"Just wondering where I will stand in the competition when somebody takes Brisas off GRZ's hands for $20 US cash a share and then GRZ continues with Choco as an exploration play and strikes an even bigger pot of gold! Gee! as if that would cause me any worry... LOL...."
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G'day Vet,
Yeah, that would cause me problems too.... like having to find me a new tax guy who has a calculator big enough to figure those kinds of numbers..... <vbg>
I'm just hoping the BFS comes in without any upside expensing surprises...
Did you see the Kosich piece detailing Daniel Ross' (EVP and Corporate Counsel for Crystallex (KRY)) take on the improving climate for VZ mining investments?
Venezuelan stabilization good for mining
By: Dorothy Kosich
Posted: '22-DEC-04 02:00
RENO--(Mineweb.com) In the wake of a presidential referendum and regional elections, which have brought political stability to the country, Crystallex mining executives believe Venezuela is "making a bonafide effort to make the country attractive from an investment standpoint."
A "very real evolution" in mining has taken place during the decade that Crystallex has operated in the country, according to Daniel Ross, EVP and Corporate Counsel for Crystallex. The country adopted a new mining law. The Ministry of Energy and Mines has assumed a higher profile in the country.
The Guyana area in southeastern Venezuela is seen as the critical region in the nation's efforts to diversify its economy away from oil. The gold mining center in Venezuela is Bolivar State. The new Governor of Bolivar is the former CEO of CVG, the Corporacion Venezolana de Guyana (CVG), an autonomous state-owned entity, located primarily in Bolivar State.
The majority of Crystallex's dealings with government and regulatory agencies have been conducted through CVG. The entity is the nation's second largest industrial group after the oil sector. "They are a very sophisticated organization," declared Ross. CVG oversees forestry, the mining of iron ore, gold, zinc, bauxite and other minerals, and the production of steel, aluminum, electricity and cement in a region that covers half of the country, CVG is in charge of gold development and research for joint ventures in large-scale projects. The Ministry of Mines is organizing cooperatives for 15,000 active prospectors in the area, who are responsible for undeclared gold production.
The advantage of Crystallex's partnership with CVG provides "an accessible partner who we can work with on a daily basis if necessary," Ross said. "We can have an almost instant, on-going exchange of ideas and information with them."
In his political platform during the race for governor, Francisco Rangel Gomez suggested that mining has not received sufficient support from the regional administration of the former Bolivar governor. As the new governor, Rangel has pledged his support for mining. "You've got an individual now as Governor who is very, very knowledgeable of industry and mining in the area," Ross explained.
A recent presidential election, combined with the regional elections, offer a stable government which can develop long-term policy, he added. The result is the formulating of better fiscal policy and tax policy favorable to foreign investment. Ross noted that the government is now re-examining its tax policy with the goal of developing regulations that are "easily understood and predictable to our investors."
"Our feeling is that it will be a workable tax system," declared Ross. "Right now they're working their way through foreign exchange controls. They're looking at possible changes to the VAT system. I think they are looking at the kinds of things that will make Venezuela an attractive opportunity for international investors."
Current Crystallex Venezuelan operations produce 50,000 ounces of gold annually. By 2007, production could increase to 350,000 ounces of year with Las Cristinas averaging 270,000 ounces of annual gold production over the 34-year project life. Existing gold reserves at Las Cristinas are 12.8 million ounces.
Meanwhile, Crystallex has reached out to small miners and others living in the region. Crystallex Vice President Richard Marshall said social programs have been initiated by the company in the region. Thirty houses have been built. Sewage and water systems were upgraded along with medical facilities, according to Marshall. Crystallex built the first dental facility in the region.
In the meantime, the government has set aside concessions in Bolivar State where locally organized cooperatives of small miners will be awarded land and given financial support to mine in an organized fashion, he added. Ross said the government has also worked to substantially reduce the gampenerios or illegal migratory population of small miners near the Las Cristinas mine site.
While Venezuela is renowned for its oil expertise, gold mining "is in its infancy as an organized nature," Marshall explained. However, due to the experience of Hecla with its La Camorra gold mine, the upcoming Bolivar Gold Choco mine, and other projects moving forward, major mining companies are considering Venezuelan projects. For instance, Barrick has told Venezuelan state mining company Minerven of its interest in developing the Viejo Callao gold deposit in Bolivar state, according to Business News Americas. Newmont, AngloGold Ashanti, and Gold Fields have also expressed interest in Venezuela.
Ross said he found permitting a mining project in Venezuela to be a very sophisticated process, which was technically oriented. Meanwhile, Marshall said Crystallex's Venezuelan-based managers are very pleased with the skilled mining workforce available in the area.
The country is finally recovering from two and a half years of political turmoil, which generated mass protests, and violence. During that time, foreign investment in Venezuela declined from $1.338 billion in 2003 to $600 million, according to the Economic Commission for Latin American and the Caribbean (ELAC).
The nation's economy grew by more than 20% this year, which was attributed to private sector growth. The Venezuelan economy is expected to grow by 6% this coming year. Unemployment has dropped to 13.7% of as October 2004 from a high of 22% in April 2003 after an oil industry shutdown. The government is aiming for a lower 10% unemployment rate in 2005.
Preliminary reports by ELAC finds that some economies are undergoing strong recoveries after facing serious crisis. For example, Venezuela is expected to have an 18% growth rate in GDP for 2004.
Industrial parks and research areas, referred to as "endogenous development regions," have been established throughout the country.
Meanwhile, Venezuelan President Hugo Chavez and heads of state and representatives from 11 South American nations earlier this month inaugurated the South American Community of Nations, which aims to create a European Union-style regional trade block. The trade block would unite the Southern Common Market (MERCOSUR) and the Andean Community of Nations (CAN) as well as add Chile, Guyana and Surname to the proposed regional organization.
The proposed union will rank third after the European Union and NAFTA and will combine a GDP of more than $970 billion, according to Venezuelanalysis.com. Political and physical integration may take place through infrastructure projects. A meeting has been tentatively set for March 2005 to work out remaining details.
Marshall noted that Venezuela's stock market hit a 29-year high due to the performance of oil this year. "Business is doing very well," he added.
"It's an asset-rich country," Ross concluded. "People like the new Governor and others recognize that and understand that it can be a point of strength for the country and they will advertise it as such."
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