Crystallex drops Las Cristinas lawsuit

Venezuela's supreme court has accepted a request from Canadian mining company Crystallex International (Amex: KRY) to withdraw a legal case it had filed concerning claims to the areas known as Las Cristinas 4 and 6, state heavy industry conglomerate CVG said in a statement. The case, filed against the Venezuelan state at a time when CVG had an agreement with Vancouver-based senior Placer Dome (NYSE: PDG) to develop the 10Moz Las Cristinas gold project, dates back to 1999. The decision to drop the claim was one of CVG's demands of Crystallex in a contract the two companies signed in September last year to develop the property, located in eastern Venezuela's Bolivar state and considered one of South America's largest gold deposits. "This ruling [made Nov.25] shows the courts are accepting the conditions that CVG imposed [on Crystallex]," a CVG spokesperson told BNamericas. Crystallex had claimed the concessions at Las Cristinas via its subsidiary Inversora Mael, but in 2001 CVG revoked the contract with Minca, the joint venture company originally set up with Placer Dome. CVG president Francisco Rangel said in a statement that the company is pushing ahead, along with Crystallex, with all the legal requirements to revive Las Cristinas. According to a feasibility study published in September this year, Las Cristinas would produce an average of 266,000oz/y gold for 34 years at total cash costs of US$196/oz, based on a 20,000t/d operation. Development costs are put at US$243mn, plus US$39mn in VAT which would be refundable from gold sales. But Toronto-based Crystallex said it has also decided to go ahead with a feasibility study into expanding the operation to 40,000t/d, and this is expected to be "substantially completed" by the end of this year. Construction at Las Cristinas is penciled in to start mid-2004 and the first gold should be produced in the first quarter of 2006, according to Crystallex said.