Major problems for Crystallex and Gold Reserve in Venezuela

Both Crystallex International and Gold Reserve are concerned about apparent revoking of gold mine permits. Both problems involve the Imataca Forest Reserve. Crystallex says it “has become aware that the Director General of the Administrative Office of Permits at the Ministry of the Environment and Natural Resources of Venezuela (MinAmb) has issued a communication to the Corp Venezolana de Guayana (CVG), the owner of the Las Cristinas concessions, denying a request for the authorisation to affect natural resources to carry out exploration activities in the mining area of Las Cristinas in Sifontes, Bolivar State.
“In issuing the communication,” Crystallex continues, “the Director General cites sensitivities surrounding indigenous peoples, the small miners and the environment in the area generally known as the Imataca Forest Reserve, which contains a number of mining projects, which like those of Crystallex, are seeking the required permits to continue their development and exploitation.

“The communication by the Director General appears to be in conflict with the Las Cristinas EIS approval, Construction Compliance Bond Request and Environmental Tax request issued by the MinAmb (that Crystallex posted and satisfied last summer) and the communication appears to be in opposition to all mineral mining in the Imataca Region.

“The communication is subject to several avenues of response, including an application for reconsideration by interested parties under Venezuelan law. Crystallex is currently working with various levels of the CVG to develop strong submissions in support of the authorization to affect natural resources. Crystallex is committed to defending its rights in the Las Cristinas project and intends to respond to this matter vigorously in accordance with its legal entitlements to protect the interests of our shareholders.

Gold Reserve says “MinAmb has communicated its plan to rescind the March 2007 permit for the commencement of the construction phase of the Brisas project. MinAmb referenced, among other things, the existence of environmental degradation and affectation in the area, the presence of small miners as well as the Imataca Forest Reserve as the basis for their decision.”

Doug Belanger, President of Gold Reserve stated, “The company has not been formally notified of this decision and is working with various government officials to resolve this matter. Another mining company has cited in a recent press release the Director General of MinAmb regarding other mining projects impacted in the Imataca Forest Reserve. Prior to this, at no time during our year-long effort to obtain the administrative Initiation Act, which would allow us to advance the project, has any environmental issue including the Imataca Forest Reserve been raised by MinAmb as an impediment to proceeding with our project.”

“There are no small miners on Brisas and any environmental disturbances result from activities prior to the company acquiring the property. Such disturbances have been addressed by the company and are clearly documented in our operating plan already approved by the Venezuelan Government and are subject to future reclamation as outlined in our Environmental and Social Impact Study, previously approved by MinAmb.”

Belanger further stated, “The Km88 area in which Brisas is located has been approved for mining previous to the company acquiring Brisas and most recently reaffirmed by Presidential Decree No. 3110 which was published in the Official Gazette in 2004. Support for mining in the Km88 area is clearly evidenced by the approval of our Environmental and Social Impact Study in early 2007, the issuance of the Authorization to Affect by MinAmb in March 2007 and the fact that the MinAmb and the Ministry for Basic Industries and Mines (MIBAM) since 2004 have issued to the company and others a number of authorizations and other acts relating to mining exploration or exploitation in the Imataca.”

“We are committed to invest during the life of the mine over $1 billion to build the largest gold and copper project in Venezuela and directly create over 1,000 jobs. After years of commitment to Venezuela, nearly $300 million invested in the development of Brisas which adheres to the Equator Principles, multiple permit approvals including most recently the Permit to Affect and receipt of, in the third quarter of 2007, accreditation letters of technical compliance from MIBAM for all of the properties that comprise Brisas, it is unfathomable that the MinAmb suddenly attacks mining projects in the Imataca – impacting not only our investment and others in the industry, but the livelihood of those most affected by the project, the local and regional citizens of Venezuela.”

“We are prepared to protect our rights to Brisas through the Venezuelan legal system and, if necessary, other avenues to protect the interests of our shareholders will be pursued. We have approximately $130 million in cash, investments and restricted cash, project related equipment with an original cost of over $30 million and convertible notes payable of approximately $104 million.”