I don't think it has anything new, but thought I would post it for all to see.

Experts see shaky future at Las Cristinas - Venezuela

Tuesday, June 3, 2008

Uncertainty has arisen in Venezuela's mining sector about the future of the Las Cristinas gold project since the country's environment and natural resources ministry (MinAmb) denied Canadian company Crystallex International (TSX, AMEX: KRY) a vital permit to affect natural resources.

"It isn't clear what the government's plans are for the area," Marianna Almeida, a partner at Colombian-Venezuelan law firm Incolven, told BNamericas.

According to Almeida - and various other sector executives who spoke with BNamericas about Las Cristinas - the situation there is "very peculiar."

The sources all agreed in pointing out that MinAmb technically is not denying the permit to Crystallex, which operates the project, but rather to state heavy industry holding CVG, which holds the concession.

"CVG is the one that should decide whether it will take action against the government's decision and CVG's head [Rodolfo Sanz] is the very person in charge of the basic industries and mining ministry. This is a struggle of government versus government," one source said.

The government has also placed Minister Sanz in the president's chair at recently nationalized steelmaker Sidor.

Another source who spoke with BNamericas said that, "the minister thinks he cannot go talk to [President Hugo] Chávez to persuade him to grant permits to certain private companies because then he wouldn't be behaving radically and Chávez would not like that."

The source said the future of Las Cristinas is "the million dollar question" and added that as long as the government does not make a clear decision about what it plans to do in the mining sector, the issue will remain on hold.

"Depending on how long it takes the government to make a decision, the project will either get developed or [Crystallex] will have to initiate an international arbitration process and ask for indemnity on its investment," the source added.

On May 12, Crystallex announced it had filed a legal rebuttal to MinAmb's late-April decision not to grant an essential exploration permit to affect natural resources.

The rebuttal was rejected last week, and the company then stated it has the right to appeal to MinAmb within 15 business days and that it had instructed its legal counsel to prepare the relevant documents.

SMALL-SCALE MINERS

Another suggestion that has surfaced about the future of Las Cristinas is that the government may be planning to award the areas to small-scale miners through a recently launched program to help cooperatives.

However, Almeida thinks such a measure would create a void of responsibility concerning environmental liabilities and restoration.

The Las Cristinas deposit has 464Mt grading 1.13g/t gold or 16.9Moz contained in proven and probable reserves plus 629Mt grading 1.03g/t gold or 20.8Moz contained in measured and indicated resources.

Harvey Beltrán
Business News Americas