Placer rejects Crystallex claim to Las Cristinas property

Gold giant Placer Dome (PDG-T) has flatly rejected Crystallex International’s (KRY-T) recent claim that it has rights to La Cristinas, a proposed open-pit gold mine in the Kilometre 88 region of Venezuela.

The US$576-million project is expected to produce 450,000 oz. gold and 36 million lb. copper per year over a 16-year mine life. The cash production cost is expected to average US$205 per oz., including copper credits.

Crystallex, which owns the nearby Albino open-pit gold mine and several other properties in the South American nation, had said it acquired the rights by buying a privately held company owned by Crystallex’s directors.

But a Placer spokesman dismissed the claim.

“We’re certain that our tenure is secure and valid, and the questions that are being placed over it are totally without any basis,” Hugh Leggatt told The Northern Miner. “These rumors and claims against us are well-known and without foundation, and they will not affect the project, which we will start building soon.”

Placer and state-owned Corporacion Venezolana de Guayana (CVG) had expected to start construction by the end of last year. But those plans were delayed until early 1997, when an agreement was reached to resolve taxation and other business issues.

Crystallex Vice-president Richard Marshall said his company informed Placer of its claim before going public. The company said its ownership, through the private company it has just purchased, had been confirmed by decisions of the Venezuelan Supreme Court in 1991 and 1996.

“The concessions acquired by Crystallex constitute ownership rights that are recognized and protected under Venezuelan mining law,” the company said. “CVG does not have the authority to grant concession rights, and the legal basis of contractual rights granted by CVG is unclear under Venezuelan law.” But in its own release Placer said those court decisions did not apply to the issue of title at Las Cristinas.

“We’ve spoken to our partner and have established that our tenure is beyond doubt,” Leggatt added. The court’s rulings “didn’t involve Placer Dome, and didn’t involve our tenure. We wouldn’t be committing ourselves to spending $600 million on a project if the tenure was in doubt, would we?” The major expects to produce an average of 530,000 oz. annually in the first few years of production at Las Cristinas, at an average cash cost below US$200 per oz. Plans call for a combined 40,000-tonne-per-day flotation/carbon-in-leach processing plant, with recoveries projected at 82% for gold and 72% for copper.

Placer’s discovery at Las Cristinas triggered an exploration boom in the Kilometre 88 district in the late 1980s. Some North American companies acquired ground from the Ministry of Mines, while others entered into contracts with CVG, which, at that time, had rights to certain lands in the region. This situation had led to some uncertainty of tenure, which prompted the Venezuelan government to review many of the CVG contracts. A year ago, Venezuelan government officials said the review upheld most of the CVG contracts, except in cases where companies did not meet requirements of those contracts.

At presstime, Venezuelan government officials were reported to have backed Placer’s rights to Las Cristinas.