Patience, Crystallex Investors: The Venezuelan Government Will Eventually Come Through

Reserves at Crystallex's (KRY) Las Cristinas Project in Venezuela have increased by 24% or approximately 3.3 million ounces, according to Wellington West analyst Catherine Gignac.

She said in a note to clients that the increase was a combination of a higher gold price assumption of US$550 per ounce versus US$450 in 2005 and a drill program delineating the Las Cristinas property.

She added, however, that the current reserves of roughly 17 million ounces were negatively affected by rising operating costs at the project.

"Operating costs are now estimated to average US$9.81 per tonne over the life of mine with total cash cost to average $339 per ounce compared to the previous estimate of $221 per ounce," Ms. Gignac wrote. "This increase in operating cost accounted for the reduction in reserves of approximately 5.9 million ounces."

As for the ongoing delay in receiving the final permit for the project from the Venezuelan government, Ms. Gignac told frustrated investors that the government appears to support the development and simply has a different timeline than North American capital markets.

She said it could take "six weeks or six months for the go-ahead permit," adding that once a permit is released, many uncertainties will be resolved.

She maintained her "strong buy" and left her C$10 target price unchanged.

KRY 1-yr chart:

Comments

[User 5272:]

If anyone really thinks KRY will be able to mine this property at any sort of capitalist terms is both nuts and delusional.

2007 Sep 26 07:56 AM

[ottorock:]

So many mining companies at or near all time highs and Gignac yet again asks patience from her pick. Pathetic.

Easy for an analyst from a company that finances KRY to call it a buy, isn't it? More difficult but more honest would to tell her clients that she's been wrong on this call for years and try to repair some of the damage she's caused by saying "walk away while you can".

$10 a share target with the dilution this thing has to go through to get to production? It's irresponsible at best. If KRY does reach $10 it'll be on gold price alone and you can bet other gold miners are 10 bagger in the same time period.

2007 Sep 26 08:46 AM