Hello Syncrude;
NEWSRELEASE??
Crystallex provides additional information on Las Cristinas lawsuits
Crystallex International Corporation KRY
Shares issued 36,933,966 Aug 9 close $0.76
Tue 10 Aug 99 News Release
Mr. A. Richard Marshall reports
Crystallex International Corporation announced in Stockwatch on Wednesday,
Aug. 4, 1999, it had commenced legal proceedings in Venezuela to enforce
its rights in relation to the Cristinas 4 and 6 concessions.
Crystallex issued a news release, and prepared a background paper for
interested parties outlining the company's position on issues in dispute
over the ownership of Las Cristinas.
In response to numerous requests, Crystallex today is releasing the
background paper for general distribution.
Two legal proceedings were launched. The first proceeding seeks to nullify
the joint venture agreement previously entered into between Corporacion
Venezolana de Guayana and MINCA, a Venezuelan joint venture in which Placer
Dome has been a participant. In essence, this action challenges the
original legal basis on which CVG purported to confer contractual rights to
exploit the concessions commercially. Crystallex also brought a motion to
join in the lawsuit originally commenced by the solicitor general of
Venezuela to challenge presidential decree 1409 and the ability of CVG to
grant mining contracts in reliance on it. The second proceeding seeks to
nullify the effect of the settlement agreement entered into in 1991
regarding a lawsuit between Inversora Mael, CA, the Republic of Venezuela,
CVG and Ramon Torres.
The company believes the legal proceedings it has launched, if advanced
successfully, could lead to the enforcement of its rights over the
concessions.
In March of 1997, the company announced that it had acquired the rights to
the Cristinas 4 and 6 concessions in Kilometre 88, Venezuela. Crystallex
acquired the concessions by purchasing the shares of Stay Management Ltd.,
the owner of Mael. The concessions were transferred to Mael in 1986 by Mr.
Torres.
When Crystallex acquired the rights to the concessions in 1997, the
validity of the transfer to Mael had been confirmed by rulings of the
Supreme Court of Venezuela issued in 1991 and 1996. These rulings also
declared the nullity of resolutions of the ministry of energy and mines
denying Mael's rights to publication in the Official Gazette of Venezuela
of the transfer from Mr. Torres to Mael. The publication in the Official
Gazette is a necessary step under Venezuelan mining law.
At the time Crystallex acquired the rights to the concessions, they had
been the subject of investigation and exploration for several years by
Placer Dome under a joint venture arrangement involving Placer Dome and
CVG. The rights of the joint venture to investigate and explore the
concessions were based on contractual rights granted by CVG in connection
with the joint venture agreement.
In the company's view, CVG did not have the legal authority to grant mining
rights to the joint venture in which Placer Dome is participating. One of
the lawsuits initiated by Crystallex challenges the legal authority for the
joint venture. Moreover, the legal basis for the granting even of
contractual rights by CVG in respect of the concessions is unclear, and
open to challenge under Venezuelan law as being illegal. This potential
illegality is also put at issue in the lawsuit. Even Placer Dome has warned
shareholders as recently as April, 1999, of the risk that presidential
decree 1409, the basis for Placer Dome's rights with respect to the
concessions, has been alleged to conflict with Venezuelan mining law.
Crystallex intends to join as an interested third party in a lawsuit
commenced by the solicitor general of Venezuela, challenging the validity
of presidential decree 1409.
>From the time of the acquisition in 1997, the company took steps to assert
its ownership interest in the concessions. These steps were actively
opposed by third parties, including MEM, Placer Dome and CVG. First,
Crystallex made Placer Dome aware of the conflict between the concession
rights Mael enjoyed under Venezuelan mining law and the contradictory
contractual rights purportedly granted by CVG. Second, around the time of
its acquisition of the outstanding shares of Mael, Crystallex attempted to
negotiate a joint venture arrangement with Placer Dome for the exploitation
of the Cristinas properties. Crystallex advised MEM, Placer Dome and CVG of
its willingness to investigate constructive means of continuing the
exploration work and putting the project into production and also made
known publicly its willingness to proceed in this way. The attempt to
negotiate a joint venture arrangement with Placer Dome and CVG was
fruitless.
In April of 1997, the Supreme Court of Venezuela issued a final and binding
ruling ordering publication in Venezuela's Official Gazette of a notice of
transfer of the concessions to Mael. The 1997 order followed orders of the
Supreme Court for the publication in the Official Gazette of the transfer
in each of 1991 and 1996. The 1997 order was made necessary because the
prior orders for publication had not been carried out by MEM. To ensure
that its order was finally carried out, the Supreme Court of Venezuela
announced in Venezuela's Official Gazette of May 15, 1997, an extraordinary
edition of the Official Gazette in which the three rulings confirming the
validity of the transfer were published. The extraordinary edition also
published the assignment agreement through which Mael acquired the
concessions and the notice of transfer of the concessions.
Late in April of 1997, Mael continued with its attempt to enforce ownership
rights by commencing an action in the Supreme Court of Venezuela seeking a
ruling requiring MEM to fully recognize its ownership of the concessions.
The 1997 action sought a court declaration that various resolutions passed
and actions taken by MEM purporting to affect the ownership rights of Mael
over the concessions were invalid. The action asked the Venezuelan Supreme
Court to rescind: the purported granting in favour of CVG of alluvial
copper concessions over the concessions; various resolutions purporting to
either terminate or deny Mael's ownership rights in the concessions; and
various resolutions granting copper concessions, including vein copper
titles, to CVG over Mael's objections. The 1997 action was opposed by MEM,
CVG and MINCA.
In June of 1998, the political administrative chamber of Venezuela's
Supreme Court ruled on procedural grounds that Mael did not have status to
assert ownership rights over the concessions and refused to proceed with
the 1997 Mael lawsuit.
The company understands the June, 1998, decision to be based on two
grounds. First, the court relied on a lower court decision in 1991 that the
transfer of title to Mr. Torres, Mael's predecessor in title, was invalid.
The second lawsuit seeks to set aside the settlement agreement, which was
the sole basis for the 1991 decision. In this respect, the June, 1998,
decision conflicted with the Supreme Court's earlier decisions of 1991 and
1996, which acknowledged the validity of the transfer to Mr. Torres.
Second, the court ruled that Mael had run out of time under Venezuelan
procedural rules to challenge certain of the resolutions and other actions
that had been taken by MEM in order to provide a foundation for the rights
CVG was purporting to grant in relation to the concessions.
The June, 1998, decision included a dissenting opinion which stated that
the majority opinion contradicted earlier rulings and also observed that
the retroactive nature of the 1991 and 1996 Supreme Court decisions meant
that the adverse finding of the majority, that Mael had run out of time to
challenge the MEM action and resolutions, should not have been made.
Under the June, 1998, decision of the Venezuela Supreme Court, Mael's
registered title to the concessions has not been altered or expunged. In
the company's view the June, 1998, decision was procedural, and did not
decide the fundamental issue of the validity of the MEM actions and
resolutions which were challenged by Mael in its 1997 action. Rather, in
the company's view, the June, 1998, decision conflicts with and does not
overrule prior and equally valid decisions of the same Venezuelan Supreme
Court.
In June of 1998, the board of directors pledged to swiftly conclude the
review of its options with respect to the concessions. The review of those
options led to the conclusion announced later in 1998 not to write off the
company's investment in the concessions. No intervening development has
altered the view of the board of directors in this regard.
In the months following the decision not to write off the investment in the
concessions, significant changes have occurred in the Venezuelan political
and business environment. Various elections during the past year have
resulted in the election of a new president and a new constitutional
assembly. The new constitutional assembly has a mandate to study and, if
necessary, change the constitution of Venezuela.
There have also been wholesale changes made in the senior management of
CVG. CVG has publicly stated that it is re-evaluating its position in
relation to the concessions in light of Placer Dome's recently announced
decision to suspend development work on the concessions. At least one other
major mining company has indicated its interest in pursuing the development
of the concessions. While Crystallex's consideration of these potential
legal proceedings has been publicly known for several months, the company
is determined that no action be taken in Venezuela with respect to the
concessions without full knowledge of Crystallex's intention to enforce its
claims to the concessions.
As with virtually any litigated matter, the ultimate outcome cannot be
predicted with any degree of certainty. Of necessity, judgments must be
made. Further, adverse parties can reach different judgments on the basis
of the same legal issues.
Crystallex looks forward to the opportunity to finally resolve the
continuing uncertainty over the ownership of the concessions and to proceed
with their development.
WARNING: The company relies on litigation protection for "forward-looking"
statements.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
With regards;Frank |
