The works have not commenced yet, even though the President opened the mine two weeks ago. A permit from the Ministry for the Environment is necessary to make a quarry in the Imataca forest reserve, but this is not the last obstacle to overcome, there is a danger of a new legal action which could paralyze the excavations. This $575 million investment could not be financed in the international market, and the concession holder, Placer Dome has to expend this huge amount from its own treasure box. Meanwhile, there are long lines of people in the area to get a job in the company.

DOMENICO CHIAPPE
www.trama.org.ve/chiappe

Wherever gold is, destiny is uncertain: This has been the case for years in Upata, Tumeremo, Guasipati and El Callao. But no testimony is so strong as the long history of associations, mismatches and litigations (not totally solved) occurred around Las Cristinas, the richest gold deposit in Venezuela. Not in vain, in the village of Las Claritas people talk about the “curse of the four deads” (this is the name of one of the most productive veins in the concession): Only a charm can explain the impossibility to attain wealth when it is at hand. Not even the powerful Canadian concessionaire, Placer Dome has been able to overcome the obstacles preventing the initiation of the exploitation, even though the mines were officially inaugurated more than three weeks ago by President Chávez in a showy manner.

After the defeat in 1998, at the Supreme Court of Justice level of its rival, Cristallex, also a Canadian corporation, and after the most monitored Venezuelan litigation, closely followed by the New York and Vancouver stock exchanges, Placer Dome has still not been able to start the progress of the mine, since it has not obtained from the Ministry of the Environment a permit related to the opening of a quarry in the Imataca Forest Reserve.

This circumstance adds up to the fact that the financing requested by the gold company since it commenced the exploration phase could not be obtained in the international market. Though Placer Dome spokesmen said that the company preferred the option of a corporate loan to pay for the high interest rates borne in Latin America, Crystallex stated that nobody wanted to risk their money since the title held by Placer Dome “had signs of illegality”, and their representatives could “file a new claim”.

“The case continues under analysis, and we have not come to a conclusion”, states a Crystallex attorney. A new litigation in Venezuelan Courts could mean serious trouble for Placer Dome’s plans. Up to this date, this company has not been able to exorcise the bewitching of Las Cristinas.

A Glowing Business

On the first Sunday of March, bad weather delayed the arrival of the President and five of his Ministers, but that did not prevent Hugo Chávez from giving an emotional speech during the inauguration act: “It can not be possible that we bury our children in gold tombs, and that we do not turn gold into vaccinations and food”. Among those who applauded were the U.S. and the Canadian Ambassadors.

Thereafter, the President toasted with Carl Gagnier, President of Placer Dome with a cup of coffee served in plastic tumblers, while one of his aides-de-camp scolded the person responsible for the lack of porcelain cups, and that was the limit, because they also forgot the papaya juice for the President: the protocol people were responsible for that. At least they brought Frescolita (a cola beverage) and Gatorade, which were also included in the “presidential requirements”.

In spite of the enthusiasm, it was known that the Government, who is the owner of 30% of the mine through Corporación Venezolana de Guayana, must wait a long time before receiving profits for the gold deposits in Las Cristinas. According to calculations made, and to the current price of gold, $285 per ounce, CVG shall not receive a dime during the first eight years of exploitation. “We are not participating in this project due to a financial interest, which is in effect a high risk project, but to foster and diversify the economy of the region”, said Clemente Scotto, President of CVG, and a knower of the difficult situation in the world gold market. “If the price does not increase, the business is not profitable, but there is always a hope that the price would increase”, said Tim Becker, Manager of Operations of Placer Dome. The situation forces CVG to study its participation in Las Cristinas. “We will have six months after the completion of the construction to capitalize our shares. Today we reached 12%, but it is now too early to make a decision about the remaining 18%, said Scotto.

Still Life

In spite of the fact that the profit margin may be limited, the project of Las Cristinas is strategic for these Canadian entrepreneurs, since its wealth potential may represent 25% of its gold reserves according to 1998 figures. Such reserves determine the quotation of the shares of a mining company in the international market.

In order not to lose the concession, Placer Dome could not delay for longer the exploration phase, as it did during the last four years. “There is no extension” said Scotto, and such statement explains the forced decision to initiate the construction of the mine, in spite of current prices. “Gold production is a business not a charity affair. The company must work at its lowest possible cost”, said Becker.

Among the budgetary provisions of Placer Dome is the cost of constructing a rock quarry in a place as near as possible to the mine, even though such place is in the Imataca forest reserve, on a sacred hill for the Pemón ethnic group, and that is a serious problem.

On Friday, May 7, the senior management of Placer Dome had a meeting with the Minister for the Environment, Atala Uriana Pocaterra, who, although in a good character, warned that the permit for the quarry must wait. “The project of Las Cristinas has all of its permits in order” said Teolinda Ramos, legal advisor of the Ministry. “But the new project near the concession to construct another non metallic mineral mine (rock quarry) is lacking a permit”.

Such permit has not been granted due to an express provision issued by the Supreme Court of Justice on April 1997, as a precautionary measure in a lawsuit filed against Decree 1850, which changed the ordering of the forest reserve. The Supreme Court ordered not to grant new concessions in that area. “The Ministry for the Environment attaches to the decision of the Court, because if the permit is granted and later the annulment of the decree is passed, damage would be non repairable”. Placer Dome wants to blast the Araima Tepuy Hill, in order not to add the cost of transportation of the rock to the other economic setbacks the project has suffered.

Gold nuggets under the magnifying glass

On April, 1997, Placer Dome ceased its efforts to sell the shares in the mine in the international market. In a first attempt, the mining company tried to place in securities a portion of the $570 million initial investment. For such purpose, Placer Dome hired CS First Boston, an investment bank operating in New York, and offered the 11 million ounces gold proven reserves deposited in Las Cristinas as a guarantee. That is a round 3 billion dollar business.

“The lawsuit filed by Crystallex on April 1997 paralyzed the whole transaction” explained Jose Antonio Pinedo, attorney of Placer Dome de Venezuela. However, on June 11, 1998, when the Supreme Court of Justice determined that the remedy filed by Crystallex was not admissible, the offer went back to the market, but it was not successful. “financing conditions change drastically: The interest rate increased from 8% to 14% due to the crisis in Brazil, gold prices fell, and political risk in Venezuela increased”, said Becker.

Placer Dome made the decision to invest money from its own treasury box, a procedure it has never used in the mines it owns in Canada, New Guinea, Chile, United States and South Africa. It offered jobs in the newspapers. In Puerto Ordaz, the line of people had more than 3,000 individuals, and in Guasdualito, Las Claritas, Guasipati and Tumeremo, the authorities assigned a space in their offices to receive those interested in the jobs. “A selection shall be made among 17,000 candidates”, said Scotto.

Optimism can not remove the shadow cast on a big de-forested area in the middle of the jungle south of Venezuela. Crystallex attorneys state that “CVG infringed procedures set out in the Mining Law, therefore the adjudication to Placer Dome is illegal”. This detail could lead to new legal actions. “These few days, some things shall occur” states Ramón Torres, who was the leader of Inversora Mael, an associate of Crystallex in a claim filed through the Courts regarding two lots of land in Las Cristinas. “The time shall come and we will be able to speak, because we believe that we have been deprived”.

Both CVG and Placer Dome are confident that the decision of the Court is final. “We trust Venezuelan legal institutions, said Becker. “CVG has covered all legal aspects in this adjudication. A potential lawsuit would not succeed, since there is no legal basis”, states Scotto.

The vote of confidence cast by Hugo Chávez in favour of Placer Dome for the exploitation of Las Cristinas is fully justified for the Government. This project represents a gold vein of new foreign investments, and the possibility that such investments are converted into gold ingots, as long as the Imataca stone is not touched to the President. (Note by Translator: This last sentence refers to make the President get angry).

An eye for an eye

Dot Culver de Whitney, the widow of the co-pilot who accompanied Jimmy Angel, obtained a concession for the mines of Las Cristinas for 25 years. Mrs. Lemon leased the mines to Amalfi Grossi Gatti, known later as the King of Gold. Grossi gathers a huge fortune and built two villages within the mines.

Mrs. Lemon filed a lawsuit against Grossi to recover the exploitation of the mine. Rodolfo Schmidt, the attorney of Mrs Lemon won the lawsuit. Schmidt filed a lawsuit against Mrs. Lemon, because she did not pay his professional fees for Bs. 259,000. He won the case and became a creditor to Mrs. Lemon. Mrs. Lemon grants a power of attorney to Jesús Angel Adrianza, so that he legally represents her. This power of attorney annulled all of the previously granted powers of attorney.

Mrs. Lemon annulled the power of attorney granted to Adrianza at a different Notary Office than the one at which she granted it. According to Crystallex, “if Adrianza represented Mrs. Lemon in the lawsuit, the power of attorney should have been revoked in the same Court, according to law, and not at a Notary Office”. Placer Dome argues that “the notary office at which the power of attorney was revoked informed the other notary office at which the power of attorney was granted, but the Notary, Luisa Coello Adrianza, a cousin of Jesús Adrianza, did not write an entry of the revocation in the books”.

- “Three days after the revocation, the Notary Office ruled by Coello issued a certified copy of the power of attorney without the relevant entry”, wrote Allan Brewer Carías in the book “El Caso Las Cristinas”. This was the first irregularity which formed the basis for the legal procedure in the Supreme Court of Justice. “They forged a document, they should have been sent to jail” said Jose Antonio Pinedo, attorney of Placer Dome.

- A week later, Schmidt assigned to miner Ramón Torres, his credit with Mrs Lemon. On the following day, Adrianza went to the Court and negotiated with Torres the credit in exchange for a debt for Bs. 259,000, and assigned to him the concessions of Las Cristinas IV and VI.

- Torres transferred the rights on the mine to Inversora Mael. The attorneys of CVG and Placer Dome state that the transaction was not legitimate, since the power of attorney of Adrianza had already been revoked. Crystallex in turn, has doubts about the revocation: “Mrs. Lemon never filed an appeal against the action of Adrianza”.

- On July, Mrs. Dot de Lemon died and she left no heirs. As the transaction between Adrianza and Torres was made, Mrs. Lemon was dying. Meanwhile, Inversora Mael asked the Ministry of Energy and Mines (MEM) to publish in the Official Gazette the notice of transfer, an obligation included in the law to have the rights on a mine.

- On September, Amalfi Grossi, who continued with the lawsuit related to the lease of Las Cristinas, requested the annulment of the transaction between Adrianza and Torres. CVG also requested the annulment of the operation.

The MEM stated that the request made by Inversora Mael was not according to law, since none of the parties informed the Ministry about such transaction. The company asked the Supreme Court of Justice to publish the notice of transfer in the Official Gazette.

The MEM declared the expiration of the concessions on the mines of Las Cristinas.
The attorneys of Inversora Mael stated that the Ministry raised all kinds of objections to prevent the company from renewing its titles.

Carlos Andrés Pérez issued a decree (1409) that allowed CVG to grant mining agreements directly. Leopoldo Sucre Figarella called Ramón Torres at 2:00 A.M., and fixed an appointment with him at 7:00 A.M: at his office. At the office he said to him: “You will never put a step in Las Cristinas”.

- In spite of the fact that the trial court stated that CVG was the owner of the estate of Mrs Lemon, the Supreme Court of Justice ordered the MEM to publish the notice of transfer in the Official Gazette, in favour of Inversora Mael. But on the same date, CVG executed an agreement with Inversora Mael: Inversora Mael abandoned the favourable effect of the judgment, and in exchange for that, it was granted other gold concessions. After the execution of that agreement, Placer Dome won the bidding process for Las Cristinas.

Inversora Mael stated to the Supreme Court of Justice that it “never waived its rights” on Las Cristinas, and it requested the Court to prohibit the MEM to assign the mines to CVG, and it asked the Court to order the publishing of the notice of transfer.

The Ministry published the notice in 1997, Crystallex purchased the shares in Inversora Mael, and entered the litigation for Las Cristinas.

- On May, Crystallex hired the Law Firm Cottin & Tejera París, which asked for a “blind report” about this case to other ten law firms, among them, the law firm representing CVG, Baumeister & Brewer. “It was just them who stated securely that the right on the mines belonged to Inversora Mael”, said the members of the Firm. “It was limited to the judgment of the Court, and they disregarded the existence of a background”, said Allan Brewer in his book to justify such statement. “In any case, the attorney of CVG in the litigation filed by Inversora Mael before the Supreme Court of Justice charged $150,000 for a three page opinion”, as stated by a source linked with Crystallex. The Cottin & Tejera París Firm did not pay such amount and the invoice arrived again one day after the final judgment from the Supreme Court of Justice, on June 12, 1998. The Supreme Court of Justice issued an unfavourable judgment for the plaintiff, Inversora Mael-Crystallex.

Cowboys and Technocrats

From the air, the gold mines look like postcards full of abysses of undermined earth full of water that reflects the silhouette of metal houses and dry sticks which were high trees before. Regarding this unrepairable depredation, international mining companies offer strict “sustainability” plans that promise to return green to this area.
In those mines which are developed without the proper technology, as in the case of Las Leonas, life is hard for the 2,000 “cowboys” as they say to the men without any law other than selling gold to the highest bidder. “We are all armed, we are de-organized, rioters, violent”, describes one of the miners. “The prevailing law is the law of the strongest”. In this camp, an earth slide buried nine miners in a 15 mt deep pit. Deads were soon forgotten. There was nobody to mourn the disappeared men. Nobody claimed any of the two corpses that appeared in the middle of the camp, killed with guns in violent fights for “rich gorges”, as they know veins with plenty of gold.

When technology is used and miners are organized, one can find exemplary cooperatives such as Los Rojas, a group of 56 miners who work in the concession of Las Cristinas. The history goes back to 1996, when Placer Dome demanded, as a condition to stay within the boundaries of the mine, that the miners get organized. Two years later, out of the initial 250 miners, only a quarter of them remained firm within the rules. “We miners are very free. We do not like rules. Before, in Los Rojas we lived as they live today in Las Leonas”, they commented. The cooperative is successful. Today, each member gets Bs. 8,000 per day for his extraction work.