Wednesday August 4, 5:42 pm Eastern Time
Canada's Crystallex renews Venezuelan legal attack
By Paul Simao
TORONTO, Aug 4 (Reuters) - Upstart Canadian miner Crystallex International Corp.
(Toronto:KRY.TO - news) fired yet another salvo on Wednesday in its long-running legal battle to win
control of the prized Las Cristinas gold project in Venezuela.
Vancouver-based Crystallex, which lost its bid last summer to challenge Canadian gold miner Placer Dome Inc.'s (Toronto:PDG.TO
- news) rights to Las Cristinas, said it had launched two additional legal proceedings in Venezuelan courts.
Las Cristinas, located in the remote southeastern jungles of Venezuela's Bolivar state, is one of South America's largest gold
deposits. It was discovered in 1993.
The legal actions claim that a Venezuelan joint venture, 70-percent owned by Vancouver-based Placer, has no legal title to the
project's main concessions. Crystallex said it acquired ownership rights two years ago.
''Crystallex looks forward to the opportunity to finally resolve the continuing uncertainty over the ownership of the concessions,''
Crystallex Chief Executive Marc Oppenheimer said.
Crystallex's renewed offensive, which won the support of shareholders at an annual meeting in June, occurs more than a year after
the Venezuelan Supreme Court dismissed the company's first attempt to claim ownership.
The resumption of the Las Cristinas catfight also arrives on the heels of Vancouver-based Placer's decision to suspend development
of the $575-million project.
One of the cornerstones of Placer's aggressive growth strategy, Las Cristinas was expected to begin production in 2001 with an
initial annual output of 530,000 ounces at a total cost of about $240 an ounce.
Placer, North America's third largest gold producer, attributed the mothballing of the project to weak bullion prices, but noted that it
would resume development when a sense of confidence returned to the gold market.
Gold, which tumbled last month to fresh 20-year lows near $253 an ounce, traded at $255.90 an ounce on Wednesday.
Despite the threat of further legal wrangling, Placer appeared confident on Wednesday that Las Cristinas would remain comfortably
within the company's growing stable of gold projects.
''During the previous challenge we said they didn't have a chance because their claim was false and the (Venezuelan) court agreed
with us,'' Placer spokesman Hugh Leggatt said.
''This is even more frivolous than that because Placer Dome and our partner own the mining rights and we are confident that we are
going to keep them,'' Leggatt added.
Analysts speculated that Crystallex's current legal attack may have been motivated in part by a desire to shield the company from
several class action lawsuits filed by disgruntled shareholders.
The class action lawsuits, which were filed in the United States last year, allege that Crystallex falsely claimed to have acquired rights
to the Las Cristinas concessions.
Shares of the company, which peaked at C$11.60 in March 1998, plummeted to around 50 Canadian cents a share on the Toronto
Stock Exchange after Crystallex's first legal challenge was thrown out of court.
Crystallex rose 12 Canadian cents to close at 95 Canadian cents a share on Wednesday on the TSE.
Oppenheimer, who has been accused of artificially inflating Crystallex's stock by making false and misleading statements, conceded
that the company's current legal strategy ''may take a long time'' to pay off.
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