Crystallex Reports Q1 2010 Financial Results
TORONTO, ONTARIO -- (Marketwire) -- 05/13/10 -- Crystallex International Corporation (TSX: KRY) (NYSE Amex: KRY) today reported its financial results for the quarter ended March 31, 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 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 (the 'CVG') which grants Crystallex
exclusive rights to develop and mine the gold deposits on the Las
Cristinas property.
-- 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 remains compliant with the MOC in order to continue to
pursue the Permit and the development of Las Cristinas and to protect
the option of proceeding to international arbitration. The Company
retains control of the Las Cristinas property site. All community
infrastructure projects as required under the MOC have been completed.
-- Despite continued efforts to secure the Permit and pursue accretive
transactions in respect of the Las Cristinas Project, the Company
recorded a $3.6 million non-cash write down in the first quarter of 2010
(accumulated a non-cash write down of $300.6 million) to the carrying
value of the Company's interest in Las Cristinas as required under
Canadian GAAP based on certain potential impairment tests including, but
not limited to, the permitting delays. Such 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, 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. Meanwhile,
the Company continues to pursue the Permit and the development of Las
Cristinas with all appropriate measures, including continued compliance
with its obligations under the MOC.
Liquidity and Capital Resources
-- Cash and cash equivalents at March 31, 2010 were $4.3 million.
-- The Company forecasts that it will have sufficient cash to fund its
operations through the second quarter of 2010, but will not, without
further measures, be sufficient to cover the Company's obligations over
the next twelve months.
Financial Results
-- Losses from continuing operations were $9.0 million ($(0.03) per share)
and $4.8 million ($(0.02) per share) for the three month periods ended
March 31, 2010 and 2009, respectively.
-- Losses from discontinued operations at El Callao were $0.4 million and
$0.4 million for the three month periods ended March 31, 2010 and 2009,
respectively.
-- Losses from operations were $9.4 million ($(0.03) per share) and $5.2
million ($(0.02) per share) for the three month periods ended March 31,
2010 and 2009, 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 (the 'Notes') against
Crystallex and ordered the Noteholders to pay Crystallex costs. In
detailed reasons the court held that Crystallex acted reasonably and in
accordance with its obligations to the Noteholders. The Noteholders
appealed this decision which was heard in late April 2010. The Company
is awaiting the decision of the Court of Appeal for Ontario. On May 11,
2010, the Company was served with a statement of claim by the trustee
for the Noteholders seeking an order for the Company to pay the trustee
its costs and to reimburse the trustee for the cost award if the
December 16, 2009 decision of the court is upheld on appeal. The Company
will defend against this claim which it believes is without merit.
-- 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.
About Crystallex
Crystallex International Corporation is a Canadian based company, whose principal asset is its interest in the Las Cristinas gold development project located in Bolivar State, Venezuela. Crystallex shares trade on the TSX (symbol: KRY) and NYSE Amex (symbol: KRY) Exchanges.
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 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: 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.
Contacts:
Investor Relations Contact:
Crystallex International Corporation
Richard Marshall, VP
(800) 738-1577
info@crystallex.com
www.crystallex.com