Crystallex vows to fight on for Las Cristinas

Vancouver-based Crystallex International (KRY-T) has vowed to continue its long court battle for control of the low-grade Las Cristinas gold project in Venezuela, despite Placer Dome‘s (PDG-T) decision to sell its 70% interest to Vannessa Ventures (VVV-V).

“Recent announcements by Placer Dome and Vanessa Ventures will have no impact on the Crystallex core strategy for the recognition of its concession rights to Cristinas 4 and 6,” says a prepared statement from Crystallex.

Crystallex has maintained for five years that it acquired the mining rights for Las Cristinas through the acquisition of an exploration company. Placer says this company gave up its right to the property in 1991, two years before the deposit was discovered.

Crystallex says its Venezuelan unit, Inversora Mael, remains the registered title holder over the two concessions. It says it has actions pending before the Venezuelan Supreme Court to clarify the issue of possession, although the company has never brought suit against Placer Dome itself.

The central issue has always been whether a transfer of title to a series of alluvial mining concessions (issued in 1964) was legally valid. Crystallex argued that those concessions were validly sold to Inversora Mael. The courts decided that the vendors had no valid title to sell.

On Friday, Placer Dome announced that it had agreed to sell its interest in Las Cristinas to Vannessa for an undisclosed amount, just days before its rights to the Venezuelan deposit were scheduled to expire.

The major put the US$575-million project on the back burner two years ago because of low gold prices. Last year, Placer took a US$116-million writedown on its stake after announcing that it would be uneconomic to resume construction.

Francisco Rangel Gomez, CVG’s president, said CVG wants Las Cristinas to move forward, with or without Placer and the company would immediately move forward with other partners.

Crystallex says it believes the statements by the president of CVG speak for themselves.

Under its deal with Vannessa, Placer would retain a carried interest and a right to back into the project. Should Placer ever exercise that right, Vannessa would retain a carried interest or royalty.

Luca Riccio, a Vannessa director, is also vice-president of exploration for Crystallex.

Las Cristinas holds proven and probable reserves of 323 million tonnes grading 1.1 grams gold per tonne. Production was expected to average 530,000 oz. gold per year over the first 10 years of a planned 20-year mine life, with total costs coming in at US$240 per oz.

Placer Dome cancelled development at Las Cristinas in 1999 and wrote off the project’s US$116-million carrying value in 2000.

Crystallex shares were off 45, or more than 14%, at $2.69 in afternoon trading on Monday on the Toronto Stock Exchange. Placer shares were 31 lower at $15.50. Vanessa’s stock was unchanged at 85 on the Canadian Venture Exchange.