Crystallex's CEO: 'We're Closer Than Ever To Venezuelan Mining Permit'

Here are some comments from an interview with Gordon Thompson, who was named the new CEO of Crystallex International Corp. (KRY) last month.

The company is waiting for a permit to mine the Las Cristinas gold project, where it has had to deal with the leftist government of Hugo Chavez.

FP Trading Desk: What are the challenges in working with the Venezuelan government?

Gordon Thompson: One thing that’s significantly different than how you operate here is that the government of Venezuela is very keen about what are you doing for local communities? How will jobs be created? We’re building a hospital down there for the people in the town. We’re building sewage treatment plants, we’re building water treatment plants, we’ve repaved some streets in the town. And all those issues are very important. They actually come before everything else in the minds of the political people in the country.

FP: How close are you to getting a mining permit?

GT: Closer than we’ve ever been before. We’re at the final step in the Venezuelan process, getting the environmental permit. The ministry of the environment came back to us about two months ago with seven areas they wanted us to deal with. And we’ve adequately dealt with those. It’s our feeling that it should be here fairly soon. There’s nothing in the way of it happening.

FP: Is it tough to get the message to shareholders worried about Mr. Chavez nationalizing the mining industry?

GT: I think we have the greatest shareholders in the world, the most patient shareholders in the world. It’s taken almost three years to get to the point we’re at now. So shareholders are anxious because they want to hear news, they want to know the permit is there.

I’ve been down there four times now in five weeks. We’re on top of the process at our level. As far as investors are concerned, one of the things we were experiencing before is when Hugo Chavez made those comments in the media, the stock would go down. What we’ve found recently is that’s not happening anymore.

I think people are getting to used to some of his statements and sitting back and saying “the world didn’t crash last time he said something like that, it’s not likely to this time.” So he’s not having that sort of impact. And if you read the Venezuelan media and what he’s saying, he’s not after the mining industry. He’s after the oil and gas industry.

FP: What advice do you have for other companies operating in politically risky parts of the world?

GT: Patience. Lots of patience. The key thing is even though we got frustrated at times, we never got critical of how the Venezuelan government operates or how the bureaucrats we’re dealing with operate.

They’re following their rules in their country, and we’re in their country and we have to abide by that. The key thing is to recognize it is a different system. But I think it is a great place to operate. Everybody we deal with is very co-operative. The other thing is it’s quite noticeable that Canadians are well-liked in Venezuela.

FP: Why did the board decide to appoint you CEO and replace (former CEO) Todd Bruce?

GT: He got us to the permit point. That was his big job over the last three years. The big job will be, once we get the permit, to get project financing and build the mine, and that’s my background. He left on good terms, he’s coming back to help me with a few things.

Comments

[Bob Kirtley_]

If if they get the permit, there is still a very big political danger in Venezuela, nobody knows if Chavez will nationalize mines or impose large taxes or worse.

Therefore I think that it is best to invest outside of countries like Venezuela.

Best of Luck to KRY though!

2007 Mar 08 01:32 PM