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China backs  giant Venezuela  goldmine
Venezuela's President Hugo Chavez plays guitar at a cabinet meeting.

Chinese and Venezuelan officials have signed an agreement to jointly develop one of the world's biggest gold mines, the Las Cristinas asset near a town bearing the name of the mythical golden city of El Dorado.

The agreement to develop the Las Cristinas gold mine was signed by officials of the Venezuelan Government and Chinese company China International Trust and Investment Corp (CITIC) at the weekend.

It comes as a blow to Western mining companies that had eyed the massive deposit, such as Canada's Crystallex International Corp, which has appealed to the World Bank arbitration body for $3.7 billion in compensation after its development permit was cancelled.

The Las Cristinas ore body, in southern Bolivar state, is estimated to contain 17 million ounces of gold. Previous proponents had flagged a low-grade, high-tonnage operation producing more than 200,000oz of the precious metal a year.

Venezuelan President Hugo Chavez called it an agreement to begin exploiting both gold and copper deposits at the mine. He described Las Cristinas as "one of the biggest reservoirs of gold that exists - not only in Venezuela, not only in Latin America, but in the world".

Officials did not discuss financial details of the agreement but said it specified engineering, construction and processing of the gold and copper. Mr Chavez said officials also signed an agreement to produce a map of mineral deposits in Venezeula.

China's ties with Venezuela have grown rapidly in recent years, encouraged by Mr Chavez who has shunned traditional Western allies, such as the US, during his 13-year rule of the South American OPEC member. China also has become the country's biggest creditor, offering Mr Chavez's Government more than $US36 billion in loans, which are being paid off largely with increasing oil shipments.

Development of Las Cristinas has been dragging on for decades because of bureaucratic, political and financing issues, while locals say the project is cursed.

The Las Cristinas ore body is massive but low grade, with Crystallex putting the average grade at 1.13 grams per tonne gold. It had flagged an operation producing 233,000oz annually for 65 years. <div class="endnote">

Associated Press </div>