Crystallex is associated with Chinese group planned Las Cristinas

10:40 a.m. Bangalore .- Crystallex International Corp said it would form a joint venture with a unit of China Railway Engineering Corp (CREC) to boost its stalled Gold Project in Venezuela.

The Canadian mining company had bought the rights to develop the Las Cristinas gold project in Venezuela's Bolivar state, but has been struggling to resolve a dispute with government permission.

China Railway Group Resources Co Ltd (CRRC), a unit of the giant Chinese contractor and engineering company CREC, will own two thirds of the venture, while Crystallex has the rest, Reuters reported.

CRRC Crystallex said it had advanced $ 2.5 million during the negotiation of this agreement and this investment was convertible into shares of Crystallex at a price of 40 cents Canadian action.

The conversion price is about a 27 percent discount to the value of the stock of Crystallex Friday's close of 55 Canadian cents on the Toronto Stock Exchange.

The proven and probable reserves at Las Cristinas are estimated at 16.86 million ounces of gold based on a gold price assumption of $ 550, Crystallex said.

Last month, the company said it was seeking a resolution of the controversial permit and may request international arbitration if no agreement is reached.

Venezuela's President Hugo Chavez had earlier said it would develop the mines in the southeastern state of Bolivar with Russian companies instead of Canadian firms.

Separately, CREC is building a railway network project valued at 7,500 million dollars in Venezuela that will connect the southwestern state of Cojedes and the eastern state of Anzoategui.

"CRRC and Crystallex have met with the Government of Venezuela to inform them of this strategic partnership and are very pleased by the outpouring of support from the Government of Venezuela," the company said in a statement.