Jose Antonio Pinedo, Placer Dome's legal advisor in Venezuela, told Reuters "All the money required will be coming from Placer". Placer Dome holds a 70-percent stake in the Minera Las Cristinas project (Minca), situated in southeastern Venezuela, potentially one of South America's largest mines.

The remaining 30 per cent are in the hands of state-owned industrial holding company Corporacion Venezolana de Guayana (CVG). The mine, with proven and probable reserves of 11.7 million ounces of gold, should start production within two years, possibly as early as late 2000.

Annual output during the first 10 years is pegged at 530,000 ounces of gold and 7,000 metric tons of copper. Of the $575 million total investment, around $250 million will come from a loan of 10 to 12years to Minca from PDG Bank, a subsidiary of Placer Dome based in the Cayman Islands.

The remaining $300 million will be supplied by Placer Dome itself. "As the CVG obviously does not have the money, everything will have to come from Placer's cash flows," Pinedo said.

He said it would take the form of a loan to the CVG to be repaid from the mine's profits. Financing for the project was agreed March 26 and formally signed last week, Pinedo said.

Venezuelan state-run companies are facing a sparse year in 1999, with government revenues set to fall due to low oil prices and a moribund economy.

Finance minister Maritza Izaguirre has estimated the government will need to borrow over $5 billion to plug its fiscal deficit, and it is already taking a tooth comb to public spending.