VANCOUVER -- Nearly 10 years ago, Toronto-based Archangel Diamond Corp. and its two Russian partners discovered the Grib Pipe, believed to be one of the biggest diamond deposits ever found in western Russia.
But no one knows its size for sure because a licence dispute between Archangel and its partners has stalled work on the deposit since 1998.
And as the wrangle drags through international arbitration panels and American courts -- where Archangel in 2001 filed a lawsuit claiming more than $1-billion (U.S.) in damages -- the company can only stew and count its mounting legal bills.
"Frustrating as this is for the long-suffering shareholders of Archangel, it must also be a concern for the Russian government, a government that continues to maintain that it is keen to encourage foreign direct investment," president and chief executive officer Ray Clark wrote in a letter to shareholders this spring.
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"In this regard, Archangel's long-running dispute with its joint venture partners . . . cannot be a helpful signal for sending to the world."
Exactly what kind of signals Russia is sending to the world, and to foreign investors, is a hot topic in the global resource sector. The recent conviction of oil tycoon Mikhail Khodorkovsky on fraud, tax evasion and other charges -- widely seen as a slap from Russian president Vladimir Putin to a would-be political rival -- raised questions about Mr. Putin's commitments to political and economic reform.
But where some companies see warning flags, other companies see a welcome mat, or at least a country so rich in resources it is too important to ignore.
Vancouver-based Bema Gold Corp. has jumped wholeheartedly into Russia, where the company has built one mine and is working on another.
Bema CEO Clive Johnson said concerns about Russia have been overblown, pointing out that international banks recently lent Bema $150-million in bridge financing for its Kupol project and are in talks to finance the rest of the mine.
Canada's biggest gold producer, Barrick Gold Corp., is also keen on Russia. Barrick opened a Moscow office this year and has bought stakes in two London-listed mining companies that have Russian assets.
Kinross Gold Corp. struggled through legal quagmires of its own in Russia in the 1990s.
New chief executive officer Tye Burt, who joined Kinross in March, had been pondering whether to turn the lights out in Russia after the company's Kubaka mine winds down this year. He recently decided to stay put.
"We like Russia, we understand the business environment and Kinross has a long-term track record there. And we don't want to allow that to dissipate," Mr. Burt said.
Kinross plans to explore around its current operations in the hopes of finding new deposits and is also open to working with other players on joint ventures, he said.
Toronto-based High River Gold Mines Ltd., which bought a stake in a Russian gold producer in 1995, has since increased its holdings and is building a new mine in Siberia.
Other companies, however, wouldn't touch the country with a barge pole.
At a mining conference in New York earlier this month, Pierre Lassonde, president of Denver-based gold giant Newmont Mining Corp., cited Russia's reputation for "bandit capitalism" and said Newmont would, for now, put its money elsewhere.
Vancouver-based Pan American Silver Corp., the poster company for Russian troubles during the 1990s after it lost control of the rich Dukat silver deposit, is spending its money in Argentina and Mexico.
Vancouver-based Goldcorp Inc., the new million-ounce producer on the gold scene since acquiring the former Wheaton River Minerals Ltd. earlier this year, is focusing on development projects in Mexico and Brazil.
A string of international companies have run into problems in Russia, Goldcorp CEO Ian Telfer said.
"I'm sure at some point they will get it sorted out, but we're likely going to wait a little bit longer," before getting involved, he said.
Patience, and a powerful backer, are helping Archangel keep up its fight for rights to the Grib Pipe.
Archangel's controlling shareholder is a subsidiary of diamond giant De Beers SA, which has provided financial support to keep Archangel afloat.
One of the parties in the Grib Pipe dispute is Russian oil company OAO Lukoil, which is also wrangling with Calgary-based oil producer PetroKazakhstan Inc. over assets in Kazakhstan.
Russia's enticing frontier
Russia is considered one of the most resource-rich, underdeveloped mineral regions of the world. Drawn by that potential, an increasing number of foreign investors, including Canadian companies, are venturing into the country. Here's a snapshot of some of the projects.
The Grib Pipe
Diamonds
Discovered in 1996
Undeveloped
Archangel Diamond Corp. and its Russian joint venture partners have been in a legal dispute since 1998.
Julietta mine
Gold
In production since 2001
Majority-owned by Bema Gold Corp.
Kupol project
Gold
Discovered in 1995
Expected start-up by 2008
Flagship project for Bema Gold Corp.
Sukhoi Log deposit
Gold
A major deposit, but plans by the Russian government to put it up to tender have been repeatedly postponed. Canada's Barrick Gold Corp. and Russia's Norilsk Nickel, which has been boosting its gold assets, have been named as potential bidders.
Dukat mine
Silver
The world's third-biggest primary silver deposit and for year the cautionary tale for would-be foreign investors. Pan American Silver Corp. spent millions on the project in the 1990s, but lost control of the mine in a legal battle and wrote off its $37-million (U.S.) investment in 2000.
But last year, Pan American sold its remaining 20-per-cent stake to its Russian operator for $43-million and is to receive up to $22.5-millio in future payments from the project - meaning its Russian adventure wasn't as disastrous as it might have been.
Kubaka mine
Gold
Discovered in 1979
In production since 1997
Scheduled to close by year-end
Owned by Kinross Gold Corp., which has been thinking of getting out of Russia but recently decided to boost exploration there, hoping to find more minable deposits.
