KRY shareholders left in tears

Another week. . . another Third World government grabbing prized mineral assets from North American mining companies.

• During the week ended May 2, the 18th trading week of 2008, the mining world’s attention was focused squarely on the goings-on in Venezuela, where foreign gold miners are getting their environmental permits denied or revoked at the whim of a capricious government inimical to Western capitalists.

• The biggest was the hardest to fall: Toronto-based Crystallex International became a penny stock again and traded at levels not seen since the dark days of 1999. This, after the director general of the Administrative Office of Permits at the Ministry of the Environment and Natural Resources of Venezuela effectively denied an environmental permit for Crystallex’s flagship Las Cristinas gold project, being co-developed with state-owned miner Corporacion Venezolana de Guayana.

For many reasons, Crystallex has never been a company to inspire a lot of confidence, but we had to grudgingly pay tribute to the company’s weird tenacity and ability to rebound after bad news. Still, its legions of “true believers” in the retail crowd and on Bay Street thinned out considerably in recent years as disappointment piled atop disappointment.

This one feels like a death blow for Crystallex, and there are few left to shed a tear.

• Kilometre 88 neighbour Gold Reserve’s been a bit of a choirboy in comparison to Crystallex’s bad-boy routine, but the company looks to have met essentially the same fate — a wonderful morality tale about the futility of trying to play nice with evil, this time around in the form of Hugo Chavez’s odious regime.

• We largely gave up hope for Venezuela in October 2007, when South Africa’s Gold Fields bailed out of the country after having made significant gold investments there only a few years earlier.

With its technical prowess, its deep roots in eastern Venezuela’s El Callao district and its ostensible status as a fellow “Third World brother,” Gold Fields was better positioned than anyone in the industry to know Venezuela’s true gold-mining potential. So, Gold Fields’ refusal to bid for Crystallex or Gold Reserve and its swift exit from Venezuela were telling signs for those willing to see them.

The dark horse in all this is Rusoro Mining, which could yet wind up playing a significant role in developing major gold projects in Venezuela.

• The ceviche hit the fan in Panama, as Petaquilla Copper launched an attack against one of its two Canadian partners at the gigantic Petaquilla copper project.

After seemingly approving of Teck Cominco’s approach to developing the Petaquilla deposit as recently as March, Petaquilla Copper is now alleging that Teck “failed to satisfy the preconditions” for making a final commitment to proceed with development, and declared that Teck’s minority interest in the property “has now been terminated.”

The move exhibits all the personal style of Petaquilla Copper CEO and former-Panamanian politician Richard Fifer, mixing his burning aspirations for more power with not a small amount of nationalism.

From a Canadian perspective, the idea of thumbing your nose at such high quality development partners as Teck Cominco and Inmet Mining seems the height of folly, but if Fifer’s current squiring of Chinese, Japanese and Korean companies around Petaquilla pays off with a new side deal, it may not matter in the end.

• Our favourite tale of serendipity this week is that of ten-bagger extraordinaire, Goldsource Mines, the formerly obscure Vancouver junior that stumbled across a decent thermal coal seam while drilling for kimberlite some 50 km north of Hudson Bay, Sask. The seam was pierced by two shallow holes 1.6 km apart.

A mini-coal rush has ensued in the area, and Goldsource stock has gone from 19 to $4.29 and beyond.

• We also like Rubicon Minerals’ continuing discovery of high grade gold in the shallow F2 zone discovered earlier this year in Ontario’s Red Lake camp. It shows the camp still has plenty more to give a group of dedicated, smart explorers.

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