Shares of Crystallex International Corp dived 25 per cent Wednesday after reports the Venezuelan government will take control of its principal asset, the Las Cristinas gold mine. Reports say Venezuela's government is taking over the mine, which Crystallex is under contract to operate, to ensure state control over mining operations in that country.
Crystallex has been working for years with the mining ministry in Venezuela on the Las Cristinas property in Bolivar State. In a release after markets closed Wednesday, the company said it hasn't been notified by the Venezuelan government of any changes in position regarding the project, or the contract.
"In addition, members of the Crystallex team have had meetings, as recently as today, with officials from MIBAM (Ministry of Basic Industry and Mining) and the Corporacion Venezolana de Guayana and no issues were raised with regards to the control of Las Cristinas," the company stated.
"Crystallex continues to comply with its obligations under the (contract), retains its interest in and remains the builder and operator of the Las Cristinas gold project. Crystallex will continue to press its case for the issuance of the environmental permit so that the project can advance for the benefit of Venezuela, the local communities, the stakeholders and shareholders."
The company said in September that discussions with the ministry about an environmental permit "have been encouraging." Crystallex said at the time it would begin constructing the mine once the permit was received.
Crystallex says on its website that Las Cristinas has an estimated production of 17 million ounces, "which positions Crystallex as one of the largest North American-based gold companies in terms of gold reserves." The website also says the company expects to start gold production at Las Cristinas in 2010 at a level of 20,000 tonnes per day. To date, Crystallex said it has spent US$114 million to date on the mine under its contract.
Venezuela's socialist government, under president Hugo Chavez, has seized control of industries considered strategic to its development. Crystallex says it has been operating in Venezuela for 16 years. Crystallex shares fell 13 cents to 38 cents on the Toronto Stock Exchange Wednesday, with nearly four million shares traded.
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