Venezuelan govt. says it is taking control of Las Cristinas gold project

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Reports from Venezuela say that Crystallex' Las Cristinas mine is being ‘recovered' and will be operated under state administration.

Author: Dorothy Kosich
Posted: Wednesday , 05 Nov 2008

RENO, NV -

In spite of Crystallex's denials, it appears that Hugo Chavez's expropriation juggernaut is about at long last to claim another victim, the Las Cristinas project, after Crystallex has operated in the country for the past 16 years.

Meanwhile, one industry blogger suggested Wednesday that Las Cristinas' neighbor, Spokane, Washington-based Gold Reserve, may be about to sell out to Vancouver's Rusoro Mining.

However, Gold Reserve President Doug Belanger told Mineweb Wednesday, "We plan to be one of the hunters, not one of the meals." He also noted Gold Reserve has $120 million of cash on hand.

In an e-mailed statement to the Venezuela news media Mining Minister Rodolfo Sanz said, the Las Cristinas gold mine "will be recovered and will be operated by the state." The same statement said the government will rescue "the most important mining deposits in Venezuela in order to increase production capacity in strategic minerals like gold, diamonds, bauxite and uranium."

The Chavez government has already seized control of steel, energy and cement industries which the president deems to be strategic. Sanz said that the global financial crisis has made it necessary for Venezuela to assume control of its gold deposits, which can be used to increase Venezuela's international reserves.

Las Cristinas is estimated to have 16.9 million ounces of proven and probable gold reserves and 4.2 million ounces of measured and indicated gold reserves.

In an interview with Bloomberg late Wednesday, Richard Marshall, Crystallex vice president, said, "We've had several meetings with the ministry in the last 24 hours and haven't heard of any changes."

In a statement issued by Crystallex Wednesday, the Toronto-based junior gold miner said, "The Company has not been notified of any changes in position by MIBAM [Ministry of Basic Industry and Mining] regarding the Las Cristinas Project or the Mining Operating Contract. In addition, members of the Crystallex team have had meetings, as recently as today, with officials from MIBAM and the Corporacion Venezolana de Guyana (CVG) and no issues were raised with control of Las Cristinas."

In late May, Crystallex was hit with the environmental ministry's decision to halt licenses for open-pit mining in the KM 88 area in the Imataca Forest Reserve. U.S. silver company Hecla Mining subsequently sold its La Camorra gold operations to the Venezuelan government's new partner, Rusoro Mining, a Russian-owned and operated company whose chief shareholder is Peter Hambro Mining.

Rusoro is splitting La Camorra's profits with a government subsidiary. However, thus far, Rusoro's Choco 10 operation remains under Rusoro control.

Meanwhile, Gold Reserve's Las Brisas project saw its 2007 permit to begin construction on its gold-mining project rescinded also in May.

The Latin American mining blog inca kola news speculated Wednesday night that Gold Reserve will get "the offer it can't refuse from Rusoro...almost certainly an all-stock offer just for the Venezuelan land assets." Rusoro previously approached Gold Reserve a few months ago to make an all-stock acquisition, but was rebuffed by the U.S. junior.