TORONTO – The World Bank
’s International Centre for Settlement of Investment Disputes (ICSID) has awarded nearly $1.4 billion for the loss of its Las Cristinas gold deposit to Crystallex International Corp
. The award finally settles the dispute with Venezuela that arose when that government denied the project an environmental permit in 2008, despite earlier approvals and assurances.
The award totals US$1.386 billion – US$1.202 billion for the value of Crystallex’s investment in Las Cristinas plus pre- and post-award interest.
Crystallex had been active in the area since 1994 and outlined almost 16.9 million oz of gold in proven and probable reserves – and this was at a gold price of US$550 per oz. The Las Cristinas deposit contained an estimated 464 million tonnes grading 1.13 g/t Au in proven and probable reserves. The feasibility study was positive and development was anticipated.
However, Las Cristinas suffered permit delays and competing claims of ownership going back to 2002. The election of Hugo Chavez’s socialist government in Venezuela put more pressure on foreign investment until he pulled the plug on Las Cristinas in 2008.
To alleviate its cash strapped position, Crystallex finally sold two-thirds of the project to China Railway Engineering Corp. in 2010. In December 2011, Crystallex filed for CCAA protection.
The recent favourable arbitration award is undoubtedly welcome, but it is no substitute for developing a profitable mine.
Crystallex also operated two other Venezuelan gold mines, La Victoria and Tomi, currently closed. Visit www.Crystallex.com