EXPLORATION ’93 — Friedland strong supporter of Guiana

Robert Friedland, self-described financier and venture capitalist, is behind Venezuelan Goldfield’s (VSE) efforts to position itself as the dominant junior in the Kilometre 88 district.

Though not a director of Venezuelan Goldfields (Vengold), Friedland is the largest single shareholder since he acquired control of a predecessor company, Mt. Grant Mines, last August. The junior then began acquiring concessions in South America’s Guiana Shield, one the world’s most promising geological environments.

Guiana is a region between the Orinoco, Negro, and Amazon rivers and the Atlantic ocean.

“What Chile is to copper, the Guiana Shield will be to gold,” Friedland tells The Northern Miner. “The region has a tremendous history of gold production going back centuries, and will one day be very important for our industry.” Investors appear to be agree, as evidenced by Vengold’s current share price of $11. Critics, however, dismiss the Kilometre 88 gold rush as “another Friedland promotion.” They are quick to invoke the fate of his previous flagship, now-defunct Galactic Resources.

Galactic is a touchy subject for Friedland, who points with pride to the Ridgeway gold mine in South Carolina (now owned by Kennecott) and the profitable sale (to CRA of Australia) of a gold-copper project in the Philippines. Nevertheless, Galactic was better-known for promotional excess and its under-performing Summitville gold mine in Colorado, as well a lacklustre environmental performance.

Older and wiser from those experiences, Friedland has adopted a different strategy. After stepping down from Galactic, he and his brother Eric were involved in the Fort Knox gold project in Alaska, successfully sold to Amax Gold in early 1992.

Those who know Friedland say his strength lies in being able to grasp the “big picture.” In the late 1980s, a decline in North American mining was under way. Among the signs were difficulties obtaining permits and burgeoning costs associated with opening (and closing) mines. Then foreign opportunities began opening up, and Friedland was there. His corporate strategy clearly reflects a belief that the next wave of gold mines will be outside North America.

His interest in the Shield — which extends from Venezuela, through Guyana and Suriname, and into Brazil and French Guiana — was triggered by research into intrusive-hosted gold deposits, such as Fort Knox. After reading that Golden Star’s (TSE) Omai deposit in Guyana conformed to this model, he contacted company founder David Fennell.

Since its inception in 1985, Golden Star was active in Guyana, and Friedland gives full marks to Fennell for his

“genius” in recognizing the promising geology of the Guiana Shield. “Golden Star’s stock was beat up when I came on the scene because of Placer Dome’s withdrawal from Omai,” Friedland recalls. “It was a bird with a broken wing, and I helped it mend.”

Friedland helped raise about $28 million for the company and now holds the most shares. Golden Star found a senior partner, Cambior (TSE), to develop Omai, and proceeded to acquire and explore other properties in the Shield. Its Gross Rosebel concession, in Suriname, is said to host a major, bulk-tonnage gold deposit.

Golden Star made the biggest gains of any gold stock on the Toronto Stock Exchange in 1992, posting a 204.3% increase as its share price rose to seven dollars from $2.30. (The issue now trades at about $10.)

With Golden Star well-established, Friedland is turning to Venezuela’s Kilometre 88 district, which gained prominence when Placer Dome discovered the Las Cristinas deposit. Analysts say the discovery could host between 12 million and 30 million oz. gold, but Placer dismisses these estimates as “wildly optimistic.” It will release its own estimate later this year. Vengold acquired several concessions and entered into agreements with other companies in the region, including Carson Gold (VSE) (now headed by Eric Friedland) and Queenstake Resources (TSE). A recent $11-million financing is aimed at further acquisitions and exploration.

Friedland won’t say which concession is most prospective, but refers to a government estimate that Venezuela’s overall gold potential is in the order of 8,000 tonnes. “These are still early days for this camp.” A number of analysts have visited the district, and several have noted geological similarities to the Timmins, Ont., camp.

“The geological aspects observed on our trip exceeded our greatest expectations,” said Eric Zaunscherb, a Quebec-based mining analyst with Lee, Zaunscherb & Associates. “It is clear from our regional and site visits and (from) our discussions with geologists of varying backgrounds and affiliations that this is one of the most important gold explorations in decades.”

In a report, Zaunscherb said the camp has at least six types of gold mineralization, including saprolitic blanket surface deposits, shear zones with quartz veins, shear zones with disseminated gold and quartz stockworks. Meanwhile, ownership of some key concessions is in litigation and more disputes may surface as the rush continues. Some companies with surface rights may be unable to acquire hardrock rights under the current “means test” system. Moreover, promotional excesses may pose problems for North American securities regulators.

As many as five years may elapse before the dust settles with respect to ownership of concessions, analysts point out. And it will be at least a year before new laws on the granting of concessions finish wending their way through legislature.