Bolivarian Republic of Venezuela National Assembly

Standing Committee on Economic Development



REPORT OF THE MEETING MADE THE DAY 04 OCTOBER 2007

AT 10:00 AM ROOM AT THE MEETINGS OF THE STANDING COMMITTEE FOR ECONOMIC DEVELOPMENT ON THE CASE OF MINING CRISTINAS. ESTUVIERON PRESENT AT THE MEETING THE PRESIDENT OF THE STANDING COMMITTEE ON ECONOMIC DEVELOPMENT, MEMBER OF RICARDO GUTIERREZ, COORDINÓ THE WHO, THE DOCTOR LAURA PAREDES, DIRECTOR OF GRANTING OF THE MINISTRY OF POWER POPULAR BASIC INDUSTRIES AND MINING. THE GRADUATE SERGIO RODRIGUEZ. DIRECTOR OF PLANNING MINISTRY OF POWER OF THE PEOPLE AND THE ENVIRONMENT RENEWABLE NATURAL RESOURCES, THE GEÓLOGO JORGE VELASCO, MANAGER OF GEOLOGY OF THE CORPORATION OF VENEZUELAN GUAVANA, ENGINEERS AND LUIS FELIPE COTTIN. EXECUTIVE CHAIRMAN OF THE COMPANY CRYSTALLEX-VENEZUELA, THE GRADUATE SERGIO ALCALÁ. MANAGER OF ENVIRONMENT AND JESUS FERNANDEZ, DIRECTOR OF CORPORATE AFFAIRS.



BACKGROUND

During the months of January to August 2003 The Standing Committee for Economic Development conducted an exhaustive investigation of the legal, technical and socio-economic Las Cristinas Mining Project, located at kilometre 88 Fields of Las Claritas Sifontes municipality of Bolivar State, property the Venezuelan State.

The investigation included the termination of the contract by the Venezuelan State parle to companies Placer Dome and MINCA between July 15, 1999 and the completion of the final contract on 16 November 2001, the assumption of the Corporación Venezolana de Guayaría as dealership Las Cristinas mining sector for the development of the project and thirdly included detailed knowledge of the contract between the C. V. G., as a dealership, and the company as operator Crystallex International Mining Project to develop the Las Cristinas 4, 5, 6 and 7.

Regarding the first point, the Commission found that to terminate the contract with Placer Dome and the Venezuelan State MINCA acted adjusted to the right to defend the country's interests and corrected an irregularity sustained failure of these companies for years. As to deposit the Las Cristinas concession in the hands of C. V. G., is considered appropriate, as it is the largest gold deposit in the country and whose dealership is a state enterprise. The other issue was the analysis of an agreement signed between C. V. G., as a dealership, and the company Crystallex International, as operator of the Las Cristinas mining project. This contract was signed on 17 September 2002, and in it the operator is authorized to conduct all investments and work necessary to reactivate and implement the Mining Project Las Cristinas 4, 5, 6 and 7, also build the plant operate and process the material for its gold sales and marketing. It also agreed to transfer the mine and its facilities to C. V. G. At the end of the contract, as stipulated in the Law on Mines. Also stresses the initial payment of fifteen (15) million by the operator to C. V. G. In the 5 working days of the contract award, as well as the related concept of royalties and taxes Fisco, in accordance with their respective laws. If these are typical in this type of contract, deserves particular reference a number of special benefits of socio-economic designed to benefit communities in the Municipality Sifontes, institution location of the mining sector. In the agreement the company Crystallex is committed to carrying out a series of social and economic programmes for employment generation, construction of housing in the community, technical training programs for staff, strengthening of local centres, and scholarship program internships to students, and design and implementation of water service in the black and white community. Importantly, the inclusion of



These aspects of socio-economic aimed at benefiting the surrounding communities, constitute a precedent for community participation that certainly worth mention. Likewise it is appropriate to indicate that in the follow-up done by this Standing Committee in the years after the signing of the contract between the C. V. G. Crystallex and we were able to verify with the communities and with representatives of the people of the municipality who has been a full performance under the agreement by the C. V. G. And Crystallex.


DEVELOPMENT OF THE MEETING


The Chairman of the Standing Committee for Economic Development, Deputy Ricardo Gutierrez, once installed the Commission, opens the meeting and in his speech is fundamentally about three things: first, a brief review of the follow-up in the course the years has made the Economic Development Commission to the case, because the communities and popular representation of Sifontes municipality have resorted to this request for mediation and involvement of the relevant agencies before granting permisología so that becomes effective. She expressed satisfaction publicly when the MIBAM in the early months of this year awarded the license with which the Ministry of the green light for the start of project development, and requested the MARNR do the same. He informed the Dep. Gutierrez of the discussions with the highest authorities of the Ministry of Environment, which was that there was no legal impediment to the granting of permisología by the MARNR. Thus, the meeting of a technical representation of all agencies involved in the case seeks to dispel any doubt on the subject, as well as to reaffirm that have covered all the points for the finiquite the permisología required. Following the intervention of Dep. Gutierrez continued meeting with technical assistance from the participants.

Ing. Luis Felipe Cottin, representative of the company made reference to contract compliance, legal and technical with which he has represented his acting, he mentioned that since the agreement was signed in September 2002, had appropriated and remedied all the requirements that had been made to the company, why did not understand the reason for the delay in granting the permisoíogía to begin with the built added that the company has a major bearing on the payroll, maintenance and socio-economic costs, and that is affected by the delay. He indicated that the negative effects of cyanide were discarded because so previsiva became an investment of 5,300 billion bolivars in a plant that prevents the degradation and harm to people. Finally noted that the company has always


Acted in accordance with the guidelines of the state, and only expected to be given permission to start the development as soon as possible.

Dr. Laura Walls, representative of MIBAM not raised any obstacle to whom the permisología, since it represents the Ministry and issued the licence to start the project's development. He emphasized the importance of participation of the Commune Councils, particularly in regard to special sales.

Ing. Jorge Velasco, representative of the C. V. G., the Corporation has noted that the feasibility study. Of course, as dealership, hopes that the permission will be granted as soon as possible. He indicated that perform an important social work jointly with Crystallex toward cooperative miners and neighborhood, and consider it important linkages with the Commune Councils.

Ing. Sergio Rodriguez, Director of Planning MARNR, referred in general to environmental aspects. He agreed also with regard to the participation of the Commune Councils in projects to develop.

In a second exchange of ideas, participants of the meeting agreed to consider a proposal on the basis of endogenous development in the region, with a comprehensive vision that enjoys popular participation on the basis of the Commune Councils. This proposal should include sustainable development and have a strong social participation.


CONCLUSIONS


According to what was expressed by the participants of this meeting, the following conclusions are obtained:

1 - The dealership, Corporacion Venezolana de Guayana (CV G), and the company Crystallex International, have met both the feasibility study and other legal and technical requirements required for them to be awarded the corresponding permisología by the Ministry Environment, for the start of construction and development of the Las Cristinas project.

2 - The delay in granting the permisología affecting the company due to the significant burden that is on staff costs, maintenance expenses and socio-economic in nature. Likewise delayed for much of the community benefits stipulated in the agreement in the fields of employment, housing, education, etc..

3 .- The Presidency of the Commission reiterates the call to the authorities MARNR for whom the licence, thus allowing the initiation of mine development.


4 - There is the development of a comprehensive proposal on the basis of endogenous development in the region by providing for the integration of the communal councils and the sustainable development of the area for all those projects under study.



Caracas, October 16, 2007


Deputy Ricardo Gutierrez

Chairman of the Standing Committee

Economic Development of the National Assembly



"2006, YEAR OF BICENTENARIO OATH OF GENERALÍSIMO FRANCISCO DE MIRANDA AND PARTICIPATION IN POWER POPULAR PROTAGÓNICA"



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