Crystallex International Corp. WKN 890 729 CA22942F1018 KRY

Why Bother Even Going Near Venezuela?

By David J. DesLauriers
28 Sep 2005 at 02:17 PM EDT

DENVER (ResourceInvestor.com) -- The Chavez debacle occurred in the week leading up to the Denver Gold Forum, and thus was much discussed at the event itself. Four major listed mining companies at the development and production stages are affected by the nut that heads the country, but none of them will admit to this fact.

Indeed, denials have been the order of the day and Jon Nones has done a fulsome job in reporting on events. From Hecla [NYSE:HL], we heard “When you boil it down, the Venezuela government is looking for companies to come in and mine the properties properly. That’s what we’ve been doing,” and “With all the noise that’s been happening in Venezuela, we’re still comfortable and happy to be there,” said President and CEO Phillips S. Baker, Jr.

Crystallex [AMEX:KRY; TSX:KRY] didn’t disappoint saying “In some respect, we’re the poster-child or the blueprint [company].” “Las Cristinas will roll through the process.” And “As we see it, this doesn’t affect Crystallex in the short-run or the long-run,” said CEO Todd Bruce.

Finally, Bolivar Gold [TSX:BGC] Chairman and CEO Serafino Iacono said “The government never once said they would confiscate or take out concessions.” Not yet, they didn’t.

Gold Reserve [TSX:GRZ] no doubt made similar noises, although didn’t attend the Denver Gold Forum.

Bolivar is a company that is currently doing a feasibility study on the economics of expanding their output to something like 350,000 ounces of gold per year at cash costs below $180. It seems to me that that would put them squarely on Chavez’s radar as it would generate almost $100 million in cash flow per year.

Crystallex calls itself the blue print. Whose blueprint? The Chavez blue print is to strip these concessions, and the sheer size of Las Cristinas puts it in a perilous situation. Further, with Gold Reserve’s Brisas property next door, why would they not be next to go?

What the market doesn’t seem to understand, is that Chavez SIMPLY DOESN’T CARE. And if he plans to take just one concession, why not take them all? In for a penny, in for a pound.

Going Forward

Regardless of whether any of these properties are confiscated, the fact that no new concessions will be granted means that BGC, GRZ, KRY and to some degree the more diversified HL, will always trade at a discount.

The second part of the discount will come from a fear of Chavez, and cash flow multiples will be a fraction of peers, with no real institutional money willing to get on board.

The only thing that these companies can hope for to save their bacon would be a coup led by forces sympathetic to the U.S./democracy. Anything can happen, but Chavez seems to have a stranglehold on opposition at this point in time, and the U.S. has their hands full – it would be very difficult for them to do a Chile repeat in this day and age, especially given the other fronts they are focused on right now.

Other Opportunities

Essentially the broader issue that this story is meant to illuminate is: Why touch these Venezuelan equities at all, when there are so many other good development and production stories out there that don’t have this uncertainty, and still have great upside?

Investing in Venezuela is not an educated bet, and it now has been completely disconnected from the companies or their assets – it is simply a bet on an unstable, mercurial nutcase named Chavez. No one can predict his next move, including the analysts, so even if the new Castro behaves, there will always be huge discounts.

Conclusion

Why not look at some of the other opportunities that have been profiled by your correspondent just in the last two days: Mundoro [TSX:MUN], Anatolia [TSX:ANO], Metallica [TSX:MR; AMEX:MRB] and RNC Gold [TSX:RNC].

They offer great upside and don’t present the same aggravation and sleepless nights worrying about whether a dictator in South America plans to scupper your retirement to further his communist agenda.
http://www.resourceinvestor.com/pebble.asp?relid=13243

@ Ulfur

Danke fuer den Bericht der mich nicht weiter runter bringen kann heute Morgen, es war ein scheiss Tag mit kleinen Blechschaden vom "Eselgespann" meinetwegen, am Kotfluegel meines A6, sowie die Frustration ueber das System hier. Hart genug !

Ja, der Neger hat keine Versicherung, ich zahl dann, weil man Entwicklungshelfer ist.

Spekulations Stock Venezuela:

Nun zu Cristina, sicher sind die im Discount solange Chaves bellt.
Aber irgendwann hoert er auf damit, darauf kann oder muss ich abwarten wie andere auf einen starken Rand z.B.

Die bauen erstmal die Mine auf, die Kohle gibt ihnen vielleicht Chaves mit seinen Petrodollars.

Naja, dann ist Cristina eben ein Schlaefer und man kann sicher sein Geld wo anders verdienen, oder auch verlieren.

Kann sie sich gleich neben X-Cal hinlegen meinetwegen.

Das stimme ich zu in der zwischen- zeit wo anders investieren, abwarten und Tee trinken, ueberall kann was passieren.

Musste lachen weil ich RNC MUN MR im Depo habe, ein highlight zur Abwechslung, glaube die verkauf ich jetzt.

Fuer so bloed halte ich Hugo jedoch nicht wie der Heini schreibt, das ist ein ganz "abgedrahter" El Presidente.

Nach Kuba geht einiges auslaendische Geld, das wissen die wenigsten,
sind natuerlich Amigo "No Problemo" .

Der macht schon einen Deal mit den Canadians, wenn er so irre ist und sich "alle Minen" schnappt ist er evtl. bald tot wie Kebble....... man weiss nie in der Position ?

EXPECT THE UNEXPECTED sage ich immer.

Wer nicht wagt der gewinnt nichts, wer nicht spielt der verliert nichts.

Ich war so angefressn, das ich mir trotzdem nochmal 40 geholt habe.
Sage das aber den Edel Man nicht.!

Suedaffenfieber oder Trotz. jetzt ein Schnitt von 1.53 USD

Die halte ich so lange bis die doppelt hoppelt beim Salsa.

Und wenn es Jahre dauert Amigo.

Wir werden sehen wie lange es dauert bis da Feuer untern Hinter kommt bei der Cristina.

Ich lass mich jedenfalls nicht unterkriegen wie Tambok mit WAR/JCI.

Denkt mal an die Droopy als die Wasserschaden hatte, wie hat sich die erholt in kuerze.

Der eine hat Kaffer Stock der andere hat Chaves Stock, so what !

Pfirty, have a nice day !

XAX

Hier zwei anderer Kommentar von Lesern,da stimme ich voll zu :

Why Bother with Accurate Reporting?

Posted by Kent Beattie on 28 September 2005 @ 06:19 PM
David J. DesLauriers piece on Venezuela was such a complete work of fiction, I though for a moment that I was reading The Onion. Then I realized that the piece was simply poorly written and poorly researched and that, clearly, it was a DesLauriers original. With respect to the recent moves by the Venezuelan government, thay have little to do with KRY, which has a contract to build and operate a mine THAT THE GOVERNMENT ALREADY OWNS, and much more with getting the Venezuelan mining industry regulation in line with that of the Venezuela's oli patch (which is booming). As for a coup, DesLauriers should give up his soldier of fortune subscription, and remember (i) that Chavez was democratically elected; (ii) Venezuela hasn't done anything that would call for foreign intervention; and (iii) foreign intervention, if it ever where to come, would be disasterous.

Venezuela

Posted by Scott Parsons on 28 September 2005 @ 05:45 PM
David J. DesLauriers adds insult to injured companies. This was a knee jerk opinion piece that played to Deslauriers personal fears with out adding any new information to the situation. To call for a coup, and to speak of US intervention on a scale of Chile in the 1960's makes Deslauriers a nut case and a poor historian. To intervene with violence has always ended in failure. Iraq is a current example of Deslaurier's thinking. Best to let the Venezuelans work it out for themselves and support them in the process. They need both the expertice and the capital that these foreign companies can supply and I believe that when the rhetoric subsides they will honor thier agreements and welcome the development and investment.

Die entscheidende Frage wird sein, ob KRY das permit für Las Christinas bekommt. Permit für Erstellung der Mine.
Und da waren sie ja wirklich säumig.

advertisement


Venezuela to give idle concessions to small miners
Thu Sep 29, 2005 12:30 PM ET
CARACAS, Venezuela, Sept 29 (Reuters) - Venezuela's government will give small miners all contracts and concessions it rescinds from international companies as part of an overhaul of the mining sector, the Ministry of Basic Industries and Mines said on Thursday.
"All areas taken away from transnational corporations and the powerful economic groups of the country will be assigned to small miners," the ministry said in a statement.

Left-wing President Hugo Chavez has launched a probe into mining concessions and contracts to weed out projects that companies have failed to develop.

Chavez says some multinational mining companies have bolstered their stock prices by winning concessions in Venezuela but have no plans to actually develop mines.

Among major foreign companies mining in Venezuela are Canada's Crystallex (KRY.TO: Quote, Profile, Research) , Bolivar Gold (BGC.TO: Quote, Profile, Research) , U.S. firm Hecla Mining Co. (HL.N: Quote, Profile, Research) and China's Shandong Gold-Mining Co. Ltd. (600547.SS: Quote, Profile, Research) .

Mining Minister Victor Alvarez said the government was looking into its contract with Crystallex as part of the industry shakeup.

Crystallex says it is waiting for an environmental permit to develop the Las Cristinas mine, considered one of the largest untapped gold deposits in the world.

Since winning a referendum last year, Chavez has launched a broad review of energy and mining contracts. He says some of those deals are "robbing" Venezuela by giving preferential terms to foreign companies.

The government says it will give no new concessions to international firms and that it will develop a state gold and diamond company, modeled after state oil firm PDVSA.

Das sind die entscheidenden nicht gestellten Fragen? (fett)

Tschonko

Das environmental permit kriegen die irgendwie und irgendwann, die anderen unbenutzen concessions bekommen small miners in der Gegend. So halten sie die illegalen Goldschuerfer in kontrolle und geben ihnen was damit's a Ruah gebn.

Lass die einmal einpegeln da bildet sich nun ein Boden, ebenso weniger Aktien werden gehandelt.

Die Stampede ist vorbei meiner Meinung.

Ciao

XAX

Aladin,
zu hoffen wär´s. Bin mir da nicht so sicher.
Gut, du hast stampede gesagt.
Bei einer Stampede wären wir bei 0,7, aber auch so geht´s Richtung 1.

Also ich ärger mich: In der phase so einen looser, das haut auf die performance.

Und was soll sich schon tun in nächster Zeit?

Grüße
Tschonko

Denk an den golden eagle

War der nicht auch in Venezuela

Wird scho Tschonko....

Liegen lassen oder verkaufen wenn dir nicht sicher bist.

Ich habe schon wieder ein Netz bei 1.20 bereit.

Mister Crystalball und Crystallex.

Wuerde mich echt wundern das nochmal eine stampede kommt oder unter 1 Dollar geht und zum penny stock wird, da liegt viel Gold das sie rausholen werden. Und da bin ich mit dabei als Bin Adabei.

Wenn ich mich nicht irre.

XAX

Die Abflugrampe wird flacher,denk ich/oder hoff ich mal.

Die Rampe von 1.20 USD sollte halten, IMO.

Keep your fingers crossed.

Gnight

XAX

Das weiß ich schon, dass KRY unterbewertet ist,
aber das nützt nichts.
Es geht um das permit für die Mine.

Eine Häufung von Fehlern ist immer fatal.
Ich dachte, es wäre Entwarnung, war es aber nicht.
Also falsches timing.
Und eine ewige Warterei, was werden wird.

Und schwaches management, das Chavez falsch einschätzt, genau so schwach wie SRLM.
Im Gegensatz zu Joe Grosso, der wird aktiv und macht was.
Siehe IMA.

Grüße
Tschonko

Könntest richtig liegen,

Ich würde aber auf steigende Aktienumsätze - auf dem noch flachen Niveau - warten, bevor mir ein Investment/Re-Investment sinnvoll erscheint.

Man muss nicht jede Chance wahrnehmen.

Es reicht aus, die wenigen besten zu erwischen.

GMY

germoney,
du sprichst ein wahres Wort gelassen aus.

Grüße
Tschonko

Germoney,hast recht manchmal lohnt sich das warten.
Ich bin nun drin egal ob zu frueh, und versuche eine guten mittelkurs zu bekommen fuer einen Ausstieg spaeter. Mit 1.63 liege ich nicht schlecht aber wenn man gestern fuer 1.27 kaufen konnte fuer den hat sich das warten gelohnt. Heute gehts weiter, ich warte wieder bei 1.20 und stocke auf mit hopp oder tropp. Ich konzentriere mich auf 12.5m Unzen die dort liegen und schau gar nicht mehr hin was darueber geredet und vermutet wird. Wenn ich mich umschau was da noch fuer Problemkinder im Depo sind wie Apollo z.B oder Tumi, da ist die Cristina harmlos dagegen.
Ich bin bis jetzt mit 1.2% in KRY und kann locker warten bis der Nebel und Geruechtekueche weg ist. Es sieht so aus das es nicht mehr unter 1.20 geht bei den jetzigen POG sicherlich.

Mit GRZ und BGC bin ich leicht im plus die sollten sich auch eingepegelt haben.

Geopolitisches Risiko kann es ueberall geben da ist Venezuela keine Ausnahme und Permits brauchen die alle so oder so.

Ich wuensche Euch einen guten Handelstag.

Gruss

XAX

INTERNATIONAL OUTLOOK

Chávez' Oil-Fueled Revolution

It seems there's no stopping Venezuelan President Hugo Chávez. He's already curbing the power of the big oil companies operating in Venezuela. Now he's stepping up a program of expropriation that could bedevil a number of businesses, both locally owned and foreign. The moves come just as Chávez seems prepared to further consolidate his power at legislative elections in December. The pro-Chávez coalition hopes to increase its majority in the 167-member National Assembly by more than 20 seats, to around 110. "It's going to be a battle for us," concedes Gerardo Blyde, a legislator from the opposition First Justice Party.

The opposition has pledged to join forces for the elections, but remains discredited after last year's defeat in a referendum that attempted to oust Chávez from office. If voters reward Chávez with a big win, as expected, the way will be clear for sweeping new moves in his Bolivarian revolution -- his populist effort to tap Venezuela's oil wealth to impose socialism in the country. "Chávez is dead set on his revolution; there's no turning back," says Aníbal Romero, a political scientist at Simón Bolívar University in Caracas. "The question is how fast and how far."

Food fight
Chávez is moving quickly. He has been boosting spending on health and education since coming to power in 1999, but he is now increasing government control of the economy, to investors' dismay. Oil companies with operating contracts in Venezuela, such as Chevron (CVX ) and BP PLC. (BP ), have been ordered to set up joint ventures controlled by state oil company Petróleos de Venezuela (PDVSA), and royalties have been hiked from 16.7% to 30%. Chávez now has targeted more than 700 plants, particularly in the food industry, that are idle or not operating at capacity for possible expropriation. On Sept. 26 the state seized control of a plant operated by Alimentos Polar, the country's No. 1 private food manufacturer. "This is an unfair and arbitrary expropriation," Polar President Lorenzo Mendoza told reporters, adding that the facility was operational. The move followed the seizure of a shuttered H.J. Heinz Co. (HNZ ) tomato processing facility. The company is negotiating to sell the plant to the state. Chavez defends the moves. "We will only expropriate what is necessary," he said in a recent speech.

The President is also going after rich landowners. Authorities recently began taking control of 21 large ranches spread over hundreds of thousands of acres. Chávez has threatened to hand part of the land to poor Venezuelans unless owners legally document their ownership and show that their spreads are being productively used. In another shock to investors, Chávez disclosed plans to review -- and possibly revoke -- mining concessions and create a national mining company. The news caused shares in Canada's Crystallex International Corp., (KRY ) which has operations in Venezuela, to plunge 52% from Sept. 19 to Sept. 28. "What happens here in Venezuela will undoubtedly have some impact on the commercial decisions of companies, not just from the U.S. but from all over the world," U.S. Ambassador to Venezuela William Brownfield told reporters in Caracas. "Nationalization is a step backward," adds a State Dept. official in Washington.

It may sound risky, but Venezuela can afford it. Gross domestic product soared 17.9% in 2004 as the country rebounded from two years of recession following a long strike at the national oil company. Growth of 6.5% is forecast for this year and next, says Efraín Velázquez, president of the National Economic Council. Thanks to a new law, Chávez can dip into the country's $32.6 billion in international reserves for social spending.

How to win friends
While Chávez goes out of his way to irritate President George W. Bush -- he's a close friend of Fidel Castro's -- he's using Venezuela's wealth to win support in his neighborhood. His Petrocaribe initiative offers 196,000 barrels of oil a day to 13 Caribbean countries -- including 98,000 to Cuba alone -- with long-term financing options. He has set up the Petrosur alliance with Venezuela, Brazil, and Argentina to work on joint oil exploration and development. A similar alliance could be forged with Colombia, Peru, Bolivia, and Ecuador. PDVSA is looking to invest in half a dozen of the region's oil refineries.

Chávez, 51, is up for reelection in 2006, and he vows to stay in power until at least 2021. Critics say his shakeup may redistribute income from the rich and middle classes to the poorest, but the spending won't be sustainable if oil prices tumble. "With oil prices this high, Chávez doesn't need investment," says Miguel Octavio, director of BBO Financial Services, a financial advisory firm. "But if they drop by $15 or $20 [a barrel], there will be problems." Annual foreign direct investment has fallen from $5 billion in 1998 to $1.5 billion last year, according to Central Bank figures. The President's bet is that he'll transform his country without foreign investors and before the oil markets shift. With Venezuela's opposition so divided, Chávez' experiment could continue for years.

War das nun ein dummer Zug die Affen wegzuhauen und Cristina bei der Eroeffnung nochmals fuer 1.22 kaufen ?

Die Dame wollte nicht in mein Netz von 1.20 springen.

Nun ein Schnitt von 1.52 mit "170" Hugo's Revolution.

Bitte schreibt noch mehr boeses ueber Hugo , I love it and I grab Cristina quickly.

Because there are less lazy Bimbos in Venezuela !

Mfg

XAX