April 14, 2016 / 8:49 PM / 3 years ago

Venezuela says $1.4 billion Crystallex award 'unfair'

CARACAS (Reuters) - Venezuela said on Thursday that a $1.4 billion award to Canada’s Crystallex International Corp for the expropriation of a mining project was “unfair and disproportionate.”

The World Bank’s International Centre for Settlement of Investment Disputes this month ordered Venezuela to pay the sum as compensation for expropriating the Las Cristinas gold project that former president Hugo Chavez’s government took over in 2008.

“The Bolivarian Republic of Venezuela expresses its disagreement with the ruling,” said a statement from the Attorney General’s Office, noting there had been “fatal errors” in the methodology used.

“The Republic will use the legal resources at its disposition to weaken the evidently unfair and disproportionate decision.”

Las Cristinas was Crystallex’s flagship project and at the time was regarded as one of the world’s biggest undeveloped gold deposits with estimated gold reserves of 12.5 million ounces.

But development was delayed for years by legal disputes and permitting hold-ups.

The award to Crystallex follows that made by the same tribunal in 2014 to another small Canadian miner, Gold Reserve, which was awarded around $750 million for the 2009 termination of its Las Brisas concession in Venezuela.

Gold Reserve and Venezuela, which is strapped for funds at a time of low oil prices, triple-digit inflation and heavy debt payments due this year, had been in a dispute over the payment until February this year when they reached a deal to jointly exploit the Brisas and Las Cristinas projects.

Reporting by Diego Ore; Writing by Andrew Cawthorne; editing by Brian Ellsworth and Phil Berlowitz

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