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Crystallex stock soars after Venezuela opens talks on Las Cristinas permit

4 hours ago

TORONTO — Crystallex International Corp.'s beaten-down stock (TSX:KRY) surged more than 70 per cent Tuesday after Venezuela's Ministry of the Environment said it was willing to discuss ways for the miner to obtain long-entangled approval of its Las Cristinas gold project.

Crystallex said it had conferred with ministry officials last week and discussed several concerns, including ways to lessen the impact of mining in the area and improve the site once the life of the mine ends.

President Hugo Chavez's administration had told the Ministry of the Environment to start talks over how a permit could be issued, the company said.

Crystallex shares rose 47 cents to $1.12 on the TSX. That's still down from almost $5 a year ago.

Las Cristinas had been left in disarray by the ministry's decision last month to refuse a permit for open-pit mining, which caused concern among development officials elsewhere in the government.

The project has been dogged for years by uncertainty, initially over its ownership and later about whether Chavez's populist government would nationalize the mining industry and whether it would allow the project to go ahead.

"Crystallex has been riding a roller-coaster of emotions and factors in the last 30 days, and it appears that they have been able to clear a major roadblock in that they are able to sit down with the environmental ministry - that's a first sign of negotiation," said John Ing, a gold analyst with Maison Placements Canada Inc.

"In the process it appears that there is some strong support coming from the government in support of the Crystallex position."

Everyone from the Ministry of Mines and Corporacion Venezolana de Guayana, the owner of the deposit, to local governments and a parliamentary committee appears to support the project, Ing said.

Crystallex shares took a new hit last month when the Environment Ministry declared that Venezuela wouldn't allow open-pit mining.

Crystallex said then that this position conflicted with the ministry's approval of its environmental impact study and acceptance of a construction compliance bond and environmental tax, as well as with presidential and National Assembly directives.

With Tuesday's announcement, it appears the only official opposition to the project comes from the Ministry of the Environment.

That ministry is now stressing the importance of submitting modifications to the mining plan in a speedy manner in order to get the process moving.

Crystallex said the modifications suggested by ministry representatives include expanding social projects in the area, mitigating the mine's impact and improving remediation, including repairing environmental damage already done by illegal miners.

All are "manageable and achievable," Ing said. "The logjam, at long last, appears broken."

Crystallex welcomed "the opportunity offered by (the ministry) to help create additional solutions to the extensive environmental damage that already exists due to illegal mining in the Las Cristinas area."

The Toronto-based company, which holds its annual meeting Wednesday, added that it is too early to forecast how the issue will be resolved but it is "encouraged by the support from the Venezuelan government and National Assembly."