By Patricia Rondon Espin
CARACAS, July 29 (Reuters) - Even after hours of shoveling earth in the stifling heat of eastern Venezuela in hopes of finding traces of gold, wildcat miner Carlos Sanchez says he's hooked on the gold rush.
"I like life in the mine," said 41-year old Sanchez, caked in mud from head to toe.
He is one of around 3,000 wildcat miners in and around Las Cristinas mine in western Venezuela who illegally pan the surface of one of Latin America's largest gold deposits while red tape and legal battles prevent its proper development.
The mine near the border with Guyana, for which Canada's Crystallex has an operating permit, is estimated to hold 13.6 million ounces of gold.
But for decades several private companies have tried but failed to get at the precious metal, making it a showcase of the difficulties in Venezuela's gold mining industry.
Crystallex was unable to obtain an environmental license and Gold Reserve had its license withdrawn.
In May Venezuela stripped Canadian miner Gold Reserve of two concessions, including a part of the Brisas property next to Las Cristinas.
The government said it does not intend to renew mining concessions to private companies.
Instead, President Hugo Chavez, who has promoted a socialist revolution and been in power for over a decade, said Las Cristinas could be developed by a joint venture between the Venezuelan state and Russian-Canadian mining junior Rusoro.
"We haven't had any new communique from the Venezuelan government. So we are continuing with our work normally," said Juan Claudio Palazzi, Crystallex administrative manager.
The possibility of Rusoro or other Russian companies taking over the mines has attracted more wildcat miners, who work in precarious conditions and contaminate rivers and ground water by using mercury to amalgamate the ore.
"They come in hopes of being compensated for a (possible) eviction once the company arrives," said one local authority.
From a birds' eye view, the green jungle canopy is spotted with water-filled pits and a sprawling camp of makeshift huts covered with plastic bags.
Miners can make up to 7,500 bolivares ($3,488) per month, compared to a minimum monthly salary of 800 bolivares.
"Making the big find is not a dream or an illusion, it's my expectation," said Sanchez.
But tapping the region's huge mineral potential requires massive investments. Judging by recent statements from Russian authorities, financing may be on its way.
Gazprombank, the banking arm of the Russian gas export monopoly Gazprom, will finance the development of minerals in Venezuela with a $4 billion loan, company officials said this week.
Gold Reserve has threatened to take Venezuela to an international tribunal, adding to the legal quagmire surrounding Venezuela's gold mining industry. (Writing by Raymond Colitt; editing by Jim Marshall)