CVG mulling direct contract for Las Cristinas - Venezuela
Friday, August 30, 2002 14:25 (GMT-0300)
Venezuela's state heavy industry holding company CVG could award a contract to develop the Las Cristinas gold project directly rather than proceed with an auction, a company spokesperson told BNamericas.
CVG is studying proposals from Canadian mining company Barrick Gold (NYSE: ABX), Spokane-based Gold Reserve (Nasdaq: GLDR), Canada's Gammon Lake (TSX: GAM) and a consortium made up of South Africa's Gold Fields (Nasdaq: GFS) and Vancouver-based Crystallex International (Amex: KRY), the official said.
Gold Reserve controls the neighboring Las Brisas gold deposit, which together with Las Cristinas could form one the largest gold mines in Latin America, according to CVG. Crystallex claims two of the key concessions to Las Cristinas as its own, and the case is before the courts.
"If there is a particularly interesting offer from one of these companies, we will award it [Las Cristinas] directly," the spokesperson said.
But if there are similar proposals it will be harder to make a decision, so an auction process would be necessary to choose a winner, the official added.
CVG president Francisco Rangel is working with a team to analyze the proposals, and a final decision is expected for the end of the year. "This isn't a decision that can be taken lightly. It needs lots of analysis to make sure it is the correct one," he said.
Under CVG's terms, the future operator of Las Cristinas must have the financial strength to commit nearly US$600mn for the project and have adequate technology to extract 40,000t/d and produce some 500,000oz/y gold, as well as guarantee the integral and sustainable development of the surrounding communities.
It must also be prepared to start working immediately since CVG wants to revive the project, in southeast Venezuela's Bolivar state, as quickly as possible. Mine construction is expected to take about eight months.
Las Cristinas is one of the largest undeveloped gold projects in South America, with proven and probable reserves of nearly 12Moz.
The project was a joint venture known as Minca between CVG and Vancouver-based senior Placer Dome (NYSE: PDG), but Placer sold its share to junior Vannessa Ventures (TSX: VVV) last year. CVG never recognized the deal, and the government revoked the licenses for the project. Vannessa is still fighting the case in the courts.
Placer Dome had been planning a US$570mn, 500,000oz/y project at Las Cristinas but halted construction in 1999 and later wrote off its investment of US$116mn before selling its 95% share in the venture to Vannessa last July for US$50. CVG had the other 5% of Minca plus an option to raise its stake to 30%.
Vannessa wanted to develop a 100,000oz/y gold mine for some US$50mn at the property, something CVG regarded as too small.
By Harvey Beltran
BNamericas.com
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