

"Assuming the Gold Reserve shareholders tender their shares and that Rusorto succeeds, we will immediately go to the Ministries of Mining and Environment and start resolving the situation. In Kilometer 88, Las Brisas will start and that will be our priority, not to mention all our other ongoing projects ... the extension of Choco 10, the mill and putting San Rafael and El Placer into production!"

"Essentially, it'll be in the normal course of business and no special contacts needed ... we will propose to the government a similar business formula as we as we have already implemented with the CVG and Mibam with Isidora ... a settlement on a 50/50 basis, and I think we will make a similar offer to the government for Las Brisas..."

Nevertheless, the view of Rusoro and Agapov in the eyes of many North American gold investors is rather much founded in Cold War (lack of) appreciation for the Soviet Union ... yet you represent the NEW Russia!

"Of course, the NEW Russia ... and I don't think its fair to make reference to Rusoro and any Cold War elements ... we're just a normal business and its a new Russia, very pro-business, added to a pro-business government, and I think that the relationship between the Russia and Venezuela will prosper in the years to come."

Well, with the Russian Navy visiting Venezuela and the Russian President too ... it kind of raises fears among a lot of capitalists that, suddenly, Venezuela is being taken over by the Russian mafia!

"I don't think anyone should be concerned about the Russian mafia, or any fears that Venezuela is being taken over by the Russians ... it was just a Navy exercise ... they made a stop in La Guaira and the Venezuelan people got a chance to see how powerful the Russian navy fleet; is and with respect to the Russian President, it was an historical visit ... the first time that a Russian President visited Venezuela.

Do you think that the United States has lost out a lot through President Bush's antagonism towards Hugo Chavez?

"Well, obviously, the relationship between two countries worsened and both presidents were portrayed negatively, and I think the Bush administration could have done better and maybe improved economical ties ... but, again, it is too late!"

With president-elect Obama due to take office in just a couple of weeks time, what do you see as the future for the United States and Venezuela after he takes office?

"I actually expect great things from President-elect Obama and I think that the relationship between the United States and Venezuela will be begin to improve and, yes, I expect very positive results!"

Does a rapprochement pose any danger to your relationship with Venezuela?

"None at all! It is only to the benefit of all the small- or medium-sized businesses that operate in Venezuela ... competition is very healthy!"

There's been a lot of criticism in the States about business opportunities in Venezuela. Is that just paranoia on the part of the Unietd States?

"Well, I shouldn't say that it is paranoia ... it's a perception of some business people in the United States that it is impossible to operate in Venezuela and that there's no corporate governance or that it's very difficult to deal with government authorities. I think that Rusoro is a fine example which shows, not just American business people, but business communities everywhere in the world that working in Venezuela is possible and that you get very significant support from government agencies regardless of which sector you are operating in!"

Do you think that a lot of the relationships between North America and Venezuela have been destroyed by certain individuals using insults in their attitudes towards certain government ministers?

"Unfortunately YES! Unfortunately, the tactics of threatening to sue certain government officials or the sovereign country of Venezuela will get you absolutely nowhere! And in the case of Gold Reserve, when I was listening to their conference call in the fall of 2008, I think there was discussion by Doug Belanger about filing a law suit and claiming billions of dollars from the Venezuelan government. I think the lesson should be learned by Vanessa Ventures -- which is still litigating with Venezuela, and its just got them nowhere. For Gold Reserve, it would be pretty much the same result. I don't see how you could sue President Chavez or the Ministry of Mining or ... litigation is not a solution ... working together with the Venezuelan government is the definitely right way to do it!"

What is being seen as Rusoro's major invasion of the Venezuelan gold mining sector has got quite a few of the other companies nervous and antsy about what Rusoro is planning to do in the next few years. Rusoro is seen as the new kid on the block, but Andre Agapov insists that the company has been in Venezuela for six years and that the well-established relationship with the Venezuelan government isn't going to go disappear like some wishful thinkers imagine!

"Well its not that difficult ... our growth is definitely there ... the Choco 10 mine expansion and Lo Incredible 6 going into production in 2009 and El Placer mine going into production at the beginning of 2010, and the expansion of the Isidora mine ... a combination of all those mines and we'll be producing significant results in years to come and, of course, we'll be looking to develop another mine in a group of concessions we own right now. Of course, by successfully taking over Gold Reserve, the development of Las Brisas represents huge future growth possibility!"

Rusoro's Agapov professes to a tendency to put the management of the company more in Venezuelan hands. "Absolutely! We are in Venezuela and we have to play by Venezuelan rules ... of course there's employment for locals and implementing local expertise, the level of production with Venezuelan workers is very, very important and I think it is being appreciated by people in the community and also by people in the Mibam ... I know that the locals and especially the Indian communities, our relations with the local communities, the unions and the indian communities is well-established and we have a proven track record of involvement in a lot of social projects ... you know, we are always therefor them!"

But a lot of the shareholders of both Gold Reserve and Crystallex say that their company has already invested millions of dollars in infrastructure projects, perhaps even more so than Rusoro ... how do you see that?

"It is difficult for me to comment. I didn't see any kind of infrastructure on Gold Reserve's side for instance. I don't know where exactly they invested their money or what they did ... I believe there is a lot of infrastructure left after Placer Dome and I'm not really aware of anything being done at Gold Reserve in the past six years that we've been in Venezuela. It is very difficult for me to comment because I'm not aware of any infrastructure or investment or any social investment they've done!"

Roy S. Carson
vheadline@gmail.com

Authors Bio:
Roy S. Carson is veteran foreign correspondent (45+ years in the business) currently editor & publisher of VHeadline Venezuela reporting on news & views from and about Venezuela in South America -- available for interviews -- call Houston 713.893.1433