Las Cristinas dispute goes to arbitration

Vancouver — An arbitration panel has been constituted to hear a long-running dispute between Vannessa Ventures (VVV-V) and the Bolivarian Republic of Venezuela involving the Las Cristinas gold-copper project in Bolivar state.

Las Cristinas is a large, low-grade deposit being advanced to production by Crystallex International (KRY-T) under the terms of an exclusive operating agreement with Venezuelan government agencies.

The project was previously explored and developed by MINCA, then owned 70% by Placer Dome, with CVG as a 30% partner. MINCA’s efforts to build a mine were stymied when Crystallex claimed ownership rights to the project and sought to assert them in the Venezuelan courts.

The courts subsequently ruled against Crystallex, but by this point, MINCA’s efforts to resume mine development were thwarted by slumping gold prices and growing political uncertainty.

In 2001, Placer suspended plans to build a mine and sold its interest in MINCA to Vannessa. Later that year, CVG terminated its contract with MINCA, and a few weeks later, the government took control of Las Cristinas as “assets for the Republic of Venezuela.”

Crystallex was subsequently awarded rights to develop the project. Vannessa still owns 95% of MINCA (with CVG as a 5% partner), but the government and CVG have refused to recognize MINCA’s contractual and property rights at Las Cristinas.

Vannessa took its case to the International Centre for Settlement of Investment Disputes, which has scheduled the first meeting of the arbitration panel for July 29 of this year, in London, England.

Vannessa alleges that the government of Venezuela and CVG breached various trade treaties and expropriated Las Cristinas in a discriminatory manner, without due process of law and compensation.

The company has asked the arbitration panel to return its contractual rights to Las Cristinas, along with other assets confiscated by the government. Failing that, Vannessa seeks monetary damages of US$1 billion.