Vannessa Ventures (VVV-V) still hopes to eventually develop the embattled Las Cristinas gold mine in Venezuela, and on Thursday, the company said its hopes were bolstered by a Supreme Court of Venezuela decision that says the company is contractual assured arbitration in its dispute with Corporacion Venezolana de Guayana (CVG), the government’s holding group.
The government of Venezuela recently unilaterally reacquired full rights to the gold and copper property refusing to recognize Placer Dome‘s (PDG-T) sale of the mine to Vannessa’s Minca unit. CVG has also rejected Vannessa’s US$50-million start-up plan, saying the sale violated the original concession contract.
Vannessa says it is “satisfied that our confidence in the Laws of Venezuela has been justified by this ruling and the assurances it gives Vannessa and other companies who invest in the country.”
Minca is currently in discussions with the Ministry of Mines with respect to title and development issues.
Just last year, Vannessa acquired a 95% stake in Minera Las Cristinas (Minca), the company that held the rights to the property, from Placer. Minca’s partner in the project, Venezuelan state-owned CVG hold’s the remaining stake.
The partnership between Placer and CVG soured after Placer froze investment in Las Cristinas in 1999, arguing that a slump in gold prices made the original US$600 million project uneconomical.
Placer had planned a US$600-million operation, producing 470,000 oz. gold and 16,000 tonnes copper annually, based on reserves of 323 million tonnes grading 1.1 grams gold per tonne with 0.14% copper. Placer halted development in 1999 when gold prices entered their prolonged slump.
Vannessa envisages a 100,000-oz.-per-year mine, much smaller than Placer had planned, to exploit near-surface mineralization. The junior estimates it would take US$35-50 million to put such a project into production.
Crystallex International (KRY-T) is still claiming a right to a portion of the Las Cristinas property. In the early 1990s, the junior purchased a Venezuelan company, Inversora Mael, which claimed to hold the rights to the Las Cristinas concessions. A series of legal challenges to CVG’s title to the ground appeared to end in June 1998, when the Venezuelan Supreme Court refused to hear claims brought by Mael and Crystallex.
Despite the ruling, Crystallex continues to take legal action against the Venezuelan government to assert its claim to the property.
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