Much of the minutes are about KRY:

Third Issue of the Order of the Day: Rights of Speech.

3.A. Right of speech to Citizen Luís Felipe Cottin, Executive President of

Crystallex International Corporation, regarding the Las Cristinas

Project.

Given the importance of the issue, the following were invited:

1. Citizen Yubirí Ortega Lovera, Minister for the Popular Power for the

Environment, who excused herself.

2. Citizen Rodolfo Sanz, Minister for the Popular Power for the Basic

Industries and Mining and President of the Corporación Venezolana de

Guayana, who sent his representative, Attorney Norelys Lucena

González, Legal Counselor of that Ministry and Attorney Flavio Véliz,

Coordination of Mining Procedures of the General Direction of

Concession of that Corporation.

Congressman Mario Isea, President of the Permanent Commission:

Introduced the issue and declared: The Representatives of Crystallex

International, have come to the Commission, alleging that they have an

agreement with the C.V.G., who in turn have a concession for the

exploitation known as Las Cristinas, that they have complied with all

the permits and other proceedings and the project is not being

executed because the Ministry of Environment has not granted the

C.V.G. the permit of use of resources (affectation). Additionally, he

manifested that he had knowledge that this case was treated in

previous opportunities by this Commission and even the National

Executive had expressed interest in its development within the

framework of the current regulations. Because of the importance of

the issue, representatives of the Ministry of Environment, from the

MIBAM and from the C.V.G. have been invited to listen to their points

of view and the objective situation of the project.

The course of action is the following: Engineer Luís Cottin, Executive

President of Crystallex will make an initial presentation and later on,

the representatives of the other present institutions may declare what

they deem convenient, to later on give the right of speech to the

Congressmen, who will be able to make the observations or questions

related to this issue.

Engineer Luis Cottín informed that this Permanent Commission has

known this case ever since several years ago, that there is a signed

contract with the Corporación Venezolana de Guayana (CVG), since

May 7, 2002, which purpose is to re activate and execute in its totality,

the mining project Las Cristinas, by way of the design, construction

and operation of a facility to process auriferous material and its later

commercialization and sale, so that once the contract is concluded,

the mine and its facilities will be transferred to the Venezuelan State

through the CVG. To date, all the necessary permits have been

approved to operate the project, except the environmental impact of

the use of the resources (affectation of resources), granted by the

Ministry of Environment, notwithstanding compliance of all the

demanded requirements. He indicated that the communities claim for

the initiation of the works since this is the sole source of employment

of the Sifontes Municipality.

He explained that the contract with the CVG establishes that Crystallex

must be the one to certify the gold reserves therein located, to later on

draft a feasibility study and consequently, draft a study of the

environmental impact to mitigate the damages that a project of this

nature could cause the environment. There was a chronogram, “since

the Venezuelan State was interested in not letting this project stand

by, since it was a commitment that the State had acquired through the

Corporation, of making it happen, to carry it out basically with the

primary benefit for the surrounding communities and some

contractual benefits as per a community point of view regarding

supply and maintenance of many services that exist therein”. He

stated that such chronogram has been met and all the documents

requested have been submitted. “The first time that the feasibility

study was submitted for consideration, it was discussed by all of the

C.V.G.´s technical team, a series of recommendations were elaborated

to maximize the social impact on the communities, and this study was

technically recommended and later approved by the Board of Directors

of the CVG, who, as the administrator of the property of the State and

of the rights before the State, submitted same to the approval of the

Ministry of Energy and Mines (currently the Ministry of Basic

Industries and Mining), and also submitted the study of the

Environmental Impact to the Environment Ministry. In the year 2006,

the approval was received, the confirmation that it was viable, feasible,

in as much as an economic point of view as well as a technical

development and we received the approval by the Ministry of Energy

and Mines in due time. Once we had that, the only permit lacking is

the study of use of natural resources (affectation) of the Las Cristinas

area, for which we have been waiting for three years, ever since the

documents were submitted for the first time”.

At the beginning of 2007, we received a letter that stated that “all the

technical part of the project had been accepted and we were requested

to submit an environmental bond for the planning of the environmental

measures, as well as payment of the customs tariffs or the

corresponding taxes. Seven days later all the documents were

submitted, all the taxes were duly paid, with which we thought that the

environmental impact of the use of resources permit would be

granted”. After a year of absolute silence on the part of the Ministry of

Environment, we received a communication of this Ministry that

denied such permit and alleged a series of reasons. He pointed out

that this causes a terrible harm to the company, since they have

investments to the order of approximately 30 Million US$ in social

investment agreed with the CVG and the purchase of special

equipment that must be built with specific dimensions for the project

and that have been contracted in different places in the world. He

highlighted that in the Sifones Municipality of the Bolívar State, there

in no other substantial economic activity that generates jobs, and as

such they receive a great social pressure. He indicated that the Las

Cristinas Project would be one of the largest projects in Latin America

and could amount to the fifth or sixth worldwide.

He requested permission to the President in order to let Engineer

Sergio Alcalá speak, in his capacity of Environment Superintendent of

Crystallex, and was duly granted.

Engineer Sergio Alcalá spoke up, who presented the Order and

Regulations of Use of the Imataca Forest Reserve Plan, and of the

administrative providence of the affectation of resources and

highlighted the environmental damage caused by handmade (local)

mining.

Engineer Luís Cottín, submitted for the knowledge of the

Congressmen, a detailed report of the project in print and magnetic

means, as well as a series of pictures and a video, where one can see:

the social work undergone by the company and the environmental

damages generated by handmade mining, not permitted in the area of

the project, insisting that the future exploitation by Crystallex would

use technology of minor environmental impact and restoration

techniques as well as reforestation.

Following, Attorney Norelys Lucena González had the right to speak,

who identified herself as “the Legal Counselor for the Ministry of Basic

Industries and Mining, the Ministry that exerts tutelage over the CVG”,

and declared the following: “What has been declared by the

representatives of Crystallex is true…lets be reminded that the

concession was granted by the Venezuelan State to the CVG and in

turn, the CVG signed an operation agreement with Crystallex for the

exploitation of this project. They have complied with a series of steps,

of proceedings set forth in the Law to obtain different permits, until the

certificate of natural resources issued by the Ministry of Environment

was denied, this is a situation that escapes the MIBAM, an it is a

competence, in this case, exclusive of the Ministry of Environment. I

imagine that they will exercise their rights, their actions. On our part,

we must await the exhaustion of the deadlines and of the

administrative and judicial processes on the part of the company to

take any decision”.

Crystallex representatives and the Legal Counsel for MIBAM intervene

in order to make observations and ask questions, as well as

Congressmen Osmar Gómez, Jhonny Milano, Carlos Olivo, Iván Lugo,

Oscar Ramírez and Mario Isea, with regards to the following:

1. Why has Crystallex invested such big amounts without having the

final operations´ permit?

2. Is there a contract between the CVG and Crystallex? Is the contract

available?

Answers:

Engineer Luís Cottín: As we have stated, such investments are

contractual, they were agreed with the CVG and the communities. On the

other part, for projects of this nature, the contribution of the equipment

must be contracted with ample anticipation so they are available and

operational on a timely basis. Being the CVG the only contracting party

on the part of the Venezuelan State, having public manifestations from the

National Executive in favor of the legal exploitation, paying taxes and with

programs of environmental impact reduction, having paid the

corresponding taxes and delivering the bonds and having obtained the

preliminary permits by the Ministry of Energy and Mines, all made us

suppose that the project would take place, and as such, we are surprised

upon the last denial by the Ministry of Environment.

Attorney Norelys Lucena González responded that the concession

granted to the CVG, were the areas: Cristinas IV, V, VI, and VII, reserved to

the State by way of Decree of the year 2002 to be explored and exploited

by the extinct Ministry of Energy and Mines. There is a contract between

the CVG and Crystallex. The authorization contract was signed in June

2002 for the execution of the exploration works, exploitation and sale of

the gold mineral that exist in that area, with a duration of 20 years,

extensive for two periods of ten years. She continued, the CVG contracts

an operator, which in this case is Crystallex, to operate the concession,

the CVG requested permission to operate such exploitation.

On the other part, Attorney Lucena committed to submit to the Economic

Development Permanent Commission, an Executive Summary of the

Legal Antecedents of the project and a copy of the corresponding

contract between the CVG and Crystallex, as soon as possible.

Congressman Mario Isea, President of the Permanent Commission, asked

the following:

Was the letter regarding the affectation of resources permit submitted by

the Ministry of Environment to the CVG? Does this make reference to the

zone being catalogued as a reserve zone or a zone of a special forest

regime?

Attorney Norelys Lucena González answered: it is my understanding that

this was the answer from the Ministry of Environment.

Engineer Luís Cottín: the applicable regulation to the Imataca reserve has

not changed since the beginning of the project until now, and that is why

it is surprising that after having approved the occupation of the territory,

drilling permits, constructions of diverse infrastructure works and even

the study of environmental impact submitted for consideration, it is when

the Ministry of Environment presents this issue as an insurmountable

obstacle for the development of the project. I insist that the area of

influence where the Las Cristinas project is located, within the Imataca

forest reserve, is totally affected by the effects of illegal local mining. One

of the main objectives of the project is the recuperation of such areas for

an industrial development with service for the community. With the

decision from the Ministry of Environment, in an indirect manner, the

current situation of environmental destruction due to illegal mining is

preserved.

The President of the Commission drafted the following summary:

1. It is clear that the Las Cristinas project dates a long way back and

deals with a concession of an organ of the State to another: Ministry

of Energy & Mines to the CVG, that it was being developed in

accordance with a chronogram with the approval of the entities

involved, as evidenced from the fact that they were requested to pay

due taxes, fix bonds, as well as the affirmation made by the MIBAM´s

Legal Counsel.

2. The project had been backed with government support until the

moment of the denial on the part of the Ministry of Environment to

grant the CVG with the affectation of resources permit.

3. The delay in this project and the existence of permanent illegal

exploitation may have contributed to the increase in the environmental

deterioration of the zone.

4. The population in the zone lack alternative options of massive

generation of jobs.

For such considerations, it is necessary to clarify the interest of the

Venezuelan State and the National Executive’s policy regarding this project.

Proposals:

1. That the Commission facilitate an encounter space to resolve the

apparent contradiction existing between two organs of the State:

CVG (which reports to MIBAM) and the Ministry of Environment. With

interest on searching for alternatives, taking into account the legal

aspects and proceedings to also allow the development of projects

with decisive participation from the State, the organized communities

and suitable private actors to guarantee generation of jobs,

improvement in the quality of life of the Sifones Municipality

population.

2. To invite the Minister of Environment for the next meeting, the

Ministry of Basic Industries and Mining, the President of the CVG and

his technical team in the mining area, as well as the representatives of

Crystallex.

It is hereby attested in the Certificate, of the commitment from the Legal

Counselor of the MIBAM to submit the contract between the CVG and

Crystallex as well as an Executive Resume with the legal antecedents.

Upon consideration: APPROVED.