I don't understand how we continue with a Primary Binding Agreement when we can no longer perform our obligations under the Agreement. How can KRY give the CREC/CRRC two thirds of what we no longer have.
Vlada...the fact of the matter is that none of us knows what is going on behind the scenes. I keep trying to come up with a reason why Venezuela would expose itself to $5 billion in arbitration awards while throwing a wet blanket on any development of these signature gold mining projects (Las Cristinas & Las Brisas) that would effectively jump start this entire sector. I come up with the following possibilities:
1. "The government" wants to clandestinely mine gold (albeit on a small scale) to afford huge profit to select connected individuals.
2. Venezuela has no intention of paying any arbitration claim (whether they ultimately will have to or not) so there is no consideration\fear of the downside of having to make good one these claims at a future date. Even if decision makers are cognizant of the real possiblility of having to pay out significant arbitration awards, these costs are incurred by the national treasury....not by connected individuals that may be growing their personal bank accounts (see item #1).
3. Negotiations for a settlement agreeable to all parties (i.e. China, Venezuela, KRY and possibly GRZ) are ongoing as we speak. Perhaps China was playing hardball (negotiating on behalf of the proposed JV) shortly before the MOC was cancelled. They may have been taking a hardline stance in response to some of Venezuela's profit killing requirements (gold sales to the central bank, currency exchange, etc.). Venezuela decided to assert itself by cancelling the MOC as a negotiation "strategy". KRY then kicked it up a notch....calling Venezuela's bluff by filing for arbitration. Have talks resumed behind the scenes? Is Venezuela looking for a 50-50 JV with the Chinese leaving the Chinese in the position of having to offer KRY (and perhaps GRZ) a buyout figure that is a viable alternative to arbitration?
I'm sure there are other scenarios that could be entertained (i.e. the Chinese in cahoots with Venezuela, etc.). Personally I'm leaning toward scenario #3. Perhaps a deal will be proposed for shareholder review....hopefully in time for a vote at the next AGM. Maybe we're being softened up for a stink bid. Who knows.
If anyone has any additional scenarios, please feel free to post them.
