Thursday, November 6, 2008

Las Cristinas: Foreign investors must recognize that if they want to do business, they have to do it on Venezuela's terms!

VHeadline Venezuela News reports: Speaking on the VHeadline Venezuela Newshour program on the American Voice Radio Network (AVRN), Venezuelan journalist Elio Ohep, editor & publisher of www.petroleumworld.com told listeners that while Basic Industries & Mines (Mibam) Minister Rodolfo Sanz has said that the giant Las Cristinas gold field, as well as other previously awarded mining concessions, are to be brought under full "Venezuelan State control and administration" there is still "wiggle room" for Toronto-based Crystallex International (KRY) to strike a revised deal with the Venezuelan government to operate the mine in full cooperation with the Venezuelan Guayana Corporation (CVG) of which Sanz is also corporate president and CEO.

"There are lots of foreign investors who want to invest in Venezuela," Ohep said. "But they must recognize that if they want to do business in Venezuela, they will have to do it on Venezuela's terms -- Venezuela will not accept that foreign organizations tell them what to do with their own resources."

The qualification duplicates what we at VHeadline Venezuela News are hearing from within the administration and which is already known to Crystallex executives who have been working diligently to get "the show on the road" after signing an exclusive mine-operating contract with the CVG several years ago. The statement also underlines a press release issued by the Canadian company, yesterday, which stated that the company is still in talks with government officials and it is believed that Crystallex president & CEO Robert Fung heading one-on-one negotiations with the central government towards an early solution.

The matter is somewhat confused by Minister Sanz' statement, yesterday, that Las Cristinas is a 33 million ounce resource ... which would only be feasible if the current Las Cristinas deal were also to include the nearby Las Brisas de Cuyuni concession which is claimed by USA-Spokane (Washington State) based Gold Reserve which only recently rejected a takeover offer from the Russian Agapov Group's Rusoro Mininig which is alread mining gold in 50/50 "socialist" joint venture with the CVG gold mining subsidiary CVG-Minerven.

Unsurprisingly, Gold Reserve executives are keeping their heads down, letting Crystallex take all the heat from international media coverage.

Extrapolating upon currently sketchy information from a myriad of Venezuelan sources, it is indeed possible that it is Gold Reserve (GRZ) that is the primary object of the so-called 'nationalization' of its Las Brisas de Cuyuni project -- which would be amalgamated into a very much larger all-encompassing "Las Cristinas" project in a similar "socialist" joint venture between Crystallex and the Venezuelan government, and which could possibly include further gold mining concessions as they become available after the central government rescinds their concessionary rights from previous owners.

Part of the problem is the Venezuelan government's inevitable incapacity to provide timely and accurate information and the fact that Minister Sanz has, himself, placed a gag order on Mibam and CVG officials to prevent them from discussing eventualities with the media.

There is also a suspicion that the move is part of a pre-election strategy on the part of the Chavez government to muster support for its failing United Socialist Party of Venezuela (PSUV) with a hoopla projection for the immediate (post-election) future and long-held promise of jobs for unemployed gold miners in the increasingly impoverished south of Bolivar State close to the border with Brazil.

Crystallex officials are making no official statement today, apart from qualifying yesterday's press release, which tends to dispute what the international news agencies have been flashing around the world of Crystallex' final demise.

A company source has told us that the company, and its ambitions to mine gold in Venezuela, are "still very much alive" ... and this is somewhat qualified by journalist Elio Ohep's conclusion that if the company is prepared to work hand-in-hand with the Venezuelan government, recognizing that the Venezuelan people are in full ownership of their own sovereign resources, there will be a deal struck.

Our own sources within the administration, tend to agree, and it is understood that an announcement is expected very soon which will clarify the situation once and for all ... leading to the start-up of mining operations at Las Cristinas in 2009 as the Minister himself has unequivocally stated.

In conclusion, we must remind ourselves that a 2009 start-up of mining operations at Las Cristinas would inevitably be put on a back-burner in the event of a non-settlement, and that Venezuela itself would be embroiled in several years of litigation before any final conclusion could be reached to the continuing Las Cristinas Saga.