The Canadian Press - ONLINE EDITION

Crystallex's Chinese partner provides 'whatever capital needed' for gold project

By: David Friend, The Canadian Press

23/06/2010 3:26 PM

TORONTO - The chief executive of miner Crystallex International Corp. (TSX:KRY) says its major new Chinese backer will provide "whatever capital is required" to develop the stalled Las Cristinas gold project in Venezuela.

Robert Fung told shareholders at the company's annual meeting Wednesday that state-owned China Railway Engineering Corp. is standing behind its agreement, which includes heading an attempt to unblock the Venezuelan environmental approval process for Las Cristinas and developing the project to commercial production.

"Chinese Railway Engineering Company, the parent company, will provide whatever that necessary capital is to develop La Christina," Fung told investors.

"Let me say again — whatever capital is required."

Las Cristinas has been hindered by setbacks ranging from political wrangling to regulatory slowdowns and economic issues in Venezuela, all of which contributed to questions about Crystallex's future earlier this year.

In 2008, a key permit was denied by the Venezuelan government and that has been a sticking point for the company because it has still not been approved. The ongoing problem led the company to take a $297.1-million writedown of the value of Las Cristinas.

However, Crystallex found another chance for survival when the CRREC ponied up US$2.5 million in a convertible debenture and a helping hand with the government, after the company mounted a search a suitable investor.

"All through this process the one message we've been getting from Venezuela is that the Venezuelans weren't necessarily upset at Crystallex... the issue was a political issue," Fung said.

"So we spent a tremendous amount of time in order to identify the nationality which would be acceptable to the Venezuelans and to come to terms with an entity within that nationality which would allow us to go forward."

Fung said that Crystallex picked a Chinese firm because in recent years the two countries have built a strong investment relationship, particularly within the energy business.

He said all sides are still negotiating over the specifics of the Las Cristinas gold project.

"All I can say to you is that the corporation and the CRREC are in discussion with the Venezualan government regarding not only these, but a variety of issues surrounding mine construction, production commencement and other issues around the La Cristinas project," he said.

"The meeting I had in Venezuela with the Chinese, the government of Venezula advised us that they view the strategic partnership quite favourably."

Under the partnership, China Railway will own two-thirds of the Las Cristinas project, while Crystallex would end up with the remaining third. China Railway would also have the option to own up to 19.9 per cent of Crystallex.

Crystallex shares closed unchanged at 45 cents Cdn on the Toronto Stock Exchange.

http://www.winnipegfreepress.com/business/breakingnews/crystallexs-chinese-partner-provides-whatever-capital-needed-for-gold-project-96979819.html