‘No mention of ... losing its mine operating contract’
CHAVEZ
Crystallex shares fell 48% to $1.65 on the Toronto Stock Exchange before trading was halted.
Crystallex went on the defensive shortly after the speech, pointing out that Mr. Chavez’s remarks did not change the company’s existing situation. Las Cristinas is already the property of the Corporación Venezolana de Guyana (CVG), a state-owned Venezuelan holding company. Crystallex has a contract to develop and operate a mine.
“ There was no mention of Crystallex losing its mine operating contract,” said Todd Bruce, chief executive of Crystallex.
“We and everybody else in this position obviously want to do everything we can to establish that clarity and hopefully get things back to a much less painful state for shareholders,” Mr. Bruce added. He spoke by telephone from Venezuela, where he was on business yesterday.
The news hammered other miners with interests in Venezuela. Shares of Torontobased dropped 15% to close at $2.40 on the TSX, while shares of Spokane, Wash.-based
dropped 27% to close at US$2.56 on Amex.
Mr. Chavez has spooked markets before. During the past year, Venezuela, the world’s fifthlargest oil exporter, has twice unilaterally raised taxes and royalties for oil companies. The country has also rewritten its oil contracts with foreign producers.
Crystallex is waiting for the Venezuelan government to issue an environmental permit. Mine construction will begin once that permit has been granted. Assuming this takes place “sooner rather than later,” Mr. Bruce said Las Cristinas could be in production by the first quarter of 2007.
Las Cristinas has estimated reserves of 12.5 million ounces. Crystallex hopes its mine will produce more than 300,000 ounces of gold a year in the first five years at an average cost of US$154 an ounce.
Financial Post, with files
from news services dhasselback@ nationalpost. com