Lawyer: Government must clarify its reasons for withdrawing Las Brisas - Venezuela

Published: Tuesday, December 30, 2008 16:41 (GMT-0400)

"It must specify whether it was for non-compliance with some clause in the company's agreement or a decision based on government policy," said the lawyer, who is a partner in Colombian-Venezuelan mining consultancy Incolven.

Almeida was speaking after BNamericas reported that Venezuela's basic industries and mining ministry (Mibam) plans to withdraw the mining areas issued to the Canadian company as part of a government policy to recover the country's mineral resources.

"If that's the case, it would be a violation of the company's basic rights which could lead to the government having to pay compensation," she said.

CRYSTALLEX, LAS CRISTINAS

The lawyer said that the case is different with Canadian miner Crystallex International (TSX: KRY), which holds a contract to develop the adjacent Las Cristinas gold project with state heavy industry holding CVG.

"No concessions are involved in that case. It's a contract that can be terminated at any time," according to Almeida.

The lawyer is also the legal representative of Infinito Gold, which has an arbitration case before the World Bank's International Centre for the Settlement of Investment Disputes against CVG over control of Las Cristinas, which was previously in Infinito's hands.

The government measures would mean the Venezuelan state would control and oversee production for a total of 762t of gold reserves worth US$19.6bn. The decision will also push state producer Minerven's gold production from roughly 4.2t/y gold to 8.2t/y in 2009.

Last week, Russian miner Rusoro Mining (TSX-V: RML) said it was eager to one day develop the Brisas project and Las Cristinas property together, and ultimately become the premiere miner in the country.

"It would make sense from an operational point of view since it's the same deposit," Rusoro president George Salamis said. Rusoro has put in an all-stock hostile bid for Gold Reserve.

Las Cristinas has 464Mt grading 1.13g/t gold or 16.9Moz contained in proven and probable reserves, in addition to 629Mt grading 1.03g/t gold or 20.8Moz contained in the measured and indicated categories.

Brisas holds proven and probable reserves of 10.2Moz of gold and 1.39Blb (630,000t) copper.