UPDATE 2-Venezuela denies Crystallex permit, stock slumps

(Adds comments, background)

By Cameron French

TORONTO, April 30 (Reuters) - Gold miner Crystallex International Corp (KRY.TO) said on Wednesday that Venezuela has denied an exploration permit at its Las Cristinas mine, reigniting fears that the project could be delayed further or nationalized.

Shares of the company plunged as much as 60 percent to their lowest level in years, after the company said denial of the permit runs counter to approvals needed to get the long-awaited mine underway.

Toronto-based Crystallex has been trying for years to nail down approvals to mine the massive gold deposit, which has proven and probable reserves of 14 million ounces.

Crystallex said in a statement it understood that the office of permits at Venezuela's environment ministry had denied the request in a communication to the state-owned company that holds the Las Cristinas concessions.

"The communication ... appears to be in conflict with the Las Cristinas (environmental) approval, construction compliance bond request and environmental tax request issued by the (ministry), and the communication appears to be in opposition to all mineral mining in the Imataca region," Crystallex said.

It said the communication cited sensitivities surrounding indigenous peoples, small miners and the environment.

Crystallex said in January it had received approval for its environmental impact study for the project, and now only needed the permit for mine construction from the ministry of environment.

Venezuela's environment ministry told Reuters it was not able to comment, while mining ministry officials said they had not been informed of the situation.

Calls to the company were not answered.

But investors yanked the stock down by as much as 60 percent when trading resumed after a halt.

Just after midday, the shares were down 69 Canadian cents, or 43 percent, at 92 Canadian cents.

Catherine Gignac, an analyst at Wellington West, said it was difficult to gauge the impact on the project without an official word from the Venezuelan ministry. But she said it ratcheted up the uncertainty surrounding the company.

"It refers to issues that have been dealt with for years.. so it doesn't make any sense whatsoever," she said.

"The whole thing is very confusing. Bottom line is it puts Crystallex into limbo, because you just don't know." ($1=$1.01 Canadian) (Additional reporting by Fabian Andres Cambero and Patricia Rondon in Caracas; editing by Janet Guttsman)