St. LOUIS () -- Shares in Crystallex [TSX:KRY; AMEX:KRY] fell as much as 5% today after the company announced that Gordon Thompson has been appointed to the chief office in the place of Todd Bruce who had held the post since 2003.
According to the release, Gordon Thompson will take over Todd Bruce's office of CEO, president and director effective immediately. The company said it had "provided appropriate compensation to Bruce in accordance with his employment agreement."
Richard Marshall, Vice President of Investor Relations for Crystallex, would not comment on the reasons behind Bruce's departure, saying "there's nothing more to be said than what is in the release."
Thompson has been a director of Crystallex from 2000 to 2002. Prior to Crystallex, he was a senior vice president at NCE Resources Group/Sentry Select Capital Corp., and president of Strategic Energy Fund, a private and public investment fund.
He brings to the table more than 30 years experience in the financial services sector including expertise in raising debt and equity in Canadian and U.S. capital markets, according to the company.
Bruce, on the other hand, has agreed to make himself available to the company as a consultant if needed.
In a farewell comment, Bruce said, "I continue to have every confidence that the final environmental permit for Las Cristinas will be secured by the Company and that Venezuela will provide the mining industry with a competitive, attractive jurisdiction."
Crystallex applied for the environmental permit in spring of 2004. The company was awarded a contract to develop Las Cristinas in Bolivar State in 2002, and has since drilled up Proven & Probable Reserves of about 13.6 million gold ounces.
Recently, Crystallex began another 38,000-metre drill program at site to increase total mineralization and add to reserves, with results scheduled for release the second quarter of 2007.
Late last year at the Venezuelan Canadian Business Forum, the Ministry of the Environment and Natural Resources (MARN) said that it is expediting the process to issue the permit as soon as possible once the outstanding aspect of the efficient utilization of regional resources was completed.
Some analysts have speculated the delay could be linked with a dispute between Crystallex and Gold Reserve [AMEX:GRZ; TSX:GRZ], owner of the abutting Las Brisas property, over the location of a water diversion ditch.
However, the companies reached an agreement in November of last year on the water channel, and Crystallex has agreed to move the diversion channel north by about 380 meters in the area of Potaso.
John Doody, Editor of Gold Stock Analyst, said he can't help but wonder whether the government wants Crystallex and Gold Reserve to create a combined Las Cristinas/Las Brisas project with 25 million P&P Reserves, as evidenced by lack of permits being issued to both companies to start construction.
"With only 40 million outstanding, KRY should bid 3 for every 1 GRZ and make this a 25 million P&P single site ... sure to be soon taken over by a major (Goldcorp?) once fully permitted," wrote Doody.
All foreign miners in the country are still waiting for a new mining policy announcement that was delayed until after the elections last year. The government wants to create a state company, which would oversee mining activities and own a majority stake in all joint ventures formed with private partners. The bill could also push up the royalties that miners pay.
Hernando Otero, International Law Associate of Appleton & Associates International Lawyers, told RI that the government is basically seeking to gain greater downstream control and a bigger portion of the profits.
"There will still be a role and a need for foreign investors in the sector and both sides understand this. Foreign investors in Venezuela's oil sector have already gone through a similar process," he said.
Crystallex closed down 7 cents at C$2.92 today, after hitting a low of C$2.82.
