Crystallex/Eurus deal stalls

Shareholder dissent appears to be stalling a deal which was to result in Crystallex International (VSE) becoming the sole owner of the Albino gold concession in Venezuela.

Certain minority shareholders in Eurus Resource (VSE), which has rights to a 50% stake in the concession being explored by partner Crystallex, are opposed to the proposed agreement.

The deal calls for Eurus to exchange its right to acquire a half interest in the concession, which is situated in the Kilometre 88 district, for certain considerations. These include 750,000 units of Crystallex, a 2.5% net smelter return royalty (NSR) on production of 150,000 oz. from surficial material, and a 1% NSR on production from hard rock material (which Crystallex may purchase for 200,000 shares).

The minority shareholders allege that after control of Eurus was acquired by principals of Crystallex in 1993, the new directors announced that Eurus would default on its payment obligations to Crystallex, as defined in a project agreement between the two companies. It is further alleged that the Crystallex board then deemed Eurus to have forfeited its right to the 50% interest in the project. A settlement was then proposed to Eurus, which the minority shareholders view as “insignificant.”

Since the dissent became known, some informal discussions have been held regarding the possibility of a merger of the two companies, rather than an asset transaction. To date, no agreement has been reached.