Vannessa: Crucitas arbitration provides backup

By
Tuesday, July 26, 2005

Vannessa Ventures (TSX-V: VVV) is still confident of receiving approval for its Crucitas gold project in Costa Rica despite continuing to seek international arbitration for the project, company president John Morgan told BNamericas.

Late on Friday Vannessa announced it had filed a request with the International Center for Settlement of Investment Disputes (ICSID) in Washington DC to advance arbitration over the Crucitas project.

Vannessa is seeking remedies under the arbitration process from the Costa Rican government for effectively being denied the right to develop the Crucitas gold deposit.

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LEGAL EXPIRATION DATE

Vannessa first made the request for arbitration "several years ago" when it felt the project had been stalled and Morgan said the company was obliged recently to issue the request to advance the project or risk letting the arbitration expire.

Under ICSID rules a company must proceed with its request for arbitration within two years of when it believes its rights to a project have been expropriated.

"We looked back and picked our date as the time when Costa Rica came down with a moratorium on surface mining and that was two years ago in June," Morgan said.

Costa Rica's government later clarified the moratorium did not apply to existing concessions and Vannessa has continued to seek approval for the Crucitas project.

EIS PROCESS

The company is waiting for country's environmental regulator Setena to approve Crucitas' environmental impact statement (EIS). Morgan said he could see "no technical reason" why Setena would reject the EIS.

But he added that the company is continuing with the international arbitration process as a backup should any further delays take place in the approval of Crucitas.

"We needed to protect ourselves because if we let it go a little further they could come back at us and say it's been more than two years and you can no longer use the arbitration process," he said.

However, Vannessa said it might suspend the arbitration process if the project receives approval to go ahead.

If the Crucitas project cannot go ahead, Vannessa wants the arbitration tribunal to restore its right to develop the project and is also seeking damages of US$5mn and legal and other administrative costs, plus interest for lost profits.

In lieu of restitution, Vannessa is seeking damages of US$276mn plus compound interest, which includes out-of-pocket expense of US$36mn and lost profits of not less than US$240mn.