New mining bill could decide future of Las Cristinas, Las Brisas - Venezuela

Thursday, October 16, 2008

Venezuela's general authority on mining economy and planning (DGPEM) - part of the country's basic industries and mining ministry (Mibam) - feels the new law to regulate the sector will determine the eventual consolidation of the Las Cristinas and Las Brisas gold projects.

"There has been talk of combining the projects because of the deposits' geological characteristics, which are uniform. We have to wait to see how the criteria is drawn up and see if it can be done," DGPEM head Javier Medina told BNamericas.

He added that "it's not advisable" to begin developing the deposit right now, given the current discussion about the new law and possible changes.

"It's probably best to avoid starting on the wrong foot and then have to change things after there is more money involved where the legal issues will be the most important point to settle," he said.

Venezuela's national assembly - led by the majority - is currently discussing a draft reform mining bill drawn up by Mibam.

One article of the draft bill establishes that a private company can only participate in mining by forming a JV with the state, where the latter holds the majority.

The Las Brisas gold project - owned by US miner Gold Reserve (TSX, Amex: GRZ) - and the Las Cristinas gold project - held by Canada's Crystallex (TSX: CRY) - are located side by side in the Guayana region of southeastern Bolívar state.

Mibam has been looking at merging the projects since 2005 in order to make development more viable and create a single project that would be much larger and have much less environmental impact.

In fact, both companies hold agreements to work in conjunction to develop some infrastructure works such as the airport and highways.

Las Cristinas has 464Mt grading 1.13g/t gold or 16.9Moz contained in proven and probable reserves, in addition to 629Mt grading 1.03g/t gold or 20.8Moz contained in the measured and indicated categories.

Las Brisas holds proven and probable reserves containing 10.2Moz gold and 1.4Blb (635,029t) copper. However, the company has not been able to develop the deposit as it has not acquired all of the permits required by the government.

Harvey Beltrán
Business News Americas