Crystallex in the dark over Chavez comments

14th January 2009 By: Liezel Hill

TORONTO (miningweekly.com) – Toronto-based Crystallex International has not been informed by the Venezuelan government about any changes in the status of its Las Cristinas gold project, the firm said on Wednesday.

The company was responding to comments reportedly made by President Hugo Chavez, that the project would be taken from Crystallex and developed by a joint venture (JV) between the government and Vancouver-based, Russian-owned Rusoro Mining.

Crystallex “has not been notified of any changes in position by the Venezuelan government regarding the Las Cristinas project or the mine operating contract,” the company said in a statement.

The firm's staff and representatives are in “continual communication with senior Venezuelan officials” and the comments attributed to Chavez had not been raised with the company, it added.

Rusoro, which has been named as the government's 'partner of choice' when it comes to gold-mining, operates the Choco 10 gold mine in Venezuela, and last year bought Hecla Mining's Isidora operation, which it now owns in JV with a State-owned company.

The firm is also in the midst of a hostile takeover bid for Spokane, Washington-based Gold Reserve, which plans to develop the Brisas gold/copper project, just down the road from Las Cristinas.

Las Cristinas, which is believed to be one of South America's biggest untapped gold deposits, has estimated proven and probable reserves (based on a $550/oz gold price assumption) of 16,86-million ounces of gold, according to a September 2007 update by Crystallex.

Crystallex has been trying for years to get permission to build the mine, but was told last year in April that a key permit would be denied.

Since then, the company has been in negotiation with various Venezuelan officials in the hope that it can find a solution, and even filed a dispute with the nation's government in December, under an investment treaty between Canada and Venezuela.

Crystallex shares were down 7% by 13:14 in Toronto, at C$0,20 apiece. The stock fell as low as C$0,165 earlier in the day.