Venezuela to Take Control of Crystallex's Gold Mine (Update1)

By Daniel Cancel

Nov. 5 (Bloomberg) -- Venezuela's government will take control of the Las Cristinas gold mine operated by Crystallex International Corp. to assure state control over mining operations.

Las Cristinas is estimated to have about 31 million ounces of gold ore, valued at about $35 billion, the Mining and Basic Industries Ministry said today in an e-mailed statement.

``This mine will be recovered and will be operated under state administration,'' the statement said.

Venezuela's socialist government has seized control of industries that President Hugo Chavez has deemed ``strategic.'' Mining Minister Rodolfo Sanz said in the statement that the government plans to seize other mining deposits to increase production of gold, diamonds, bauxite and uranium.

Toronto-based Crystallex was given a 20-year contract to operate the mine in 2002 and hasn't been informed of any changes, Richard Marshall, vice president of Crystallex, said in a telephone interview.

Crystallex fell 13 cents, or 25 percent, to 38 cents a share as of 3:16 p.m. in Toronto Stock Exchange trading. The shares sank 43 percent on April 30 after the company said the environment ministry didn't plan to issue permits for Las Cristinas.

A ministry spokeswoman didn't immediately return phone calls seeking comment from Bloomberg News.

To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net.

Last Updated: November 5, 2008 15:26 EST