CVG fires latest shot at Las Cristinas

Minera Las Cristinas (Minca) has advised Vannessa Ventures (VVV-V) that Corporacion Venezolana de Guayana (CVG) intends to cancel Minca’s work contract effective November 13, 2001.

Minca was formed by Placer Dome (PDG-T) and Venezuelan state-owned CVG to develop the Las Cristinas gold project in Venezuela, but Placer put construction of the project on the back burner in 1999, citing low gold prices, and subsequently took a US$116-million writedown.

Vannessa holds a 95% interest in Minca after acquiring it from Placer in mid-July.

CVG originally rejected the sale Placer’s mid-July sale of its 70% stake in the project (via its interest in Minca), citing that Placer did not obtain CVG’s written consent. Placer, whose right to the deposit was just days away from expiration, said no such approval was required. CVG then announced plans to develop the large, low-grade deposit as a “macro-mining project” that would combine Las Cristinas with Gold Reserve‘s (GLR.A-T) Brisas deposit.

Vannessa said in a prepared statement that it is “pleased” with CVG’s move to cancel the contract because, “for the first time CVG has clearly defined the legal basis which it feels supports the cancellation of the contract. Contrary to its original position, the CVG now no longer questions the legality of the transaction of the purchase of Placer Dome de Venezuela (and thereby 95% ownership of Minca) by Vannessa, which previously had been its most important point of contention with respect to the contract.”

Vanessa says that CVG now contends that the contract should be rescinded since Minca is in default in areas of activity reporting requirements, and has delayed mine development without CVG approval.

Minca has rejected both claims and has launched a legal defence. The company intends to continue with the planned development of the project with CVG.

At last report, Las Cristinas reserves stood at 323 million tonnes grading 1.1 grams gold per tonne. An updated feasibility study, unveiled in the fall of 1998, pegged annual production at 470,000 oz. gold and 16,000 tonnes copper over 20 years. At the nearby Brisas deposit, proven and probable reserves stand at 235 million tonnes grading 0.14% copper and 0.79 gram gold per tonne.

Still lurking in the background is Crystallex International (KRY-T), which claims a right to a portion of the Las Cristinas property. In the early 1990s, the junior purchased a Venezuelan company, Inversora Mael, which claimed to hold the rights to the Las Cristinas concessions. A series of legal challenges to CVG’s title to the ground appeared to end in June of 1998, when the Venezuelan Supreme Court refused to hear claims brought by Mael and Crystallex.

Despite the ruling, Crystallex is continuing to take legal action against the Venezuelan government to assert its claims to the property.