Let's look at the chronology of today's events and try to see if we can put any pattern to this madness.

Early this morning Crystallex received an indirect message from a middle level official of MinAmb (The department of the Environment) that their application for the Las Cristinas environment permit is going to be denied, stating reasons which had been negotiated and settled years ago. None of those reasons are current, nor have there been any recent changes to the project that altered the previous status quo. The reasons that MinAmb previously stated around a year ago as being problems in the Crystallex plan, which were the cyanide disposal and non-utilization of the copper don't seem to have been mentioned in this new denial. It is as if somebody in MinAmb dragged out a 10 year old report and simply rehashed it to justify the release.

Late in the day, Gold Reserve received a similar indirect message again from a middle level official of MinAmb indicating that the Environmental permit which was granted a year ago by MinAmb will be rescinded. The reasons stated seem to be a straight "cut and paste" from the earlier KRY notification even though logically most of them don't apply to Brisas. It seems that somebody in MinAmb suddenly realised that they hadn't covered Brisas and then decided to modify the KRY document simply by changing the names and replacing "denied" with "rescind" and then "communicating" it to GRZ.

Apparently higher level officials in MinAmb won't comment, or have become "not available" and the Department of mining, MIBAM hadn't even been told of the MinAmb decision until after the fact. Even more unusual is the lack of local Venezuelan press coverage of the matter. High level officials almost always make major policy decisions with significant fanfare and press coverage. This simply didn't happen here, so it may be that they were taken by surprise as well as us.

The whole issue looks like an interdepartmental dispute between MIBAM and MinAmb. It seem almost inconceivable to me that MinAmb would have made such a major decision without informing MIBAM who are actually the "lead dog" in this area. However apparently there are undercurrents and differences of opinion between the two departments that are not apparent to outsiders.

MinAmb is on quite shaky legal ground in both the KRY and GRZ cases, more so with GRZ as MinAmb had already approved and signed off on GRZ's environmental plan and it doesn't seem that they would to be able to quote any new legal or factual issues that would cause that original approval to be rescinded. In KRY's case the major injured party would be the CVG as the actual holder of the concession, making legal action there more indirect and a little more difficult to execute. If it came to legal action GRZ's case is far more straightforward and it is quite likely they would be offered a settlement rather than risk international arbitration which would be impossible for Venezuela to win.

Should this decision stand and be supported by the higher powers in government it would be a body blow to all further mining and mineral exploration and development in Venezuela. Cooler heads in the administration must know this but who has the upper hand politically is hard to judge. This looks like a small scale copycat exercise by someone in MinAmb which followed a similar pattern to the debacle in Ecuador last week, however it was executed a much lower level. It is likely to be followed up in a similar manner with reassurances and modifications but how long that will take is uncertain.

However Brisas is exactly the same today as it was yesterday; nothing dramatic has occurred to change the gold and copper in the ground or the financial status of Gold Reserve. The market panic is entirely the result of somebody in a minor (but important to us) ministry grandstanding their views by indirect contacts to the Gold Reserve and Crystallex knowing full well the chaos that would ensue. Even if this was followed by higher level official support it can be overturned with the stroke of a pen. If it is rejected or modified at a higher level then the overall practical effect will be nil to the Brisas project; it would just leave a lot of hurt and confused shareholders who were faked out of their shares by political manoeuvring and further distrust of attempting to invest in Venezuela. The real values of both Brisas and las Cristinas would remain as robust as ever.

Make your decisions accordingly.