Crystallex International Corp. WKN 890 729 CA22942F1018 KRY

Gönne jedem von uns,der bei KRY dabei ist, das Beste.
Aber vor allem : mir.
Denn mit 3,6 % der PM und rd. 2,5 % des Depots,
mit 2,1$ Schnitt ,bin ich vermutlich der Betroffenste
und damit auch der Gierigste.

Grüsse

Nu schaumermal!
Rd. 20 % ist schon was.
Geht fast zu fix, aber nichts drauf dagegen!

Me too!
But not to these venezolanian Cre´tins.

Das sieht doch alles ganz nett aus!!
Hope the very best.

Den Salsa tanzen wir nun noch lieber. :))

Grüsse

Crystallex Bludgeoned by Unnecessary Uncertainty

By Gene Arensberg
03 Oct 2005 at 08:35 AM EDT

"Whoever knows he is deep, strives for clarity; whoever would like to appear deep to the crowd, strives for obscurity.ý - Friedrich Nietzsche
HOUSTON (ResourceInvestor.com) -- A well known saying goes, ýThe market loathes uncertainty.ý Crystallex International [AMEX:KRY; TSX:KRY], the lately hapless holder of an operating contract to mine one of the largest gold deposits in South America, now knows what it is like to be on the receiving end of that saying. Sometimes it really doesnýt matter if the uncertainty is unnecessary.

After an initial Dow Jones report on September 20, which caught part of a Venezuelan President Hugo Chavez television speech that touched on the subject of changes being made to mining sector policy, a firestorm erupted on the newswires and in the American and Toronto exchanges of the stock markets.

While news writers in general are very interested in anything sensational and being first, very few of the people in the news craft today are apparently interested in getting the story right, first. As the piling-on of journalists over the last month, and particularly over the past two weeks on mining companies in Venezuela in general and Crystallex International in particular demonstrate, more often than not journalists shoot first, ask questions later these days.

Dow Jones Shoots First, and Shoots to Kill

With little more than a couple hours to go in the trading day on the 20th, Dow Jones fired off a headline-only into cyberspace ominously proclaiming: ýDJ Venezuela Chavez: Crystallex-Run Mine Belongs To Venezuela.ý (The news flash mentioned that details would follow.)

To already nervous shareholders and investors that doomsday headline was too much. All across the globe those with quick trigger fingers hit the red button sending Toronto based Crystallex shares tumbling through multiple sell stops for the second time in two months. Just before the DJ headline news flash Crystallex was trading at an already weakened US $2.66. In less than an hour it had careened down to $1.40. On just a headline. It took that long to get the stock halted.

One can only guess why Dow Jones felt it necessary to fire that kind of troubling headline-only news flash into the already nervous stock market so close to the daily closing time. DJ did follow up with a complete article, but only after the carnage had played out and the trading for Crystallex shares was safely closed. As it turned out, the full DJ story on the 20th was indeed troubling as written by DJ correspondent Raul Gallegos. In a later update, Gallegos began the out-of-this-world story:

ýCARACAS ý (Dow Jones) ý Venezuelan President Hugo Chavez said Tuesday his government is reclaiming national mining assets such as Las Cristinas, a gold mine operated by Canadaýs Crystallex International Corp. (KRY).ý

A sensational story if there ever was one. The only problem is that while Mr. Chavez did mention Las Cristinas, he never once mentioned the name Crystallex. As we will see, that distinction is extremely important.

Once Dow Jones dripped blood in the water other news services jumped on the story. At 3:51 pm EDT, DJ competitor Reuters included a clipped Chavez quote either taken off Venezuelan television or from other sources. The Reuters version, with no by line, quoted Chavez as saying:

ýAs it happens in Las Cristinas ... It's mine, it's over. That belongs to Venezuela, and there we are going to create a national mining company there, ourselves," Chavez said in a speech.ý

Once again, Crystallex was not mentioned by the president. The quote was murky at best, but no matter, the reporters had something that was mouth-watering to run with. And run they certainly did. It was a short-sellerýs dream come true. (Short sellers profit if a stock goes down in price).

Soon literally dozens of reports were hitting the wires. Western reporters just love to report on anything that hints at some business enterprise being ýnationalizedý or ýexpropriatedý by what they have come to label in politically correct speech as the ýpersonalized politicsý (code for dictator) of Venezuela. As one reporter put it, that is where the decisions of one man affect an entire nation.

By late evening on the 20th a flood of stories from a basket full of services were parroting and embellishing Raul Gallegosý TV-gotten quotes. We will look at some of those quotes a bit later.

But now hold on a minute. What about context? What about background? What about the reporterýs duty to get the whole story and to put that story in a context that is understandable? And what about the consequences of running with a story before those ideal conditions are satisfied?

That is also part of what we will look into, but first things first, a little background.

ýAlo Presidenteý

Just about every weekend, Venezuelan president Hugo Chavez delivers a marathon nationally televised speech called ýAlo Presidente.ý A kind of fireside chat on steroids. In these 2 to 4-hour sermons the colorful head of state covers wide ranging topics. Everything from the best time to plant a garden to complicated international agreements.

Since many of the cabinet level ministers avoid the international press, preferring to speak with local (read friendly) newspapers and the government-run television company, (there are opposition-run TV stations in Venezuela too) it is increasingly difficult for the largely opposition and international press to button hole the politicians for interviews. Consequently, Mr. Chavezý hours-long chats are a source for many reports. The trouble with that kind one-way communication is obvious: No opportunity for the reporting correspondent to ask questions or get clarification.

Compounding the confusion is the observation, by many, of Chavezý propensity to speak in intentionally vague terms. ýHe likes to keep people guessing,ý says an international reporter based in Brazil. His extended weekend speeches, ýoffer red meat to both supporters and detractors because of that.ý Another cynical commenter referring to ýChavez-speaký asked rhetorically if ýhe does that to boost (TV) ratings.ý

From email exchanges with a number of correspondents who jumped on the erroneous ýLas Cristinas-is-being-nationalizedý bandwagon, it is clear that if one has an agenda in their reporting of Venezuela national politics, all they need is a television set in Caracas. Sooner or later, a delicious opportunity will present itself in the form of a Hugo Chavez ad lib.

The presidentýs TV show is more like variety show on some days, but on most he uses part of the air time for a kind of ýworld according to Hugoý launch pad. While ýAlo Presidenteý is a rich source of nourishment for hungry reporters it is not the only format where the president goes on national television. Like most other national leaders wherever he goes there are likely to be cameras present. In this particular case, quotes attributed to the president were gleaned from several TV appearances. Before we look into those instances of ýChavez-speaký it might be helpful to gain some understanding of what the subject is.

What Is at Issue?

In 2002 Crystallex was awarded a mine operating agreement (MOA) by the Chavez-run government holding company Corporacion Venezolana de Guayana (CVG) covering the mining areas known as Las Cristinas 4,5, 6 and 7, just off the Pan-American Highway to Brazil near the Kilometer 88, Sifontes and Las Claritas communities in Bolivar state. That MOA is for a period of 20 years and foresees two possible 10-year extensions.

Las Cristinas is a very large tonnage relatively low grade but easily mined near-surface gold deposit on the edge of an ecologically sensitive area called Imataca in southeastern Venezuela. While much of the Imataca is relatively undisturbed rain forest, a good deal of the area in and immediately surrounding the portion of Las Cristinas planned to be mined is a waste land of small scale mining scars and is not ecologically pristine. Historic and contemporary (largely unregulated) small scale mining in the area has been a problem from mining pollution and unsafe sanitary and working conditions. Recently the government of Venezuela has cracked down on that largely illegal mining and forcibly removed the small miners. More about that in a moment.

Las Cristinas

The draw for Crystallex is a resource base of something over 17 million ounces of gold (about 12.5 million ounces proven and probable) contained in that Venezuelan soil in a portion of Las Cristinas according to a recently updated SNC Lavalin feasibility study which used a conservative gold price of $350. The details of the study can be found on the Crystallex website and they donýt need to be repeated here. Suffice it to say it is an understatement to call it a really big project.

From a purely economic standpoint, development of Las Cristinas and other large scale mining projects requires a substantial commitment of capital, talent and resources and that is why the government of Venezuela invited companies in to develop the large-scale projects. Companies actively mining or advancing projects include Hecla [NYSE:HL], Bolivar Gold [TSX:BGC], Gold Reserve [AMEX:GRZ; TSX:GRZ], Crystallex International and Shandong Gold Mining, a Chinese firm. The tradeoff for Venezuela comes in the form of taxes, jobs, social commitments and royalties those projects provide.

Make sense so far? Good, but wait, the Las Cristinas story is just a wee bit more complicated. Without a program or scorecard it is not a story that is easy to understand, but it is an easy story for some to misrepresent or to manipulate for their own purposes, political or economic. (For convenience, just such ýprogramý of the Crystallex - Las Cristinas story main players is presented at the end of this paper.)

Permit in Waiting

Part of what made the September 20 Dow Jones report and other reports that followed shortly after so sensational was that Crystallex has been waiting (and waiting and waiting) for an overdue final permit to impact natural resources which would allow heavy construction of the mine to begin. Contractors for that heavy construction are literally at the ready.

Something many writers forget, it is the responsibility of the government-controlled CVG (see the program) to obtain that final permit from MARN. So, while Crystallex has been waiting for the CVG to obtain a permit, and has already spent gobs of money on things like engineering, mine equipment, heavy mining trucks, excavators, shovels, mill equipment, road and airstrip upgrades, and so on, here comes the international press interpreting the National Executiveýs vague words and follow up comments by the president of the Venezuelan government company responsible for obtaining that all-important final permit as ýthe end of the worldý for Crystallex!

As mentioned before, it was a short sellerýs dream come true. For Crystallex and for its shareholders it was a nightmare. Curiously, the one thing that Crystallex needed from its ýpartner,ý the government of Venezuela, during the furor was a direct expression of support from Mr. Chavez or Mr. Alvarez (see the program) which would have put investorýs minds at ease. There were some supportive comments (discussed a little later) from the National Assembly, for example, but none were reported by the bloodthirsty press as coming from either the president or the minister of the MBIM.

Instead, the press focused on signals out of Venezuela that can only be described, as one reporter put it, ýas intentionally vague.ý To those who have been following the Cristinas story for years it is infuriating to see the perception manipulated in order to satisfy a particular news organizationýs dislike for the political leadership of a country. Perhaps more maddening is that the reporters who fired off their incomplete and surface-only reports probably know better. It was just too tempting to raise the evil specter of ýnationalizationý or ýexpropriation.ý Anything to make President Chavez the next Saddam Hussein.

But, as we will see, context and understanding the history is everything in this intriguing chapter of an ongoing Latin saga.

Chavez Speaks, but What Did He Say? (And What Was He Actually Talking About?)

Freshly back in Venezuela after a trip to his favorite verbal target, the United States, the former paratrooper went on national TV several times. We have already seen the first quotes and misquotes which exploded into cyberspace courtesy of Dow Jones & Company. (Just because it is Dow Jones doesnýt necessarily mean they are anti-Chavez, does it?) That is not to single out DJ. Once they got the feeding frenzy started all the international newswires jumped in for a slice.

Back to those presidential TV quote opportunities. One occasion was a gathering in Puerto Ordaz, a port city in Bolivar State to commission the start of a group of new companies set up to provide alternate employment possibilities either in the mining sector or in other areas for small miners displaced when they were removed from mining in certain areas including Las Cristinas. Did you catch that? For those who have not yet had enough coffee, that means that the president was speaking to some people recently displaced so that CVG and Crystallex could begin mining.

Lost in the over-the-top reporting of Chavezý remarks was the fact that just a couple weeks before a near riot had occurred as hundreds of small miners, many working illegally, blocked the main highway to Brazil in a protest organized by official (and unofficial) small mining leaders. A sensational story that the international guys missed about that was public the charge by Sifontes Mayor Vargas that the miners were at least partly incited and financed in their trouble-making by MINCA and MINCA supporters. (See the program.) Nowhere did the various international news services remind us that President Chavez was speaking to the unemployed, some of whom had just been removed from Las Cristinas. Nowhere did the newswires mention that the government brought in the army to protect Crystallex property and the portion of Las Cristinas that Crystallex will mine from invasion by those energized small miners.

That would be context, after all, which is apparently not a requirement to be included in an international report these days.

During the ruckus, a commission was hastily formed consisting of MBIM Minister Alvarez, MARN Minister Farias, Governor Rangel, the Minister of Defense and Sifontes mayor Vargas (see program) who met with the small miners and hammered out an agreement which allowed the miners to continue their small workings (provided they register with the new government mining company) on a portion of the enormous Las Cristinas land, but outside the area which Crystallex will be mining. That was the time when the government had brought in the army to protect the Crystallex site from invasion by those so-called ýgarimpiros.ý

While it would have been nice had Mr. Chavez uttered a word of support for Crystallex and the other mining companies who are playing by the Chavez-government rules, under those politically charged circumstances and with elections literally around the corner on December 4, it is understandable that Chavez said what he did. It would have been unseemly for the president to come out in support of any transnational company while at the same time he is ranting against those who have tied up mineral concessions but not advanced them or provided productivity to the nation.

The companies came out with clarifications and statements of course. Besieged Crystallex president Todd Bruce issued several statements as did the company heads of the other productive mining companies, but the overwhelming weight of the orgy of blind ýnationalizationý and ýexpropriationý messages delivered by the big boys of the press world was just too heavy to overcome. As always, however, sooner or later the truth oozes to the surface in spite of the press.

So What Was All the Fuss About?

It is not practical or necessary to recount all the various quotes and misquotes by all the various services who covered the story, but in order to understand how patently misleading and damaging those news stories were, it is important to examine several of the quotes. What follows is a montage of remarks attributed to the Venezuelan leader, followed by a context-reality-check those international reporters might want to review.

First example, from an AP story: (All quotes attributed to Hugo Chavez by the sources).

"I want to tell the country I've decided, after looking at this and that, to cancel all mining concessions. We're not giving more concessions to transnationals," he said.

"(Las Cristinas) is the eighth gold mine in the world, right here. And, well, that's a mess if a company from who-knows-where has the concession, then sold it to another. They sell it," Chavez said. "They go around the world saying they have this much in gold reserves, but they are never going to exploit it."

Chavez said the aim "is to recover the national power, sovereignty to manage our own resources."

And since it ties in with the AP quotes, add this one from Pete Wilson who writes for Bloomberg:

ýThey fooled me one time,ý Chavez said. ýWe went there, in a helicopter and all, and those officials were telling us what they would do. It was only done to win the concession, which they wonýý Chavez didn't name the company.

Bereft of their context and without any plausible explanation of why the supreme leader of the country was saying what he did, the comments were left to give the sensational, but unreal impression which suited the news services.

What was ýhurricane Hugoý as some of the press correspondents mockingly referred to him talking about? The first paragraph relates to an initiative by the Chavez administration to do away with concessions, which by the way is not new. The mining law was changed in 1977, 1996 and again in 1999. The country does not plan to award concessions in the future and now plans to convert existing concessions into contracts. Instead all mining concessions will remain with the state (not new) and outside companies will work under MOAs similar to the Crystallex example.

While this does represent a potential change for companies now operating under a concession, presumably when those concessions are up for renewal, or abandoned concessions, that statement does not affect Crystallex. Crystallex does not have a concession, it has a mine operating agreement with CVG. (See program).

In the second paragraph, Mr. Chavez is referring to the purported and unauthorized ýsaleý by the former contractor for Las Cristinas, Placer Dome, to Vannessa Ventures in 2001 just before the mining contract was set to expire. After the sale Vannessa hired Doug Casey to anchor a promotional campaign in which Vannessa was touted as having control of the mega-mine it had just ýpurchasedý from Placer for $50. (See program for more details).

In the third paragraph Mr. Chavez is referring both to the existing policy of no more new concessions where title to mining projects remains with the state and to the new mining company being planned to administer mining operations. According to Todd Bruce, Crystallex president, if completed, that new mining company will actually streamline what has heretofore been an eclectic combination of sometimes contradictory bureaucratic agencies.

Aladin:
genau der ists!

Venezuelan Saga Update: Crystallex Bashed Again

By Jon A. Nones
03 Oct 2005 at 03:50 PM EDT

St. LOUIS (ResourceInvestor.com) -- Crystallex shares [AMEX:KRY] crashed again today, falling 27 cents, or 17.2%, to $1.30, after Venezuela President Hugo Chavez dropped yet another political bomb ý in three different places.

First and foremost, Venezuela has officially stopped granting environmental permits for mining companies pending the previously announced review of mining contracts and concessions.

Venezuela Deputy Environmental Minister Nora Delgado said in a telephone interview with Bloomberg today that the environmental permit process is ýfrozený for the time being, until the country completes its review, which is scheduled for completion by year-end.

ýWe have sent all the paperwork on all pending permits back to the Heavy Industries and Mining Ministry,ý Delgado said. ýWe won't be granting permits for anyone until this is completed.ý

Crystallex will thus have to wait longer for their long-overdue environmental permit.

Secondly, during his weekly radio and TV program on Sunday, Chavez reiterated that the government would no longer allow oil companies to run oil fields independently under contract.

All foreign oil companies with operating contracts to pump oil Venezuela must comply with a new law and agree to form joint ventures with the government, and any that refuse will not be welcome, President Hugo Chavez said.

The existing oil companies running Venezuelaýs 32 oil operating agreements must convert their deals into joint ventures with state oil company Petroleos de Venezuela SA. And, the state oil company is to have a majority share in all joint ventures with foreign firms.

ýAlmost all have agreed, there is just one European company left. And I have said: those that don't accept it should pick up their things and go, and hand over all the (oil) wells,ý he said.

Although this news concerns a different sector, it is yet another stab at foreign-owned companies in Venezuela.

Lastly, Chavez announced on Friday that Venezuela has moved its central bank foreign reserves out of U.S. banks, liquidated its investments in U.S. Treasury securities and placed the funds in Europe.

ýWeýve had to move the international reserves from U.S. banks because of the threats,ý from the U.S., Chavez said during televised remarks from a South American summit in Brazil.

ýThe reserves we had (invested) in U.S. Treasury bonds, we've sold them and we moved them to Europe and other countries,ý he added.

The implications for funding mine projects could be very substantial. If banks do not feel that there is recourse to seize assets in the event of default, the mines may not get financing. And, European banks can be light at times on project financing skills.

Today's Snapshot

Crystallex shares [TSX:KRY; AMEX:KRY] regained some value throughout the day to close at $1.40, down about 11% on AMEX.

Bolivar Gold [TSX:BGC] dropped 10 cents, or 3.92%, to end at $2.45.

Gold Reserve [AMEX:GRZ; TSX:GRZ] fell 10 cents, or 4.35%, to finish off the day on AMEX at $2.20.

Hecla Mining [NYSE:HL] lost 16 cents, or 3.65%, to close at $4.22.

The Big Picture

Now letýs take a look at the big picture. How much total value have these companies lost since the initial Venezuelan announcement?

On August 1, Crystallex reported 214 million fully diluted shares. If we use this number to calculate the value of the company on September 19, with shares trading at $2.72, this gives the company a market value of $582.08 million. Now, with shares trading at $1.40, the company is worth roughly $299.6 million, a loss of $282.48 million in just two weeks.

Bolivar Gold has 169.1 million fully diluted shares, according to its Web site. On September 19, trading at $2.85 a share, BGC had a market value of $481.93 million. Now, trading at $2.45, we see the companyýs value at $414.29 million ý not as big of a loss as Crystallex obviously, but still $67.635 million down the drain.

Gold Reserve currently reports 41.67 million fully diluted shares. So, if we calculate that number when the companyýs shares were trading at $3.52 on September 19, its market value was about $146.67 million. Post news, we see a loss of roughly $55 million, thus bringing the companyýs value to $91.67 million.

Hecla has about 121.6 million fully diluted shares at the present time. Using this number, multiplied by a share value of $4.25 on September 19, the companyýs market value was $516.8 million. With shares closing today at $4.22, Hecla has seen a ýbig pictureý loss of approximately $3.64 million ý the least affected by the Venezuela news.