OK, G, here it is. Hold your nose...

Venezuelan GOLD: Is President Hugo Chavez really going to incur the wrath of powerful friends?

VHeadline editor & publisher Roy S. Carson writes: I don't particularly want to throw a bucket of freezing cold water over anybody's celebration parade but with a significant (lunatic) bunch of North American stock exchange speculators salivating over what they delude themselves into believing will be rich pickings in the wake of Wednesday's annual general meeting of the Crystallex International Corporation in Toronto, Canada, it becomes necessary to highlight several anomalies that may (or may not) send the loonies into a tailspin.

Crystallex CEO Robert Fung told his audience of shareholders on Wednesday that its "major new Chinese backer will provide whatever capital is required to develop the stalled Las Cristinas gold project in Venezuela." Canadian Press and other newspaper headlines clarioned the statement without further investigation and with Fung emphasizing the depth of Chinese Railway (CREC) pockets while minimizing the fact that the "deal" he has struck with CREC gives the Chinese two-thirds ownership of a Crystallex/CREC collaboration, the satisfactory conclusion of said deal appears to be the physical production of a long-awaited Environmental Permit from Venezuela's Environment Ministry (MinAmb) PLUS the assent of the Venezuelan Guayana Corporation (CVG) and the National Executive (i.e. President Hugo Chavez Frias).

The problem for the remaining pack of Crystallex groupies is that President Hugo Chavez Frias already signed on the bottom line less than two years ago to form a socialist 50/50 VenRus partnership with the Russians...

As per a January 14, 2009, report cabled out in the early hours of the following day by Bloomberg:

Venezuela, Russian Venture to Mine Las Cristinas Gold Deposit
By Steven Bodzin - January 13, 2009 23:35 EST
Jan. 14 (Bloomberg) -- Venrus CA, a joint venture of Rusoro Mining Corp. and the Venezuelan government, was formed to mine Las Cristinas, a deposit containing an estimated 35.2 million ounces of gold, Venezuelan President Hugo Chavez said.

Venezuela wants to develop the mine this year "under the control of socialism," Chavez said on state television late yesterday. The mine covers five concessions, he said, naming four where Crystallex International Corp. of Toronto has been awaiting permits to begin mining and one concession belonging to Gold Reserve Inc., which is also awaiting a mining permit.

"The Venezuelan state is getting ready this year for the exploitation and control of the gold deposit Las Cristinas," Chavez said. VenRus was formed last year, he said.

Yet, only recently, Venezuelan Army General (FANB) Henry Rangel Silva, Environment Minister (MinAmb) Alejandro Hitcher and Minister for Indigenous Affairs, Nicia Maldonado overflew the Caroni/Cuyuni gold mining district in a Russian helicopter with General Rangel Silva quoted officially as saying that the only mining to be permitted will be joint venture projects with the Venezuelan State.

Environment Minister Hitcher was equally adamant in his critique of the transnational Crystallex: "After six months of environmental demands, the (Crystallex) directors promised to comply and the State gave them the go ahead. They then went to the Energy & Mines Ministry and got authorization ... it didn't stop there, they immediately went to the New York stock exchange with the certificate ... their shares rose and to stop them from dropping, they needed to specify the exploitation..."

It should at this juncture be pointed out that even with its much-vaunted Mine Operating Contract (MOU) Crystallex is NOT in joint venture with the Venezuelan State (socialist or otherwise) and that the Las Cristinas gold mines and their underlying reserves of mineable bullion are securely the unimpeachable sovereign property of the Venezuelan people... All they have is a stagnant Mine Operating Contract that is, seemingly, going nowhere!

• There should be no confusion between a CREC joint venture with Crystallex, and a ditto with the Venezuelan State in representation of the Venezuelan people.

Venezuelan authorities accuse Crystallex of profit-seeking "capitalist manipulations" while their cadre of lusting internet supporters add to the crescendo with historic statements such as "screw the natives, gimme the gold!"

It certainly doesn't go down well with the central government in Caracas which maintains a whole section of pro-government web-surfers on the 24/7 outlook for all and any criticism of what Chavez and his ministers get up to.

...and it goes without saying that the Venezuelan government (under Chavez) is hyper-sensitive to negative critique ... as witness the legal witch hunt conducted round-the-clock against nay-sayers within their own jurisdiction (and often beyond as well!).

So here we have the Status Quo as of today, June 25, 2010!

The VenRus consortium -- backed by the Russian government and in person by Vladimir Putin and Dimitry Medvedev as well as already conceded multi-$ million strategic loans, a substantial involvement in the nationalized oil industry and base metals -- has already been assigned by President Hugo Chavez Frias to mine five gold-bearing tracts Las Cristinas in a socialist joint venture with State-owned CVG-Minerven. The VenRus consortium is up and running, already producing gold ... and only this week a new president (Laura Paredes) was assigned to the top job by the President himself, with the declared intention of getting Venezuela's gold-mining industry producing gold at full throttle ... as quickly as possible.

On the other side of the coin, there's Crystallex International ... which decided to give away a major chunk of its Mine Operating Contract to the Chinese to avoid immediate bankruptcy -- but under the critical proviso that the deal with the Chinese would fall on fallow ground should the Venezuelan government NOT be forced to hand over the much-vaunted "Permit." I have already emailed Crystallex' media spokesperson Richard Marshall querying if he has had sight of, or official undertaking, that the Permit will be produced ... but usually voluble Richard has been remarkably silent on the issue!

Agreed that anything just about anything can happen in Venezuela and that the remotest idea of holding to a timetable is NOT in the cultural make-up of many Venezuelans (officials or otherwise) we're left with a quandary...

• Is President Hugo Chavez Frias really going to incur the wrath of his powerful friends in Moscow if he welches on an already-promulgated deal to have the VenRus consortium mine gold in joint venture with CVG-Minerven, or...

• Is President Hugo Chavez Frias really going to be forced to agree to abandon any idea of a joint venture on Las Cristinas etc., effectively giving up 50% ownership of sovereign Venezuelan assets to a Chinese-Canadian capitalist venture, or...

• Will President Hugo Chavez Frias really find it best for his own personal security to hole up in the Cuevas del Guacharo when he finds himself in the direct line of fire of what would undoubtedly be a very damaging (for Venezuela) Russian-Chinese political-economic debacle?

Roy S. Carson
editor@vheadline.com