GOLD DEVELOPMENT NEWS Venezuela to Review CVG-Crystallex Contract

CARACAS Venezuela's mines and energy ministry will review a contract signed by state heavy industry holding compa...


CARACAS Venezuela's mines and energy ministry will review a contract signed by state heavy industry holding company CVG and Toronto's CRYSTALLEX INTERNATIONAL to develop the Las Cristinas gold project, said a local communities' spokesperson. He says the ministry's mining board made the commitment to the communities in the Las Cristinas area, located in the kilometre 88 zone of Sifontes municipality in southeast Venezuela's Bolivar state.

Local groups had denounced "serious" cases of noncompliance with the terms of the contract CVG made with Crystallex, according to the spokesperson. One of the more serious allegations is related to a labour dispute, with workers claiming that Crystallex has refused to sign a collective agreement with employees. The company has not offered any solutions to the problem and neither does it comply with even minimal safety and hygiene measures, according to the community representative.

"The company has caused social chaos in the zone, to the extent that it has allowed an invasion of the Las Cristinas property by more than 300,000 miners," pointed out the spokesperson.

On the other hand, Crystallex declared that "it is the legitimate operator of the mines, recognized by the Venezuelan government and has very little to say about the matter."

A report commissioned by Venezuela's supreme court at the end of September describes the mining areas of the Cristinas 4 and 5 zones as being approximately 80% deforested. It also mentions the presence of sludge-filled lagoons, the existence of abundant excavations of different sizes and an undetermined number of camps in the area with people coming and going. The document says there were a large number of people working in the area, without being able to provide an exact figure because of the size of the Las Cristinas property.

In response, Crystallex said in its declaration: "As has been demonstrated on repeated occasions, the information provided by Minca will not have any other purpose that to keep the media's attention on a dispute that belongs strictly within the bounds of the legal system." The company said any further declaration will be made through appropriate legal avenues.

CVG signed the contract with Crystallex in September last year to develop Las Cristinas, considered one of South America's largest undeveloped gold deposits, with proven and probable reserves of 10.2 million oz. Through Minera Las Cristinas C.A. (Minca), Vancouver-based Placer Dome had been building a mine that would produce 500,000 oz of gold per year plus some copper. Construction was halted in 1999 because of low prices, and Placer Dome wrote off its investment of US$116 million in the project.

Placer sold its stake in Minca to Canadian junior Vannessa Ventures for a token US$50 in July 2001. CVG never recognized the Vannessa transaction, and accused Minca of not complying with its contractual obligations, as Las Cristinas was still not producing more than a decade after the original joint venture had been created in 1992. The mines and energy ministry then revoked the contract between CVG and Vannessa and authorized the state company to find a new partner for the project. Vannessa had wanted to build a 100,000-oz/year mine at Las Cristinas for some US$50 million, something CVG regarded as too small.

According to a Crystallex feasibility study published last month, Las Cristinas would produce an average of 266,000 oz of gold annually for 34 years at total cash costs of US$196/oz. Development costs are put at US$243 million.

Crystallex has recently sold its San Gregorio gold mine in Uruguay. More news is archived at


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