Here's an article that appeared in the Saturday edition of the Financial
Post.
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Saturday, March 1, 1997
Rumors of rumors hit Placer, Crystallex
By DAVID THOMAS
The Financial Post
Unsubstantiated rumors surrounding Placer Dome Inc.'s title to its
Las Cristinas gold mine project in Venezuela fuelled some aggressive
buying Friday of shares of Vancouver junior Crystallex International
Corp.
Placer flatly denied rumors that the Supreme Court of Venezuela has
ruled that a previous owner in fact has title to concessions on the
property.
The ruling has not been officially confirmed -- nor has it been
confirmed that the Venezuelan court is even considering a title
dispute.
"We are 100% certain that our tenure on Las Cristinas is safe and
secure," said Placer spokesman Hugh Leggatt.
"If we thought there was a problem we would disclose it."
The rumors hold that the issue could shift ownership of at least two
concessions at Las Cristinas to their previous owners, which could
jeopardize Placer's plans to start a US$576-million mine at the site.
According to mining analysts, Crystallex was preparing to purchase
the concessions from its original owner.
Crystallex shares (KRY/VSE) were traded heavily Friday, rising
$1.05 to $4.15 with almost a million shares changing hands.
Despite Friday's sharp rise in the price of gold, Placer shares
(PDG/TSE) fell 30› to $29.35. On Thursday, an analyst at Goldman Sachs
in New York lowered her rating on the stock. But, in an interview
Friday, Goldman's Amy Gassman said the move was unrelated to the
Venezuela rumors.
"There is a company that we know is putting out false news about
us," Leggatt said, without disclosing the company's name.
On Tuesday, Crystallex issued a statement saying it believes that
recent market activity may be based on rumors it is "currently in
negotiations involving the acquisition of certain properties in
Venezuela."
Some analysts played down the rumor, saying they were confident
Placer had a solid lock on the property.
While claims were made against the property back in the 1980s, no
title disputes have ever gone "to court or any formal forum,"
according to Leggatt.
One analyst said he'd heard there was a recent court decision but
said the indications were that its ruling was inconclusive. "It's an
extrapolation," he said of any conclusion that Placer has lost title.
He said the parties may need to ask for a reinterpretation of the
ruling. "It's not over yet."
Another analyst expressed shock at the turn of events and said he
had word from a reliable Canadian source in Venezuela that the rumor
is, in fact, true.
"He had no doubt that the [challenger] was going to win [title] or
had won it already."
Adding to the intrigue is another rumor that Crystallex was
successful earlier this week in raising $30 million to buy the two
concessions.
Analysts say the two concessions represent about 20% of the gold
reserves at the property. Crystallex chief financial officer K.Y.
Szetho said he is not in a position to comment on the possible
financing.
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Strange twist of events. Late in the day there was panic buying of
KRY.
Could be that shorts were busy covering. If the rumour is
true, KRY is a real bargain at $4+. |
