Crystallex International Corporation
TSX : KRY
NYSE Amex : KRY

Crystallex International Corporation

November 12, 2010 16:13 ET

Crystallex Reports Q3, 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - Nov. 12, 2010) - Crystallex International Corporation (TSX:KRY)(NYSE Amex:KRY) today reported its financial results for the quarter ended September 30, 2010. The Company prepares its consolidated financial statements in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles. The consolidated financial statements along with management's discussion and analysis will be available for viewing on the Crystallex International Corporation website at www.crystallex.com. The Documents have been filed with SEDAR (www.sedar.com).

Overview

Crystallex is a Canadian-based company which has been granted the Mine Operating Contract (the "MOC") to develop and operate the Las Cristinas gold properties ("Las Cristinas Project" or "Las Cristinas") located in Bolivar State, Venezuela. Its common shares are traded on both the Toronto Stock Exchange (symbol: KRY) and the NYSE Amex Exchange (symbol: KRY).

Las Cristinas

  • The Company's principal asset is its interest in the Las Cristinas gold project located in Bolivar State, Venezuela. The Company's interest in the Las Cristinas concessions is derived from the MOC with the Corporacion Venezolana de Guayana which grants Crystallex exclusive rights to develop and mine the gold deposits on the Las Cristinas Project.
  • The Company has not received a response from the Minister of Environment and Natural Resources ("MinAmb") to its June 16, 2008 appeal of the Director General of the Administrative Office of Permits at MinAmb denying its request for the Authorization to Affect Natural resources (the "Permit") for the Las Cristinas Project.
  • The Company is in continuing discussions with China Railway Resources Group Co. Ltd. to create a strategic partnership for the development of Las Cristinas ("Las Cristinas Joint Venture"). The closing of the proposed transaction is subject to the execution of definitive agreements, receipt of applicable regulatory, shareholder and government approvals (including Venezuelan governmental approvals), and satisfaction or waiver of all conditions contained in the definitive agreements.
  • Despite continued efforts to secure the Permit and pursue transactions in respect of the Las Cristinas Project, the Company recorded a non-cash writedown of $3.2 million and $10.8 million for the three months and nine months ended September 30, 2010, respectively (accumulated non-cash writedown of $307.9 million), to the carrying value of the Company's interest in Las Cristinas as required under Canadian GAAP based on certain impairment indicators including, but not limited to, the permitting delays. The non-cash impairment charge has been taken to comply with accounting requirements and is thus without prejudice to the legal qualification that the Venezuelan measures may be given under Venezuelan or international law.
  • The Company will consider its options under International Financial Reporting Standards ("IFRS"), when adopted in 2011, to reverse the impairment charge and restore the carrying value of the Company's interest in Las Cristinas to its original amount, if receipt of the Permit or other circumstances warrants a reversal of this impairment charge at a future date under IFRS. Meanwhile the Company continues to maintain compliance with its obligations under the MOC while pursuing the development of Las Cristinas.
 
Liquidity and Capital Resources
  • Cash at September 30, 2010 was $21.5 million.
 
Financial Results
  • Losses from continuing operations were $8.4 million ($(0.02) per share) and $30.3 million ($(0.09) per share) for the three months and nine months ended September 30, 2010, respectively.
  • Losses from discontinued operations at El Callao were $0.9 million and $1.6 million for the three months and nine months ended September 30, 2010, respectively.
  • The resulting losses from continuing and discontinued operations were $9.3 million ($(0.03) per share) and $31.9 million ($(0.10) per share) for the three months and nine months ended September 30, 2010, respectively.
 
Legal Matters
  • On December 16, 2009, the Ontario Superior Court dismissed all of the claims by certain holders (the "Noteholders") of the Company's 9.375% aggregate principal amount of $100 million notes against Crystallex and ordered the Noteholders to pay Crystallex costs. In detailed reasons the court held that Crystallex and its Board acted reasonably and in accordance with its obligations to all stakeholders including the Noteholders. The Noteholders appealed this decision which was heard in late April 2010. In May 2010, the Court of Appeal for Ontario dismissed the Noteholders' appeal and the Noteholders paid costs of $0.8 million. The Noteholders also signed a release against the Company and its directors at the same time.
  • The Company and certain officers and/or directors have been named as defendants in a proposed class action lawsuit commenced in the United States District Court of the Southern District of New York. Crystallex believes that the complaint is without merit and will vigorously defend itself against this action. Crystallex has filed a motion to dismiss the class action complaint. The motion to dismiss remains pending before the court.

About Crystallex

Crystallex International Corporation is a Canadian based company, whose principal asset is its interest in the Las Cristinas gold project located in Bolivar State, Venezuela. Crystallex shares trade on TSX (symbol: KRY) and NYSE-Amex (symbol: KRY).

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including: statements relating to the expected timing of completion of the transactions contemplated by the Agreement, estimated reserves and resources at Las Cristinas; anticipated results of drilling programs, feasibility studies or other analyses; the potential to increase reserves and expand production, at Las Cristinas; Crystallex's projected construction and production schedule, and cost and production estimates, for Las Cristinas; and management's statements regarding its expectations regarding mining in Venezuela. Forward-looking statements are based on estimates and assumptions made by Crystallex in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that Crystallex believes are appropriate in the circumstances. Many factors could cause Crystallex's actual results, performance or achievements to differ materially from those expressed or implied by the forward looking statements, including: the conditions to the transactions contemplated by the Agreement not being satisfied, gold price volatility; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production, between actual and estimated reserves, and between actual and estimated metallurgical recoveries; mining operational risk; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign investment; speculative nature of gold exploration; dilution; competition; loss of key employees; additional funding requirements; and defective title to mineral claims or property. These factors and others that could affect Crystallex's forward-looking statements are discussed in greater detail in the section entitled "Risk Factors" in Crystallex's Annual Information Form (which is included in the Annual Report on Form 40-F that Crystallex files with the United States Securities and Exchange Commission (the "SEC") and elsewhere in documents filed from time to time with the Canadian provincial securities regulators, the SEC and other regulatory authorities. These factors should be considered carefully, and persons reviewing this press release should not place undue reliance on forward-looking statements. Crystallex has no intention and undertakes no obligation to update or revise any forward-looking statements in this press release, except as required by law.

Contact Information