Venezuelan gold project secure, Crystallex says

Venezuelan gold project secure, Crystallex says

GARY NORRIS, Canadian Press

30th October 2006

TORONTO -- The Las Cristinas gold project in Venezuela is secure despite investor anxiety over the policies of President Hugo Chavez, the chief executive officer of Crystallex International Corp. said yesterday.

Proposed mining law changes remain entangled in Venezuela's national assembly, but "there is nothing in the draft that has any negative impact on Las Cristinas," Todd Bruce told a shareholders meeting.

Crystallex chairman Robert Fung told the meeting, which was called to approve extending the company's shareholder rights plan, that nothing has changed: The government owns the resource as it always has, and Crystallex holds an operating contract and is awaiting only environmental approval.

Mr. Bruce confirmed there have been talks with the government and U.S.-based Gold Reserve Inc. on ways to reduce the impact of the developments, such as sharing Crystallex's airstrip.

"You've got two very large projects, ourselves and Gold Reserve, in an area, the Imataca forest, that obviously requires a great deal of sensitivity," he said later.

However, it has been 2 1/2 years since Crystallex submitted its environmental impact assessment, and in North America or Europe "the very minimum time you'd expect between issuing an EIA and receipt of your final environmental permit is probably closer to three years or longer."

Analyst David Stein of Sprott Securities Ltd. said he is taking a wait-and-see position on Crystallex and Gold Reserve, and it all comes down to trusting the government.

"You get conflicting reports from different ministers and people involved in the political process there, and it's really tough to wade through what's true and what's not true," said Mr. Stein, whose firm has had an investment banking relationship with Crystallex.

"If Crystallex and the market can trust the government of Venezuela, then it should not be an issue. If they can't, then it is."

The amended shareholder rights plan, also known as a poison pill, is not intended to foreclose a takeover but only to ensure fair treatment of stockholders, Mr. Bruce said following yesterday's meeting, held after a snag prevented voting on the plan at a meeting in June.

Crystallex, which won the rights to Las Cristinas after extended legal wrangles with Placer Dome and Vannessa Ventures Ltd. in the late nineties, "has made it known throughout the industry and investment banking community that we have an open-door policy," Mr. Bruce said.

"We're perfectly happy to let everybody have a look, kick the tires. Our job is to create shareholder value . . . If there's interest, then we'll respond in a very responsible fashion."

On the Toronto Stock Exchange yesterday Crystallex shares closed unchanged at $3.16.