In September 2002, Crystallex signed a Mining Operation Contract with the Corporacion Venezolana de Guayana (CVG) which granted Crystallex exclusive rights to develop and exploit the gold deposits on the Las Cristinas property. At a US$550 per ounce gold price, reserves of 16.9 million ounces of gold, contained in a measured and indicated resource of 20.8 million ounces, rank Las Cristinas as one of the largest undeveloped gold deposits in the world.
A positive Feasibility Study was completed by SNC Lavalin Engineers and Constructors Inc. (SNCL) in September 2003 and the study was approved by the CVG on March 8, 2004. In August of 2005, a comprehensive update to the 2003 Feasibility Study (Las Cristinas Development Plan 2005) was completed by SNC Lavalin. The process for obtaining the required mining permits was formally initiated with the submission of the Environmental Impact Study (EIS). It is presently anticipated that the required permits for project construction will be issued in the near term, allowing construction to commence. An Engineering, Procurement and Construction Management (EPCM) contract to provide services for the development of Las Cristinas was awarded to SNCL in March 2004. The engineering and construction schedule is estimated at approximately 18-24 months from the start of detailed engineering.
The Company continues to progress its objective of becoming a significant intermediate gold producer. Crystallex expects to commence gold production at Las Cristinas at its base case level of 20,000 tonnes per day (“tpd”). Currently, Las Cristinas engineering and design work is essentially complete and all Long Lead items have been fabricated and/or secured. Expenditures to date under the EPCM contract stand at approximately US$110 million. In the first five years of full operation Las Cristinas average production for the 20,000 tpd base case will amount to approximately 252,000 ounces a year at total cash costs of US$258 per ounce.
Location and Infrastructure
The Las Cristinas property is located in the southeast corner of Venezuela in Bolivar State at Kilometre 88. Access to the property is via the main paved highway from the Venezuelan port of Puerto Ordaz to the Brazilian border. Puerto Ordaz is a major industrial city located on the Orinoco River, some 360 kilometres from Las Cristinas. Current access to the site from the paved highway is along a six kilometre dirt road from the village of Las Claritas. To bypass local villages, an upgraded nineteen kilometre road was built by Crystallex and is currently in use.
A long history of mining and industrial projects in Bolivar State makes the region very suitable for the development of a large gold mining project. Power for Las Cristinas will be from the national hydroelectric power grid. An existing 400 kV power line parallels the main highway from Puerto Ordaz and, in 2001, a new substation was constructed six kilometres from Las Cristinas to service the Las Cristinas project and the surrounding area. Two 150 MVA power transformers have been installed at the substation and provision has been made to supply Las Cristinas via a new six kilometre 230 kV overhead power line. The power line, which has a 300 MW capacity can adequately supply a 20,000 tonne per day operation or an expansion to 40,000 tonnes per day, which require 30 MWs and 60 MWs respectively.
Feasibility Study
The positive Feasibility Studies completed by SNCL demonstrate the technical and economic viability of developing Las Cristinas as a large open pit mine, employing conventional carbon-in-leach (CIL) gold processing technology. Mill throughput is planned at 20,000 tonnes per day; however, the process plant has been designed to accommodate an expansion to 40,000 tonnes per day, which will be implemented as soon as practicable.
The Feasibility Study was approved by the CVG on March 8, 2004. On March 26, 2006, Crystallex received official notice from the Ministry of Basic Industry and Mining (“MIBAM”) advising that MIBAM has formally approved the technical, economic and financial Feasibility Study for Las Cristinas.
Calculated at a US$550 per ounce gold price, Las Cristinas’ proven and probable reserves currently stand at 464 million tonnes, grading 1.13 grams of gold per tonne for a total of approximately 17 million ounces of gold. The reserves are included in a measured and indicated resource of 20.8 million ounces of gold. In addition to the measured and indicated resources, Las Cristinas contains inferred resources of 6.3 million ounces of gold.
Las Cristinas Reserve Sensitivities - Lerchs-Grossman Pit Shell Sensitivity
Gold Price Ore Grade Contained Strip Ratio
(million tonnes) (g/t) (million ozs)
$450 337 1.30 14.16 1.76
$500 414 1.20 15.98 1.55
$550 489 1.12 17.56 1.39
$600 552 1.06 18.83 1.30
$650 614 1.01 19.91 1.21
Reserves calculated by Mine Development and Associates in accordance with Canadian NI 43-101
At a processing rate of 20,000 tonnes per day, gold production is forecast to average 233,000 ounces per year over the 65 year mine life at a cash cost, including royalties, of US$346 per ounce. However, over the first five years of operation, gold production is expected to average 252,000 ounces per year at an average cash cost, including royalties, of US$258 per ounce.
Engineering, Procurement and Construction Management (EPCM)
Crystallex awarded SNCL an EPCM contract to provide services for the design, construction and commissioning of a 20,000 tonne per day gold processing facility at Las Cristinas. Detailed engineering commenced upon the awarding of the EPCM mandate. Pending receipt of all permits, construction is planned to start in 2008. The schedule of engineering design through commissioning of the plant is estimated at approximately eighteen to twenty four months.
Social Development Programs
Crystallex is committed to employing the highest standards of corporate citizenship at Las Cristinas and recognizes the importance of developing a long term partnership with the local communities. The Company’s social development program for Las Cristinas is dedicated to supporting the communities near Las Cristinas with long term employment training, economic development, local infrastructure and health care. Crystallex has hired a Community Relations Director, based in Las Claritas, to oversee the implementation of the social development program. To date, Crystallex has spent approximately US$2.0 million on the Las Cristinas social development program.
A number of local infrastructure construction projects have been completed, including:
- Thirty new homes were constructed for local residents.
- Built and installed three new water treatment plants, inclusive of reticulation.
- Built and installed two new sewage treatment plants and related sewerage network.
- Upgraded and paved local community roads.
- Continuing with the upgrading of the local medical centre and supplying of medicines on a monthly basis.
- Providing ongoing job training programs to small miners' associations.
- Sponsoring training programs to local communities.
- Established government anti-malaria facility at site.
In addition, the Company employs over 125 local residents and is providing ongoing programs for technical assistance training and the Company is also funding and administering a scholastic scholarship program.
On January 26, 2004, the mayor of the Municipality of Sifontes and the Governor of Bolivar State presented Crystallex and the Las Cristinas Project with the “Orden (Order of) General Dimingos Sifontes – Primera Clase”. This annual award is the highest award bestowed by the Municipality and recognizes Crystallex’s contribution to the Municipality and its residents.
Environmental Impact Study (EIS)
Crystallex and the CVG, together with SNCL, have completed an updated EIS. The EIS updates the Las Cristinas EIS submitted in 1996. The 1996 EIS was approved by the Ministry of Environment and Natural Resources (MinAmb - formerly MARN) in 1997 and the two permits required for conducting mining activities in Venezuela, namely, the Land Occupation Permit and the Permit to Impact Renewable Natural Resources were issued. The 1996 EIS was updated by Crystallex to reflect changes in the project design and environmental characteristics. Some of the project changes include: (i) reducing the initial processing capacity from 40,000 to 20,000 tonnes per day, (ii) changing the processing flowsheet to produce gold only, (iii) changing the design of the tailings management facility from two cells to one and (iv) the socio-economic baseline has changed with the presence of small scale miners on the property.
The EIS includes additional baseline studies carried out by Crystallex and various consultants. The baseline database has been updated in several areas: additional acid rock drainage testwork and initial cyanide destruction tests by SGS Lakefield, additional socio-economic surveys and a census of unauthorized small scale miners conducted by Proconsult of Venezuela.
Crystallex submitted the EIS to the CVG and the MinAmb on April 15, 2004. This initiated the final process for environmental permitting for Las Cristinas. The CVG has approved a program of additional environmental baseline data collection, including drilling in the tailings management facility, pit and dump areas to confirm soils and groundwater characteristics, additional acid rock drainage tests, a second phase of socio-economic studies and a characterization of the small scale miners. The results of this additional work was submitted during the second and third quarters of 2004 as addenda to the EIS. In February 2006, Crystallex received rights to aggregate quarry from the Bolivar State Mining Institute (IAMIB). In March 2006 the Ministry of Basic Industries and Mining (MIBAM) formally approved the technical, commercial and contractual complaiance aspects of the Project. Receipt of permits is expected in the near term. The EIS includes a Site Closure and Rehabilitation Plan and an Environmental Management Plan that meets Venezuelan and World Bank standards.
In June 2007, Crystallex received official notice from the CVG that the requirements of the MinAmb for the issuance of the environmental permit have been fulfilled.
Crystallex's project partner the CVG, was formally notified by the MinAmb that all the requirements for the issuance of the Las Cristinas Environmental permit had been fulfilled.
MinAmb approved the Environmental Impact Study for the Las Cristinas gold project, and requested the CVG post a Construction Compliance Guarantee Bond and pay certain environmental taxes. The formal notice MinAmb sent to the CVG stated, "the Environmental permit will be issued following the payment of taxes and posting of the bond". Crystallex posted the requested bond and paid the requested taxes. No impediments have been raised in discussions with Government officials, and they've recently confirmed we're in good standing for the issuance of the permit.
The Company received additional support for the issuance of the Las Cristinas permit in the fall of 2007, when the Venezuelan National Assembly's Commission of Economic Development reviewed the protracted timeline for the issuance of the Las Cristinas environmental permit. Following their October 4th, 2007 hearings, the Commission issued a report noting that representatives from MinAmb, the Ministry of Basic Industry and Mines ("MIBAM"), the CVG, and Crystallex had testified at their hearings. The Commission's report concluded that the CVG and Crystallex had complied with the feasibility study and other legal and technical requirements, thus allowing for the permit to be granted by MinAmb. The Chairman of the Commission recommended MinAmb grant the permit.
Please visit our image and video gallery to view a video of the Las Cristinas Project's development, operation and site closure plan Las Cristinas Jungle to Jungle Video.
Financing Plan
Crystallex intends to finance the development of Las Cristinas with a combination of equity and project finance debt. To complete the financing for the development of Las Cristinas, Crystallex currently expects to issue equity or arrange other forms of financing and expects to close a project finance debt agreement with a syndicate of commercial banks and possibly export credit agencies. Crystallex has engaged BNP Paribas (“BNPP”) as a project finance advisor to assist in the arranging and structuring of project finance debt for the development of Las Cristinas.