Citic Group to begin work to certify resources at Las Cristinas

- Wednesday, April 25, 2012

Citic Group to begin work to certify resources at Las Cristinas

Chinese state-owned Citic Group will begin work to quantify and certify the gold reserves at the Las Cristinas deposit in Venezuela's Bolívar state, the former president of state gold miner Minerven, Luis Herrera, told BNamericas.

"They are going to begin the evaluation work at Las Cristinas to certify the reserves that they say are there and to later begin to develop the project under a JV with the state," Herrera said.

However, to consolidate the JV model, first there needs to be clarity on how these types of companies will be governed, as well as what will happen to the small-scale producers that currently operate in the area, under the gold nationalization law that was passed by the Venezuelan government in September 2011, he said.

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Under the law, all gold producers operating in Venezuela must form JVs with the government to continue exploration and mining. The state is required to have a share of 55% in the JVs and all the gold produced must be sold to the central bank.

Since so far there has been no clear definition of a model or blueprint to follow for the creation of the JVs, the issue has not progressed.

In February, President Hugo Chávez announced the approval of an agreement with Citic Group for the joint development of the Las Cristinas gold deposit.

A year earlier, Chávez had announced the cancellation of Toronto-based Crystallex International's (TSX, AMEX: KRY) mine operating contract with state heavy industry holding CVG for Las Cristinas.

"With this, the sector will take off with some force," said Herrera, who added that he does not know how long it will take to see this move forward, "because bureaucracy makes the process very slow."

Citic was chosen for the project from several companies and governments that expressed interest in developing it.

According to previous estaimtes, Las Cristinas has 464Mt grading 1.13g/t gold or 16.9Moz gold in proven and probable reserves, in addition to 629Mt grading 1.03g/t gold or 20.8Moz in measured and indicated resources.

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