Crystallex says Venezuelan minister's comments at odds with previous approvalsRomina Maurino, The Canadian Press
May 16, 2008 - 3:26 p.m.TORONTO - Crystallex International Corp. (TSX:KRY) said Friday it will do "whatever is necessary" to protect its shareholder's rights and move along the Las Cristinas mine in Venezuela despite comments by the country's environment minister that open-pit mining would be blocked.Crystallex and the Las Cristinas open pit gold mine have been dogged for years by uncertainty about whether the socialist government of President Hugo Chavez will allow the project to go ahead and whether the mining industry will be nationalized.This week, the Venezuelan minister of the environment and natural resources said the country wouldn't allow open-pit mining. That followed similar comments in a letter last month by an official at the Administrative Office of Permits at the environment and mines ministry, which the company disclosed on April 30.The official was backed up by the minister on Thursday, Crystallex said, but still believes the new position is in conflict with the ministry's approval of Las Cristinas environmental impact study, construction compliance bond and environmental tax as well as presidential and National Assembly directives."We don't think this is the end of the story, but certainly we've got some obstacles that we're working to deal with," said Richard Marshall, vice-president of investor relations at Crystallex.The Toronto-based company said it was pursuing a legal challenge of the ministry's current opposition to the project and began a legal appeal on May 12 under Venezuelan administrative law. It also said local and indigenous communities continue to support the Las Cristinas project and other mining projects in the region."Crystallex is also aware of its legal rights and remedies and will undertake whatever is necessary in order to protect its shareholders' rights," the company said Friday.Marshall said Crystallex believed that policy, law, decrees and resolutions were all supportive of its position, adding that iron ore, nickel and bauxite - some of the country's biggest industries - are all mined through open-pits."Concerns of the tropical rainforest seem to be raised (but) there is no rainforest in this area," Marshall said."This region has been devastated by decades and decades of mining activity of a small-scale nature by local and illegal miners."If this project doesn't move forward, then the chances of more environmental damage from these illegal nomadic miners multiplies."Catherine Gignac, an analyst with Wellington West, said it wasn't yet possible to know how the legal challenge may turn out or whether Crystallex would maintain the permits."Even if they're told: 'go ahead and start construction' - who's to say that something (won't) change down the road?" she said."It's a different country (and) they own the resources. It would be like working on Crown land in Canada - you abide by the federal rules. And if those federal rules change, then you have no choice but to get a new rule book."Venezuela, she said, is like most of the other global emerging countries that don't have a established metal mining industries."It's fairly common and it has a heck of a lot to do with the fact that metal prices are at record highs, and the governments don't feel they're getting their fair shake," Gignac said."In addition, there's well-financed NGOs who are against any development and want to preserve the environment as much as possible."But while those pressure apply to all mining companies, she added, how much of it applies to Venezuela remains to be seen.Chavez's government hasn't "come out and said: 'we want to nationalize,' or 'we want a larger piece of the pie,"' she said."They have said, however, that its is a preserved area," she added, referring to an earlier ministry communication expressing opposition to all mineral mining in the Imataca region.

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