Exhibit 1.1
  
  
  
  
  CRYSTALLEX
INTERNATIONAL CORPORATION
  
  
  
  ANNUAL
INFORMATION FORM
  FOR
THE YEAR ENDED DECEMBER 31, 2007
  
  
  
  
  
  
  March 31,
2008
  
  
  
 
  TABLE
      OF CONTENTSDOCUMENTS
      INCORPORATED BY REFERENCE
              1
              
              Regional
      Geology
              15Local
      Geology
              15FOREIGN
      CURRENCY AND ACCOUNTING PRINCIPLES
              1
              
              Mineralization
              16Drilling,
      Sampling and Data Verification
              17GLOSSARY
      AND METRIC/IMPERIAL CONVERSION TABLE
              1
              
              Mineral
      Reserves
              19Additional
      Mineral Resources
              19SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS
              2
              
              2007
      Technical Report Update
              20Engineering,
      Procurement and Construction Management
              21NATIONAL
      INSTRUMENT 43-101 – STANDARDS OF DISCLOSURE
                FOR
      MINERAL PROJECTS
              2
              
              Permits
              21CRYSTALLEX
              3
              
              OTHER
      ASSETS
              22Overview
              3
              
              Tomi
      Operations
              22Corporate
      Chart
              5
              
              Overview
              22Location
      and Property Description
              23MINERAL
      RESERVES AND RESOURCES
              6
              
              Physiography,
      Climate and Local Resources and Infrastructure
              23History
              23INFORMATION
      WITH RESPECT TO THE GOLD INDUSTRY
              7
              
              Geology
      and Mineralization
              23Drilling,
      Sampling and Data Verification
              24MINING
      IN VENEZUELA
              7
              
              Mine
      Production
              24Mineral
      Reserves
              25VENEZUELA
              7
              
              Mineral
      Resources
              25MINING
      LAW
              8Introduction
              8
              
              Environmental
      Liabilities
              25Mineral
      Concessions
              8
              
              Lo
      Increíble Properties
              26Direct
      Exploitation
              9
              
              Background
              26Environmental
      Laws
              9
              
              Location
      and Property Description
              26General
              9
              
              Accessibility,
      Physiography, Climate and Local Resources and
    Infrastructure
              27Environmental
      Impact Study
              9
              
              History
              27Mine
      Closure and Remediation
              10
              
              Geology
      and Mineralization
              28Taxation
              10
              
              Drilling
              28Corporate
      Income Tax
              10
              
              Mine
      Production
              28Dividends
      and Branch Profits Tax
              10
              
              Mineral
      Resources
              29VAT
      and Import Duties
              10
              
              Environmental
      Liabilities
              29Science
      and Technology Contribution
              11
              
              Current
      Activities
              29Tax
      Treaties
              11
              
              Revemin
      Mill
              29Exchange
      Controls
              11
              
              Overview
              29Environmental
      Liabilities
              30LAS
      CRISTINAS PROJECT
              11
              
              Production
              30LOCATION
      AND PROPERTY DESCRIPTION
              11
              
              DESCRIPTION
      OF SHARE CAPITAL AND RELATED INFORMATION
              30MINING
      OPERATION CONTRACT
              12ACCESSIBILITY,
      PHYSIOGRAPHY AND CLIMATE AND LOCAL RESOURCES AND
      INFRASTRUCTURE
              14
              
              Authorized
      Capital
              30Accessibility
              14
              
              Common
      Shares
              30Physiography
      and Climate
              14
              
              Class
      “A” Preference Shares and Class “B” Preference Shares
              30Local
      Resources and Infrastructure
              14
              
              Shareholder
      Rights Plan
              30HISTORY
              15
              
              Price
      Range and Trading Volume of the Common Shares
              31GEOLOGY
      AND MINERALIZATION
              15
              
              Dividend
      Policy
              31Capitalization
              32LEGAL
      PROCEEDINGS
              32
   
 
 WITHDRAWAL
      OF MINCA LITIGATION
              32
              
              ADDITIONAL
      INFORMATION
              47MINCA
      Litigation
              32Vannessa
      Arbitration
              33
              
              SCHEDULE
      “A” CONSOLIDATED FINANCIAL STATEMENTS (As attached)
              1RISK
      FACTORS
              33
              
              SCHEDULE
      “B” MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS
              1RISKS
      SPECIFIC TO OPERATIONS IN VENEZUELA
              34
              
              SCHEDULE
      “C” GLOSSARY OF DEFINED TERMS AND TECHNICAL MINING TERMS AND
      ABBREVIATIONS
              1Political
      and Economic Instability
              34Environmental
      Permit Still Required
              34
              
              SCHEDULE
      “D” MINING OPERATION CONTRACT AND RELATED DOCUMENTS
              1Exchange
      Controls
              34Mining
      Operation Contract
              34
              
              SCHEDULE
      “E” AUDIT COMMITTEE CHARTER
              1Lack
      of Ownership Rights
              34Lack
      of Copper Rights
              35
              
              SCHEDULE
      “F” POLICY ON INDEPENDENCE OF DIRECTORS
              1Proposed
      Amendments to Mining Laws
              35Arbitration
      Proceedings
              36Sale
      of Gold
              36Unauthorized
      Miners
              36Imataca
      Forest Reserve
              36GENERAL
      RISK FACTORS
              37Title
      to Mineral Properties
              37Environmental
      Regulation and Liability
              37Additional
      Funding Requirements
              38Reserve
      and Resource Estimates
              38Mineral
      Exploration and Exploitation
              38Uninsurable
      Risks
              39Competition
              39Dependence
      on Limited Mining Operations and Properties
              39Production
      Risks
              39Regulations
      and Permits
              40Gold
      Price Volatility
              40Currency
      Fluctuations
              40Credit
      and Market Risks
              40Dependence
      on Key Employees
              41Compliance
      with Sarbanes-Oxley Act of 2002
              41Common
      Share Price Volatility
              41Potential
      Dilution
              42Enforcement
      by Investors of Civil Liabilities
              42Operating
      Losses are Expected to Continue In the Near Future
              42Future
      Hedging Activities
              43No
      Payment of Cash Dividends in the Near Future
              43DIRECTORS
      AND SENIOR OFFICERS
              43AUDIT
      COMMITTEE
              45Composition
              45Charter
              45Policy
      on the Provision of Services by External Auditors
              45External
      Auditors Service Fees
              46CORPORATE
      GOVERNANCE STATEMENT
              46TRANSFER
      AGENT AND REGISTRAR
              47MATERIAL
      CONTRACTS
              47INTEREST
      OF EXPERTS
              47
 
 
 
   DOCUMENTS
INCORPORATED BY REFERENCE
  The
following documents of Crystallex International Corporation (the “Corporation”)
filed with the securities regulatory authorities in certain of the provinces of
Canada are incorporated by reference in this Annual Information
Form:
  (a)
              the
      audited consolidated financial statements of the Corporation as at
      December 31, 2007 and 2006, for each of the years in the three year period
      ended December 31, 2007, as restated, including the notes thereto and the
      auditors’ reports thereon (the “Consolidated Financial
      Statements”);
  (b)
              management’s
      discussion and analysis of financial condition and results of operations
      of the Corporation for the year ended December 31, 2007 (“Management’s
      Discussion and Analysis”);
  (c)
              a
      report prepared by Mine Development Associates, (“MDA”) and other
      independent consultants in November 2007 titled “Technical Report Update
      on the  Las Cristinas Project, Bolivar State, Venezuela” (the
      “2007 Technical Report Update”)
  Copies of
these documents are available on the SEDAR website at www.sedar.com.  Copies
of the Consolidated Financial Statements and Management’s Discussion and
Analysis are attached to this Annual Information Form as Schedule “A” and
Schedule “B,” respectively.
  Any
statement contained in a document incorporated by reference in this Annual
Information Form (a “prior statement”) shall be deemed to be modified or
superseded for purposes of this Annual Information Form to the extent that any
statement contained in this Annual Information Form (a “subsequent statement”)
modifies or supersedes such statement.  A subsequent statement need
not state that it has modified or superseded a prior statement.  The
making of a subsequent statement will not be deemed an admission for any
purposes that the prior statement, when made, constituted a misrepresentation,
an untrue statement of a material fact or an omission to state a material fact
that is required to be stated or that is necessary to make a statement not
misleading in light of the circumstances in which it was made.  Any
prior statement so modified or superseded will not constitute part of this
Annual Information Form except as so modified or superseded.
  FOREIGN
CURRENCY AND ACCOUNTING PRINCIPLES
  In this
Annual Information Form, unless otherwise specified, all references to “C$” are
to Canadian dollars and all references to “US$” or “U.S. dollars” are to United
States dollars.  The Consolidated Financial Statements are reported in
U.S. dollars.
  The
following table sets out the rates of exchange for Canadian dollars (“C$”) per
U.S. dollar in effect at the end of the periods indicated and the average rates
of exchange during such periods based on the noon spot rate quoted by the Bank
of Canada:
  Year
      ended December 31,2007
              2006
              2005Rate
      at end of year
              C$1.0120
              C$1.1653
              C$1.1659Average
      rate for year
              C$1.0692
              C$1.1340
              C$1.2116
 
 The
Consolidated Financial Statements have been prepared in accordance with Canadian
generally accepted accounting principles. Note 18 to the Consolidated Financial
Statements provides the reconciliation of these financial statements to U.S.
GAAP.
  GLOSSARY
AND METRIC/IMPERIAL CONVERSION TABLE
  A
glossary of certain defined terms and technical mining terms and abbreviations
and a metric/imperial conversion table are included in Schedule “C” to this
Annual Information Form.
  1
  SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Certain
statements included or incorporated by reference in this Annual Information
Form, including information as to the future financial or operating performance
of the Corporation, its subsidiaries and its projects, constitute
forward-looking statements. The words “believe,” “expect,” “anticipate,”
“contemplate,” “target,” “plan,” “intends,” “continue,” “budget,” “estimate,”
“may,” “schedule” and similar expressions identify forward-looking
statements.  Forward-looking statements include, among other things,
statements regarding targets, estimates and assumptions in respect of gold
production and prices, operating costs, results and capital expenditures,
mineral reserves and mineral resources and anticipated grades and recovery
rates.  Forward-looking statements are necessarily based upon a number
of estimates and assumptions that, while considered reasonable by the
Corporation, are inherently subject to significant business, economic,
competitive, political and social uncertainties and
contingencies.  Many factors could cause the Corporation’s actual
results to differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, the
Corporation.  Such factors include, among others, risks relating to
additional funding requirements, reserve and resource estimates, gold prices,
exploration, development and operating risks, illegal miners, political and
foreign risk, uninsurable risks, competition, limited mining operations,
production risks, environmental regulation and liability, government regulation,
currency fluctuations, recent losses and write-downs and dependence on key
employees.  See “Risk
Factors” and “Risk Factors” in Management’s Discussion and
Analysis.  Due to risks and uncertainties, including the risks and
uncertainties identified above and elsewhere in this Annual Information Form,
actual events may differ materially from current expectations. Investors are
cautioned that forward-looking statements are not guarantees of future
performance and, accordingly, investors are cautioned not to put undue reliance
on forward-looking statements due to the inherent uncertainty
therein.  Forward-looking statements are made as of the date of this
Annual Information Form, or in the case of documents incorporated by reference
herein, as of the date of such document, and the Corporation disclaims any
intent or obligation to update publicly such forward-looking statements, whether
as a result of new information, future events or results or
otherwise.
  NATIONAL
INSTRUMENT 43-101 – STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS
  National
Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”)
issued by the Canadian Securities Administrators (the “CSA”) requires, among
other things, that issuers ensure that all written disclosure of a scientific or
technical nature, including disclosure of a mineral resource or mineral reserve,
concerning a mineral project on a property material to the issuer must be based
on material provided by a qualified person or under their supervision (a
“Qualified Person”). A Qualified Person for purposes of NI 43-101 means an
individual who is an engineer or geoscientist with at least five years of
experience in mineral exploration, mine development or operation and/or mineral
project assessment, has experience relevant to the subject matter of the
disclosure and is a member in good standing of a specified professional
association.  The issuer must disclose the name and the relationship
to the issuer of the Qualified Person who prepared or supervised the preparation
of the information that forms the basis for the written disclosure.
  2
  CRYSTALLEX
  Overview
  Crystallex
International Corporation (the “Corporation”) is a corporation continued under
the Canada Business
Corporations Act.  The registered and head office of the
Corporation is located at 18 King Street East, Suite 1210, Toronto, Ontario, M5C
1C4.
  The
Corporation and its subsidiaries (collectively, the “Crystallex Group”) explore
for, mine and produce gold inVenezuela.  The Corporation’s principal
asset is its interest in the Las Cristinas project located in Bolivar State,
Venezuela.  The Corporation’s other assets include the Tomi
operations, the Lo Increible properties (which include the La Victoria
deposit), and the Revemin mill, all of which are located in Bolivar State,
Venezuela.
  The
primary focus of the Corporation over the past six years has been the
development of the Las Cristinas project, including:
  ·
              entering
      into a Mining Operation Contract (the “Mining Operation Contract”) dated
      September 17, 2002 with Corporacion Venezolana de Guayana (the
      “CVG”);
  ·
              supervising
      the preparation of the feasibility study completed by SNC-Lavalin Inc.,
      (“SNC-Lavalin”) and other independent consultants in September 2003 with
      respect to the development of the Las Cristinas project and the
      construction and operation of a mining and processing facility at a
      production rate of 20,000 tonnes per day (“TPD”) (the “20,000 TPD
      Feasibility Study”);
  ·
              securing
      the CVG approval in March 2004 for the 20,000 TPD Feasibility
      Study;
  ·
              supervising
      the preparation of a 40,000 TPD expansion plan pre-feasibility study
      completed by SNC-Lavalin and MDA in October
  2005;
  ·
              completing
      financing transactions (including a C$115 million Common Share offering in
      April 2004, a U.S.$100 million debt offering in December 2004, a C$10
      million short term note financing in September 2005 in conjunction with
      the establishment of a C$60 million equity draw down facility, a U.S.$31
      million private placement in February 2006, the receipt of C$21.6 million
      and C$5 million pursuant to draw downs under the equity draw down facility
      in the fourth quarter of 2005 and January 2006, respectively, a C$32.4
      million offering of units in August 2006, a C$61 million Common Share
      offering in April 2007, and a C$64.8 million offering of units in February
      2008), and an early exercise of certain warrants for proceeds of U.S.$6.04
      million;
  ·
              settling
      of the Corporation’s gold contract obligations.  In December
      2005, the remaining gold forward sales and gold call options were settled
      and the resulting liability of U.S.$14.3 million was converted into a new,
      fully drawn term loan facility with Standard Bank Plc
      (“SB”).  At the same time, an existing loan with SB was
      restructured and its payment terms coordinated with the new term loan
      facility.    In May 2006, the Corporation issued 3.8
      million Common Shares to SB as settlement of the U.S.$7.5 million
      exchangeable portion of the bank loan and in May 2007, the Corporation
      repaid in full the balance of the SB term loan
  facility;
  ·
              working
      to acquire the necessary permits for the Las Cristinas project (including
      the submission of an Environmental Impact Study
  (“EIS”);
  ·
              entering
      into an Engineering, Procurement and Construction Management Contract in
      February, 2004 (the “EPCM Contract”) with SNC-Lavalin and supervising the
      engineering, procurement and construction
  process;
  ·
              supervising
      the preparation of an updated feasibility study (completed in August 2005
      by SNC-Lavalin, MDA and other independent consultants) (the “2005
      Development Plan”) prepared in compliance with National Instrument 43-101
      — Standards of Disclosure for Mineral Projects of the Canadian Securities
      Administrators (“NI 43-101”);
  ·
              completing
      98% of detailed engineering and design work and purchasing all long lead
      time equipment;


3




·
              securing
      the Ministry of Basic Industries and Mining (“MIBAM”) approval of the
      technical, commercial and contractual compliance aspects of the Las
      Cristinas project in March 2006;
  ·
              securing
      the Ministry of the Environment and Natural Resources (“MinAmb”) approval
      of the Las Cristinas EIS in June 2007; and, based on this approval,
      posting of a Compliance Guarantee Bond and payment of certain surface
      taxes; and
  ·
              supervising
      the preparation of the 2007 Technical Report Update (completed in November
      2007 by MDA and SNC-Lavalin).
  The
Corporation produced approximately 34,000 ounces of gold in 2007 from its
operations in Venezuela, including the Tomi open-pit and underground mines, the
La Victoria open-pit mine and ore purchased from third parties.  All
the ore from these sources is processed at the Corporation’s Revemin
mill.  The Corporation continues to conduct exploration on the Tomi
properties with the aim of finding sufficient open-pit ore to supply the Revemin
mill after the depletion of the existing Tomi pits during 2008.
  The
diagram below shows the relative locations of the Corporation’s current projects
in the Bolivar State, Venezuela.











4




Corporate
Chart
  The
following chart lists the principal subsidiaries of the Corporation and their
jurisdictions of incorporation.  Except where noted, all subsidiaries
are wholly-owned, directly or indirectly, by the Corporation.
   
 Notes:
  (1)
                The
      Corporation holds its interest in the Las Cristinas project directly
      through its Venezuelan Branch.  See “Las Cristinas
      Project– Mining
      Operation Contract.”
  (2)
                The
      Corporation holds its interest in the Tomi operations indirectly through
      Mineras Bonanza, C.A.  See “Other Assets-Tomi
      Operations–Mine
      Production.”
  (3)
                The
      Corporation holds its interest in the Lo Increible operations
      indirectly through Osmin Holdings Limited.  See“Other Assets–Lo Increíble
      Properties–Background.”
  (4)
                The
      Corporation holds its interest in the Revemin mill indirectly through
      Revemin II, C.A.  See “Other Assets–
  Revemin Mill–Overview.”
 5




MINERAL
      RESERVES AND RESOURCES
  The
following table summarizes the mineral reserves and resources at the Las
Cristinas project and certain of the Corporation’s other mineral concessions and
leases as at December 31, 2007.  The mineral reserve and resource
estimates have been prepared in accordance with the standards of the Canadian
Institute of Mining, Metallurgy and Petroleum and NI 43-101 and, as set out in
the notes below, are based on technical reports prepared by independent experts,
or have been prepared by the Corporation under the direction of, and verified
by, Dr. Richard Spencer, P. Geo., a Qualified Person and former VP
Exploration of Crystallex International Corporation.
  Mineral
resources are not mineral reserves and do not have demonstrated economic
viability, but do have reasonable prospects for economic
extraction.  Measured and indicated mineral resources are sufficiently
well defined to allow geological and grade continuity to be reasonably assumed
and permit the application of technical and economic parameters in assessing the
economic viability of the resource.  Inferred resources are estimated
on limited information not sufficient to verify geological and grade continuity
and to allow technical and economic parameters to be
applied.  Inferred resources are too speculative geologically to have
economic considerations applied to them to enable them to be categorized as
mineral reserves.  There is no certainty that mineral resources will
be upgraded to mineral reserves through continued exploration.  See
Schedule “C” for detailed definitions of mineral reserve, proven mineral
reserve, probable mineral reserve, mineral resource, measured mineral resource,
indicated mineral resource, inferred mineral resource, and cut-off
grade.


RESERVESPROVEN
              PROBABLE
              TOTALTonnes
              Grade
              Contained
                  Gold
              Tonnes
              Grade
              Contained
                  Gold
              Tonnes
              Grade
              Contained
                  Gold(g/t)
              (oz)
              
              (g/t)
              (oz)
              
              (g/t)
              (oz)(tonnes
      and ounces in thousands)Las
      Cristinas Project(1)
              112,761
              1.24
              4,483
              351,601
              1.10
              12,379
              464,362
              1.13
              16,862




RESOURCES(3)MEASURED
              INDICATED
              TOTALTonnes
              Grade
              Contained
                  Gold
              Tonnes
              Grade
              Contained
                  Gold
              Tonnes
              Grade
              Contained
                  Gold(g/t)
              (oz)
              
              (g/t)
              (oz)
              
              (g/t)
              (oz)(tonnes
      and ounces in thousands)Las
      Cristinas Project(1)
              33,380
              0.84
              897
              131,641
              0.71
              3,002
              165,021
              0.73
              3,899La
      Victoria(2)
              —
              —
              —
              2,422
              4.5
              349
              2,422
              4.5
              349Total
              33,380
              0.84
              897
              134,063
              0.78
              3,351
              167,443
              0.79
              4,248


Resources(3)InferredTonnes
              Grade
              Contained
                Gold(g/t)
              (oz)(tonnes and ounces
      in thousands)Las Cristinas
      Project(4)
              229.626
              .085
              6,276
  __________________________
 Notes:




6







INFORMATION
WITH RESPECT TO THE GOLD INDUSTRY




The principal
uses of gold are product fabrication and bullion investment.  A broad range
of end uses is included within the fabrication category, the most significant of
which is the production of jewellery.  Other end uses include official
coins, electronics, miscellaneous industrial (including a role in jet engines
and space craft) and decorative uses, medals and medallions.


Average Gold
      Price(US$/oz)1997
            3311998
            2941999
            2792000
            2792001
            2712002
            3112003
            3632004
            4102005
            4452006
            6042007
            695




MINING IN VENEZUELA
  
  Venezuela
  
    7


Mining Law
  Introduction
  
 
 Mineral
Concessions
  Regulatory Title Process
  
 8
  Mineral Concession
Taxes





Ownership of Concessions






Sale of Production







Direct Exploitation







Operation Agreements







Environmental Laws




General










Environmental
Impact Study









9
 
 
 Mine Closure and
Remediation







Taxation


Corporate Income Tax













Dividends and
Branch Profits Tax













VAT and Import Duties















10




Science and Technology
Contribution
  
 Tax Treaties
 
 Exchange
Controls
  
  LAS CRISTINAS PROJECT
   www.sedar.com
  Location and Property Description
   11
    
  Mining
Operation Contract
   ●
 ●
 ●
  12












● Authorization.


● Fees and
Payments.








Commercial
      Value
            Royaltyless than US$280 per
      ounce
            1.0%equal to or more
      than US$ 280 per ounce and less than US$350 per ounce
            1.5%equal to or more
      than US$350 per ounce and less than US$400 per
      ounce
            2.0%more than US$400 per
      ounce
            3.0%








● Covenants. force majeure


● Non-Assignment by the
Corporation.


● Term and Termination.


● Dispute Resolution.


● Governing Law.


13




Accessibility, Physiography and Climate and Local
Resources and Infrastructure
 Accessibility
  
 
 Physiography and
Climate
  
 
 
 Local Resources and
Infrastructure


14




History
 
 
 
 Geology and Mineralization
  Regional
Geology
  
 Local
Geology
  Weathered Profile
  
 Structure
  1 1 1
 2
 15
  
 en echelon
 Alteration
  
 ●
  ●
  ●
  ●
  ●
  
 Mineralization
  Primary
mineralization in hard rock
 
 
 16
  
 1 1 1 2
 1
 
 Saprolite
  
 
 Drilling, Sampling and Data Verification
  
 ●
  ●
  ●
 17
  ●
  ●
 
 
 
 
 
 
  18
  
  Societe
Generale de Surveillance
  Mineral Reserves
 The
estimated mineral reserves at the Las Cristinas project as at December 31, 2007,
were as follows:
  Mineral
      Reserves(1)
                
                
                Average
      Grade
                
                
                Contained
      Gold(tonnes
      – 000’s)
                
                
                
                (g/t
                )
                
                (ounces
      – 000’s)Proven
                
                
                112,761
                
                
                
                1.24
                
                
                
                4,483Probable
                
                
                351,601
                
                
                
                1.10
                
                
                
                12,379Total
                
                
                464,362
                
                
                
                1.13
                
                
                
                16,862
   Notes:
  (1)
                The
      mineral reserves estimated by MDA are based on a US$550 per ounce gold
      price and cut-off grades ranging from 0.33 grams of gold per tonne to 0.57
      grams of gold per tonne depending on the mineral
  type.
   Additional
Mineral Resources
  The
estimated additional mineral resources at the Las Cristinas project at December
31, 2007, were as follows:
  Mineral Resources(1)
      (2)
                
                
                Average
      Grade
                
                
                Contained
      Gold(tonnes
      – 000’s)
                
                
                
                (g/t
                )
                
                (ounces
      – 000’s)Measured
                
                
                33,380
                
                
                
                0.84
                
                
                
                897Indicated
                
                
                131,641
                
                
                
                0.71
                
                
                
                3,002Total
      Measured and Indicated
                
                
                165,021
                
                
                
                0.73
                
                
                
                3,899
 
  Total
      Inferred
                
                
                229,626
                
                
                
                0.85
                
                
                
                6,276
   19
   Notes:
  (1)
                The
      resources are estimated to the standard and requirements stipulated in NI
      43-101 and meet Canadian Institute of Mining classifications. The mineral
      resources estimates are based on a cut-off grade of 0.5 grams of gold per
      tonne.
  (2)
                Mineral
      resources are in addition to and do not include mineral
      reserves.
   2007
Technical Report Update
  In
September 2003, SNC-Lavalin and other independent consultants (including MDA)
completed the 20,000 TPD Feasibility Study. The 20,000 TPD Feasibility Study was
approved by the CVG in accordance with the terms of the Mining Operation
Contract in March 2004.
  In
August 2005, SNC-Lavalin and other independent consultants (including MDA)
completed the 2005 Development Plan, a comprehensive update of the 20,000 TPD
Feasibility Study.  The 2005 Development Plan was commissioned to
incorporate a number of design enhancements and to include a review of capital
and operating cost estimates.
 
 In
November 2007, MDA and other independent consultants (including SNC-Lavalin)
completed the 2007 Technical Report Update on the Las Cristinas Project which
updates components of the 2005 Development Plan.    The 2007
Technical Report Update incorporates several factors, including:
 
 ·
                A
      46-hole, 13,574 m drill program that was completed by the Corporation in
      2007, results of which were press released on May 1, 2007 and June 22nd,
      2007.
  ·
                A
      new pit design based upon a $550 per ounce gold
  price.
  ·
                Revised
      estimates of capital and operating
costs.
  The
2007 Technical Report Update serves as the Corporation’s current NI 43-101
compliant technical report.  The conclusions, estimates and findings
of the 2007 Technical Report Update are set out below.
  ·
                Mining.Mining
      at Las Cristinas will be by conventional open-pit methods using excavators
      and haul trucks.  The production schedule contemplated under the
      2007 Technical Report Update provides for processing 20,000 tonnes of ore
      per day (7.3 million tonnes annually), an overall stripping ratio of
      1.38:1 and an expected mine life of 64
years.
  ·
                Processing and
      Recovery.Processing will consist of crushing,
      semi-autogenous primary grinding and secondary ball mill
      grinding.  A gravity circuit is contemplated to recover free
      gold.  Gold extraction will be achieved using a conventional
      carbon-in-leach circuit.  Under this method of recovery, a
      slurry of gold ore, carbon granules and cyanide are mixed together, the
      cyanide dissolves the gold content and the gold is adsorbed onto the
      carbon and the loaded carbon is separated from the slurry for further
      processing.  Gold is removed from the loaded carbon by pressure
      stripping the carbon to produce a pregnant eluate solution, electrowinning
      the solution to produce gold cathodes and smelting the cathodes to produce
      gold doré.  Pilot-plant metallurgical testing conducted under
      the supervision of an independent consultant during the feasibility study
      resulted in an overall recovery rate of 88.7% for the planned ore
      blend.
  The average annual gold production contemplated
      is 233,000 ounces for the life of mine and 252,000 ounces for the first
      five years.
  ·
                Reserves. Reserves at
      Las Cristinas were calculated using a US$550 per ounce gold
      price.  The pit design and other physical parameters and costs
      were updated from previous estimates.  At US$550 per ounce,
      proven and probable reserves at Las Cristinas are 464 million tonnes
      grading 1.13 g/t containing 16.86 million ounces of gold.  The
      strip ratio was decreased from 1.57:1 to
1.38:1.
  ·
                Capital
      Costs.The estimated capital costs of the Las Cristinas
      project are approximately US$356 million, an increase of approximately 22%
      from the 2005 estimate.  In addition, sustaining capital
      totalling US$573 million over the 64 years of the mine will be
      required.
   20
   ·
                Cash Operating
      Costs.The estimated average total cash operating costs
      are approximately US$346 per ounce (including royalties at US$550 per
      ounce) for the life of mine and approximately US$258 per ounce (including
      royalties at US$550 per ounce) for the first five
      years.  Estimates for operating costs increased from
      US$7.66/tonne of ore to US$9.80/tonne of ore, largely due to revisions in
      costs and quantities of operating supplies, maintenance supplies and
      power, revision of staffing levels and labour rates and changes to the
      mining plans including updates to the mineral resource and mineral reserve
      estimates.  Operating cost estimates were not significantly
      affected by the near-global climb in energy costs, a reflection of
      Venezuela’s extremely low, stable prices for
  fuel.
  Engineering,
Procurement and Construction Management
  On
March 25, 2004, following completion of a competitive bidding process, the
Corporation entered into an Engineering, Procurement and Construction Management
Contract (the “EPCM Contract”) with SNC-Lavalin relating to the development of
the Las Cristinas project.
  Detailed
engineering and design for the Las Cristinas project was 98% complete by the end
of 2005.  All long lead time equipment for Las Cristinas was also
purchased during 2004 and 2005.  Equipment which cost approximately
$64 million is in storage, principally in Houston (USA), Antwerp (Belgium) and
Cape Town (South Africa) and will remain in storage until the commencement of
construction at Las Cristinas.  The remaining purchasing of supplies
and awarding of service contracts will be undertaken following receipt of the
Permit. Project development slowed during 2006  and 2007 while the
Corporation continues to wait for the Permit.
  The
2007 revised capital cost estimate to construct Las Cristinas is $356
million.  The Corporation has spent $206 million on Las Cristinas
since the inception of the EPCM contract in April 2004; however, only about $102
million of this was on items included in the $356 million estimate, thus leaving
a balance to spend, once the Permit is received, of $254 million.  The
expenditures of $102 million were principally payments for equipment and
engineering services.    The balance of the $206 million of
expenditures were for items such as camp security, reserve drilling programs,
environmental work, community relations projects, among
others.  Ongoing expenditures (including site security, camp catering,
equipment storage, general site administration and social and community
programs) prior to receipt of the Permit are not included in the construction
estimate of $356 million.     Upon receipt of the
Permit, the Company will renegotiate the main construction contracts that were
originally awarded in 2005 and will revise the capital cost estimate for the
project.
  Permits
  In
August 2004, the Corporation announced that the land occupation permit
(authorizing the occupation and use of the Las Cristinas Deposits for the
purpose of mining) had been confirmed by MinAmb.
  In
April 2004, the Corporation initiated the process for obtaining the required
mining permits, including the Authorization to Affect Natural Resources (“the
Permit”), by submitting an EIS to the CVG and MinAmb.  The EIS was
prepared simultaneously with the feasibility stage of design for the Las
Cristinas project.  It has taken more time than expected to conclude
the permitting process, however various events have reinforced the Corporation’s
confidence in the commitment of the Government of Venezuela (the “Government”)
to support the Corporation’s operating agreement.  Among these events
are the following developments:
  ·
                The
      commission established by the National Assembly of Venezuela to
      investigate the situation in the Las Claritas area of Bolivar State
      publicly concluded that the respective permits should be granted to the
      CVG.
  ·
                In
      February 2006, the Corporation was granted the rights to explore and
      develop an aggregate quarry by the Mining Institute of Bolivar State
      (IAMIB). Aggregate is required for the construction of the Las Cristinas
      project and the proposed quarry is located approximately 1 km from the Las
      Cristinas project site.
  ·
                In
      March 2006, MIBAM formally approved the legal, technical, economic,
      financial and social aspects of the 20,000 TPD Feasibility Study and 2005
      Development Plan for the Las Cristinas gold exploitation
      project.  The official approval of the project by MIBAM is based
      on the original terms and conditions of the underlying Mining Operation
      Contract.  Through the MIBAM approval,
  the
   21
   Government
      has officially sanctioned the Las Cristinas gold project from the
      technical, economic, financial and social
  perspective.
  ·
                In
      May 2007, the Corporation’s project partner, the CVG, was notified by
      MinAmb that all the requirements for the issuance of the Permit had been
      fulfilled.  MinAmb approved the EIS for the Las Cristinas gold
      project and requested that the CVG post a construction compliance
      guarantee bond and pay certain environmental taxes.  The
      Corporation posted the requested bond and paid the requested
      taxes.  No impediments have been raised in discussions with
      Government officals.
  ·
                In
      the fall of 2007, the Venezuelan National Assembly’s Commission of
      Economic Development reviewed the protracted timeline for the issuance of
      the Permit.  Following their October 4th,
      2007 hearings, the Commission issued a report noting that representatives
      from MinAmb, MIBAM, the CVG and the Corporation had testified at their
      hearings.  The Commission’s report concluded that the CVG and
      the Corporation had complied with the feasibility study and other legal
      and technical requirements, thus allowing for the Permit to be granted by
      MinAmb.  The Chairman of the Commission recommended MinAmb grant
      the Permit.
  The
Corporation continues to meet with senior government officials and is of the
opinion that the Government recognizes and values its contractual commitments
and working relationships with international companies that have demonstrated
both compliance and good corporate citizenship in their dealings with
government.  The Las Cristinas project has the published support of
the National Assembly, the senior Ministers involved in the permitting process
and the senior levels of State and Municipal government. Consequently the
Corporation has continued to advance the development of the Las Cristinas
project.
  The
Corporation remains unaffected by the Government’s announced intention in 2005
to change the regulatory title process for the mining industry from a
combination of concession and operating contracts based one to one where all
future mining rights will be granted through joint ventures or operating
contract agreements, since the Mining Operation Contract is consistent with the
government’s public references both to the type of operating contract that it
intends to implement for the mining industry and to the validity of existing
title that is in good legal standing.
  OTHER
ASSETS
  The
Corporation’s other assets are also located in Bolivar State, Venezuela and
include:
  ·
                Tomi operations– during
      2007, mined ore from two open-pit mines and one underground mine, which is
      delivered to the Revemin mill for
processing.
  ·
                La Victoria/Lo Increíble
      operations– mines ore from the La Victoria open-pit mine, which is
      delivered to the Revemin mill for processing.  Waste rock from
      La Victoria is currently being used as a source of aggregate supply for
      Las Cristinas.
  ·
                Revemin mill– processes
      ore from the Tomi and Lo Increíble operations to produce
      gold.
  SeeOperations Review under
Management’s Discussion and Analysis for financial information relating to these
assets.
  Tomi
Operations
  Overview
  The
Tomi operations comprise approximately 500 Ha and are held by Mineras
Bonanza, C.A. (an indirect, wholly-owned subsidiary of the Corporation) under a
concession.  See
“Mining in Venezuela – Mining Law – Mineral Concessions.”
 In
2007, the Tomi operations consisted of two active open-pit mines (McKenzie and
Fosforito) and one underground mine (Charlie Richards).  The Fosforito
pit was depleted in early 2008.  Open pit mining ceased at the
Milagrito open pit mine at the end of the first quarter of 2006.  Open
pit and underground mining is conducted by mining contractors.  The
relative locations of the Tomi mines are shown in the diagram
below.
   22
   
    Location
and Property Description
  The
Tomi concession is located approximately 16 km northeast of the town of El
Callao in the El Callao District, Bolivar State, Venezuela.  El Callao
is a three-hour drive south from Puerto Ordaz, the largest city in Bolivar
State.  The Tomi property is accessible via an all-weather, northbound
dirt road that exits from Highway 10 about 10 km from El Callao.  Ore
from Tomi is trucked approximately 21 km to the Revemin mill for
processing.  See “Revemin Mill” below.
  Physiography,
Climate and Local Resources and Infrastructure
  The
project area lies in open grassland and savannah from which dense vegetation
(low tropical forest) has been stripped historically for farming
purposes.  Densely treed areas remain along watercourses and in some
of the less accessible areas.  The topography consists of gently
rolling hills and shallow valleys between the elevations of 140 m and 200 m
above sea level.  The climate is tropical with average temperatures of
24°C. Annual precipitation averages 1,200 mm, and mainly falls as tropical
downpours during May to September with a second wet season in
December-January.
  All
necessary infrastructure exists at the Tomi concession since the open-pit mines
have been in operation since August 2000.
  History
  The
Corporation acquired the Tomi operations from Bolivar Goldfields Ltd. in August
2000.  An extensive exploration program had been implemented in 1993,
prior to the Corporation taking ownership of the Tomi operations.  The
work included soil and rock sampling, geological mapping, geophysics, trenching,
and diamond and reverse circulation drilling. The exploration work culminated in
a feasibility study (the “Kilborn Report”) by Kilborn Inc. of Toronto, Canada in
1996.
  Geology
and Mineralization
  The
Tomi operations are located in the eastern limb of the “Y”-shaped El Callao
greenstone belt.  Stratigraphy in the greenstone belt generally
consists of a basal mafic and ultramafic volcanic pile overlain by intermediate
to felsic metavolcanic rocks, metavolcanoclastic rocks and
metasediments.  This sequence has been subjected to greenschist facies
metamorphism.  Most of the economic gold mineralization at Tomi is
hosted by gabbro sills that were emplaced near the unconformable contact between
the Yuruari Formation and the overlying Caballape Formation.  The
Yuruari Formation consists of phyllites and chlorite and sericite schists, while
the Caballape is
   23
   composed
of mainly of clastic rocks such as metagreywackes and fragmental metavolcanics
of intermediate composition.
  The
gabbro bodies in the Tomi area show asymmetric folding with near-vertical
northern limbs and moderately dipping southern limbs which define steep,
southward-dipping axial planes.  Fold axes plunge to the
east-southeast at about 40°.  Gold mineralization is spatially
associated with southeast-striking shear zones and the most consistent gold
grades are located where these structures cut folded gabbro
bodies.  Gold mineralization is located in the planar shear zones, but
also extends outwards into the limbs of the folded gabbro.
  Alteration
assemblages distal to mineralization are dominated by chlorite and
calcite.  These give way to muscovite-calcite alteration with
leucoxene and finally to pervasive K-feldspar masses most proximal to
mineralization.  Gold mineralization has a strong association with
pyrite and is concentrated in the muscovite-pyrite selvages adjacent to
quartz-calcite veins.  Black tourmaline is ubiquitous although no
clear relationship with gold mineralization has yet been
recognized.
  Drilling,
Sampling and Data Verification
  The
Corporation has undertaken more than 40,000 m of drilling in several campaigns
on the Tomi property as follows:
  ·
                  A
      33-hole program totalling 4,464 m on the Charlie Richards deposit in the
      year 2000;
  ·
                  A
      further 30-hole program totalling 1,444 m at Charlie Richards in
      2002;
  ·
                  A
      45-hole program of 3,682 m at the Milagrito deposit in
    2003;
  ·
                  In
      2004, an 11-hole program totalling 805 m at the Milagrito deposit, as well
      as a 28-hole campaign for 2,194 m at the Fosforito
  deposit;
  ·
                  Reverse
      circulation drilling was undertaken on three deposits at Tomi in 2005:
      1,033 m in 21 bore holes at Fosforito, 2,163 m in 30 bore holes at
      McKenzie, and 1,380 m in 21 bore holes on the Milagrito
      deposit;
  ·
                  A
      total of 6,214 m of reverse circulation drilling was completed in 75 bore
      holes on 5 targets in the Tomi property in 2006.  An additional
      4,177 m of underground diamond drilling was completed in 60 bore holes in
      the Tomi Underground Mine in 2006;
  ·
                  In
      2007, a 32-hole diamond drilling program totalling 4,443 m was completed
      at Fosforito, La Fortuna and Milagrito East.  A 54-hole reverse
      circulation drilling program totalling 5,999 m was also undertaken at
      Fosforito.  The Tomi Underground Mine had an additional 26
      diamond drill holes totalling 3,211 m completed in 2007;
    and
  ·
                  Two
      programs of geophysics (microgravity) were completed in western and
      south-eastern Tomi in 2007.
  Mine
Production
  The
annual production from the Tomi operations for the three years ended December
31, 2007 is set out below:
   24
   2007
                  
                  
                  2006
                  
                  
                  2005Open-pit
      minesOre mined
(tonnes)
                  
                  
                  95,629
                  
                  
                  
                  227,845
                  
                  
                  
                  313,599Waste mined
    (tonnes)
                  
                  
                  1,531,589
                  
                  
                  
                  2,287217
                  
                  
                  
                  1,971,402Ore processed
      (tonnes)
                  
                  
                  105,126
                  
                  
                  
                  211,936
                  
                  
                  
                  319,287Average ore grade
      (g/t)
                  
                  
                  2.8
                  
                  
                  
                  3.1
                  
                  
                  
                  3.2Recovery rate (%)
                  
                  
                  90%
                  
                  
                  
                  94%
                  
                  
                  
                  93%Production
    (ounces)
                  
                  
                  8,437
                  
                  
                  
                  19,428
                  
                  
                  
                  30,290Underground
      mineOre mined
(tonnes)
                  
                  
                  61,031
                  
                  
                  
                  89,689
                  
                  
                  
                  72,177Ore processed
      (tonnes)
                  
                  
                  65,334
                  
                  
                  
                  88,183
                  
                  
                  
                  63,319Average ore grade
      (g/t)
                  
                  
                  7.0
                  
                  
                  
                  8.4
                  
                  
                  
                  10.2Recovery rate (%)
                  
                  
                  92%
                  
                  
                  
                  93%
                  
                  
                  
                  95%Production
    (ounces)
                  
                  
                  13,551
                  
                  
                  
                  22,210
                  
                  
                  
                  19,811
 
 Production
from the Tomi deposits was 21,988 ounces in 2007, a 47% decrease from 41,638
ounces produced in 2006.  Lower production in 2007 primarily reflects
the near depletion of the Mackenzie and Fosforito open pit deposits (as
evidenced by higher strip ratios and lower ore grades), coupled with fewer
tonnes mined from underground due to poor drill availability.  The
strip ratio (the ratio of waste mined to ore mined) at the Tomi open pits
increased to 16.0:1 in 2007, up from 10.0:1 in 2006 and 6.3:1 in
2005.  The higher strip ratios are due to mining from deeper pits and
the timing of the push back of the pits, which resulted in removing most of the
waste in 2007 to uncover ore to be mined in 2008.  Only 96,000 tonnes
of ore were mined from the Tomi open pits in 2007, as compared with 228,000 in
2006, (however this was partially offset by increasing the mining rate at the La
Victoria deposit – see Lo Increible Properties below).
  The
Fosforito open pit was depleted in early 2008 and it is forecast that the
Mackenzie deposit will be depleted by mid 2008.  A drill program aimed
at determining the feasibility of expanding the Fosforito pit was completed in
the first quarter of 2008.  A resource model is expected to be
available during the second quarter and an assessment of the expansion economics
will be undertaken.
  The
Corporation continues to develop a regional exploration program targeting Tomi
and adjoining concessions in an effort to extend the life of the El Callao
operations beyond 2008.  A total of 10,442 m of diamond and reverse
circulation drilling was completed in 86 bore holes in the exploration of 3
target areas in the Tomi property in 2007.
  An
additional 3,211 m of underground diamond drilling was completed in exploration
of the down-plunge extension of mineralization in the Tomi Underground Mine in
2007.  Ramp development was stopped while the underground exploration
drill program was underway.  Production from the current level is
expected to continue until early in the second quarter of 2008. Upon completion
of the drilling, an updated resource estimate will be produced and the
feasibility of deepening the mine will be assessed.  The Corporation
has not determined at this stage if it is economically viable to continue
operating the Revemin mill with ore coming only from the underground
mine.  The underground mine can produce approximately 200 tonnes of
ore per day, while the mill capacity is 1,000 to 1,200 tonnes per
day.  Accordingly, as noted above, an exploration campaign is underway
aimed at finding new sources of open pit ore.
  
 Mineral
Reserves
  There
are no NI 43-101 compliant mineral reserves to report for the Tomi
operations.
  Mineral
Resources
  Although
the Company continues to mine and recover gold from the Tomi deposits,
insufficient geological work has been conducted to report mineral resources at
Tomi.
  Environmental
Liabilities
  As
at December 31, 2007, the Corporation estimates that the cost of maintaining the
Tomi operations in compliance with existing regulatory environmental protection
measures will amount to US$1.3 million.
   25
   Lo Increíble
Properties
  Background
  The
Lo Increíble Properties formed part of a land package that totalled
10,017 Ha prior to the Vengroup Transaction described below.  The
Corporation acquired its interest in the Lo Increíble properties in
February 2001 and commenced mining operations at La Victoria in April
2001.  The La Victoria mine has been the only source of the production
from the Lo Increíble properties.  The Lo Increible properties
were held indirectly by Osmin Holdings Limited (“Osmin”) under a combination of
mining operation agreements and concessions.  See “Mining in
Venezuela– Mining
Law– Mineral Concessions” and “– Direct Exploitation.”In
December 2005 the Corporation acquired, through an indirect, wholly-owned
subsidiary, the minority shareholder interests in Lo Increíble and now owns
100% of Osmin (having previously owned 51%).  The Corporation further
acquired the 30% outstanding interest in Tamanaco Holdings Limited, a
corporation that controls the Lo Increíble Mining Company de Venezuela,
(C.A.), (the “Vengroup Transaction”).  In August 2006, Tamanaco
amalgamated with Osmin.
  The
Vengroup Transaction resulted in the Corporation acquiring the Lo Increíble 2,
Lo Increíble 4C and Lo Increíble 4D parcelas and La Victoria
concession and relinquishing the Lo Increíble 4A and Lo Increíble 4B “parcelas.”  “Parcelas” are concessions
that are held by CVG on which CVG entered into operating agreements with third
parties.  As a result of the Vengroup Transaction, the Corporation’s
Lo Increíble Properties total 7,800 Ha in extent.  The resources
at the La Victoria mine are located on the Lo Increíble 4D parcela and the La Victoria
concession.  The Lo Increíble 2, 4C and 4D properties are governed by
contracts with the CVG, whereas the La Victoria property is a
concession.
  
   Location
and Property Description
  The
Lo Increíble properties are located in the 15-km long Lo Increíble Belt – a
northeast trending zone of scattered gold mineralization located immediately
north of the town of El Callao in the El Callao District, Bolivar State,
Venezuela.  Ore from the La Victoria mine, located on the Lo Increíble
property, is delivered to the Revemin mill for processing.  See
“Revemin Mill” below.
   26
   Accessibility,
Physiography, Climate and Local Resources and Infrastructure
  The
Lo Increíble properties are located between El Callao and Guasipati, towns that
are located on the principal two-lane paved highway that links Puerto Ordaz with
Brazil.  Puerto Ordaz is a major industrialized city and port on the
Orinoco River, and lies 190 km by road to the north of El
Callao.  This highway is suitable for the transportation of major
project components.  A power line crosses the property, with a
substation located immediately north-east of the La Victoria
prospect.  Access to the various deposits within the Lo Increíble land
package is provided by a network of dirt roads branching off the paved
interstate highway.  Water is available and fuel costs in Venezuela
are exceptionally low (approximately US$0.05 per litre for
gasoline).
  The
project area lies partly in savannah and partly in low tropical forest at
elevations ranging from 150 m to 300 m. The climate is tropical with average
temperatures of 24°C. Annual precipitation averages 1,200 mm, and mainly falls
as tropical downpours during the May to September rainy season.
  Open
pit mining at La Victoria is conducted by a mining contractor.  The
diagram below shows the location of the open pit, waste dumps and crusher at La
Victoria.
  
   History
  Despite
the El Callao district’s impressive production history and Lo Increíble’s
numerous surface workings, little modern exploration had taken place until Bema
Gold Corp. began work in the Lo Increíble district in late 1993. Bema Gold
Corp.’s exploration program began with panel sampling and geologic mapping of
all the significant old workings on the Lo Increíble belt, together with 15
km of dozer and backhoe trenching of areas of interest. These two programs
generated approximately 9,000 sample assays. Accessible areas of the Increíble 4
and 2 concessions, some 6,000 Ha in all, were covered by soil geochemistry
on a 200 m by 25 m grid, resulting in the generation of a database containing
11,128 sample assays.  A low-level airborne geophysical (magnetics and
radiometrics) survey was also flown over the Lo Increíble 2 and Lo Increíble 4
areas.
  Areas
of interest resulting from the trenching and panel sampling were followed up in
1994 by a Phase I Reverse Circulation drill program comprising 72 drill holes
totalling 10,413 m. The targets generated by this drilling
   27
   were
subsequently followed up by additional reverse circulation and diamond drilling
which, by the end of 1997, totalled 49,377 m in 302 drill
holes.  Nineteen additional diamond holes totalling 1,925 m were
drilled in 1999.
  Geology
and Mineralization
  The
Lo Increíble Belt is a northeast to east-northeast trending shear zone, which
has a strike length of at least 15 km.  Representative rock types
within the belt include greenschist facies massive and pillowed basalts,
intermediate to felsic metavolcanics and metavolcaniclastics, meta-epiclastic
sedimentary rocks, as well as mafic and felsic intrusives.  Tropical
weathering has led to the development of a saprolite layer that is locally up to
40 m thick depending on the nature of the underlying protolith and the local
penetration of water along fractures and faults.
  The
supracrustal sequences are complexly folded into concentric to isoclinal
double-plunging folds which plunge to the east or west at shallow angles (20° to
40°). Superimposed on the folded lithologies are zones of more intense
brittle-ductile deformation that are best developed in more competent
lithologies and along lithological competency contacts. The Lo Increíble
shear itself is a complex zone of splays and bifurcating faults along which gold
mineralizing fluids were focused.
  Gold
mineralization occurs in shear-vein systems, associated with intense hydraulic
brecciation, silica injection and flooding, carbonation (calcite, ankerite and
ferroan dolomite), sericitization, and the deposition of sulphides, mainly
pyrite and subordinate arsenopyrite. Most of the gold occurs as microscopic
grains on micro-fractures within the pyrite. Some coarser visible gold can
occasionally be observed within discrete quartz veins.
  Drilling
  La
Victoria
  Exploration
drilling on the project was carried out by Bema Gold Corp. in several phases
between 1994 and 1999 resulting in 39,024 m of diamond drilling (HQ- and
NQ-diameter) in 230 holes and 8,731 m of reverse circulation drilling in 71
holes. The bulk of the drilling was carried out at La Victoria (142 holes
totalling 19,751 m) and La Cruz (76 holes totalling 14,642 m).
  All
diamond drill holes were geo-technically logged by local technicians who
measured core recovery and RQD. The holes were geologically logged by a number
of different geologists and with a variety of formats until 1997 when all the
drill information was coded according to lithology, structure, alteration and
mineralization.
  The
Corporation subsequently carried out three diamond drilling campaigns at La
Victoria.  These include:
  ·
                  A
      35-hole, 2,885 m program in 2001 to provide detailed information for the
      phase 2-pit design;
  ·
                  A
      10-hole, 874 m program in 2002 to delineate mineralization in the northern
      part of the deposit;
  ·
                  A
      61-hole, 8,594 m program in 2004 to delineate mineralization beneath the
      Yuruari River and to increase the density of intercepts in areas of
      relatively sparse drilling.  The greater density of drill
      intercepts was required for resource estimation
  purposes.
  Lo Increíble 2
Concession
  A
3,131 m (27-hole) reverse circulation drill program was completed on an
exploration target in the Lo Increíble 2
concession in 2006. In 2007, an additional 7-hole diamond drilling program
totalling 1,756 m was completed.  Metallurgical tests on the low-grade
gold mineralization intersected in these holes reported >90% recovery by
standard cyanide treatment.
  Mine
Production
  The
information presented below and under the heading “Mineral Resources” represents
100% of the production and mineral resources with respect to the
Lo Increíble properties.  The annual production from the La
Victoria mine for the three years ended December 31, 2007 is set out
below.
   28
 
  2007
                  
                  
                  2006
                  
                  
                  2005La
      Victoria mineOre mined
(tonnes)
                  
                  
                  128,676
                  
                  
                  
                  64,222
                  
                  
                  
                  24,892Waste mined
    (tonnes)
                  
                  
                  557,657
                  
                  
                  
                  353,052
                  
                  
                  
                  126,704Ore processed
      (tonnes)
                  
                  
                  125,903
                  
                  
                  
                  51,424
                  
                  
                  
                  25,649Average ore grade
      (g/t)
                  
                  
                  2.9
                  
                  
                  
                  2.3
                  
                  
                  
                  2.0Recovery rate (%)
                  
                  
                  79%
                  
                  
                  
                  86%
                  
                  
                  
                  89%Production
    (ounces)
                  
                  
                  9,356
                  
                  
                  
                  3,260
                  
                  
                  
                  1,491
 
 Mineral
Resources
  The
mineral resources at the La Victoria mine at December 31, 2007 were as
follows:
  Mineral
      Resources(1)
                  
                  Average
      Grade
                  
                  Contained
      Gold(tonnes
      – 000’s)
                  
                  (g/t)
                  
                  (ounces
      – 000’s)Indicated
                  2,422
                  
                  4.5
                  
                  349
  Notes:
  (1)
                  The
      mineral resource with respect to the La Victoria operation has been
      estimated by Dr. Richard Spencer, P. Geo, formerly VP Exploration,
      Crystallex International Corporation.  The resource estimates
      are based on a cut-off grade of 2.0 grams of gold per
    tonne.
  Environmental
Liabilities
  As
at December 31, 2007, the Corporation estimates that the costs of environmental
protection requirements at the La Victoria mine will be US$0.6
million.
  Current
Activities
  During
the fourth quarter of 2003, the Corporation reduced activities at La Victoria as
a result of significantly lower recovery rates due to the presence of refractory
ore.  With the increase in gold prices in 2006 and 2007, the
Corporation restarted mining activities at La Victoria.  In addition,
the mine’s economics were improved by averaging a 75% gold recovery rate in
2007, as compared with the 68% average for the first three quarters of 2003
prior to reducing activities at the mine.
  During
2005, the Corporation reviewed alternative methods for processing of refractory
sulphide ore at La Victoria.  However, significantly modifying the Revemin
mill is not economically attractive as there is insufficient mineralized
material to recover capital for mill modifications, diverting the Yuruari River
and pre-production waste stripping.  With sustained high gold prices
and reasonable gold recovery rates, the Corporation plans to continue mining at
La Victoria until the end of 2008.  The next phase of mining at La
Victoria (beyond 2008) requires diverting the Yuruari River. At current gold
prices it may be economically viable to process the La Victoria ore at the
Revemin mill, accepting the lower mill recoveries.  The river
diversion project and associated project investments have a preliminary capital
estimate of approximately $9.0 million.  The pit expansion and river
diversion project will be assessed during 2008.
  Revemin
Mill
  Overview
  The
Revemin mill is located approximately 3 km southeast of the town of El Callao in
the El Callao District, Bolivar State, Venezuela and has the capacity to treat
1,250 metric tonnes of ore per day and has 177 full time
employees.  The Revemin mill processes ore from the Tomi and
Lo Increíble operations and ore purchased from independent miners at nearby
operations.The
Corporation holds its interest in the Revemin mill through Revemin II,
C.A.
  The
Revemin mill extracts gold using a conventional carbon-in-leach
circuit.
   29
   Environmental
Liabilities
  As
at December 31, 2007, the Corporation estimates that the costs of environmental
protection requirements at the Revemin mill will be US$0.1 million.
  Production
  The
annual production from the Revemin mill for the three years ended December 31,
2007 is set out below.
  2007
                  
                  
                  2006
                  
                  
                  2005Revemin
      MillTomi
      Open-Pit Ore Processed (tonnes)
                  
                  
                  105,126
                  
                  
                  
                  211,936
                  
                  
                  
                  319,287Tomi
      Underground Ore Processed (tonnes)
                  
                  
                  65,334
                  
                  
                  
                  88,183
                  
                  
                  
                  63,319La
      Victoria Ore Processed (tonnes)
                  
                  
                  125,903
                  
                  
                  
                  51,424
                  
                  
                  
                  25,649Purchased
      Ore Processed (tonnes)
                  
                  
                  16,552
                  
                  
                  
                  16,124
                  
                  
                  
                  10,159Total Ore Processed
      (tonnes)
                  
                  
                  312,915
                  
                  
                  
                  367,667
                  
                  
                  
                  418,414Head
      Grade of Ore Processed (g/t)
                  
                  
                  3.8
                  
                  
                  
                  4.4
                  
                  
                  
                  4.2Total
      Recovery Rate (%)
                  
                  
                  87%
                  
                  
                  
                  92%
                  
                  
                  
                  94%Total
      Gold Recovered (ounces)
                  
                  
                  33,567
                  
                  
                  
                  47,344
                  
                  
                  
                  53,178
 
 DESCRIPTION
OF SHARE CAPITAL AND RELATED INFORMATION
  Authorized
Capital
  The
share capital of the Corporation consists of an unlimited number of common
shares, an unlimited number of Class “A” preference shares and an unlimited
number of Class “B” preference shares.  As at December 31, 2007, there
were 261,659,072 common shares, no Class “A” preference shares and no Class “B”
preference shares issued and outstanding.
  The
following is a summary of the material provisions attached to the common shares,
the Class “A” preference shares and the Class “B” preference
shares.
  Common
Shares
  Each
common share entitles the holder to receive dividends if, as and when declared
by the directors, to have one vote at all meetings of holders of common shares
and to participate rateably in any distribution of the assets of the Corporation
upon liquidation, dissolution or winding-up, subject to the prior rights of
holders of shares ranking in priority to the common shares.
  Class
“A” Preference Shares and Class “B” Preference Shares
  The
Class “A” preference shares and the Class “B” preference shares are issuable in
series.  Each series may consist of such number of shares and have
such designation, rights, privileges, restrictions and conditions attached
thereto as may be determined by the board of directors of the Corporation,
subject to the provisions attached to the Class “A” preference shares as a class
or the Class “B” preference shares as a class.  The Class “A”
preference shares and the Class “B” preference shares each rank ahead of the
common shares with respect to the distribution of assets of the Corporation upon
liquidation, dissolution or winding-up.
  Shareholder
Rights Plan
  A
new shareholder rights plan (the “Rights Plan”) was adopted by the board of
directors on June 22, 2006 replacing the original shareholder rights plan of the
Corporation dated March 10, 1997 (the “Original Rights Plan”), which expired at
the termination of the Corporation’s 2006 general and special meeting of
shareholders held on the same date. The Rights Plan was confirmed at a special
meeting of the Corporation’s shareholders held on October 30, 2006. The Rights
Plan is subject to reconfirmation at every third annual meeting of shareholders
until its expiry on June 22, 2016. If the shareholders do not reconfirm the
Rights Plan, the Rights Plan will terminate and cease to be effective at that
time.
   30
   Pursuant
to the Rights Plan, the board of directors of the Corporation declared a
distribution of one right (a “Right”) for each outstanding Common Share of the
Corporation to shareholders of record at the close of business on June 22, 2006
and authorized the issuance of one Right for each Common Share issued thereafter
and before the earlier of the Separation Time (described below) and the
expiration of the Rights in accordance with the Rights Plan. The Rights will
separate from the Common Shares in accordance with the terms of the Rights Plan
at the time (the “Separation Time”) which is the close of business on the eighth
trading day (or such later day as determined by the board of directors of the
Corporation) after the public announcement of the acquisition of, or intention
to acquire, beneficial ownership of 20% or more of the Common Shares of the
Corporation by any person other than pursuant to a take-over bid having certain
attributes including the following: the offer must be made to all shareholders
(other than the offeror) in compliance with the Rights Plan, must be open for at
least 60 days and be accepted by shareholders holding more than 50% of the
outstanding voting shares and, if so accepted, must be extended for a further 10
business day period.
  A
copy of the Plan is available on the SEDAR website at www.sedar.com.
  Price
Range and Trading Volume of the Common Shares
  The
common shares of the Corporation are listed on the Toronto Stock Exchange (the
“TSX”) and the American Stock Exchange (the “AMEX”).  The closing
price range and the trading volume of the common shares for each of the months
in 2007 are set forth in the following table.
  TSX
                    
                    AMEXHigh
                    
                    Low
                    
                    Volume
                    
                    High
                    
                    Low
                    
                    Volume(C$)
                    
                    (C$)
                    
                    
                    
                    (US$)
                    
                    (US$)January
                    $4.50
                    
                    $2.64
                    
                    42,646,300
                    
                    $3.82
                    
                    $2.22
                    
                    108,993,000February
                    $4.00
                    
                    $3.31
                    
                    27,709,300
                    
                    $3.41
                    
                    $2.82
                    
                    44,142,400March
                    $4.82
                    
                    $3.17
                    
                    51,455,100
                    
                    $4.18
                    
                    $2.70
                    
                    100,316,200April
                    $5.02
                    
                    $4.02
                    
                    40,497,000
                    
                    $4.41
                    
                    $3.57
                    
                    104,670,700May
                    $5.70
                    
                    $4.31
                    
                    68,019,200
                    
                    $5.25
                    
                    $3.90
                    
                    135,930,900June
                    $5.07
                    
                    $3.88
                    
                    33,416,200
                    
                    $4.80
                    
                    $3.63
                    
                    62,188,100July
                    $4.54
                    
                    $3.45
                    
                    16,851,000
                    
                    $4.33
                    
                    $3.28
                    
                    36,796,200August
                    $3.65
                    
                    $2.31
                    
                    24,400,700
                    
                    $3.48
                    
                    $2.32
                    
                    62,738,400September
                    $3.28
                    
                    $2.67
                    
                    14,645,400
                    
                    $3.28
                    
                    $2.65
                    
                    35,044,900October
                    $3.37
                    
                    $2.44
                    
                    32,756,700
                    
                    $3.50
                    
                    $2.52
                    
                    68,581,900November
                    $3.00
                    
                    $2.30
                    
                    16,222,800
                    
                    $3.20
                    
                    $2.31
                    
                    45,976,100December
                    $2.56
                    
                    $1.86
                    
                    11,734,600
                    
                    $2.56
                    
                    $1.87
                    
                    43,858,200
 
  Dividend
Policy
  No
dividends have been paid on the common shares of the Corporation.  The
Corporation does not have any intention to pay dividends on the common shares in
2008. Any decision to pay dividends on the common shares in the future will be
made by the board of directors of the Corporation on the basis of the earnings,
financial position and financing requirements of the Crystallex Group and other
relevant factors.
   31
   Capitalization
  The
following table sets forth the consolidated cash and cash equivalents, and
capitalization of the Corporation as at December 31, 2007.
  US$(millions)Cash
      and cash equivalentsUnrestricted
                    16.1Total
      cash and cash
      equivalents
                    16.1Long-term
      debtNotes due December 23, 2011(1)
                    83.3Total
      long-term
      debt
                    83.3Shareholders’
      equityCommon shares (authorized –
      unlimited; issued 261,659,072)(2)
                    503.5Contributed
    surplus
                    27.1Accumulated comprehensive
      income
                    12.0Deficit
                    (314.2)Total
      shareholders’ equity
                    228.4Total
      capitalization
                    327.8
  Notes:
  (1)
                    See Note 6 to the Consolidated Financial
    Statements.
  (2)
                    See
      Note 8 to the Consolidated Financial
Statements.
  
  LEGAL
PROCEEDINGS
  Withdrawal
of MINCA Litigation
  MINCA
Litigation
  In
early 1991, the CVG called for bids to develop the Las Cristinas
Deposits.  Placer was the winning bidder.  In July 1991,
Placer and the CVG entered into a joint venture agreement pursuant to which they
agreed to form a joint venture company, Mineras Las Cristinas, C.A. (“MINCA”),
to explore and, if feasible, develop the gold ore in the Las Cristinas
Deposits.  In early 1992, the CVG and MINCA entered into a contract
(the “MINCA Contract”) with respect to the exploration and exploitation of the
Las Cristinas Deposits.
  The
work plan provided for in the MINCA Contract contained milestones with respect
to the development of the Las Cristinas Deposits.  During the period
1996 to 2000, MINCA suspended its development activities on several
occasions.
  In
August 2000, PDI and the CVG agreed that PDI would have the right, until July
15, 2001, to engage an investment bank to attempt to find an approved buyer or
joint venture partner to develop the Las Cristinas Deposits.  In early
July 2001, PDI assigned its interest in MINCA to Vannessa Ventures Ltd.
(“Vannessa”).  Shortly after July 15, 2001 the CVG declared MINCA to
be in default of its obligations under the MINCA Contract and gave MINCA notice
that it had the cure period specified under the MINCA Contract to cure the
default.  In early November 2001, after expiry of the cure period, the
CVG terminated the MINCA Contract for cause and took possession of the Las
Cristinas Deposits and related assets.
  In
March 2002, the MIBAM repossessed the Las Cristinas Deposits and related assets
on behalf of the Republic of Venezuela.  In April 2002, by
Presidential decree, the Venezuelan government reserved for itself through the
MIBAM the direct exploration and exploitation of the gold mineral located in the
Las Cristinas Deposits and granted to the MIBAM the right to contract with the
CVG the activities required to carry out such exploration and
exploitation.  In May 2002, the MIBAM and the CVG entered into an
agreement pursuant to which the MIBAM granted to the CVG the right to explore
and exploit the gold mineral located in the Las Cristinas Deposits and to enter
into operation agreements with third parties for such purposes.  In
September 2002, the CVG and the Corporation entered into the Mining Operation
Contract.  See “Las Cristinas Project – Mining Operation
Contract.”
   32
   Beginning
in March 2002, MINCA and Vannessa commenced a number of proceedings, (the “MINCA
Litigation”) before the Venezuelan Supreme Court against the Republic of
Venezuela and the CVG seeking, among other things, restitution of MINCA’s rights
under the MINCA Contract or damages in lieu thereof.
  Vannessa
Arbitration
  In
July 2004, Vannessa filed a Request for Arbitration with the International
Centre for Settlement of Investment Disputes (“ICSID”) against the Republic of
Venezuela pursuant to the Agreement between the Government of Canada and the
Government of the Republic of Venezuela for the Promotion and Protection of
Investments (the “Treaty”).  The Request for Arbitration alleges that
the Republic of Venezuela, including its agency, the CVG, breached the Treaty;
that the Republic of Venezuela expropriated the investments of Vannessa and
MINCA without due process of law, in a discriminatory manner and without prompt,
adequate and effective compensation contrary to Article VII of the Treaty; and
that the Republic of Venezuela failed to accord fair and equitable treatment and
full security to Vannessa and MINCA contrary to Article II of the
Treaty.  Vannessa has requested restitution and monetary damages or,
in lieu of restitution, monetary damages, including out-of-pocket expenses and
lost profits.  Vannessa has reported that ICSID registered the Request
for Arbitration in October 2004.
  Section
3(b) of Article XII of the Treaty provides that an investor may submit a dispute
to arbitration under the Treaty only if “the investor has waived its right to
initiate or continue any other proceedings in relation to the measure that is
alleged to be in breach of the Treaty before the courts or tribunals of
Venezuela or in a dispute settlement procedure of any kind.”  Section
10 of Article XII of the Treaty provides that “an award of arbitration shall be
final and binding.”
  In
July 2004, MINCA and Vannessa discontinued the MINCA Litigation.
  Although
the Corporation is not a party to the arbitration proceedings and cannot predict
the outcome of these proceedings, including whether any arbitration award could
have a material adverse effect on the Corporation’s rights under the Mining
Operation Contract, the Corporation believes (on the basis of advice received
from special Canadian and Venezuelan legal counsel to the Corporation)
that:
  (a)
                    the
      possibility of an award being made that would have a material adverse
      effect on the Corporation’s rights under the Mining Operation Contract is
      remote (on the basis that the MINCA Contract was properly terminated by
      the CVG; equitable remedies are normally not granted when damages are a
      proper and available remedy; Vannessa has included the remedy of monetary
      damages in lieu of restitution in its Request for Arbitration; and the
      Republic of Venezuela has contractually committed the Las Cristinas
      Deposits to a third party);
  (b)
                    if
      an arbitration award were made against the Republic of Venezuela, it would
      likely be in the form of monetary damages;
and
  (c)
                    if
      a restitution award were made against the Republic of Venezuela, the
      Republic would likely exercise its unilateral right under Section 9(b) of
      Article XII of the Treaty to pay monetary damages in lieu of restitution
      since, if the Republic were to terminate the Mining Operation Contract,
      the Corporation would have a more substantial claim for damages against
      the Republic, particularly in light of the advanced stage of the Las
      Cristinas project and the likelihood that the Las Cristinas project will
      be complete before the arbitration is
completed.
  RISK
FACTORS
  The
business and operations of the Company and its affiliates are subject to risks.
Any of the following risks could have a material adverse effect on the Company,
its business and future prospects.
  
  Risks
Associated with Operating in Developing Countries
   33
   The
Corporation’s mineral exploration and mining operations are located in Venezuela
and may be adversely affected by political instability and legal and economic
uncertainty that might exist in such country. The risks associated with the
Corporation’s foreign operations may include political unrest, labour disputes,
invalidation of governmental orders, permits, agreements or property rights,
risk of corruption including violations under U.S. and Canadian foreign corrupt
practices statutes, military repression, war, civil disturbances, criminal and
terrorist actions, arbitrary changes in laws, regulations and policies,
taxation, price controls, exchange controls, delays in obtaining or the
inability to obtain necessary permits, opposition to mining from environmental
or other non-governmental organizations, limitations on foreign ownership,
limitations on the repatriation of earnings, limitations on mineral exports,
high rates of inflation and increased financing costs. These risks may limit or
disrupt the Corporation’s projects or operations, restrict the movement of funds
or result in the deprivation of contractual rights or the taking of property by
nationalization, expropriation or other means without fair
compensation.
  Risks Specific to Operations
in Venezuela
  Political
and Economic Instability
  The
Corporation’s mineral properties are located in Venezuela and as such the
Corporation may be affected by political or economic instabilities there. The
risks associated with carrying on business in Venezuela, in addition to those
highlighted above, include, but are not limited to violent crime, which is
prevalent throughout the country and includes kidnapping, smuggling and drug
trafficking especially in remote areas. Changes in resource development or
investment policies or shifts in political attitudes in Venezuela may adversely
affect the Corporation’s business. Operations may be affected in varying degrees
by government regulations with respect to restrictions in production, price
controls, export controls, exchange controls, income taxes, expropriation of
property, maintenance of claims, environmental legislation, land use,
unauthorized mining activities, land claims of local people, water use and mine
safety. The effect of these factors cannot be accurately predicted.
  Environmental
Permit Still Required
  MIBAM
completed its overall approval process of Las Cristinas on March 26, 2006. On
June 14, 2007 the Company announced that it received written notice from the CVG
that all the requirements for the issuance of the Las Cristinas Permit from
MinAmb had been fulfilled.  The CVG confirmed that MinAmb’s approval
of the Las Cristinas Environmental Impact Study, together with Crystallex’s
payment of certain taxes and posting of a Compliance Guarantee Bond, as
requested by MinAmb, represent the final steps in the process for the issue of
the Permit.  CVG’s notice to the Company was based on a formal notice
the CVG received from MinAmb, which stated that the Permit will be issued
following the payment of the taxes and the posting of the
bond.  Development of Las Cristinas and the ultimate commencement of
commercial production are dependent upon receipt of the Permit, which will allow
the Corporation to proceed to put in place financing to fund construction. As
the Las Cristinas project is the Corporation’s primary project, the continued
delay in receipt of the Permit could have a material adverse effect on the
future of the Corporation’s business, and may result in the need for additional
financing.  There can be no assurance as to when or if the Permit will
be granted.
  Exchange
Controls
  Venezuela
currently has exchange controls that affect the ability of companies doing
business in Venezuela to convert Venezuelan source income into foreign currency.
The Central Bank of Venezuela enacted such exchange control measures in 2003 in
order to protect international reserves. The exchange rate, originally fixed at
approximately 1.6 Bolivars /U.S.$, has since been adjusted twice upwards and
presently stands fixed at 2.15 Bolivars/U.S.$. There can be no assurance that
exchange controls will not continue and, if they do, that they will not
adversely affect the Corporation’s operations, including its ability to satisfy
its foreign currency obligations.
  Mining
Operation Contract
  Lack
of Ownership Rights
  Under
the Venezuelan Mining Law of 1999 (“VML”), all mineral resources
belong to the Republic of Venezuela.  In accordance with the VML, the
Government of Venezuela has reserved for itself the right to directly explore
and exploit the Las Cristinas deposits and has elected to do so through the
CVG.  See “Las Cristinas Project – Mining Operation Contract” in the
AIF.  The Mining Operation Contract is an operation agreement and does
not transfer any
   34
   property
ownership rights or title rights to the gold produced to the
Corporation.  Rather, the Corporation has been authorized to exploit
the Las Cristinas deposits for the CVG in accordance with the Mining Operation
Contract.  The interests of the Corporation in the Las Cristinas
deposits are contingent upon the Corporation continuing to satisfy its
obligations under the Mining Operation Contract.  Failure to do so
could result in the CVG having the right to terminate the Mining Operation
Contract.  In addition, the CVG is party to an agreement dated May 16,
2002 with MIBAM.  As the CVG’s rights thereunder are contingent upon
the CVG continuing to satisfy its obligations, while the Corporation has no
reason to believe the CVG is not performing its obligations thereunder, any
failure to do so could result in MIBAM having the right to terminate such
agreement, thereby effectively terminating the Mining Operation
Contract.
  Lack
of Copper Rights
  In
addition to gold, the Las Cristinas deposits also contain very low levels of
copper, 0.11% on average.  Under the Mining Operation Contract, the
Corporation is only entitled to exploit the gold contained in the Las Cristinas
deposits.  Based on the feasibility studies carried out by the
Corporation and following discussions with the CVG, the Corporation has
determined that exploiting the copper contained in the Las Cristinas deposits
would detract from the economics of the Las Cristinas
project.  Furthermore, it may not be technically viable to produce a
marketable copper concentrate from the main Las Cristinas deposit as the copper
is too low grade.  The Corporation does not need the right to exploit
the copper contained in the Las Cristinas deposits in order to exploit the gold
and does not currently intend to negotiate with the CVG for the right to exploit
the copper contained in the Las Cristinas deposits.
  Although
the Corporation does not believe that the MIBAM would do so, the MIBAM retains
the right to grant exploitation and other rights with respect to the copper
contained in the Las Cristinas deposits to the CVG or a third
party.  The Corporation has been advised by its Venezuelan counsel
that:
  (a)
                    if
      the MIBAM grants the right to exploit the copper contained in the Las
      Cristinas deposits to the CVG, subject to fulfilling all necessary
      requirements of Venezuelan law (including the additional grant by the
      MIBAM to the CVG of the right to negotiate the exploitation of the copper
      with third parties), the CVG has agreed under the terms of the Mining
      Operation Contract to negotiate the exploitation of the copper with the
      Corporation; and
  (b)
                    if
      the MIBAM grants the right to exploit the copper contained in the Las
      Cristinas deposits to a third party, the Corporation’s right under the
      Mining Operation Contract to exploit the gold contained in the Las
      Cristinas deposits would, as a matter of Venezuelan law, take precedence
      over the third party’s right to exploit the
  copper.
  If
the MIBAM grants the right to exploit the copper contained in the Las Cristinas
deposits to the CVG, there can be no assurance that the MIBAM will grant to the
CVG the additional right to negotiate the exploitation of the copper with third
parties or that the Corporation will be able to negotiate an agreement with
respect to the exploitation of the copper with the CVG.  Also, if the
MIBAM grants the right to exploit the copper contained in the Las Cristinas
deposits to a third party, or if the MIBAM grants the right to exploit the
copper contained in the Las Cristinas deposits to the CVG and the CVG grants the
right to exploit the copper to a third party, there can be no assurance that the
Corporation will be successful under Venezuelan law in asserting that its right
to exploit the gold contained in the Las Cristinas deposits takes precedence
over the third party’s right to exploit the copper.
  Proposed
Amendments to Mining Laws
  The
Corporation’s business will be affected by amendments or changes to mining laws,
regulations and requirements in Venezuela.  At any time, a number of
draft mining laws may be proposed.  There is no assurance when or if a
draft mining bill will be enacted into law or what the final provisions of such
law will be, if enacted.  Any changes to current Venezuelan mining law
may adversely affect the Corporation’s ability to develop and operate the
Corporation’s Venezuelan properties.
  On
February 1, 2007 the National Assembly of the Republic of Venezuela issued the
“Law which Authorizes the President of the Republic to Issue Decrees with Rank
and Force of Law in those Matters Delegated” (the “Decree Law”), which empowers
the President of Venezuela to approve changes to certain laws without consulting
Congress for a period of 18 months. The Decree Law does not include any direct
mention of, or references to, mining matters
   35
   and,
accordingly, such matters remain within the exclusive competence of the National
Assembly.  In order for amendments to the mining law to be enacted
into law, it must be accepted in the Venezuelan National Assembly and undergo a
review by the Permanent Commission of Energy and Mines.  The detailed
provisions of the Draft Mining Bill are then debated in the National Assembly,
and finally the Draft Mining Bill must be approved by the President of
Venezuela. There is no assurance that the Government of Venezuela will not issue
further decrees or otherwise attempt to modify existing mining rights or other
laws affecting the Corporation, its Venezuelan properties and its ability to
operate in Venezuela.
  Arbitration
Proceedings
  The
Corporation is a party that is interested in, but is not a party to, an ongoing
arbitration. See “Legal Proceedings — Withdrawal of MINCA Litigation — Vanessa
Arbitration” in the AIF, available electronically at www.sedar.com andwww.sec.gov.
  Sale
of Gold
  For
the past several years, the Corporation sold all of its Venezuelan gold
production to the Central Bank of Venezuela. In June 2006, the Central Bank of
Venezuela informed the Corporation it was suspending purchase of gold from the
Corporation. During June and July, the Corporation sold gold to accredited third
parties within Venezuela and in August 2006 the Central Bank resumed purchasing
gold from the Corporation and continued to purchase all of the Corporation’s
gold production through the end of the third quarter of 2007.  In
October 2007, the Corporation began selling all of its gold production to
accredited third parties in Venezuela. The Corporation is updating the
registration of its export licence which will also allow it to export and sell
gold outside of Venezuela. Pending the update of the Corporation’s export
licence, should the Corporation be unable to sell gold within Venezuela, it
could have an adverse effect on the Corporation’s revenues, cash flow and
profitability in the short-term.
  Unauthorized
Miners
  The
Corporation’s operations may also be affected by the presence of unauthorized
miners which is not uncommon in the gold mining areas of the Guyana Shield area
of northern South America, including Venezuela. The methods used by unauthorized
miners to extract gold are typically harmful to the environment and may be
disruptive of authorized mining operations. Although the Corporation, in
conjunction with the local authorities, employs strategies to control the
presence of unauthorized miners, there can be no assurance that these strategies
will be successful or that the Corporation’s operations will not be adversely
affected by the presence of unauthorized miners.
  Imataca
Forest Reserve
  In
addition to the general risks associated with environmental regulation and
liability, the Las Cristinas deposits are located within the Imataca Forest
Reserve (the “Forest
Reserve”). On September 22, 2004, Presidential Decree 3110, which
establishes an ordinance plan and regulations for the use of the Forest Reserve,
permits various activities (including mining) in up to 13% of the Forest Reserve
and establishes the legal framework for such activities, was issued.
Presidential Decree 3110 was issued in response to previous Presidential Decree
1850, the latter of which was issued in May 1997. Decree 1850 reserved an even
larger part of the Forest Reserve for various activities and became subject to a
legal challenge before the Venezuelan Supreme Court. The Venezuelan Supreme
Court issued a prohibition order on November 11, 1997 prohibiting the relevant
government authorities from granting concessions, authorization and any other
acts relating to various mining activities in the Forest Reserve under Decree
1850 until the Venezuelan courts ruled on the merits of the nullity action. It
is possible that Presidential Decree 3110 could be similarly challenged and that
such challenge, if ultimately successful, could prevent the Corporation from
exploiting or fully exploiting the Las Cristinas deposits.
  Venezuelan
Decree No. 1257 establishes the environmental assessment requirements for mining
projects. The Corporation was advised that the Las Cristinas project is not a
new project and, accordingly, Article 40 of Decree 1257 does not apply since no
significant increase in environmental impact is predicted.
   36
   General
Risk Factors
  Title
to Mineral Properties
  Acquisition
of title to mineral properties is a very detailed and time-consuming
process.  Title to, and the area of, mineral properties may be
disputed or impugned.  Although the Corporation has investigated its
title to the mineral properties for which it holds concessions or mineral leases
or licenses, there can be no assurance that the Corporation has valid title to
such mineral properties or that its title thereto will not be challenged or
impugned.  For example, mineral properties sometimes contain claims or
transfer histories that examiners cannot verify; and transfers under foreign law
often are complex.  The Corporation does not carry title insurance
with respect to its mineral properties.  A successful claim that the
Corporation does not have title to a mineral property could cause the
Corporation to lose its rights to mine that property, perhaps without
compensation for its prior expenditures relating to the
property.  Furthermore, the Mining Operation Contract does not
transfer any property ownership rights to the Corporation.
  In
2005 the Government of Venezuela announced that it would be changing the mining
title regime from a system where title was granted in the form of joint ventures
or either concessions or operating contracts to a system where all new economic
interests would be granted in the form of operating contracts. In order to
effect this change, the Government advised that it would need to create a
national mining company which would be the nation’s contracting party covering
the entire country of Venezuela. The Government also indicated that, given this
change in title regime, it would also be appropriate to review all existing
mining companies in a single comprehensive exercise to ensure that only
companies found to be in compliance with their existing title terms and
conditions would qualify for the new title.This review was
completed as of December 31, 2005.  MIBAM completed its approval
process for the Las Cristinas project at the end of March 2006. The Ministry of
the Environment and Natural Resources (“MinAmb”) approved the Las Cristinas EIS
in June 2007; and, based on this approval, the Corporation posted a Compliance
Guarantee Bond and paid certain surface taxes. However, there is no assurance
that the Government will not issue further decrees or otherwise attempt to
modify existing mining rights.
  Environmental
Regulation and Liability
  The
Corporation’s activities are subject to laws and regulations controlling not
only mineral exploration and exploitation activities themselves but also the
possible effects of such activities upon the environment. Environmental
legislation may change and make the mining and processing of ore uneconomic or
result in significant environmental or reclamation costs. Environmental
legislation provides for restrictions and prohibitions on spills, releases or
emissions of various substances produced in association with certain mineral
exploitation activities, such as seepage from tailings disposal areas that could
result in environmental pollution. A breach of environmental legislation may
result in the imposition of fines and penalties or the suspension or closure of
operations. In addition, certain types of operations require the submission of
environmental impact statements and approval thereof by government authorities.
Environmental legislation is evolving in a manner which may mean stricter
standards and enforcement, increased fines and penalties for non-compliance,
more stringent environmental assessments of proposed projects and a heightened
degree of responsibility for companies and their directors, officers and
employees. Permits from a variety of regulatory authorities are required for
many aspects of mineral exploitation activities, including closure and
reclamation. Future environmental legislation could cause additional expense,
capital expenditures, restrictions, liabilities and delays in the development of
the Corporation’s properties, the extent of which cannot be
predicted.
  In
the context of environmental permits, in particular the approval of closure and
reclamation plans, the Corporation must comply with standards and laws and
regulations which may entail costs and delays depending on the nature of the
activity to be permitted and how stringently the regulations are implemented by
the permitting authority. In accordance with applicable laws, the Corporation
has provided various forms of financial assurances to cover the cost of
reclamation activities. However, there can be no assurance that the Corporation
will not incur reclamation costs that are in excess of such financial
assurances. While the Corporation plans to establish a reserve for reclamation
activities, there can be no assurance that the combination of the reserve and
financial assurances will be sufficient to meet future reclamation standards, if
such standards are materially more stringent than existing standards. The
Corporation does not maintain environmental liability insurance. The Corporation
has adopted high standards of environmental compliance; however, failure with or
unanticipated changes in Venezuela’s laws and regulations pertaining to the
protection of the environment in the future could adversely affect the
Corporation.
   37
   Additional
Funding Requirements
  Under
the terms of the Mining Operation Contract, the Corporation is required, among
other things, to make all necessary investments and complete all works necessary
to reactivate the Las Cristinas deposits, to design, construct and operate a
processing plant to process gold for its subsequent commercialization and sale
and to return the mine, its installations and equipment to the CVG upon
termination of the Mining Operation Contract.  In order to carry out
the Las Cristinas project and its other mining projects, the Corporation will
need to raise substantial additional financing. In establishing its funding
requirements, the Corporation has assumed that costs incurred during the
construction phase of Las Cristinas will receive an exoneration from the 9%
Value Added Tax (“VAT”). Venezuelan Law allows for but does not guarantee the
granting of exoneration of VAT on goods and services, including expenses in
Venezuela, related to the construction and development of mining
projects.  Crystallex will apply for an exoneration of VAT during the
construction phase of Las Cristinas.  If the Corporation does not
receive the construction period VAT exoneration, sufficient additional funds
would need to be raised to cover the development phase. The construction period
VAT can then be recovered by the Corporation during the production phase of the
Las Cristinas project.
  The
Corporation may decide to meet its additional funding requirements through one
or more of non-recourse project debt and other forms of public markets debt and
equity. If the Corporation elects to raise commercial bank limited recourse
project debt, the Corporation will need to demonstrate to potential lenders
compliance with the Equator Principles, which are a set of guidelines adopted by
a number of international financing institutions to address the environmental
and social issues associated with project financing transactions. The Equator
Principles are largely based on policies and guidelines established by the
International Finance Corporation. Although the Corporation has completed an
Environmental Impact Study to international standards, which was approved by the
Venezuelan Ministry of the Environment and includes plans to comply with the
Equator Principles, there can be no assurances that potential lenders will
conclude that the project is in compliance with the Equator
Principles.  In this case, some institutions may decide not to lend to
the project, or the financing timeline may be extended while the Corporation
addresses the concerns of the banks.
  Despite
the financings that have been completed by the Corporation, the Corporation has
limited access to financial resources and there can be no assurance that
sufficient additional financing will be available to the Corporation on
acceptable terms or at all. Failure to obtain such additional financing could
result in a delay or the indefinite postponement of the Las Cristinas project
and other mining projects of the Corporation and could also result in the
Corporation defaulting in the performance of its obligations under the Mining
Operation Contract.
  Reserve
and Resource Estimates
  The
Corporation’s reported mineral reserves and resources are estimates
only.  As a result, there can be no assurance that they will be
recovered at the rates estimated or at all.  Mineral reserve and
resource estimates are based on limited sampling and are uncertain because the
samples may not be representative.  Mineral reserve and resource
estimates may require revision (either up or down) based on actual production
experience.  Market fluctuations in the price of metals, increased
production costs or reduced recovery rates may render estimated mineral reserves
and resources uneconomic and may ultimately result in a restatement of mineral
reserves and resources.  In addition, short-term operating factors,
such as the need for sequential development of mineral deposits and the
processing of new or different ore grades, may adversely affect the
Corporation’s profitability in any particular accounting period.  If
its mineral reserve and resource estimates are incorrect, the Corporation will
not correctly allocate its financial resources, causing it either to spend too
much on what could be a less than economic deposit or to fail to mine what could
be a significant deposit.
  Mineral
Exploration and Exploitation
  Mineral
exploration and exploitation involves a high degree of risk.  Few
properties that are explored are ultimately developed into producing
mines.  Unusual or unexpected formations, formation pressures, fires,
power outages, labour disruptions, flooding, explosions, tailings impoundment
failures, cave-ins, landslides and the inability to obtain adequate machinery,
equipment or labour are some of the risks involved in mineral exploration and
exploitation activities.  The Corporation has relied on and may
continue to rely on consultants and others for mineral exploration and
exploitation expertise.  Substantial expenditures are required to
establish mineral reserves and resources through drilling, to develop
metallurgical processes to extract the metal from the material processed and, in
the case of new properties, to develop the mining and processing facilities and
infrastructure at any site chosen for mining.  There can
   38
   be
no assurance that the Corporation will discover mineral reserves and resources
in sufficient quantities to justify exploitation or that the funds required to
exploit any mineral reserves and resources discovered by the Corporation will be
obtained on a timely basis or at all.  The economics of exploiting
mineral reserves and resources discovered by the Corporation are affected by
many factors, many outside the control of the Corporation, including the cost of
operations, variations in the grade of material mined and metals recovered,
price fluctuations in the metal markets, costs of processing equipment,
continuing access to smelter facilities on acceptable terms and other factors
such as government regulations, including regulations relating to royalties,
allowable production, importing and exporting of minerals and environmental
protection.  There can be no assurance that the Corporation’s mineral
exploration and exploitation activities will be successful.
  Uninsurable
Risks
  Mineral
exploration and exploitation activities involve numerous risks, including
unexpected or unusual geological operating conditions, rock bursts, cave-ins,
fires, floods, earthquakes and other environmental occurrences and political and
social instability.  It is not always possible to obtain insurance
against all such risks and the Corporation may decide not to insure against
certain risks as a result of high premiums or other reasons.  Should
such liabilities arise, they could negatively affect the Corporation’s
profitability and financial position and the value of the common shares of the
Corporation.  The Corporation does not maintain insurance against
environmental risks.
  Competition
  The
competition to discover and acquire mineral properties considered to have
commercial potential is intense.  The Corporation competes with other
mining companies, many of which have greater financial resources than the
Corporation, with respect to the discovery and acquisition of interests in
mineral properties and the recruitment and retention of qualified employees and
other personnel to carry on its mineral exploration and exploitation
activities.  There can be no assurance that the Corporation will be
able to successfully compete against such companies.
  Dependence
on Limited Mining Operations and Properties
  The
Corporation’s Tomi and La Victoria operations and Revemin mill currently account
for all of the Corporation’s mineral production and revenues. Any adverse
development affecting these operations could adversely affect the Corporation’s
financial performance and results of operations. Furthermore, future results for
the Corporation depend largely on the Las Cristinas project, which is currently
in the development stage and which may never be developed into a commercially
viable mining operation. Any event, or combination thereof, which adversely
affects the Las Cristinas project (whether the property itself or the
Corporation’s ability to finance and/or construct and operate a commercially
viable mine on the property), would adversely impact the Corporation’s future
performance.
  Production
Risks
  The
Corporation prepares estimates of future production at its
operations.  Failure to meet these estimates could adversely affect
the corporation’s profitability, cash flows and financial
position.  There can be no assurance that the Corporation will achieve
its production estimates.
  The
Corporation’s actual production may vary from its estimates for a variety of
reasons, including actual ore mined varying from estimates of grade, tonnage,
dilution and metallurgical and other characteristics; short-term operating
factors such as the need for sequential development of ore bodies and the
processing of new or different ore grades from those planned; mine failures,
slope failures or equipment failures; industrial accidents; natural phenomena
such as inclement weather conditions, floods, droughts, rock slides and
earthquakes; encountering unusual or unexpected geological conditions; changes
in power costs and potential power shortages; shortages of principal supplies
needed for operation, including explosives, fuels, chemical reagents, water,
equipment parts and lubricants; labour shortages or strikes; civil disobedience
and protests; and restrictions or regulations imposed by governmental or
regulatory authorities or other changes in the regulatory
environments.  Such occurrences could result in damage to mineral
properties, interruptions in production, injury or death to persons, damage to
property of the Corporation or others, monetary losses and legal
liabilities.  These factors may cause a mineral deposit that has been
mined profitably in the past to become unprofitable forcing the Corporation to
cease production.  These factors also apply to the Corporation’s
future operations.  For example, it is not unusual for new mining and
processing operations to experience unexpected problems during the start-up
phase.
   39
   In
addition to the general production risks outlined above, one of the most
significant physical production issues the Corporation faces in the Las
Cristinas project pertains to the heavy amount of rainfall the area receives (an
average of 3.3 m/year). MDA has accounted for anticipated time lost due to
rainfall in scheduling production and determining equipment
requirements.  Crystallex believes that the allowances made are
consistent with the range of practice employed by the iron ore and bauxite
mining industry in the same high rainfall regions in Venezuela as well as
comparable mining operations in similar or greater rainfall regions of Guyana,
Suriname and Brazil. Regardless, actual mining experience with the combination
of wet saprolite and high rainfall rates may require adjustment of these
estimates.
  Regulations
and Permits
  The
Corporation’s activities are subject to wide variety of laws and regulations
governing health and worker safety, employment standards, waste disposal,
protection of the environment, protection of historic and archaeological sites,
mine development and protection of endangered and protected species and other
matters.  The Corporation is required to have a wide variety of
permits from governmental and regulatory authorities to carry out its
activities.  These permits relate to virtually every aspect of the
Corporation’s exploration and exploitation activities.  Changes in
these laws and regulations or changes in their enforcement or interpretation
could result in changes in legal requirements or in the terms of the
Corporation’s permits that could have a significant adverse impact on the
Corporation’s existing or future operations or projects.  Obtaining
permits can be a complex, time-consuming process.  There can be no
assurance that the Corporation will be able to obtain the necessary permits,
including any renewals thereof, on acceptable terms, in a timely manner or at
all.  The costs and delays associated with obtaining permits and
complying with these permits and applicable laws and regulations could stop or
materially delay or restrict the Corporation from continuing or proceeding with
existing or future operations or projects.  Any failure to comply with
permits and applicable laws and regulations, even if inadvertent, could result
in the interruption or closure of operations or material fines, penalties or
other liabilities.
  Gold
Price Volatility
  The
gold price can fluctuate widely and is affected by numerous factors beyond the
Corporation’s control, including industrial and jewellery demand, inflation and
expectations with respect to the rate of inflation, the strength of the U.S.
dollar and other currencies, interest rates, gold sales by central banks,
forward sales by producers, global or regional political or financial events,
and production and cost levels in major gold-producing regions.  The
gold price is also subject to rapid short-term changes due to speculative
activities. During the period 1998 to 2007, the gold price fluctuated between a
low of U.S.$253 per ounce and a high of U.S.$841 per ounce.
  The
Corporation’s revenues, cash flow, profitability and the market price of the
common shares of the Corporation are significantly affected by changes in the
gold price.  If the gold price is below the cost of production at any
of the Corporation’s operations for a significant period, the Corporation may be
required to suspend or terminate production at the affected
operation.  In addition, the Corporation may be required to restate
its mineral reserves and resources, write down its investment and increase or
accelerate reclamation and closure charges at the affected
operation.  Any of these developments could negatively affect the
Corporation’s profitability, cash flows and financial
position.  Accordingly, even if the Corporation discovers and produces
gold, there can be no assurance that the gold price will be high enough to
enable the Corporation to sell the gold produced by it profitably.
  Currency
Fluctuations
  Currency
fluctuations may affect costs at the Corporation’s operations.  Gold
is sold throughout the world based principally on a U.S. dollar price, but a
portion of the Corporation’s operating expenses is in non-U.S. dollar
currencies.  Any appreciation of these non-U.S. dollar currencies
against the U.S. dollar could negatively affect the Corporation’s profitability,
cash flows and financial position.
  Credit
and Market Risks
  The
Corporation enters into financial agreements (financial instruments) with major
international banks, other international financial institutions and other
accredited third parties in order to manage underlying revenue and future cash
flow exposures arising from commodity prices.  Financial instruments,
which subject the Corporation to market risk and concentrations of credit risk,
consist primarily of cash and accounts receivable.
   40
   Market
risk is the risk that the value of a financial instrument might be adversely
affected by a change in interest rates or currency exchange rates. The
Corporation manages the market risk associated with commodity prices by
establishing and monitoring parameters that limit the types and degree of market
risk that may be undertaken.
  Credit
risk is the risk that counterparty might fail to fulfill its performance
obligations under the terms of a contract. The Corporation limits the amount of
credit exposure in cash and cash equivalents by placing these in high quality
securities issued by government agencies and financial institutions. The
Corporation’s cash equivalents consist of Government of Canada Treasury Bills,
denominated in U.S. dollars. The Corporation also has concentrations of credit
risk with respect to accounts receivable as the accounts receivable are due from
the Venezuelan Tax Department and occasionally from the Venezuelan Central
Bank.
  The
Corporation can be exposed to credit risk in the event of non-performance by
counterparties in connection with metal forward and option contracts. The
Corporation does not obtain any security to support financial instruments
subject to credit risk but mitigates this risk by dealing only with a diverse
group of financially sound counterparties and, accordingly, does not anticipate
loss for non-performance. Further, the Corporation minimizes its credit risk in
derivative instruments by entering into transactions with high-quality
counterparties whose credit ratings are high and by monitoring the financial
condition of its counterparties. The Corporation continually monitors the market
risk of its activities. The Corporation currently does not have metal forward
and option contracts.
  Dependence
on Key Employees
  The
Corporation’s business and operations are dependent on retaining the services of
a small number of key management personnel.  The success of the
Corporation is, and will continue to be, to a significant extent, dependent on
the expertise and experience of the directors and senior
management.  The loss of one or more of these people could have a
materially adverse effect on the Corporation.  The lengthy and ongoing
delay in obtaining the Permit has resulted in the departure of a number of
senior management personnel since 2005.  Continuing delays may make it
difficult for the Corporation to retain key employees. The Corporation does not
have a senior management retention program.
  Compliance
with Sarbanes-Oxley Act of 2002
  Passed
by the U.S. Congress on July 30, 2002, the Sarbanes-Oxley Act of 2002
(“Sarbanes-Oxley”) requires companies to, among other things, have management
provide a report on the Company’s internal controls with respect to financial
reporting.  The Company has complied with this particular aspect of
Sarbanes-Oxley for its fiscal year ended December 31,
2007.  Management’s evaluation of, and report on, the Company’s
internal controls over financial reporting is set out in the Management
Discussion and Analysis under the section Controls and Procedures – Internal
Control over Financial Reporting. Based
on this evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures were not
effective and the Corporation has described the plans to remediate the material
weaknesses described therein.
  There
can be no assurance that the Corporation will be able to adequately remediate
its currently known weaknesses or that the Corporation’s internal controls over
financial reporting will be free of material weaknesses in future periods, which
could cause the market price of the Corporation’s common shares to decline and
could lead to shareholder litigation.  In addition, the discovery of
additional material weaknesses will likely result in the Corporation having to
incur costs to fix the internal controls for financial reporting as well as
costs to remediate any financial inaccuracies. Management is in the process of
remediating the material weaknesses discovered in fiscal 2007. The aggregate
final costs of addressing such weaknesses, however, cannot be assured. Any
remediation costs for the discovery of additional material weaknesses in future
periods are unknown.
  Common
Share Price Volatility
  The
market price of the common shares of the Corporation could fluctuate
significantly based on a number of factors in addition to those listed in this
document, including:
  ·
                    the
      Corporation’s operating performance and the performance of competitors and
      other similar companies;
   41
   ·
                    the
      public’s reaction to the Corporation’s press releases, other public
      announcements and the Corporation’s filings with the various securities
      regulatory authorities;
  ·
                    changes
      in earnings estimates or recommendations by research analysts who track
      the common shares or the shares of other companies in the resource
      sector;
  ·
                    changes
      in general economic conditions;
  ·
                    the
      number of the common shares to be publicly traded after this
      offering;
  ·
                    the
      arrival or departure of key
personnel;
  ·
                    acquisitions,
      strategic alliances or joint ventures involving the Corporation or its
      competitors; and
  ·
                    gold
      price volatility.
  In
addition, the market price of the common shares of the Corporation are affected
by many variables not directly related to the Corporation’s success and are,
therefore, not within the Corporation’s control, including other developments
that affect the market for all resource sector shares, the breadth of the public
market for the common shares and the attractiveness of alternative
investments.  The effect of these and other factors on the market
price of common shares on the exchanges on which the Corporation trades has
historically made the Corporation’s share price volatile and suggests that the
Corporation’s share price will continue to be volatile in the
future.
  Potential
Dilution
  As
at March 31, 2008, the Corporation has outstanding options to purchase
12,388,088 common shares of the Corporation (including 1,094,333 options
outstanding that were not fully vested) and warrants to purchase 29,570,000
common shares of the Corporation (including 12,250,000 warrants that do not
become effective until after the receipt of the Permit). The issue of common
shares of the Corporation upon the exercise of the options and warrants will
dilute the ownership interest of the Corporation’s current shareholders. The
Corporation may also issue additional option and warrants or additional common
shares from time to time in the future.  If it does so, the ownership
interest of the Corporation’s then current shareholders could also be
diluted.
  Enforcement
by Investors of Civil Liabilities
  The
enforcement by investors of civil liabilities under United States federal
securities laws may be adversely affected by the fact that the Corporation is
organized under the laws of Canada, that most of its officers and directors and
most of the experts named in this Annual Information Form are residents of
Canada, and that a substantial portion of the Corporation’s assets and the
assets of a majority of the Corporation’s directors and officers and the experts
named in this Annual Information Form are located outside the United States.
Furthermore, it may not be possible to enforce against the Corporation or its
directors, officers or experts, judgments contained in U.S. courts. The
Corporation believes that a monetary judgment of a Canadian court predicated
solely on the Canadian civil liability regime would likely be enforceable in the
U.S. if the Canadian court in which the judgment was obtained had a basis for
jurisdiction in the matter that was recognized by a U.S. court for such
purposes. However, the Corporation can provide no assurances to this
effect.
  Operating
Losses are Expected to Continue In the Near Future
  The
Corporation expects that it will continue to incur losses, and possibly incur
increased losses, until the Las Cristinas mine is operating at full capacity.
The Corporation’s profitability depends, among other things, on the gold price,
gold production and cash operating costs at its operations, interest expense and
general and administrative expenses.  Substantially all of these
factors are beyond the control of the Corporation.  There can be no
assurance that the Corporation will become profitable in the near
future.  The Corporation expects that this trend will reverse if and
when gold is produced from the future Las Cristinas mine in commercial
quantities at prices equal to or in excess of the prices assumed in the 20,000
TPD Feasibility Study.
   42
   Future
Hedging Activities
  The
Corporation has not entered into forward contracts or other derivative
instruments to sell gold that it might produce in the future. Although the
Corporation has no near term plans to enter such transactions, it may do so in
the future if required for project financing. Forward contracts obligate the
holder to sell hedged production at a price set when the holder enters into the
contract, regardless of what the price is when the product is actually mined.
Accordingly, there is a risk that the price of the product is higher at the time
it is mined than when the Corporation entered into the contracts, so that the
product must be sold at a price lower than could have been received if the
contract was not entered. There is also the risk that the Corporation may have
insufficient gold production to deliver into forward sales positions. The
Corporation may enter into option contracts for gold to mitigate the effects of
such hedging.
  No
Payment of Cash Dividends in the Near Future
  Given
that the Corporation is currently in the development stage for its principal
property, the Las Cristinas project, the Corporation intends to retain its
earning to finance the growth and development of the business rather than pay
dividends to shareholders. The Corporation does not intend to declare or pay
cash dividends in the near future, nor has it done so since its inception. In
the event that the Corporation decides to declare and pay cash dividends in the
future, such a decision will made entirely in the discretion of the board of
directors and shall be dependent on factors such as the existing earnings,
capital requirements, future business opportunities, financing agreements and
market conditions for the Corporation’s shares and the underlying commodities
markets.
  DIRECTORS
AND SENIOR OFFICERS
  The
following table sets forth, for each of the directors and senior officers of the
Corporation, the name, municipality of residence, office, principal occupation
and, if a director, the date on which the person became a
director.  Each director is elected to serve until the Corporation’s
next annual meeting of shareholders.
  Name
      and
                      Municipality of
      Residence
                    Office
                    Principal
      Occupation
                    Director
      Since
                    Expiry
      of
                      Current
      Term(6)Robert
      A. Fung (1)
      (4)
                      Toronto,
      Ontario
                    Director,
      Chairman of the Board
                    Employee
      of Macquarie Capital Markets Canada Ltd. (formerly Orion Securities, Inc.)
      (investment bank)
                    December
      3, 1996
                    June
      25, 2008Gordon
      M. Thompson (1)(4)
                      Toronto,
      Ontario
                    Director,
      President and Chief Executive Officer
                    President
      and Chief Executive Officer, Crystallex International
      Corporation
                    February
      1, 2007
                    June
      25, 2008Michael
      J.H. Brown (1)(3)(4)(5)
                      Toronto,
      Ontario
                    Director
                    Principal,
      Capital Markets Advisory (a financial and capital markets advisory
      firm)
                    October
      10, 2002
                    June
      25, 2008C.
      William Longden (2)(4)
                      Toronto,
      Ontario
                    Director
                    Vice
      Chairman, Marshall, Macklin, Monaghan Limited (an engineering and
      construction management company)
                    July
      25, 2000
                    June
      25, 2008Harry
      J. Near (2)
                      Ottawa,
      Ontario
                    Director
                    President,
      Near Consultants & Associates; Principal, The Earnscliffe Strategy
      Group (political advisory firm)
                    May
      5, 1997
                    June
      25, 2008Marc
      J. Oppenheimer (1)(4)
                      Leonia,
      New Jersey
                    Director
                    President,
      Octagon Associates Inc.
                    February
      20, 1995
                    June
      25, 2008Johan
      C. van’t Hof (1)(2)(5)
                      Toronto,
      Ontario
                    Director
                    President,
      Tonbridge Corporation (infrastructure fund manager)
                    March
      12, 2004
                    June
      25, 2008Armando
      F. Zullo (3)(5)
                      Vancouver,
      British Columbia
                    Director
                    President,
      A.F. Zullo & Company Ltd. (equipment supplier)
                    December
      3, 1996
                    June
      25, 2008Hemdat
      Sawh(7)
                      Oakville,
      Ontario
                    Chief
      Financial Officer
                    Chief
      Financial Officer, Crystallex International Corporation
                    –
                    –Robert
      Crombie(8)
                      Toronto,
      Ontario
                    Senior
      Vice President,
                      Corporate
      Development
                    Senior
      Vice President,
                      Corporate
      Development, Crystallex International Corporation
                    –
                    –
   43
   Municipality of
      Residence
                    Office
                    Principal
      Occupation
                    Director
      Since
                    Expiry
      of
                      Current
      Term(6)
  Richard
      Marshall
                      Alpharetta,
      Georgia
                    Vice
      President,
                      Investor
      Relations
                    Vice
      President,
                      Investor
      Relations, Crystallex International Corporation
                    –
                    –William
      A. Faust(9)
                      Albuquerque,
      New Mexico
                    Senior
      Vice President and Chief Operating Officer
                    Senior
      Vice-President and Chief Operating Officer, Crystallex International
      Corporation
                    –
                    –
  Notes:
  (1)
                    Member
      of the Finance and Risk Management Committee.  The role of the
      Finance and Risk Management Committee is to assist the board of directors
      in fulfilling its responsibilities with respect to financial matters
      (including short- and long-term financings, issuances of shares, foreign
      currency, hedging and derivatives transactions, capital expenditures and
      long-term commitments and policies and guidelines for the investment of
      cash) and its oversight responsibilities with respect to non-financial
      risk management systems.  A copy of the charter of the Finance
      and Risk Management Committee may be viewed on the Corporation’s website
      at www.crystallex.com.
  (2)
                    Member
      of the Audit Committee.  See “Audit
      Committee” below.
  (3)
                    Member
      of the Corporate Governance Committee.  The role of the
      Corporate Governance Committee is to assist the board of directors in
      fulfilling its responsibilities with respect to the composition and
      operation of the board of directors and committees of the board and
      corporate governance standards and practices.  A copy of the
      charter of the Corporate Governance Committee may be viewed on the
      Corporation’s website at www.crystallex.com.
  (4)
                    Member
      of the Environment, Health and Safety and Operations
      Committee.  The role of the Environment, Health and Safety and
      Operations Committee is to assist the board of directors with respect to
      environment, health and safety matters arising out of the activities of
      the Corporation and to oversee the company’s operations.  A copy
      of the charter of the Environment, Health and Safety and Operations
      Committee may be viewed on the Corporation’s website at www.crystallex.com.
  (5)
                    Member
      of the Nominating and Compensation Committee.  The role of the
      Nominating and Compensation Committee is to assist the board of directors
      in fulfilling its responsibilities with respect to the composition of the
      board of directors, including recommending candidates for election or
      appointment as directors of the Corporation, the recruitment and
      compensation of the Chief Executive Officer and other officers of the
      Corporation, executive compensation disclosure and oversight of the
      compensation structure and benefit programs of the
      Corporation.  A copy of the charter of the Nominating and
      Compensation Committee may be viewed on the Corporation’s website at www.crystallex.com.
  (6)
                    Proposed
      date for the Corporation’s 2008 annual meeting of
      shareholders.
  (7)
                    Appointed
      as Chief Financial Officer of the Corporation effective May 15,
      2007.
  (8)
                    Appointed
      Senior Vice-President, Corporate Development effective April 1,
      2007.
  (9)
                    Appointed
      Chief Operating Officer and Senior Vice-President effective April 16,
      2007.
   All
of the directors and senior officers of the Corporation have held the principal
occupations identified above with the same or associated companies or
organizations for not less than five years, except for Mr. Thompson who was
Senior Vice President, Corporate Development of Sentry Select Capital Corp. from
2004 to 2006 and Senior Vice President, Corporate Development of NCE Resources
Group from 2002 to 2003; Mr. Oppenheimer who was Executive Vice President
of Kenmar Global Investment Management, Inc. and a Managing Director of Kenmar
Nihon Venture Capital LLC from May 2004 to July 2006 and Vice-Chairman of the
Corporation from September 2003 to May 2004 and the President and Chief
Executive Officer of the Corporation prior to September 2003; Mr. van’t Hof who
was the Chief Operating Officer of Carter Group Inc. (an automobile parts
manufacturer) from July 2001 until May 2003 and was a partner and managing
director with PricewaterhouseCoopers LLP prior to January 2001; Mr. Sawh who was
Chief Financial Officer of Goldbelt Resources Ltd. from October 2005 to May
2007; and Mr. Faust who served as Vice President Operations for Nevada Pacific
Gold Ltd. from 2004 to 2007, President of Pan American Silver from 2003 to 2004;
Vice President, Operations of Corner Bay Silver Inc. from 2001 to 2003 and Vice
President Operations of Eldorado Gold Corporation from 1997 to
2001.
  Other
than as described below, no director or senior officer of the Corporation has,
within ten years prior to the date of this Annual Information Form:
  ·
                    been
      a director or officer of any reporting issuer that, while that individual
      was acting in that capacity, was the subject of a cease trade or similar
      order or an order that denied the reporting issues access to any statutory
      exemption for a period of more than 30 consecutive days or was
      declared
   44
   bankrupt
      or made a voluntary assignment in bankruptcy, made a proposal under any
      legislation relating to bankruptcy or been subject to or instituted any
      proceedings, arrangement or compromise with creditors or had a receiver,
      receiver-manager or trustee appointed to hold the assets of that
      individual;
  ·
                    been
      subject to any penalties or sanctions imposed by a court or securities
      regulatory authority relating to trading in securities, promotion or
      management of a publicly traded issuer or theft or fraud;
    or
  ·
                    become
      bankrupt, made a proposal under any legislation relating to bankruptcy or
      insolvency or been subject to or instituted any proceedings, arrangement
      or compromise with creditors or had a receiver, receiver manager or
      trustee appointed to hold the assets of that
  individual.
  In
connection with ongoing negotiations between Mr. Fung and certain parties, Mr
Fung has filed an intention to make a proposal to certain creditors on February
29, 2008.
  The
directors and executive officers of the Corporation, and their associates and
affiliates, as a group, beneficially own, directly or indirectly, 1,483,297
common shares of the Corporation or approximately 0.6% of the outstanding common
shares of the Corporation.
  Audit
Committee
  The
board of directors of the Corporation has established the Audit Committee to
assist the board in fulfilling its corporate governance and oversight
responsibilities with respect to accounting and financial reporting processes,
internal financial control structure, financial risk management systems and
external audit function.
  Composition
  The
Audit Committee is composed of Johan C. van’t Hof (Chair), C. William Longden
and Harry J. Near, each of whom is independent (as determined by the Board in
accordance with the Policy on Independence of Directors of the Corporation,
attached hereto as Schedule “F”) and financially literate (i.e., has the ability
to read and understand a set of financial statements that present a breadth and
level of complexity of accounting issues that are generally comparable to the
breadth and complexity of accounting issues that can reasonably be expected to
be raised by the financial statements of the Corporation) within the meaning of
applicable Canadian and U.S. securities laws.
  Mr.
van’t Hof was a partner and managing director with PricewaterhouseCoopers LLP,
between 1991 and 2001 and is financially sophisticated (i.e., has past
employment experience in finance and accounting both as a chartered accountant
and as a regular lecturer to members of the accounting profession on matters of
audit and finance) within the meaning of applicable U.S. securities
laws.
  Charter
  The
composition, responsibilities and authority of the Audit Committee are set out
in its charter.  The terms of the charter are attached and set out in
Schedule “E.”
  A
copy of the charter of the Finance and Risk Management Committee may be viewed
on the Corporation’s website at www.crystallex.com.
  Policy
on the Provision of Services by External Auditors
  The
Audit Committee reviews all requests for proposed and audit or permitted
non-audit services to be provided by the Company’s external auditor under the
Policy on Provision of Services by External Auditors developed by the Audit
Committee. Under this Policy, the Audit Committee annually reviews and
pre-approves recurring audit and non-audit services that are identifiable for
the coming year. This Policy requires that the Audit Committee approve any audit
or non-audit services that are proposed during the year.
  Copies
of the Corporation’s Policy on the Provision of Services by External Auditors
and the Corporation’s Code of Business Conduct and Ethics may be viewed on the
Corporation’s website at www.crystallex.com.
   45
   External
Auditors Service Fees
  The
auditors of the Corporation were Deloitte & Touche LLP, Toronto, Ontario for
the fiscal year ended December 31, 2006. Pursuant to a notice delivered to the
Corporation, Deloitte & Touche LLP, Chartered Accountants, declined to stand
for reappointment for the office of auditor of the Company effective March 30,
2007, which decision was considered and accepted on behalf of the Company by its
board of directors. There were no reservations or Reportable Events (as defined
in National Instrument 51-102 - Continuous Disclosure Obligations) relating to
Deloitte & Touche LLP’s audit reports in respect of the audits of the
Corporation’s three most recently completed fiscal years other than an issue
related to the potential necessity to capitalize interest to the Las Cristinas
project for the fiscal years ended December 31, 2006 and 2005 with respect to
Note 19-Differences Between Canadian and United States Generally Accepted
Accounting Principles on the date of filing the Notice of Change of Auditors.
This issue was subsequently resolved and the financial statements were
restated.
  The
Corporation’s shareholders appointed PricewaterhouseCoopers LLP, Chartered
Accountants as successor auditors of the Company in place of Deloitte &
Touche LLP, Chartered Accountants, at the Annual General Meeting of the
Corporation held on June 28, 2007.
  The
table below sets out the fees billed by the Corporation’s auditors for each of
last two years in respect of the services noted below.
  
  Deloitte
& Touche LLP
  Year
      -ended December 31 (US$)2007
                      
                      2006Audit-related
      fees(1)
                      $138,580
                      
                      
                      $640,363Tax
      fees(2)
                      $-
                      
                      
                      $29,870All
      other fees(3)
                      $18,683
                      
                      
                      $226,315$157,263
                      
                      
                      $896,548
 
  PricewaterhouseCoopers
LLP
  Year
      -ended December 31 (US$)2007
                      
                      2006Audit-related
      fees(1)
                      $1,530,000
                      
                      
                      $-Tax
      fees(2)
                      9,195
                      
                      
                      -All
      other fees(3)
                      47,500
                      
                      
                      -$1,586,695
                      
                      
                      $-
 Notes:
  (1)
                    Fees
      for audit services include fees associated with annual audit, the reviews
      of the Company’s quarterly reports, statutory audits and regulatory
      filings.
  (2)
                    Fees
      for tax services include tax compliance, tax planning and tax advice
      services.
  (3)
                    All
      other fees include fees required for regulatory filing requirements and
      review of prospectuses.
   Corporate
Governance Statement
  The
Corporation’s Corporate Governance Statement (together with the documents
referred to in the Corporate Governance Statement) may be viewed on the
Corporation’s website at www.crystallex.com.
   46
   TRANSFER
AGENT AND REGISTRAR
 The
transfer agent and registrar for the common shares of the Corporation is CIBC
Mellon Trust Company at its principal office in Toronto, Ontario.
  MATERIAL
CONTRACTS
  Neither
the Corporation nor any of its subsidiaries has entered into any material
contract within the two years before the date of this Annual Information
Form.
  INTEREST
OF EXPERTS
  MDA
and SNC-Lavalin have been involved in the preparation of certain technical
reports, which are incorporated by reference in this Annual Information
Form.  The foregoing experts have advised the Corporation that they do
not own any common shares or other property of the Crystallex
Group.
  PricewaterhouseCoopers
LLP is the independent auditor of the Company and is independent within the
meaning of the Rules of Professional Conduct of the Institute of Chartered
Accountants of Ontario.
  ADDITIONAL
INFORMATION
  Additional
information with respect to the Crystallex Group may be found at the SEDAR
website at www.sedar.com.
  Additional
information including directors and officers remuneration and indebtedness,
principal holders of the Corporation’s securities and securities authorized for
issuance under equity compensation plans, where applicable, is or will be
contained in the management information circular for use at the next annual
meeting of shareholders of the Corporation (currently scheduled for June 25,
2008).
  Additional
financial information is provided in the Consolidated Financial Statements and
Management’s Discussion and Analysis, copies of which are attached to this
Annual Information Form as Schedule “A” and Schedule “B,”
respectively.
 47
  SCHEDULE
“A”
 CONSOLIDATED
FINANCIAL STATEMENTS
 (AS
ATTACHED)
   A-1
   SCHEDULE
“B”
 MANAGEMENT’S
DISCUSSION AND ANALYSIS
 OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
   B-1
 
   SCHEDULE
“C”
 GLOSSARY
OF DEFINED TERMS AND TECHNICAL MINING TERMS AND ABBREVIATIONS
  Defined
      Terms20,000
      TPD Feasibility Study
                      The
      feasibility study completed by SNC-Lavalin and other independent
      consultants (including MDA) in September 2003 with respect to the
      development of the Las Cristinas project and the construction and
      operation of a mining and processing facility at a production rate of
      20,000 tonnes of ore per day.  See “Las Cristinas
      Project.”2005
      Development Plan
                      The
      study completed by SNC-Lavalin and other independent consultants
      (including MDA) in August 2005 updating the 20,000 TPD Feasibility
      Study.  See “Las Cristinas Project.”Consolidated
      Financial Statements
                      The
      audited consolidated balance sheets of the Corporation as at December 31,
      2007 and 2006, and consolidated statements of operations, cash flows and
      shareholders equity of the Corporation for each of the years in the three
      year period ended December 31, 2007, including the notes thereto and the
      auditors report thereon.  A copy of the Consolidated Financial
      Statements is attached to this Annual Information Form as Schedule
      “A”.Corporation
                      Crystallex
      International Corporation.Crystallex
      Group
                      The
      Corporation and its subsidiaries.CVG
                      Corporacíon
      Venezolana de Guayana.  See “Mining in Venezuela –
      Venezuela.”EIS
                      Environmental
      Impact Study.  See “Mining in Venezuela – Environmental
      Laws.”Las
      Cristinas Deposits
                      The
      four areas referred to as Las Cristinas 4, 5, 6, and 7.  See
      “Las Cristinas Project – Location and Property Description.”Management’s
      Discussion and Analysis
                      Management’s
      Discussion and Analysis of Financial Condition and Results of Operations
      of the Corporation for the year ended December 31, 2006.  A copy
      of Management’s Discussion and Analysis is attached to this Annual
      Information Form as Schedule “B.”MinAmb
                      The
      Ministry of the Environment and Natural Resources.  See “Mining
      in Venezuela – Environmental Laws.”MDA
                      Mine
      Development Associates.  See “Las Cristinas
      Project.”2007
      Technical Report Update
                      The
      2007 Technical Report Update dated November 7, 2007, prepared by MDA and
      SNC-Lavalin with respect to the Las Cristinas project.  See “Las
      Cristinas Project.”MIBAM
                      The
      Ministry of Basic Industries and Mining (formerly, the Ministry of Energy
      and Mines).  See “Mining in Venezuela – Mining
Law.”Mining
      Operation Contract
                      The
      Mining Operation Contract between the CVG and the Corporation dated
      September 17, 2002, with respect to the Las Cristinas
      Project.  See “Las Cristinas Project – Mining Operation
      Contract.”  A copy of the Mining Operation Contract is attached
      to this Annual Information Form as Schedule “D”.NI
      43-101
                      National
      Instrument 43-101 (Standards of Disclosure for Mineral Projects) of the
      Canadian Securities Administrators.
   C-1
   Qualified
      Person
                      A
      person who: is an engineer or geoscientist with at least five years of
      experience in mineral exploration, mine development or operation or
      mineral project assessment or any combination of these; has experience
      relevant to the subject matter of the mineral project and the technical
      report; and is a member in good standing of a professional
      association.SNC-Lavalin
                      SNC-Lavalin
      Inc.  See “Las Cristinas Project.”VAT
                      Value
      Added Tax.  See “Mining in Venezuela – Taxation.”VML
                      Mining
      Law of 1999.  See “Mining in Venezuela – Mining
      Law.”Technical
      Mining TermsAlluvial
                      Relating
      to deposits made by flowing water, washed away from one place and
      deposited in another.Assay
                      An
      analysis to determine the presence, absence or concentration of one or
      more chemical components.ball
      mill
                      A
      large steel cylinder containing steel balls into which crushed ore is
      fed.  The ball mill is rotated, causing the balls to cascade and
      grind the ore.Belt
                      A
      specific elongate area defined by unique geologic
      characteristics.Bleb
                      A
      small, usually rounded inclusion of one material in another.Breccia
                      Rock
      consisting of fragments, more or less angular, in a matrix of
      finer-grained material or cementing material.carbon-in-leach
      (CIL)
                      A
      recovery process in which a slurry of gold ore, carbon granules and
      cyanide are mixed together.  The cyanide dissolves the gold,
      which is then adsorbed by the carbon.  The loaded carbon is
      subsequently separated from the slurry and the gold removed from the
      carbon.Cathode
                      A
      rectangular plate of metal produced by electrolytic refining.  A
      cathode is typically the finished product of the copper refining
      process.Chalcopyrite
                      A
      copper mineral, the composition of which is copper iron
      sulphide.Concentrate
                      A
      metal rich product from a mineral separation process such as flotation,
      from which most of the waste material in the ore has been separated. The
      metals are “concentrated” from the ore and the remainder discarded as
      tailings.cut-off
      grade
                      The
      minimum metal grade of which a tonne of rock can be processed on an
      economic basis.Deposit
                      A
      mineralized body which has been physically delineated by sufficient
      drilling, trenching, and/or underground work and found to contain a
      sufficient average grade of metal or metals to warrant further exploration
      and/or development expenditures.  A deposit does not qualify as
      a commercially mineable ore body or as containing mineral reserves, until
      final legal, technical and economic factors have been
      resolved.Development
                      The
      preparation of a known commercially mineable deposit for
      mining.
   C-2
   diamond
      drill
                      A
      type of rotary drill in which the cutting is done by abrasion rather than
      percussion. The cutting bit is set with diamonds and is attached to the
      end of long hollow rods through which water is pumped to the cutting face.
      The drill cuts a core of rock, which is recovered in long cylindrical
      sections, an inch or more in diameter.Dissemination
                      A
      scattered distribution of generally fine-grained, metal-bearing minerals
      throughout a rock body.Dyke
                      A
      tabular intrusion, meaning it is sheet or slab-like, that cuts across or
      through the host rocks.  Dykes vary from a few centimetres to
      many tens of metres in thickness and may extend for several
      kilometres.Extraction
                      Removal
      of ore or waste from the ground.Fault
                      A
      geological term that refers to a fracture or zone of fractures in the
      earth’s crust along which the rock units on each side of the fracture have
      moved relative to one another.feasibility
      study
                      A
      comprehensive study of a deposit in which all geological, engineering,
      operating, economic and other relevant factors are considered in
      sufficient detail such that the study could reasonably serve as the basis
      for a final decision by a financial institution to finance the development
      of the deposit for mineral production.Flotation
                      A
      milling process by which some mineral particles are induced to become
      attached to bubbles of froth and float, and others to sink, so that the
      valuable minerals are concentrated and separated from the remaining rock
      or mineral material.geophysical
      surveys
                      Studies
      conducted to measure the physical characteristics of a certain
      area.Geophysics
                      The
      study of the earth by quantitative physical methods.gold
      doré
                      A
      bar of gold which contains impurities in excess of 2% and which will be
      further refined to almost pure metal.Grade
                      The
      concentration or quality of an ore or metal content.Hectare
                      A
      square of 100 m on each side, or 2.471 acres.Host
                      The
      body of rock in which mineralization of economic interest
      occurs.Intrusive
                      A
      body of igneous rock formed by magma penetrating or intruding into or
      between other rocks but solidifying before reaching the surface; in
      contrast to lavas or tuffs which are extruded upon the
      surface.Mill
                      A
      plant where ore is ground fine and undergoes physical or chemical
      treatment to extract the valuable metals.Mine
                      An
      excavation in the earth for the purpose of extracting minerals. The
      excavation may be an open-pit on the surface or underground
      workings.mineral reserve(1)
                      Mineral
      Reserve:  The economically mineable part of a Measured
      Mineral Resource or Indicated Mineral Resource demonstrated by at least a
      preliminary feasibility study (which must include adequate information on
      mining, processing, metallurgical, economic and other relevant factors
      that demonstrate, at the time of reporting, that economic extraction can
      be justified).  A Mineral Reserve includes diluting materials
      and allowances for losses that may occur when material is
      mined.
   C-3
   Proven Mineral
      Reserve:  The economically mineable part of a Measured
      Mineral Resource demonstrated by at least preliminary feasibility
      study.Probable Mineral
      Reserve:The economically mineable part of an Indicated
      and, in some circumstances, a Measured Mineral Resource, demonstrated by
      at least a preliminary feasibility study.
 _________________
 Note:
 (1)           As
defined in NI 43-101.
  mineral resource(1)
                      Mineral Resource:A
      concentration or occurrence of natural, solid, inorganic or fossilized
      organic material in or on the earth’s crust in such form and quantity and
      of such a grade or quality that it has reasonable prospects for economic
      extraction. The location, quantity, grade, geological characteristics and
      continuity of a Mineral Resource are known, estimated or interpreted from
      specific geological evidence and knowledge.Measured Mineral Resource:That part of a Mineral Resource for which quantity, grade or
      quality, densities, shape, physical characteristics are so well
      established that they can be estimated with confidence sufficient to allow
      the appropriate application of technical and economic parameters, to
      support production planning and evaluation of the economic viability of
      the deposit. The estimate is based on detailed and reliable exploration,
      sampling and testing information gathered through appropriate techniques
      from locations such as outcrops, trenches, pits, workings and drill holes
      that are spaced closely enough to confirm both geological and grade
      continuity.Indicated Mineral Resource:That part of a Mineral Resource for which quantity, grade or
      quality, densities, shape and physical characteristics, can be estimated
      with a level of confidence sufficient to allow the appropriate application
      of technical and economic parameters to support mine planning and
      evaluation of the economic viability of the deposit. The estimate is based
      on detailed and reliable exploration and testing information gathered
      through appropriate techniques from locations such as outcrops, trenches,
      pits, workings and drill holes that are spaced closely enough for
      geological and grade continuity to be reasonably assumed.Inferred Mineral Resource:That part of a Mineral Resource for which quantity and grade or
      quality can be estimated on the basis of geological evidence and limited
      sampling and reasonably assumed, but not verified, geological and grade
      continuity. The estimate is based on limited information and sampling
      gathered through appropriate techniques from locations such as outcrops,
      trenches, pits, workings and drill holes.Mineralization
                      The
      natural process by which sometimes valuable minerals are aggregated,
      resulting in a potential ore deposit.Ore
                      A
      natural aggregate of one or more minerals which, at a specified time and
      place, may be mined and sold at a profit, or from which some part may be
      profitably separated.Oxidation
                      A
      chemical reaction caused by exposure to oxygen that results in a change in
      the chemical composition of a mineral.Oxide
                      An
      adjective applied to a rock, mineral resource or mineral reserve
      indicating that it has been subjected to oxidation through weathering and
      exposure to the surface elements or ground water.
   C-4
   Plunge
                      The
      vertical angle between a horizontal plane and the line of maximum
      elongation of an orebody.Pulp
                      A
      mixture of ground ore and water capable of flowing through suitably graded
      channels as a fluid.pyrite
                      A
      mineral, the composition of which is iron sulphide.Quartz
                      A
      mineral composed of silicon dioxide.
 _________________
 Note:
 (1)           As
defined in NI 43-101.
  reclamation
                      The
      process by which lands disturbed as a result of mining activity are
      brought back to beneficial land use. Reclamation activity includes the
      removal of buildings, equipment, machinery and other physical remnants of
      mining, closure of tailings impoundments, leach pads and other mine
      features and contouring, covering and revegetation of waste rock piles and
      other disturbed areas.recovery
                      A
      term used in process metallurgy to indicate the proportion of valuable
      material obtained in the processing of an ore. It is generally stated as a
      percentage of valuable metal in the ore that is recovered compared to the
      total valuable metal present in the ore.recovery
      rate
                      The
      percentage of a particular metal contained in ore that is recovered during
      processing.refining
                      The
      final stage of metal production in which impurities are removed from the
      molten metal.refractory
      ore
                      Gold
      mineralized material in which the gold is not amenable to recovery by
      conventional cyanide methods without any pre-treatment.  The
      refractory nature can be either silica or sulphide encapsulation of the
      gold or the presence of naturally occurring carbons which reduce gold
      recovery.royalty
      interest
                      Generally,
      a percentage interest that is tied to some production unit such as tonne
      of concentrate or ounce of gold produced.  A common form of
      royalty interest is a net smelter return.sample
                      Small
      amount of material that is supposed to be typical or representative of the
      object being sampled.sedimentary
                      A
      rock formed from cemented or compacted sediments deposited in horizontal
      strata.sediments
                      The
      debris resulting from the weathering and break-up of pre-existing
      rocks.shoot
                      A
      body of ore, usually in elongated form, extending downward or upward in a
      vein.smelter
                      A
      plant where concentrates are processed into an upgraded
      product.smelting
                      A
      pyro-metallurgical operation in which metal is separated from impurities
      by a process that includes fusion.strike
                      A
      geological term that refers to the compass direction on a map that layered
      rock units or faults run.stripping
      ratio
                      The
      ratio of waste removed to ore processed.
   C-5
   sulphides
                      Minerals
      that are compounds of sulphur together with one or more other elements
      (such as iron, copper, lead, zinc and arsenic).tailings
                      The
      material that remains after all metals considered economic have been
      removed from ore during milling.tuff
                      A
      finer grained pyroclastic rock made up mostly of volcanic
ash.vein
                      An
      epigenetic mineral filling of a fault or other fracture, in tabular or
      sheet-like form, often with associated replacement of the host
      rock.waste
                      Barren
      rock in a mine, or mineralized material that is too low in grade to be
      mined and milled at a profit.Abbreviationsg/t
                      Grams
      per tonne.m
                      Metre.oz
                      Ounce(s).t
                      Tonnes.ton
                      A
      dry short ton (2,000 pounds).tonne
                      A
      metric ton (1,000 kilograms or 2,204.62 pounds).tpa
                      Tonnes
      per annum.
 Metric/Imperial
Conversion Table
  The
following table sets out the imperial equivalents of the metric units of
measurement used in this Annual Information Form:
  Metric
      Unit
                      Imperial
      EquivalentGram
                      0.03215
      troy ouncesHectare
                      2.4711
      acresKilogram
                      2.20462
      poundsKilometre
                      0.62139
      milesMetre
                      3.2808
      feetTonne
                      1.1023
      short tons
  C-6
  SCHEDULE
“D”
 D-1
   The
undersigned, MARIELA CÉSPEDES MORENO, a Venezuelan, a single, of lega1 age,
domiciled in Caracas, bearer of Identity Card No. 6.560.009, a Public
Interpreter of the Republic of Venezuela in the English language, as evidenced
from title published in the Official Gazette of the Bolivarian Republic of
Venezuela No. 37.119 dated January 15, 2001, recorded at the Main Office of
Public Registry of the Federal District on September 23, 1999, under No. 80,
onto page 80, Volume 17° and subsequently registered in the Second Court of
First Instance in Civil, Mercantile and Transit Matters of the Judicial
Circumscription of the Metropolitan Area of Caracas on October 18, 2000, hereby
CERTIFIES: That the attached document written in Spanish, which has been
presented to her for its translation, textually reads in English as
follows:
  “MINISTRY
OF THE INTERIOR AND JUSTICE
 BOLIVARIAN
REPUBLIC OP VENEZUELA
 General
Department of Registries and Notary Public’s Offices
  FOURTH
NOTARY PUBLIC’S OFFICE OF PUERTO ORDAZ
   Centro
Comercial Cristal – 1 er piso – Locales 110 y 111
 Telephone
number: (0286) 962.40.57
 Alta
Vista – Puerto Ordaz – Estado Bolivar
  Executing
parties: Francisco José Rangel Gómez and Marc J. Oppenheimer. Volume
86.
   CRISTINA 4, CRISTINA 5,
CRISTINA 6 AND CRISTINA 7
 MINING OPERATION
CONTRACT
  The
CORPORACION VENEZOLANA DE GUAYANA, an Autonomous Institute created by Decree No.
430, dated December 29, 1960, published in Official Gazette of the Republic of
Venezuela No. 26.445 dated December 30, 1960, amended by Decree No. 1.531, dated
November 1, 2001, published in Official Gazette of the Bolivarian Republic of
Venezuela No. 5-553, dated November 12, 2001, which has the
   D-2
   prerogatives
and privileges granted by the Law of the Republic and is exempt from payment of
all taxes, duties and contributions, as determined by Articles 24 and 25 of said
Decree-Law, represented in this act by its President, FRANCISCO JOSE RANGEL
GOMEZ, a Venezuelan, legally competent, bearer of Identity Card No. 2.520.281,
of this domicile, the designation of whom is evidenced from Decree No. 1.034
dated October 10, 2000, published in Official Gazette of the Bolivarian Republic
of Venezuela No. 37.054, dated October 10 2000, hereinafter and for the purpose
hereof referred to as THE CORPORATION, in compliance with what was approved in
the Board of Directors, as per Resolution No. 8.700 and Resolution DIR-No. 8.705
dated September 2, 2002 and September 16, 2002, respectively on the one hand;
and on the other, CRYSTALLEX INTERNATIONAL CORPORATION, a company domiciled in
the Province of British Columbia of Canada, the duration of which was extended
under the Commercial Corporation Law of Canada, as Corporation No. 345631-5,
through Certificate dated January 23, 1998, represented in this act by its
President, MARC J. OPPENHEIMER, a citizen of the United States of America,
bearer of Passport No. 152092004, duly authorized for this act as per Resolution
of the Board of Directors dated September 16, 2002, hereinafter referred to as
CRYSTALLEX, each of them individually referred to as the ‘Party’ or collectively
as the ‘Parties’, have agreed to enter into, as they hereby do, this mining
operation contract for Las Christinas 4, 5, 6, and 7, which is based on the
following:
  WHEREAS
  1.-
The CORPORACION VENEZOLANA DE GUAYANA is an Autonomous Institute with its own
legal capacity and a patrimony separate from and independent of that of the
Republic and which is ascribed to the Ministry of the Secretary’s Office of the
Presidency.  The purpose of the CORPORACION VENEZOLANA DE GUAYANA is
to promote the balanced development of the Guayana Region, perform the
exploration, prospecting, and exploitation works of the mines or deposits to
that end granted by the Ministry of Energy and Mines.
  2.-
On May 16, 2002, the MINISTRY OF ENERGY AND MINES and the CORPORACION VENEZOLANA
DE GUAYANA entered into a contract whereby the Ministry authorizes the
Corporation to execute the works of exploitation, recovery and sale of the Gold
mineral that is in the deposits located within the areas of the concessions
called Cristina 4, Cristina 5, Cristina 6, Cristina 7, in the Sifontes
Municipality of the State of Bolivar, called ‘PROYECTO LAS CRISTINAS 4, 5, 6 y
7’ and hereinafter referred to as the Project.
  3.-
The MINISTRY OF ENERGY AND MINES, through said Contract, authorized the
CORPORACION VENEZOLANA DE GUAYANA to use the property committed to said
concessions that was transferred to the Republic according to Resolution No. 035
dated March 6, 2002, published in the Official Gazette of the Bolivarian
Republic of Venezuela No. 37.400, dated March 8, 2002.
   D-3
   4.-
For purposes of the appropriate performance of said Contract, the CORPORACION
VENEZOLANA DE GUAYANA may enter into DESIGN, CONSTRUCTION, AND OPERATION
contracts WITH THIRD PARTIES, after informing the Ministry of Energy and Mines
in writing.
  5.-
Prior to commencing the operative activities of the project, all of the
corresponding environmental permits must have been obtained and complied
with.
  CLAUSE
FIRST
 INTERPRETATION
  1.1  Definitions.  In this Contract, unless
otherwise expressly established, the following words and phrases shall have the
meaning established below:
  ‘Contract’
means this mining operation contract and its Exhibits and written amendments
made by the Parties.
  ‘Effective
Date’ means the date of execution of this Contract by the parties before a
Notary Public.
  ‘Material
Breach’ means any act or omission of any of the Parties that causes an essential
damage to: (i) the business, the result of the operation, or the financial
conditions of the other Party; (ii) the other Party’s ability to timely and
fully perform its obligations herein prescribed, according to the terms herein
established; (iii) the validity or legal effectiveness of the Contract or of the
rights of the other Party.
  ‘Law
of Mines’ means the Decree with the Status and Force of Law of Mines, published
in Official Gazette No. 5.382, dated September 28, 1999, as well as its
Regulations, decrees, resolutions and other applicable laws.
  ‘MEM’
means the Ministry of Energy and Mines.
  ‘Parties’,
in the plural, means both parties executing this Contract, that is, the
Corporación Venezolana de Guayana and CRYSTALLEX and, in the singular (Party),
means each of them.
  ‘Environmental
Permits’ means the Permit to Affect Resources for Exploitation of gold, copper,
and other minerals granted by the Ministry of the Environment and Natural
Resources, as well as any other environmental permit or authorization that may
be required by said Ministry or any other competent authority or by the law for
the performance of the activities in Las Cristinas.
  ‘Small
Miners’ means groups of small miners organized and identified
as:  Nuevas Claritas, Siete estrellas, Los Rojas, and la Bolivariana,
established in delimited areas within the Las Cristinas project.
   D-4
   ‘Annual
Production Plan’ refers to the document annually submitted by CRYSTALLEX to the
consideration and approval of THE CORPORATION, the content of which comprises an
estimate of the following points: - Investments, - production volume, -
processing capacity, - operating costs, - logistics, - number of workers, - gold
production, - gold price, - income for sales, and any other elements related to
the project development and execution.
  ‘Monthly
Gold Price’ means the average monthly gold price, which shall be calculated by
dividing the sum of all ‘London Bullion Market Association P.M. BID Gold Fix
prices’ (which fixes the closing price of said mineral per refined gold Troy
ounce on that day) reported for the corresponding month by the number of days
for which said prices were established.
  ‘Production’
refers to the quantity of gold mineral processed per day, expressed in tons per
day (t/d).
  ‘Tenor’
means the content of gold in the gold material of the deposit, measured at the
entry of the mill of the processing plant, expressed in grams per dry
tons(gr/t).
  CLAUSE
SECOND
 Purpose of the
Contract
  2.1  THE CORPORATION, according to
authorization issued by the MEM, through Contract dated May 16, 2002,
authenticated before the
Second Notary Public’s Office of Puerto Ordaz, Caroni
Minicipality, State of Bolivar, recorded in the Authentication Books under
No.08, Volume 82, dated June 13, 2002 and the First Notary Public’s Office of the Municipality of Barota
ofthe State of Miranda,
recorded under No. 28, Volume 40 of the Authentication
Books, on June 19, 2002, hereinafter referred to as the CVG-MEM Contract, which
is attached hereto and an indivisible part hereof, authorizes CRYSTALLEX, and
the latter so accepts, to
make all necessary investments and works to reactivate and execute in full the
mining project of CRISTINA 4, CRISTINA 5, CRISTINA 6,andCRISTINA 7, design, construct the plant, operate
the same and process the gold material for its subsequent commercialization and sale, and transfer the
mine and its facilities to THE CORPORATION upon the end of the Contract , in
accordance with the provision of Article 102 of the Law of Mines.  The
Las Cristinas 4,5,6, and 7 project is located in the
Municipality ofSifontes of
the State of Bolivar, in the Bolivarian Republic of Venezuela.  Its
location is described in the Plan attached hereto as Exhibit‘A’, which has been signed by CRYSTALLEX
and THE CORPORATION and is a part hereof.  According to said plan, THE
CORPORATION
authorizesCRYSTALLEX to exploit and recover gold
mineral present in the area of Las Cristinas 4, 5, 6,and7, within the following boundaries that
are defined in said Plan by a closed traverse line and by vertices expressed in
U.T.M. coordinates(Universal Transversal de Mercator):
   D-5
   AREA
CALLED CRISTINA 4.  Total area one thousand hectares (1,000
Ha.).
 POINT
                  NORTH
      (m)
                  EAST
      (m)BOT
      – 1
                  683,208.00
                  666,284.00BOT
      – 2
                  685,208.00
                  666,284.00BOT
      – 3
                  685,208.00
                  671,284.00BOT
      – 4
                  683,208.00
                  671,284.00
  AREA
CALLED CRISTINA 5.  Total area nine hundred thirty-nine hectares and
four ares (939.4 Ha.).
 POINT
                  NORTH
      (m)
                  EAST
      (m)BOT
      – 1
                  685,208.00
                  671,284.00BOT
      – 2
                  685,208.00
                  668,340.00BOT
      – 3
                  687,070.00
                  668,340.00BOT
      – 4
                  687,070.00
                  673,340.00BOT
      – 5
                  685,208.00
                  673,340.00
   AREA
CALLED CRISTINA 6.  Total area nine hundred forty-four hectares and
two ares(944.2 Ha.).
 POINT
                  NORTH
      (m)
                  EAST
      (m)BOT
      – 1
                  685,208.00
                  668,340.00BOT
      – 2
                  685,208.00
                  663,340.00BOT
      – 3
                  687,070.00
                  663,340.00BOT
      – 4
                  687,070.00
                  668,340.00
   AREA
CALLED CRISTINA 7.  Total area one thousand two hectares (1,002
Ha.).
 POINT
                  NORTH
      (m)
                  EAST
      (m)BOT
      – 1
                  687,070.00
                  663,340.00BOT
      – 2
                  689,070.00
                  663,340.00BOT
      – 3
                  689,070.00
                  668,340.00BOT
      – 4
                  687,070.00
                  668,340.00
  The
works to be performed by CRYSTALLEX for the design, construction, start-up, and
exploitation of the mine subject-matter of the ‘Las Cristinas 4, 5, 6, and 7’
Project comprise the geological-mining planning and the supply of all materials,
labor, machinery, equipment, spare parts, and other resources materials or
elements that are necessary for the development, exploitation, processing,
commercialization and sale of the gold mineral present in said mine, according
to the terms hereof.
  2.2  FEASIBILITY STUDY
   D-6
   2.2.1  CRYSTALLEXbinds itself to submit to THE
CORPORATION the Technical, Economic, Financial Feasibility Study within a term
not exceeding one (1) year as from the date of execution hereof, in order for it
to be analyzed, considered and approved before commencement of theworks.  During said period,
CRYSTALLEX must maintain a minimum of field activity allowing for the generation
of jobs in the communities adjacent to the Project area.
  2.2.2  The Feasibility Study must conformtothe guidelines established in this
contract and befor the
benefit of both parties.  The approval of said Feasibility Study must
be evidenced in writing and shall be attached hereto as Exhibit‘B’, which shall be an indivisible part
hereof.
  CLAUSE
THIRD
 INVESTMENT PROGRAM
  CRYSTALLEX
binds itself to make all necessary investments for the reactivation and
execution of the ‘Las Cristinas 4, 5, 6, and 7’ mining Project, as estimated
according to the Feasibility Study approved by THE CORPORATION.  To
that end, CRYSTALLEX must submit to THE CORPORATION, at the same time and as a
part of the Feasibility Study referred to in the foregoing clause, a program
and/or schedule of investment disbursement and performance, as well as the
financing sources and their conditions.  This investment program
and/or schedule shall be approved and signed by CRYSTALLEX and THE CORPORATION
in a document attached hereto as Exhibit ‘C’, which shall be an integral part
hereof.
  CLAUSE
FOURTH
 EXPLOITATION PLANS
  1.-
CRYSTALLEX must submit to THE CORPORATION the Exploitation Plans for the Life of
the Project and the detailed Annual Exploitation Plans.  The
Exploitation Plan for the Life of the Project, as well as the annual plans, must
be accepted in writing by THE CORPORATION for their implementation.
  Said
Investment Programs and the Exploitation Plans must contain the necessary
technical information, at the request of THE CORPORATION which may request at
any time additional information from CRYSTALLEX or may propose modifications or
adjustments that it deems to be reasonably necessary.
  2.-
CRYSTALLEX must specify in said Plans the mineral excavation volumes and barren
volumes, waste disposal, handling of effluents, environmental protection,
industrial safety, and any other aspect that THE CORPORATION deems pertinent,
which aspects shall be informed to CRYSTALLEX sufficiently in advance, depending
on the technical characteristics of the information required.
  CLAUSE
FIFTH
   D-7
   PRODUCTION VOLUME
  1.-
CRYSTALLEX binds itself to put the ‘Las Cristinas 4, 5, 6, and 7’ mining Project
into production within the period of time established in clause Ninth of the
CVG-MEM Contract entered into on May 16, 2002.
 
 2.-
CRYSTALLEX binds itself to annually recover from the mine subject-matter of the
‘Las Cristinas 4, 5, 6, and 7’ Project an average daily production volume of
present gold mineral, as indicated in the Annual Production Plan agreed by the
parties, which shall be attached hereto as Exhibit ‘D’ and an integral part
hereof.
 
 3.-
CRYSTALLEX binds itself to process the gold mineral volume specified in the
Annual Production Plan at the plant to be installed by it in accordance with the
Project, incorporating the greatest quantity of added value.
 
 4.-
CRYSTALLEX shall exploit and recover the barren material that cannot be stored
in the mine and put it in a place therefor fitted out, in agreement with the
environmental legislation.
  CLAUSE
SIXTH
 ECONOMIC
COMPENSATION
  1.-
CRYSTALLEX shall make the following mandatory payments to THE
CORPORATION:
  ·
                  Initial
      Payment: The amount of FIFTEEN MILLION DOLLARS OF THE UNITED STATES OF
      AMERICA (US$ 15,000,000.00) corresponding to eight percent (8%) of the
      value of the investments made within the Project, such
      as:  reports, digitized information, camp, drilling, which
      payment shall be made by CRYSTALLEX within five (5) bank working days
      following execution hereof, after the instructions of THE
      CORPORATION.
 ·
                  Minimum
      monthly payment on account of royalty calculated on the commercial value
      of the monthly gross production in percentage terms, which is to be paid
      once the construction state is
completed:
 GOLD:US$
      Price/Troy ounce%Less
      than 280 $/ounce
                  1.00Equal
      to or more than 280 $/ounce and less than 350 $/ounce
                  1.50Equal
      to or more than 350 $/ounce and less than 400 $/ounce
                  2.00More
      than 400 $/ounce
                  3.00
   D-8
   These
royalties are different from the Exploitation Tax established in the Law of
Mines that CRYSTALLEX shall pay to THE REPUBLIC and are subject to revision in
accordance with the laws ruling the matter.
   CLAUSE
SEVENTH
 SPECIAL ADVANTAGES
  CRYSTALLEX
binds itself to comply with the following Employment Plan and Social Community
Development Program:
   FOR YEAR
2002:
 ·
                  To generate 50 jobs and bear the
      costs of maintenance of the facilities and of the 24 people currently
      working
 ·
                  To continue with the technical
      assistance to the five (5) Small Miners Associations operating in the
      Project SmallMiners
      area.
 ·
                  To bear the costs of maintenance,
      supplies, and other operation expenses of theCentro MedicoAsistencial
      Las Claritas, which
      shall provide services to the project personnel and to the community, and
      transforming the same from Ambulatory RuralType II to Ambulatory Urban Type
      L
  FOR YEAR
2003:
 ·
                  To generate 50 additional jobs
      during the twelve (12) months of the
year
 ·
                  To build at least 30 houses in the
      local Community of Santo Domingo.
 ·
                  To train personnel in the
      Community to handle the necessary machinery and equipment for mining
      operations.
 ·
                  To develop Social Programs for the
      benefit of the Community
 1.  Installation
and integration of clean water treatment plants:
 ·
                  Km 88-Santa Lucia de Inaguay-Las Claritas-Nueves Claritas-Santo
    Domingo
 ·
                  Las Manacas–El  -
      Araymatepury
 2.  Construction
of sewerage systems:
 ·
                  Las Claritas-Nuevas Claritas-Santo
    Domingo
 3.  Improvement
      and Paving of the existing road between Kilometer 85 and Las
      Cristinas
  FOR
THE FOLLOWING YEARS OF THE TERM OF THIS CONTRACT, CRYSTALLEX shall continue to:
provide technical assistance to the small miners associations operating in the
small miners area of the Project, bear the costs of maintenance, supplies and
other operation expenses of the Centro Medico Asistencial Las
Claritas, maintain the scholarship and internship programs for students,
and the training of personnel, perform the activities of maintenance of the road
to which the paragraph corresponding to year 2003 refers.
   D-9
   CLAUSE
EIGHTH
 CRYSTALLEX’S OBLIGATIONS
  1.-
CRYSTALLEX warrants that the operations of the mine subject-matter of Las
Cristinas 4, 5, 6, and 7 Project shall be carried out by competent personnel
with expertise in the gold mining area.  To that end, it shall
establish Training Programs for the personnel.  According to Article
27 of the Organic Labor Law, during performance of this contract, at least
ninety percent (90%) of the employees and of the workers are to be Venezuelans,
except as established in Article 28 of said Law.  Likewise, as from
the date of execution hereof, CRYSTALLEX takes on the administrative personnel
and workers that work at the operation and maintenance facilities of the Camp
committed to Las Cristinas 4, 5, 6, and 7 Project, according to the payroll
provided by THE CORPORATION and identified by letter ‘B’.
  2.-
CRYSTALLEX shall use the most advanced technologies in order to achieve
international standards and competitive cost.  Likewise, it covenants
that the gold mineral shall be recovered according to the best mining techniques
in order to achieve an optimal recovery of the resource, making efforts to
preserve the deposit and the environment in the performance of the exploitation
works.  CRYSTALLEX shall adapt to the provisions established in the
Annual Production Plan approved by THE CORPORATION.
  3.-
CRYSTALLEX is bound to meet the committement of production and tenor of the gold
mineral recovered, in accordance with the Annual Production
Plan.  Therefore, it binds itself to:
  3.1  Adopt
the necessary precautions and measures to prevent and avoid occupational
accidents and place special interest in the compliance with the provisions of
the Ministry of Labor about Industrial health and safety, in pursuance of the
applicable legislation.
  3.2  Supply
the equipment, consumable materials, and related services, such as drainage,
dams, electrical control and distribution facilities, compressed air,
ventilation system, pumping systems, drinking water treatment facilities, sewage
facilities, communications and transport internal and external routes, dining
areas and, in general, all facilities operated by it in the mine
area.
  3.3  CRYSTALLEX
is the sole employer of the personnel assigned to the performance of the works
subject-matter of this contract.  Therefore, it must bear the payment
of all obligations derived from their employment relationship and strictly
comply with the provisions of any applicable laws.
  CRYSTALLEX
expressly accepts to release THE CORPORATION from any joint and several
liability as established in the Organic Labor Law.  By virtue of the
foregoing,
   D-10
   CRYSTALLEX
binds itself to reimburse all expenses or payments that THE CORPORATION may be
bound to make by reason of labor actions filed against the same by virtue of the
joint and several liability established in the aforesaid legal
provisions.
  3.4  CRYSTALLEX
must provide THE CORPORATION with the technical documentation for the obtainment
of the environmental permits necessary for the operation of the mine
subject-matter of Las Cristinas 4, 5, 6, and 7 Project.  CRYSTALLEX
must strictly comply with the applicable environmental legislation in the
performance of the works subject-matter of this contract.
  3.5  CRYSTALLEX
shall handle together with THE CORPORATION the obtainment of all permits for use
of explosives and others stipulated by the Venezuelan laws and regulations in
this connection.
  3.6  CRYSTALLEX,
with the support of THE CORPORATION, must obtain the municipal, state or
national permits or authorizations required for its legal operation, if
applicable.
  3.7  CRYSTALLEX
binds itself to engage, according to its operating requirements, Venezuelan
service companies, preferably local and regional companies, and to purchase
Venezuelan consumable supplies and materials to be used in this project, in
accordance with the provisions of Presidential Decree No. 1.892 dated July 25,
2002, published in Official Gazette of the Bolivarian Republic of Venezuela No.
37.494, dated July 30, 2002.
  3.8  CRYSTALLEX
binds itself to deliver to THE CORPORATION, under inventory, at the end of the
term hereof, all facilities and equipment existing on such date and in proper
operating conditions, normal wear and tear excepted, which must coincide with
the inventory or list of equipment or facilities notified by CRYSTALLEX to THE
CORPORATION at the time of their acquisition or construction, as the case may
be, during the term of this contract.  To that end, CRYSTALLEX binds
itself to deliver to THE CORPORATION the list of equipment to be imported with
its charcteristics and specifications, including its commercial
value.
  3.9  CRYSTALLEX
shall deliver to THE CORPORATION, through the liaison Manager, within the first
seven (7) days of each month, a report of the activities performed (technical
studies made, including field and production information), as well as any other
information required from it, for purposes of following up the project
development.
  3.10  CRYSTALLEX
binds itself to desist from and judicial claim or action that it may have
against THE CORPORATION and THE CORPORATION binds itself to accept.
   D-11
   CLAUSE
NINTH
 THE CORPORATION’S OBLIGATIONS
  1.-
THE CORPORATION binds itself to deliver to CRYSTALLEX the existing technical
studies performed about the area to be contracted, in order for CRYSTALLEX to
make the Certification of the same and afterwards prepare the Feasibility
Study.
  2.-
THE CORPORATION may propose to CRYSTALLEX such specialized technical personnel
as THE CORPORATION considers fit for the development of this project and
CRYSTALLEX is free to hire said suggested personnel.
  3.-
THE CORPORATION shall deliver to CRYSTALLEX, through an inventory attached
hereto as Exhibit ‘F’, at the beginning of the term hereof, the current
facilities of the mine subject-matter of the Las Cristinas 4, 5, 6, and 7
Project, for the purposes of the contract.
  4.-
THE CORPORATION shall take the necessary steps for the obtainment of the
environmental and mining permits required for the execution of this
Project.  In any case, the periods of time established in this
contract shall not begin to elapse until the obtainment of said authorization
permits.
  5.-
All notifications to the MEM hereunder shall be from THE
CORPORATION.
  CLAUSE
TENTH
 Bonds or Guaranties
  1.-
CRYSTALLEX must present within the first sixty (60) days following execution of
the contract and every year a faithful performance bond issued by a bank, for
the performance of the contract, corresponding to five percent (5%) of the
production value of the time that the construction lasts, which bond is to be
released with the Certificate of Commencement (Acia de Inicio) of commercial
production issued by THE CORPORATION.  Likewise, CRYSTALLEX must keep
an insurance policy for the equipment and facilities in order to cover damages,
such as robbery, theft, fire and floods.  Also, it must present a
labor bond to guaranty the labor liabilities to be accrued each
year.
  2.-
CRYSTALLEX, before commencing construction and exploitation, shall present the
environmental bonds in favor of the Ministry of the Environment and Natural
Resources that guaranty the remedy of the environmental damages that may be
caused by the construction and exploitation prescribed in the Project, in order
to proceed in accordance with Article 59 of the Law of Mines.
  CLAUSE
ELEVENTH
 Technical
Supervision
   D-12
   1.-
THE CORPORATION shall create a Liaison Technical Management (Gerencia Técnica de Enlace)
composed of a team of professionals who shall be in charge of supervising the
proper progress of the works.  Such team shall be under the
responsibility of a Link Manager who may be freely designated and removed by THE
CORPORATION.  THE CORPORATION shall deliver to CRYSTALLEX in writing,
as a result of the supervision, the comments or recommendations that it deems
convenient and CRYSTALLEX must give consideration to the same in the terms
indicated, unless CRYSTALLEX has different criteria with respect to the issues
stated, which criteria must be informed to THE CORPORATION in a reasoned manner
for the corresponding discussion to reach an agreement to the satisfaction of
the parties.  Likewise, CRYSTALLEX must bear the expenses of the
remuneration of said Technical Management personnel and shall provide the
necessary logistic support:  it shall make physical space with its
corresponding office furniture and computers available, provide transportation,
board and lodging and shall allow free access to the Project area by the
Technical Management personnel.
  CLAUSE
TWELFTH
 Small Miners
  CRYSTALLEX
binds itself to provide technical assistance under the guidance of THE
CORPORATION to groups of Small Miners organized and identified as Nueves
Claritas, Siete estrellas, Los Rojas, and La Bolivariana, established in
delimited areas within the Las Cristinas project, and any other group that may
be organized and that is approved by CRYSTALLEX, in order to guaranty sound
operating practices and a lesser environmental impact.
  CLAUSE
THIRTEENTH
 Notices
  All
notices to be given hereunder shall be in writing, in the Spanish language, and
personally delivered.  The notices shall be sent to the following
addresses:
  CORPORACION
VENEZOLANA DE GUAYANA
 Edificio
CVG - Alta Vista
 Puerto
Ordaz, Batado Bolivar.
 REPUBLICA
BOLIVARIANA DE VENEZUELA
 Attention:  Gral
(Div) Francisco José Rangel Gómez
 Presídente
de la Corporación Venezolana de Guayana.
 Telephone:  0286
9681474 - 9681475
 Telefax:  0286
9624805
  CRYSTALLEX’s
NAME
 Address:  Torre
Forum, piso 12, Avenida Principal de Las Mercedes con calle Gusicaípuro,
Urbanización El Rosal, Municipio Chacao.
 Attention:  Ing.
Luis Felipe Cottin
   D-13
   Title:  Presidente
de Crystallex de Venezuela, C.A.
 Telephone:  0212
9526061
 Telefax:  0212
9525011
  Any
of the parties may, by written notice, designate another officer as the
addressee of the notices, as well as a new address for sending the corresponding
notices.  All notices shall be deemed to be given at the time when
they are received by the corresponding addressee.
  CLAUSE
FOURTEENTH
 Breach
  1.-
If during the performance of the works herein prescribed, in a period of one
year, CRYSTALLEX is not able to meet the average daily production or tenor of
the mineral recovered established in the Annual Production Plan, CRYSTALLEX
shall provide an economic compensation to THE CORPORATION in proportion to the
benefits not received.
  In
order to quantify this effect of breach, the one-year period shall be counted as
from the first day of work prescribed in the Annual Production Plan and, the
total production of the year divided by three hundred and sixty-five days (365)
shall be used as the daily average.
  The
suspensions of operations due to force majeure are excepted from being
considered as breach, in accordance with Clause Fifteenth hereof.
  2.-
Likewise, the causes described in Article 98 of the Law of Mines shall be deemed
to be breaches.
  3.-
Also, the breach of the environmental conditions issued by the Ministry of the
Environment and Natural Resources (MARN) shall be penalized.
  4.-
The causes defined as Material Breach in Clause First of this
contract.
  CLAUSE
FIFTEENTH
 Force Majeure
  None
of the parties shall be liable for any breach of the obligations undertaken
hereunder, when such breach results from force majeure, which shall consist in
any circumstance beyond the control of any of the parties that has not been
reasonably foreseen and overcome and that may impede or excessively delay the
performance of any obligation established in the contract.  Such
circumstances include, but are not limited to, events of nature such as floods,
earthquakes, strong winds, as well as wars, sedition, epidemic, fire or any
other of the same magnitude, and they also include new
   D-14
   laws,
decrees, regulations, ordinances or administrative acts of the government at its
different levels or branches of State Power (Público), issued by any legally
competent public authority of the corresponding matter, provided that when such
events occur the affected party exercises the due care and diligence to
reasonably control, avoid or prevent the event and the damaging consequences of
the same.  Any of the parties shall notify the other in writing, as
soon as possible, if such party is not able to perform any of its obligations
due to force majeure, as well as the reason for said non-compliance and must
resume performance, if such were the case, within a reasonable period after
disappearance of the force majeure.  But in no case and for no reason
shall the term of this contract be extended beyond the period hereinafter
establishes.
  CLAUSE
SIXTEENTH
 Termination of the
Contract
  1.-
THE CORPORATION and CRYSTALLEX may agree upon the termination hereof by mutual
agreement when it is considered convenient due to the
circumstances.  After a period of time has been agreed by the parties
for the termination of the contract, they both bind themselves to fully perform
the obligations undertaken hereunder.
  2.-
In the event of any of the parties’ breach, according to clause Sixteenth, the
affected party shall have the right to terminate this contract immediately after
the elapsing of ninety (90) days as from the date on which one of the parties
gives written notice to the other attributing to it in a reasoned manner the
breach of any of the obligations undertaken hereunder, provided that said breach
has not been remedied within such period of time.  If the party that
involves the breach considers that it may be remedied before the aforesaid
ninety (90) days, it must expressly indicate in the notice to the other party
the reasonable period of time within which such breach is to be remedied,
expressly stating the reasons on which said period of time is
based.  If the breach is remedied in a period of time longer than that
reasonably stated by the affected party or than that accepted by such affected
party upon the proposal of the other party, provided that such period of time
does not exceed the maximum limit of (90) days, the breaching party shall pay to
the other party the corresponding damages caused by the delay.
  The
stipulations of this number shall be applied in all cases of breach of this
contract, except in the cases in which the clause establishes the form and time
for rescission due to breach, and except as prescribed in Clause Twenty-fourth
hereof.
  CLAUSE
SEVENTEENTH
 Environmental
Legislation
  1.-
CRYSTALLEX shall be responsible for compliance with the provisions in force
regarding environmental conservation, defense, and improvement, specially those
   D-15
   referred
to the control of environmental impact of mining activities and correction,
recovery, and improvement of the affected areas.
  2.-
The mining activities developed in the parcels must be performed in a national
and scientific manner, in accordance with the sustainable development principle,
environment conservation, and land use planning, according to articles 5 and 15
of the Law of Mines.
  3.-
CRYSTALLEX is entitled to the rational use and utilization of public domain
waters, provided that it observes the environmental provisions,
respectively.  Likewise, if necessary, it may use private domain
waters, either through the establishment of easements or via expropriation,
provided that the requirements established in the application legislation are
met.
  4.-
CRYSTALLEX must prepare the Environmental Handling Program and THE CORPORATION
shall review and validate the same and be in charge of the steps to be taken
before the Ministry of the Environment and Natural Resources.
  CLAUSE
EIGHTEENTH
 TERM OF THE CONTRACT
  1.-
This contract shall be in force as from the date of its execution for a period
of twenty (20) years, extendible for one (1) or two (2) periods of ten (10)
years, with the previous written agreement of the parties.  Said
extension must be notified before the term of the contract.
  2.-
CRYSTALLEX binds itself to define and establish, by mutual agreement with THE
CORPORATION and within one (1) year before the end of this contract, a plan for
the transfer of the assets of the Las Cristinas 4, 5, 6 and 7 mine and its
operations to THE CORPORATION.
  CLAUSE
NINETEENTH
 Settlement of
Conflicts
  Any
doubts and controversies of any nature whatsoever that may arise out of the
performance of this contract and which may not be amicably settled by the
parties shall be decided by the competent courts of the Bolivarian republic of
Venezuela, in accordance with its laws, and in no case and for no reason may
they give rise to claims before foreign courts.
  CLAUSE
TWENTIETH
 Assignment of
Contract
  CRYSTALLEX
may not assign, directly or indirectly, in whole or in part, its rights and/or
delegate its obligations hereunder to another natural or legal
person.  Any
   D-16
   assignment
and/or delegation made in violation of this clause shall be null and without
effect, except for the legal penalties derived from such assignment or
delegation.
  CLAUSE
TWENTY-FIRST
 Representations
  1.-
The parties, being aware of the impossibility of foreseeing all contingencies
that may arise during performance of this contract, agree that their intention
is to agree between them on the basis of equity and without damaging the
interests of both of them.  If during performance hereof, any
inequality, damage or injustice arises against any of them, they shall by mutual
agreement endeavor to take the necessary actions to eliminate or remedy such
inequality or damage.
  2.-
The Ministry of Energy and Mines has granted the THE CORPORATION, by means of a
contract entered into on May 16, 2002, in accordance with the provisions of
Decree No. 1.757 of the President of the Republic dated April 29, 2002,
published in Official Gazette of the Bolivarian Republic of Venezuela No.
37.437, dated May 7, 2002, the areas called Cristinas 4, 5, 6 and 7 located in
the Sifontes Municipality of the State of Bolivar for the exploration, recovery
and sale of the gold mineral present in deposits located in said
areas.  Likewise, it has been authorized to use the property committed
to said areas that was transferred to the Republic in accordance with resolution
No. 035 dated March 6, 2002, published in Official Gazette of the Bolivarian
Republic of Venezuela No. 37.400 dated March 8, 2002.  Therefore, no
property rights are transferred to CRYSTALLEX by virtue of this contract or its
Exhibits.
  3.-
this contract is materially and legally complemented and supported, in addition
to the stipulations herein, by its Exhibits mentioned in the text of this
contract, which Exhibits are an integral and indivisible part
hereof.
  4.-
For purposes hereof, it shall be understood that for the technical, geological
and legal knowledge of the Las Cristinas Project that CRYSTALLEX has, it is
willing, ‘for its own risk and account’, to invest its human, technical, and
financial resources in the exploitation of the deposit, without having anything
to claim now and in the future on account of the results obtained in the
exercise of said activities, since as a professional specialized in mining
activities it took precautions, made the pertinent studies, and was able to
foresee the existing situations with respect to geology, production, historical
production figures, mineralogical formation, potential and estimates of the
results obtained and to be obtained.  According to Article 34 of the
Law of Mines, the existence of the mineral and that the same is industrially and
economically exploitable are presumed, until proven to the contrary, but THE
CORPORATION undertakes no responsibility with the execution of the contract for
the truth of such facts.  To such end, THE CORPORATION and CRYSTALLEX
must verify the existing technical information to be delivered by THE
CORPORATION within a term of ninety (90) days as from the execution hereof,
which shall be certified in the Minutes issued for such purposes.
   D-17
   CLAUSE
TWENTY-SECOND
 Complementary
Provisions
  1.-
The parties shall prepare and sign, within a term of thirty (30) working days as
from execution of this contract, a detailed inventory of the facilities,
property and equipment owned by the Republic that exist in the area of Las
Cristinas 4, 5, 6, and 7 at the time when said inventory is signed, in
accordance with number 3 of Clause Ninth hereof, which inventory shall be an
integral part of this contract.
  2.-
Should the MEM grant THE CORPORATION an authorization for the exploration,
exploitation, commercialization, and sale of the copper mineral existing in the
Las Cristinas 4, 5, 6, and 7 area, THE CORPORATION binds itself to enter into
the corresponding addendum with CRYSTALLEX, complementary to this contract, in
order to fix the conditions in which said activities shall be performed by
CRYSTALLEX.
  3.-
This contract may be amended by mutual agreement of the parties, by means of an
addendum therefor entered into, without changing the spirit, purpose and reason
that led them to enter into it.
  CLAUSE
TWENTY-THIRD
 Applicable Law
  The
contracting parties expressly declare that this contract and its exhibits shall
be governed by the laws of the Bolivian Republic of Venezuela.
  CLAUSE
TWENTY-FOURTH
 Rescission of
Contract
  This
contract may be unilaterally rescinded by THE CORPORATION, with no
indemnification whatsoever for CRYSTALLEX, in the event of delay in
commencement, suspension of any of the activities, or breach of contract for a
period of one (1) year without a duly justified reason.
  CLAUSE
TWENTY-FIFTH
 Domicile
  Without
prejudice to the jurisdiction corresponding to the Political-Administrative
Chamber of the Supreme Court of Justice to take cognizance of the controversies
relating to administrative contracts, the city of Ciudad Guayana, Caroni
Municipality of the State of Bolivar, is chosen as the special domicile and the
controversies shall be submitted to the courts of said city.
   D-18
   This
contract is made in three (3) counterparts with the same contract and effects,
in Ciudad Guayana, on the seventeenth day of the month of September of year
2002.
  By
      THE CORPORATION
                  By
      CRYSTALLEX(Sgd.)
      (Illegible)
                  (Sgd.)
      (Illegible)
  BOLIVARIAN
REPUBLIC OF VENEZUELA, Dr. PEDRO E. ALFARO, NOTARY PUBLIC OF THE FOURTH NOTARY
PUBLIC’S OFFICE OF PUERTO ORDAZ, AUTONOMOUS MINICIPALITY OF CARONI OF THE STATE
OF BOLIVAR, Puerto Ordaz, September 17, Two Thousand and Two, 192° and
143°.  The foregoing document drawn up by lawyer FIRELY C. NAVARRO,
registered in the Inpreabogado under No. 11121
was presented to be authenticated and returned, as per form No. 38890, dated
09-17-2002.  The parties executing the document being present, they
stated that their names were FRANCISCO JOSÉ RANGEL GOMEZ AND MARC J.
OPPENHEIMER, of legal age, domiciled in Puerto Ordaz, State of Bolivar, a
citizen of Venezuela and a citizen of the United States of America, both
married, holders of Identity Card No. 2.520.281 and Passport No.
152092004.  The original having been read to them and compared to its
copies and such original and copies having been signed before the Notary, the
executing parties stated:  “ITS CONTENT IS TRUE AND OURS THE
SIGNATURES THAT APPEAR AT THE BOTTOM THEREOF”.  The Notary, by virtue
whereof, declares it authenticated in the presence of witnesses YANNINA GUILLEN
and GABRIELA RODRIGUEZ, holders of Identity Cards Nos. 11.995.595 and
11.636.896.  The document was recorded under No. 16, Volume 86 of the
Books of Authentication kept by this Notary Public’s Office.  The
undersigned Notary Public certifies that in this act Article 78, Number 2 of the
Decree with the Force of Law on Public Registry and Notary Public’s Offices was
complied with.  Likewise, he certifies that he saw:  1)
Decree No. 430 of the CORPORACIÓN VENEZOLANA DE GUAYANA, dated 12-29-1960,
published in Official Gazette of the Republic of Venezuela No. 26.445 dated
12-30-1960, the last amendment to which having been made through Decree of Law
No. 1.531 dated 11-07-2001, published in Official Gazette of the Bolivarían
Republic of Venezuela No. 5,553 dated 11-12-2001, which has the prerogatives and
privileges that the National Treasury grants in the Preliminary Title of the
Organic Law on National Public Finance and is exempt from the payment of all
taxes, duties, and contributions as determined by articles 24 and 25 of said
Decree, represented by its President, Francisco Rangel Gomez, according to
designation made by the President of the Republic through Presidential Decree
No. 1.034, published in Official Gazette of the Bolivarían Republic of Venezuela
No. 37.054, on 10-10-2000, sufficiently authorized for this act according to
articles 36 and 37 of said Decree-Law.  2) Resolution No. 8.700 and
Resolution DIR-No. 8,705 dated:  09-02-2002 and 09-16-2002,
respectively.  3) Resolution of the Board of Directors of CRYSTALLEX
INTERNATIONAL CORPORATION dated 09-16-2002.  4) The Notary’s Office
was convened at the office of C.V.G., Alta Vista, Puerto Ordaz, today, at 11:00
a.m., upon the request from the interested party.
   D-19
   The
Notary Public (Sgd.) (Illegible).  Dr. Pedro E. Alfaro, Fourth Notary
Public of Puerto Ordaz.  The Witnesses. (Sgd.) (Illegible) Yamína
Guillén. (Sgd.) (Illegible) Garbriela Rodríguez.  The executing
Parties (Sgd.) (Illegible) Francisco J. Rangel Gomez, (Sgd.) (Illegible) Marc J.
Oppenheimer.
 The
undersigned Notary Public does hereby certify that he saw By-Laws No. 1, By-laws
referred to, in general, to the performance of the businesses and affairs of
CRYSTALLEX INTERNATIONAL CORPORATION, dated 01-23-1998.
 THE
NOTARY PUBLIC, Dr. Pedro E. Alfaro M. Fourth Notary Public of Puerto
Ordaz.
 (There
is a linear seal that reads: ‘Attorney Firely C. Navarro, L.P.S.A. No. 11121.
VPC Legal Affairs’ and there is an illegible signature on the
same.  There is a linear seal that reads:  ‘Fourth Notary
Public’s Office of Puerto Ordaz, Form No.
38890.  Fees:  n/a.  Execution:
09-17-02’.  There are several round seals that
read:  ‘Bolivarían Republic of Venezuela.  Ministry of the
Interior and Justice, Fourth Notary Public’s Office.  Autonomous
Municipality of Caroni, Pto Ordaz’, with the Coat of Arms of the Bolivarían
Republic of Venezuela in the center.  There are initials on the
pages).”
 
 The
foregoing is a true and exact translation of the attached document written in
Spanish, rendered upon the request from an interested party, IN WITNESS WHEREOF,
I affix my signature and stamp my official seal in Caracas, on this eighteenth
day in the month of January, year Two Thousand and Five.
   D-20
    PRESIDENTIAL
DECREE 1.757
     Decree No.
      1.757
                  April 29,
      2002
  HUGO
CHAVEZ FRIAS
 President
of the Republic
  In
compliance of article 23 of the Decree with Rank and Force of Law of Mines, in
Council of Ministers in Government.
  WHEREAS
  It
is a priority for the Republic, the reactivation of the mining activity to the
effects of increasing its contribution to the National Product and to the
generation of employment,
  WHEREAS
  That
the Activities of Mining are of relevant importance for the Region of
Guayana,
  WHEREAS
  That
the deposits located in the area of the expired and extinguished gold
concessions Cristina 4, Cristina 5, Cristina 6 y Cristina 7, constitute an
important reservoir of this mineral,
  DECREES
  Article 1°. Shall be reserved
to the National Executive, through the Ministry of Energy and Mines, the direct
exercise of the exploration and exploitation of the gold mineral located at the
deposit in the area of the expired and extinguished concessions of gold Cristina
4, Cristina 5, Cristina 6 and Cristina 7, located in the Municipality of
Sifontes of the State of Bolivar.
  Article 2°. The area
denominated Cristina 4 has a total surface of approximately ONE THOUSAND
HECTARES (1000 Ha), defined by a closed polygonal and vertex expressed in the
coordinates U.T.M. (Universal Transversal of Mercator) Huso 20, Datum La Canoa
and Datum Sirgas-Regven
 Datum
La Canoa.
  Datum
      La Canoa
                  Datum
      Sirgas-Regven
   D-21
   POINT
                  NORTH(m)
                  EAST
      (m)
                  NORTH
      (m)
                  EAST
      (m)BOT-1
                  683,208.00
                  666,284.00
                  682,850.76
                  666,093.52BOT-2
                  685,208.00
                  666,284.00
                  684,850.76
                  666,093.52BOT-3
                  685,208.00
                  671,284.00
                  684,850.76
                  671,093.50BOT-4
                  683,208.00
                  671,284.00
                  682,850.78
                  671,093.50
  Article 3°. The area
denominated Cristina 5 has an approximated total surface of NINE HUNDRED THIRTY
NINE WITH FOUR HECTARES (939,4 Ha), defined by a closed polygonal and vertex
expressed in the coordinates U.T.M. (Universal Transversal of Mercator) Huso 20,
Datum La Canoa. And Datum Sirgas-Regven
  Datum
      La Canoa
                  Datum
      Sirgas-Regven
 
 POINT
                  NORTH(m)
                  EAST
      (m)
                  NORTH
      (m)
                  EAST
      (m)BOT-1
                  685,208.00
                  671,284.00
                  684,850.77
                  671,093.50BOT-2
                  685,208.00
                  668,340.00
                  684,850.77
                  668,149.50BOT-3
                  687,070.00
                  668,340.00
                  686,712.76
                  668,149.50BOT-4
                  687,070.00
                  673,340.00
                  686,712.78
                  673,149.49BOT-5
                  685,208.00
                  673,340.00
                  684,850.77
                  673,149.49
  Article 4°. The area
denominated Cristina 6 has an approximated total surface of NINE HUNDRED FORTY
FOUR AND TWO HECTARES (944,02 Ha), defined by a closed polygonal and vertex
expressed in the coordinates U.T.M. (Universal Transversal of Mercator) Huso 20,
Datum La Canoa. And Datum Srigas-Regven
  Datum
      La Canoa
                  Datum
      Sirgas-Regven
 
 POINT
                  NORTH(m)
                  EAST
      (m)
                  NORTH
      (m)
                  EAST
      (m)BOT-1
                  685,208.00
                  668,340.00
                  684,850.77
                  668,149.50BOT-2
                  685,208.00
                  663,340.00
                  684,850.75
                  663,149.52BOT-3
                  687,070.00
                  663,340.00
                  686,712.74
                  663,149.52BOT-4
                  687,070.00
                  668,340.00
                  686,712.76
                  668,149.50
  Article 5°. The area
denominated Cristina 7 has an approximated total surface of ONE THOUSAND TWO
HECTARES (1002 Ha), defined by a closed polygonal and vertex expressed in the
coordinates U.T.M. (Universal Transversal of Mercator) Huso 20, Datum La Canoa
and Datum Sirgas­Regven.
   D-22
   Datum
      La Canoa
                  Datum
      Sirgas-Regven
 
 POINT
                  NORTH(m)
                  EAST
      (m)
                  NORTH
      (m)
                  EAST
      (m)BOT-1
                  887,070.00
                  563,340.00
                  686,712.74
                  663,149.52BOT-2
                  689,070.00
                  663,340.00
                  688,712.73
                  663,149.51BOT-3
                  689,070.00
                  668,340.00
                  688,712.75
                  668,149.49BOT-4
                  687,070.00
                  668,340.00
                  686,712.73
                  668,149.50
  Article 6°. In exercise of the
right of exploration and exploitation referred in Article 1 of this Decree, the
Minister of Energy and Mines has the faculty to contract with the Corporación
Venezolana de Guayana or with any other entity of the exclusive property of the
Republic, the activities required to carry out said exploration and
exploitation, in the technical and economical terms more convenient for the
rational exploitation of the mentioned deposits.
  Article 7°. The present Decree
will enter in force and effect from its publication in the Official Gazette of
the Bolivarian Republic of Venezuela.
  Article 8°. The Secretaries of
Energy and Mines and of the Secretary of the Presidency of the Republic are in
charge of the execution of this Decree.
  In
Caracas, April 20, 2002. Year 192° of the Independency and 143° of the
Federation.
  Be
Executed.
   HUGO
CHAVEZ FRIAS
   D-23
   AGREEMENT
BETWEEN THE MINISTRY OF ENERGY AND MINES
 AND
THE CVG WITH RESPECT TO THE LAS CRISTINAS DEPOSITS
   Bolivarian
Republic of Venezuela
 Ministry
of Energy and Mines
 Office
of the Minister
  The
Bolivarian Republic of Venezuela, through the Ministry of Energy and Mines,
represented in this act by its Minister, Dr. Alvaro Silva Calderón, a
Venezuelan, of legal age, of this domicile, and bearer of Identity Card
V-928.729, authorized by designation conferred through Decree No. 1.153, dated
December 28, 2000, published in Official Gazette of the Bolivarian Republic of
Venezuela No. 37,108 dated December 28, 2000, hereinafter referred to as “THE
MINISTRY”, on the one hand; and on the other, the Corporación Venezolana de
Guayana an Autonomous Institute assigned to the Ministry of the Secretary of the
Presidency, created by Decree No. 430, dated December 29, 1960, published in
Official Gazette of the Republic of Venezuela No. 26.445, dated December 30,
1960, amended by Decree No. 1.531 with the Force of Law of Partial Amendment to
the Organic Statute of Development of Guayana, dated November 7, 2001, published
in Official Gazette of the Bolivarian Republic of Venezuela No. 5.553,
Extraordinary, dated November 12, 2001, represented in this act by its
President, Major General (Army), Francisco José Rangel Gómez, a Venezuelan, of
legal age, domiciled in Ciudad Bolívar, bearer of Identity Card No. V-2.520.281,
which designation is evidenced from Decree No. 1.034, published in Official
Gazette of the Bolivarian Republic of Venezuela No. 37.054, dated October 10,
2000, and in accordance with the provision of article 36 and number 10 of
article 37 of the aforesaid Decree-Law No. 1.531, hereinafter referred to as
“THE CORPORATION”, have agreed, in accordance with number 8 of article 4 of the
above-mentioned Decree No. 1.531 dated November 7, 2001, to enter into this
Contract in the terms and conditions specified in the following
clauses:
  FIRST:
“THE MINISTRY” authorizes “THE CORPORATION” for the execution of the works of
exploration, exploitation, and sale of the gold mineral that is in the deposits
located in the areas of the concessions called Cristina 4, Cristina 5, Cristina
6 and Cristina 7, in the Municipality of Sifontes of the State of Bolivar, all
in accordance with
   D-24
   the
plans attached hereto as Annex “A” that are an integral part hereof. Likewise,
it authorizes “THE CORPORATION” for the use of the property committed to said
concessions that was transferred to the Republic according to Resolution No.
035, dated March 6, 2002, published in Official Gazette of the Bolivarian
Republic of Venezuela No. 37.400, dated March 08, 2002, and Minutes dated May
10, 2002.
  The
area and coordinates of said concessions are the following:
  a.           The
area called Cristina 4 has an appropriate total area of ONE THOUSAND HECTARES
(1,000 Ha.), defined by a closed traverse line and vertices expressed in U.T.M.
(Universal Transversal Mercator) coordinates, Zone (Huso) 20, Datum La Canoa and
Datum Sirgas-Regven.
  Datum
      La Canoa
                  Datum
      Sirgas-Regven
 
 POINT
                  NORTH(m)
                  EAST
      (m)
                  NORTH
      (m)
                  EAST
      (m)BOT-1
                  683,208.00
                  666,284.00
                  682,850.76
                  666,093.52BOT-2
                  685,208.00
                  666,284.00
                  684,850.76
                  666,093.52BOT-3
                  685,208.00
                  671,284.00
                  684,850.76
                  671,093.50BOT-4
                  683,208.00
                  671,284.00
                  682,850.78
                  671,093.50
 
  b.           The
area called Cristina 5 has an approximated total area of NINE HUNDRED THIRTY
NINE HECTARES AND FOUR ARES (939.4 Ha.), defined by a closed traverse line and
vertices expressed in U.T.M. (Universal Transversal of Mercator) coordinates,
Zone (Huso) 20, Datum
La Canoa and Datum Sirgas-Regven.
  Datum
      La Canoa
                  Datum
      Sirgas-Regven
   D-25
    POINT
                  NORTH(m)
                  EAST
      (m)
                  NORTH
      (m)
                  EAST
      (m)BOT-1
                  685,208.00
                  671,284.00
                  684,850.77
                  671,093.50BOT-2
                  685,208.00
                  668,340.00
                  684,850.77
                  668,149.50BOT-3
                  687,070.00
                  668,340.00
                  686,712.76
                  668,149.50BOT-4
                  687,070.00
                  673,340.00
                  686,712.78
                  673,149.49BOT-5
                  685,208.00
                  673,340.00
                  684,850.77
                  673,149.49
   c.           The
area called Cristina 6 has an approximated total area of NINE HUNDRED FORTY FOUR
HECTARES AND TWO ARES (944.02 Ha.), defined by a closed traverse line and
vertices expressed in U.T.M. (Universal Transversal of Mercator) coordinates,
Zone (Huso) 20, Datum
La Canoa and Datum Sirgas-Regven.
  Datum
      La Canoa
                  Datum
      Sirgas-Regven
 
 POINT
                  NORTH(m)
                  EAST
      (m)
                  NORTH
      (m)
                  EAST
      (m)BOT-1
                  685,208.00
                  668,340.00
                  684,850.77
                  668,149.50BOT-2
                  685,208.00
                  663,340.00
                  684,850.75
                  663,149.52BOT-3
                  687,070.00
                  663,340.00
                  686,712.74
                  663,149.52BOT-4
                  687,070.00
                  668,340.00
                  686,712.76
                  668,149.50
  d.           The
area called Cristina 7 has an approximate total area of ONE THOUSAND TWO
HECTARES (1,002 Ha.), defined by a closed traverse line and vertices expressed
in U.T.M. (Universal Transversal Mercator) coordinates, Zone (Huso) 20, Datum La
Canoa  and Datum Sirgas-Regven.
  Datum
      La Canoa
                  Datum
      Sirgas-Regven
 
 POINT
                  NORTH(m)
                  EAST
      (m)
                  NORTH
      (m)
                  EAST
      (m)BOT-1
                  687,070.00
                  663,340.00
                  686,712.74
                  663,149.52BOT-2
                  689,070.00
                  663,340.00
                  688,712.73
                  663,149.51BOT-3
                  689,070.00
                  668,340.00
                  688,712.75
                  668,149.49BOT-4
                  687,070.00
                  668,340.00
                  686,712.73
                  668,149.50
 
  D-26
   SECOND:
For purposes of an adequate performance of this Contract, “THE CORPORATION” may
enter into operation agreements with third parties, after informing the Ministry
of Energy and Mines in writing within a period of time not shorter than ten (10)
business days.
  THIRD:  “THE
CORPORATION” covenants that the exploitation of the gold mineral shall be made
in accordance with the best mining techniques in order to achieve an optimal
recovery of the resource, making efforts to conserve the deposit and preserve
the environment. For the execution of the exploitation works, “THE CORPORATION”
shall adjust to the provisions established in the plans of exploration,
exploitation and other activities to that end made by it, which plans must be
previously approved by the THE MINISTRY and other entities related to the
matter.
  For
purposes of this Clause, compliance with the provisions in force regarding
environmental conservation, defense, and improvement, specially those referred
to the control of environmental impact of mining activities and the correction,
recovery, and improvement of the affected areas, shall be of the exclusive
responsibility of “THE CORPORATION”.
  FOURTH:  “THE
CORPORATION’s failure to comply with the plans prescribed in Clause THIRD shall
be a cause for rescission of this Contract.
  FIFTH:  Of
the gross income generated by the exploitation and sale of the gold mineral, THE
CORPORATION binds itself to deliver on a quarterly basis to the National
Treasury (Fisco
Nacional) three percent (3%) of the commercial value in Caracas of the
mineral sold.
  SIXTH:  THE
CORPORATION shall deduct from the gross income generated by the exploitation and
sale of the gold mineral all the expenses accrued or paid, as the case may be,
which are normal and necessary, made in the country with the purpose of
   D-27
   producing
the benefits, such as: salaries and wages, interest of principal received from
loans and invested in production; taxes paid by reason of economic activities or
of property that generates income, indemnification corresponding to the workers
by virtue of the work, determined according to the Law or to employment
contracts, a reasonable amount to meet the depreciation of permanent assets and
the amortization of the cost of other elements invested in production; the
expenses of administration and conservation of real property given in lease, the
expenses of ordinary repairs of property intended for production, and research
and development expenses, among others. From the result obtained, THE
CORPORATION binds itself to deliver to the National Treasury (Fisco National) an amount of
thirty-four percent (34%).
  SEVENTH:  If
THE CORPORATION executes the exploitation of the deposits referred to in this
Contract by itself, Clause SIXTH hereof shall not be applied.
  EIGHTH:
THE CORPORATION, in addition to observing the Decree with the Status and Force
of Law of Mines dated September 5, 1999, published in Official Gazette of the
Republic of Venezuela No. 5.382, Extraordinary, dated September 28, 1999, to the
extent possible, must provide the officials of the Ministry of Energy and Mines
with the information required and the facilities that its employees may require
for a better performance of their functions.
  NINTH:  “THE
CORPORATION” must begin the works of exploitation of the gold mineral of the
deposits of concessions Cristina 4, Cristina 5, Cristina 6, and Cristina 7,
within two (2) years after the date when this Contract is entered into. Failure
to perform this obligation, as well as the interruption of the exploitation for
a period of two (2) years, shall be a cause for rescission of this
Contract.
  TENTH:  THE
CORPORATION binds itself to use preferably Venezuelan workers and employees and,
if possible, of the region. To that end, it shall establish, to the extent
possible, personnel training programs. Likewise, it shall give preference to
regional
   D-28
   companies
for the purchase of goods, materials, equipment or machinery, specialized
services, and execution of infrastructure works and various supporting tasks,
always provided that both the personnel and the companies are qualified
therefor.
  ELEVENTH:  Failure
to perform or delay in performance of any of the obligations of this Contract
shall not be considered as non-performance, violation or breach of the same, if
such failure or delay is due to act of God or force majeure. Labor
conflicts, strikes, any order or requirement from a legitimate authority,
explosions, wars and blockades, sabotages, mutinies, fire, floods, lightning, or
other acts of nature shall be considered as such, provided that at the time of
occurrence of such events the affected Party exercises due care and diligence to
reasonably control, avoid, or prevent the event and its damaging consequences.
Either Party, as soon as possible, shall notify the other Party in writing the
cause for the failure to perform any of its obligations due to force majeure,
and shall resume performance, if such were the case, within a reasonable period
of time after the force majeure that give rise to the failure to perform has
disappeared. But in no case and for no cause shall the duration of this Contract
be extended beyond the period of time established in Clause
Thirteenth.
  TWELFTH:  The
doubts and controversies of any nature whatsoever that may arise by reason of
the performance of this Contract and which cannot be amicably settled by the
Parties shall be decided by the competent courts of the Bolivarian Republic of
Venezuela, in accordance with its laws, and for no reason or cause shall they
give rise to foreign claims.
  THIRTEENTH:  This
Contract shall be in effect from the date of its execution for up to a period of
twenty (20) years, extendable for two (2) periods of ten (10) years each, with
the prior written agreement of the Parties.
  FOURTEENTH:  For
purposes of this Contract, its effects and consequences, the city of Caracas is
chosen as special domicile, and the Parties declare to submit themselves to
   D-29
   the
jurisdiction of the competent Courts of said city. This Contract is made in
three (3) counterparts with the same content and effects. In Caracas, on the
16th day of the month of May of 2002.
  (Sgd.)
(Illegible)                                                                (Sgd.)
(Illegible)
 By
the Ministry
of                                                                       By
the Corporation
 Energy
and
Mines                                                                       Venezolana
de Guayana
   D-30
   BOLIVARIAN
REPUBLIC OF VENEZUELA, MINISTRY OF THE INTERIOR AND JUSTICE SECOND NOTARY
PUBLIC’S OFFICE OF PUERTO ORDAZ AUTONOMOUS MUNICIPALITY OF CARONI OF THE STATE
OF BOLIVAR, Puerto Ordaz. June 13, 2002. 192° and 143°. The foregoing document,
drawn up by lawyer Firely C. Navarro A., duly registered in the Bar Association
under Diploma No. (blank), in Association (Blank) and registered in the Inpreabogado under No.
11.121, Legal Fee Form No 175528, dated 06-13-2002 was paid, under the Law on
Legal Fees currently in force, only with respect to the signature of FRANCISCO
JOSE RANGEL GOMEZ, of legal age, domiciled in Ciudad Guayana, a Venezuelan,
married, bearer of Identity Card No. 2.520.281.The document having read, the
executing party stated:  “Its content is true and mine the signature
that appears at the bottom of the instrument.” The Notary, by virtue whereof,
certifies this document and the copies with original signatures that will form
the Principal Volume and the Duplicate, the document being registered under No.
08, Volume 82 of the Authentication Books. Witnesses were María de Lanser and
Noravis Alcalá, bearers of Identity Cards Nos. 6.022.083 and 9.903.288, officers
of this Notary’s Office designated for this act. The Notary Public certifies
that he saw: 1) One counterpart of Official Gazette of the Republic of Venezuela
No. 26.445 dated November. 30, 1960. 2) One counterpart of Official Gazette of
the Bolivarian Republic of Venezuela No. 5.553 (Extraordinary) dated November
12, 2001 and 3) One counterpart of Official Gazette of the Republic of Venezuela
No. 37.054 dated
   D-31
   BOLIVARIAN
REPUBLIC OF VENEZUEIA, MINISTRY OF THE INTERIOR AND JUSTICE. Dr. YOLANDA MENDOZA
F. PROVISIONAL FIRST NOTARY PUBLIC OF THE AUTONOMOUS MUNICIPALITY OF BARUTA OF
THE STATE OF MIRANDA. June 19, 2002. 192° and 143°. The foregoing document,
drawn up by lawyer Firely C. Navarro A., registered in the Inpreabogado under No.
11.121, was presented to be authenticated and returned as per Form No. 99.486,
dated 06-17-2002. The executing party being present, he stated that his name was
Alvaro Silva Calderón, of legal age, domiciled in Caracas, a Venezuelan,
married, bearer of Identity Card No. 928.729. The document having read and
compared with its photocopies and the photocopies and the original having been
signed, he stated: “Its content is true and mine the signature that appears at
the bottom of the instrument” The Notary, by virtue whereof, declares it
authenticated in the presence of witnesses Cristobal Bravo and Jaime Andreu
bearers of Identity Cards Nos. 12.357.090 and 14.157.533, the document being
recorded under No. 28, Volume 40, of the Authentication Books kept by this
Notary Public’s Office. The undersigned Notary certifies that she saw Decree No.
1.153 dated December 28, 2000, published in Official Gazette of the Bolivarian
Republic of Venezuela No. 37.108, dated December 28, 2000. Likewise, the
undersigned Notary certifies that the Notary’s Office was convened at TORRE
OESTE, PISO 14, PARQUE CENTRAL today at 7:00 p.m. upon the request from an
interested party. Officer authorized for this act Virgilio Suares, Identity Card
No. 2.070.097. Signautre (Sgd.) (Illegible). The Provisional Notary Public.
(Sgd.) (Illegible). Dra. Yolanda Espinoza Foucault. Provisional First Notary
Public of the Municipality of Baruta, Miranda State. Witnesses (Sgd.)
(Illegible). (Sgd.) (1llegiblle). The Executing Party (Sgd.)
(Illegible).
  D-32
   SCHEDULE
“E”
 AUDIT
COMMITTEE CHARTER
  1.           General
  (1)
                  The
      board of directors (Board)
      of Crystallex International Corporation (Corporation)
      has established the Audit Committee (Committee)
      to assist the Board in fulfilling its corporate governance and oversight
      responsibilities with respect to the accounting and financial reporting
      processes, internal financial control structure, financial risk management
      systems and external audit
function.
  (2)
                  The
      composition, responsibilities and authority of the Committee are set out
      in this Charter.
  (3)
                  This
      Charter and the by-laws of the Corporation and such other procedures, not
      inconsistent therewith, as the Committee may adopt from time to time,
      shall govern the meetings and procedures of the
  Committee.
  2.           Composition
  (1)
                    The
      Committee shall be composed of at least three directors of the Corporation
      (Members):
 (a)
                  all
      of whom are independent (as
      determined by the Board in accordance with the Policy on Independence of
      Directors of the Corporation);
  (b)
                  all
      of whom are financially
      literate (i.e., have the ability to read and understand a set of
      financial statements that present a breadth and level of complexity of
      accounting issues that are generally comparable to the breadth and
      complexity of the accounting issues that can reasonably be expected to be
      raised by the financial statements of the Corporation);
  and
  (c)
                  at
      least one of whom is financially
      sophisticated (i.e., has past employment experience in finance or
      accounting, requisite professional certification in accounting or other
      comparable experience or background that results in his/her financial
      sophistication).
  (2)
                  Members
      shall be appointed by the Board and shall serve until they resign, cease
      to be a Director or are removed or replaced by the
  Board.
  (3)
                  The
      Board shall designate one of the Members as chair of the Committee (Chair).
  (4)
                  The
      Secretary of the Corporation shall be secretary of the Committee (Secretary).
  3.           Responsibilities
  The
Committee shall assist the Board in fulfilling its corporate governance and
oversight responsibilities with respect to accounting and financial reporting
processes, internal financial control structure, financial risk management
systems and external audit function.
  The
Committee shall have the responsibilities set out below.
  3.1        Managing, on
behalf of the Shareholders of the Corporation, the Relationship between the
Corporation and its External Auditors
  The
Committee shall be responsible for managing, on behalf of the shareholders of
the Corporation, the relationship between the Corporation and its external
auditors, including:
  (a)
                  appointing
      the external auditors, subject to shareholder
  approval;
  (b)
                  setting
      the compensation of the external
auditors;
   E-1
   (c)
                  overseeing
      the work of the external auditors, including the resolution of
      disagreements between management and the external auditors with respect to
      financial reporting;
  (d)
                  pre-approving
      all audit services and permitted non-audit services to be provided to the
      Corporation and its subsidiary entities by the external
      auditors;
  (e)
                  having
      the external auditors report to the Committee in a timely manner with
      respect to all required matters, including those set out in paragraph
      3.2;
  (f)
                  reviewing
      and approving the hiring policies of the Corporation with respect to
      present and former partners and employees of the current and former
      external auditors;
  (g)
                  overseeing
      the rotation of the audit partner having primary responsibility for the
      external audit of the Corporation, the audit partner responsible for
      reviewing the external audit and the external auditors at such intervals
      as may be required;
  (h)
                  overseeing
      any change in the external auditors, including the notice of change of
      auditors required under applicable laws;
and
  (i)
                  reviewing
      and assessing the performance, independence and objectivity of the
      external auditors.
  3.2           Overseeing the External
Audit
  The
Committee shall be responsible for overseeing the external audit of the
Corporation, including:
  (a)
                  reviewing
      and approving the engagement letter and the audit plan, including
      financial risk areas identified by the external auditors and management,
      and facilitating coordination where more than one audit firm is
      involved;
  (b)
                  reviewing
      and assessing the accounting and reporting practices and principles used
      by the Corporation in preparing its financial statements,
      including:
  (1)
                  all
      significant accounting policies and practices used, including any changes
      from preceding years and any proposed changes for future
      years;
  (2)
                  all
      significant financial reporting issues, estimates and judgments
      made;
  (3)
                  all
      alternative treatments of financial information discussed by the external
      auditors and management, the results of such discussions and the
      treatments preferred by the external
auditors;
  (4)
                  any
      material issues identified by the external auditors with respect to the
      adequacy of the internal financial control structure and any special audit
      steps adopted in light of material deficiencies or
    weaknesses;
  (5)
                  the
      effect of regulatory and accounting initiatives and off-balance sheet
      transactions or structures on the financial
  statements;
  (6)
                  any
      errors or omissions in, and any required restatement of, the financial
      statements for preceding years;
  (7)
                  all
      significant tax issues;
  (8)
                  the
      reporting of all material contingent liabilities and related party
      transactions; and
  (9)
                  any
      material written communications between the external auditors and
      management;
   E-2
   (c)
                  reviewing
      and assessing the results of the external audit and the external auditors’
      opinion on the financial statements,
including:
  (1)
                  the
      scope and quality of the external and internal audit work
      performed;
  (2)
                  the
      resources required to carry out the audit work
  performed;
  (3)
                  the
      cooperation and any lack of cooperation received by the external auditors
      from employees of the Corporation;
and
  (4)
                  the
      contents of the audit report;
  (d)
                  reviewing
      and discussing with the external auditors and management any management or
      internal control letters issued or proposed to be issued by the external
      auditors;
  (e)
                  reviewing
      and discussing with the external auditors any problems or difficulties
      encountered by them in the course of their audit work and management’s
      response (including any restrictions on the scope of activities or access
      to requested information and any significant disagreements with
      management); and
  (f)
                  reviewing
      and discussing with legal counsel and other advisors matters that may have
      a material impact on the financial statements, operations, assets or
      compliance policies of the Corporation and any material reports or
      enquiries received by the Corporation and its subsidiary entities from
      regulators or government agencies.
  3.3           Reviewing and Approving and
Recommending to the Board for Approval the Financial Statements, MD&A and
Interim Reports of the Corporation
  The
Committee shall review and approve, and where required recommend to the Board
for approval, the financial statements, management’s discussion and analysis of
financial condition and results of operations (MD&A)
and interim financial reports of the Corporation and other public disclosure of
financial information extracted from the financial statements of the Corporation
with particular focus on:
  (a)
                  the
      quality and appropriateness of accounting and reporting practices and
      principles and any changes thereto;
  (b)
                  major
      estimates or judgments, including alternative treatments of financial
      information discussed by management and the external auditors, the results
      of such discussions and the treatments preferred by the external
      auditors;
  (c)
                  material
      financial risks;
  (d)
                  material
      transactions;
  (e)
                  material
      adjustments;
  (f)
                  compliance
      with loan agreements;
  (g)
                  material
      off-balance sheet transactions and
structures;
  (h)
                  related
      party transactions;
  (i)
                  compliance
      with accounting standards;
  (j)
                  compliance
      with legal and regulatory requirements;
and
  (k)
                  disagreements
      with management.
   E-3
   3.4           Overseeing Internal Financial
Control Structure and Financial Risk Management Systems
  The
Committee shall be responsible for overseeing the internal financial control
structure and financial risk management systems of the Corporation,
including:
  (a)
                  reviewing
      and discussing with management and the external auditors the quality and
      adequacy of the internal control over financial reporting structure of the
      Corporation including any material deficiencies or weakness and the steps
      taken by management to rectify these deficiencies or
      weaknesses;
  (b)
                  reviewing
      and discussing with management and the external auditors the quality and
      adequacy of the financial risk management systems of the Corporation
      including the major financial risk exposures of the Corporation and the
      steps taken by management to monitor and control these
      exposures;
  (c)
                  reviewing
      and discussing with management and the external auditors the establishment
      of and compliance with the Code of Business Conduct and Ethics of the
      Corporation; and
  (d)
                  reviewing
      and discussing with the Chief Executive Officer and the Chief Financial
      Officer of the Corporation the procedures undertaken by them in connection
      with the certifications required to be given by them in connection with
      annual and other filings required to be made by the Corporation under
      applicable securities laws.
  3.5           Establish and Review Certain
Procedures
  The
Committee shall establish adequate procedures, or require that adequate
procedures are established, with respect to the following and shall annually
assess the adequacy of these procedures:
  (a)
                  the
      review of the public disclosure of financial information extracted from
      the financial statements of the
Corporation;
  (b)
                  the
      receipt, retention and treatment of complaints received by the Corporation
      with respect to accounting, internal accounting controls or auditing
      matters; and
  (c)
                  the
      confidential, anonymous submission by employees of the Corporation of
      concerns regarding questionable accounting or auditing
      matters.
  3.6           Other
  The
Committee shall:
  (a)
                  in
      cooperation with the Board and management, develop a calendar of
      activities and a meeting schedule for each
year;
  (b)
                  review
      the operating and capital budgets of the
  Corporation;
  (c)
                  annually
      and more frequently if appropriate, review the funding and administration
      of the employee benefit plans of the Corporation;
  and
  (d)
                  review
      and discuss with management and the external auditors any material
      difficulties or problems with regulatory or government agencies with
      respect to financial matters and management’s response
      thereto.
  3.7           Matters for which the Audit
Committee is not Responsible
  The
Committee is not responsible for those matters which are the responsibility of
management or the external auditors including:
   E-4
   (a)
                  planning
      and conducting the external audit;
  (b)
                  ensuring
      that the financial statements of the Corporation have been prepared in
      accordance with generally accepted accounting
  principles;
  (c)
                  ensuring
      that the financial statements of the Corporation and the other financial
      information of the Corporation contained in regulatory filings and other
      public disclosure of the Corporation fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the Corporation;
  (d)
                  ensuring
      the adequacy of the internal control over financial reporting structure
      and the financial risk management systems of the Corporation;
      and
  (e)
                  ensuring
      compliance with applicable laws and regulations or the Code of Business
      Conduct and Ethics of the
Corporation.
  4.           Authority
  (1)
                  The
      Committee is authorized to carry out its responsibilities as set out in
      this Charter and to make recommendations to the Board arising
      therefrom.
  (2)
                  The
      Committee may delegate to the Chair and to the Chief Financial Officer of
      the Corporation (CFO)
      the authority, within specified limits, to authorize in advance all
      engagements of the external auditors to provide pre-approved services to
      the Corporation and its subsidiary entities.  The Chair and the
      CFO shall report all engagements authorized by them to the Committee at
      its next meeting.
  (3)
                  The
      Committee shall have direct and unrestricted access to the external
      auditors, officers and employees and information and records of the
      Corporation.
  (4)
                  The
      Committee is authorized to retain, and to set and pay the compensation of,
      independent legal counsel and other advisors if it considers this
      appropriate.
  (5)
                  The
      Committee is authorized to invite officers and employees of the
      Corporation and outsiders with relevant experience and expertise to attend
      or participate in its meetings and proceedings if it considers this
      appropriate.
  (6)
                  The
      external auditors shall have direct and unrestricted access to the
      Committee and shall report directly to the
  Committee.
  (7)
                  The
      Corporation shall pay directly or reimburse the Committee for the expenses
      incurred by the Committee in carrying out its
      responsibilities.
  5.           Meetings
and Proceedings
  (1)
                  The
      Committee shall meet at least five times each year and not less frequently
      than once each calendar quarter.
  (2)
                  Any
      Member or the Secretary may call a meeting of the
      Committee.  The external auditors or the CFO may ask a Member to
      call a meeting of the Committee.
  (3)
                  The
      Chair is responsible for the agenda of each meeting of the Committee,
      including input from the officers and employees of the Corporation, the
      external auditors, other Members and other directors of the Corporation as
      appropriate.  Meetings will include presentations by management
      or professional advisors and consultants when appropriate and allow
      sufficient time to permit a full and open discussion of agenda
      items.
   E-5
   (4)
                  Unless
      waived by all Members, a notice of each meeting of the Committee
      confirming the date, time, place and agenda of the meeting, together with
      any supporting materials, shall be forwarded to each Member at least three
      days before the date of the
meeting.
  (5)
                  The
      quorum for each meeting of the Committee is two Members.  In the
      absence of the Chair, the other Members may appoint one of their number as
      chair of a meeting.  The chair of a meeting shall not have a
      second or casting vote.
  (6)
                  The
      Chair or his delegate shall report to the Board following each meeting of
      the Committee.
  (7)
                  The
      Secretary or his delegate shall keep minutes of all meetings of the
      Committee, including all resolutions passed by the
      Committee.  Minutes of all meetings shall be distributed to the
      Members and the other directors of the Corporation after preliminary
      approval thereof by the Chair.
  (8)
                  An
      individual who is not a Member may be invited to attend a meeting of the
      Committee for all or part of the meeting.  The Chair of the
      Board, the President and Chief Executive Officer of the Corporation, the
      CFO and the engagement partners at the external auditors have a standing
      invitation to attend all meetings of the Committee except those meetings
      or parts of meetings where the Committee meets alone or in private session
      with management, the external auditors or professional advisors and
      consultants.
  (9)
                  The
      Committee shall meet regularly alone and in private sessions with
      management and the external auditors to facilitate full
      communication.
  6.           Self
Assessment
  (1)
                  The
      Committee and the Board shall annually assess the effectiveness of the
      Committee with a view to ensuring that the performance of the Committee
      accords with best practices.
  (2)
                  The
      Committee and the Board shall annually review and update this Charter as
      required.
   E-6
 
  SCHEDULE
“F”
 POLICY
ON INDEPENDENCE OF DIRECTORS
  1.
                  Background
  The
board of directors (Board) of
Crystallex International Corporation (Corporation)
has developed this Policy after consideration of recent changes in the corporate
governance requirements in Canada and the United States relating to the
independence of directors applicable to the Corporation.
  Certain
of these requirements require that a majority of the directors of the
Corporation (Directors),
and all the Directors on the audit, compensation and nominating committees of
the Board, are independent.
  2.
                  Purpose
  The
purposes of this Policy are:
  (a)
                  to
      set out the test that the Board will use to determine whether a Director
      is independent;
  (b)
                  to
      identify the criteria that the Board will use to assess whether a Director
      is independent; and
  (c)
                  to
      describe the disclosure that the Board will provide to the shareholders of
      the Corporation with respect to its determination of the independence of
      Directors.
  3.
                  Test
      of Independence
  The
test that will be used by the Board to determine whether a Director is
independent is:
  Independent
of management or any other direct or indirect material business or other
relationship with the Corporation and its subsidiaries and any other entity that
is consolidated with the Corporation’s financial statements (Crystallex Group) that could
interfere with the exercise of independent judgment by the Director or the
ability of the Director to act in the best interests of the
Corporation.
  4.
                  Assessment
      Process
  Each
Director will provide the Board with information sufficient to enable the Board
to assess whether the Director is independent, including information with
respect to the criteria set out below.
  The
Board will assess whether a Director is independent annually and whenever new
information is provided to the Board.  The Board will consider all
relevant information in assessing whether a Director is
independent.
  Generally,
a Director will be considered to be independent if he/she satisfies all the
criteria set out below.  A Director may, however, be considered to be
independent even though he/she does not satisfy one or more of the criteria set
out below.  For example, the director independence criteria set out
below are in some cases more restrictive than those prescribed under
requirements applicable to the Corporation (Prescribed
Requirements).  Also, the Prescribed Requirements for
qualification for membership on an audit committee are more restrictive than
those for qualification for membership on a compensation or nominating committee
or a board of directors generally.  If a Director satisfies the
Prescribed Requirements, the Board may, in certain circumstances, determine that
a Director is independent.
  5.
                  Criteria
      used to Assess Independence
  The
criteria that the Board will use in assessing whether a Director is independent
are set out below.  Defined terms used in connection with one of the
criteria apply to all of the criteria.
  (1)
                  Is not an officer or
      employee – neither the Director nor an immediate family member of
      the Director is, or within the last three years has been, an officer or
      employee of a member of the Crystallex
Group.
   F-1
   An
immediate
family member of an individual is the individual’s spouse, parent, child,
sibling, mother-in-law, father-in-law, sister-in-law, brother-in-law,
daughter-in-law, son-in-law and anyone, other than an employee, who resides in
the individual’s home.
  An
officer of
an entity includes an individual who performs a policy making function in
respect of the entity or who makes, or participates in making, decisions that
affect all or a substantial part of the business of the entity, whether or not
the individual is employed by the entity and whether or not the individual does
so directly or through another entity.
  A
Director may be considered to be independent if an immediate family member of
the Director is only an employee of a member of the Crystallex
Group.
  (2)
                  Is not a substantial
      shareholder– the Director is not a substantial shareholder of a
      member of the Crystallex Group or affiliated with a substantial
      shareholder of a member of the Crystallex
Group.
  A
substantial
shareholder of an entity is a person who beneficially owns, directly or
indirectly, or exercises control or direction over, 10% or more of the voting
interests of the entity.
  An
individual is affiliated
with an entity if the individual is a director, officer, employee, principal,
partner or managing director of, or occupies a similar position with, the entity
or is a substantial shareholder of the entity.
  A
Director who is a director of a substantial shareholder of a member of the
Crystallex Group may be considered to be independent if the Director is
independent of the substantial shareholder.
  (3)
                  Has no
      material contractual relationship – the Director does not have any
      material contractual relationship with a member of the Crystallex Group
      other than as a
Director.
  The
test of whether a contractual relationship is material
will be based on all the circumstances relevant to the Director.
  (4)
                  Does not
      receive consulting or other advisory fees or payments – neither the
      Director nor an immediate family member or related entity of the Director
      receives, or within the last three years has received, consulting or other
      advisory fees or payments from the Crystallex Group that in any year
      exceed the lesser of C$75,000 and the Canadian dollar equivalent of
      US$60,000, other than compensation for Board services, payments arising
      from investments in securities of the Corporation or, in the case of an
      immediate family member who is not an officer of a member of the
      Crystallex Group, compensation for services as an employee of a member of
      the Crystallex
Group.
  An
entity is a related
entity of a Director if the Director or an immediate family member of the
Director is a director, officer, employee, principal, partner or managing
director of, or occupies a similar position with, the entity or is a substantial
shareholder of the entity.
  (5)
                  Does not
      receive incentive compensation – the Director does not participate
      in any share based incentive scheme or performance related pay scheme of
      the Crystallex
Group.
  This
criterion does not preclude the payment of all or part of a Director’s
compensation for Board services in the form of shares or options to receive
shares of the Corporation.
  (6)
                  Is not a
      professional consultant or advisor – neither the Director nor an
      immediate family member of the Director is, or within the last three years
      has been, an auditor or other professional consultant or advisor to a
      member of the Crystallex Group or affiliated with an auditor or other
      professional consultant or advisor to a member of the Crystallex
      Group.
  A
professional
consultant or advisor
includes an entity that provides accounting, actuarial, consulting, legal,
investment banking or financial advisory services.
   F-2
   A
Director may be considered to be independent if an immediate family member of
the Director is only an employee of an auditor or other professional consultant
or advisor to a member of the Crystallex Group and does not participate in a
material way in the provision of services to the member of the Crystallex Group
by the auditor or other professional consultant or advisor.
  (7)
                  Is not a
      material supplier or customer– neither the Director nor an
      immediate family member of the Director is, or within the last three years
      has been, a material supplier or customer of the Crystallex Group or
      affiliated with a material supplier or customer of the Crystallex
      Group.
  A
material
supplier or customer
of the Crystallex Group is a person to which the Crystallex Group made or from
which Crystallex Group received payments (other than payments arising from
investments in securities of the Corporation) in any year that exceed the
greater of 5% of the consolidated gross revenues of the person for the year and
the Canadian dollar equivalent of US$200,000.
  (8)
                  Has no
      board remuneration committee connection – neither the Director nor
      an immediate family member of the Director is, or within the last three
      years has been, an officer of any entity, the compensation committee of
      which includes, or within the last three years included, an officer of the
      Corporation.
  (9)
                  Has no
      other material business relationship – neither the Director nor an
      immediate family member or related entity of the Director has, or within
      the last three years has had, directly or indirectly, any other material
      business relationship with the Crystallex
    Group.
  The
test of whether a business relationship is material
will be based on the circumstances relevant to the Director.
  (10)
                  Has no
      significant links with other Directors – the Director does not hold
      cross-directorships or have any significant links with any other Director
      (e.g., through involvement in other entities) that would materially
      interfere with the exercise of independent judgment by the Director or the
      ability of the Director to act in the best interests of the Crystallex
      Group.
  (11)
                  Has not
      served too long – the Director has not served on the Board for a
      period that could, or could reasonably be perceived to, materially
      interfere with the Director’s ability to act in the best interests of the
      Crystallex
  Group.
  (12)
                  Is
      independent in character and judgment – the Director is independent
      in character and
    judgment.
  6.
                  Disclosure
  The
Board will provide to the shareholders of the Corporation annually disclosure
with respect to its determination of the independence of the Directors,
including:
  (a)
                  identifying
      which Directors are and are not independent and the basis of the
      determination of independence;
  (b)
                  explaining
      any determination of independence of a Director who does not satisfy all
      the criteria set out above; and
  (c)
                  describing
      all the material relationships of each Director with the Crystallex Group
      (whether or not falling within the criteria set out above), including
      relationships which the Board believes do not affect independence but
      which the Board believes could be perceived as interfering with the
      exercise of independent judgement by the Director or the ability of the
      Director to act in the best interests of the Crystallex
    Group.
  The
Board will provide to the shareholders of the Corporation as soon as practicable
disclosure with respect to any change in its determination of the independence
of a Director.
    F-3