Exhibit
1.3
 
 Managements Discussion and Analysis
For the Year Ended December 31, 2008
(All monetary figures are expressed in United States dollars, unless otherwise specified)
   www.sedar.com www.crystallex.com
 Special Note Regarding Forward Looking Statements
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Cautionary Note to U.S. Investors
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Overview
  Las Cristinas
 
    
    The Companys principal asset is its interest in the Las Cristinas gold project located
in Bolivar State, Venezuela. The Companys interests in the Las Cristinas concessions are
derived from a Mine Operating Contract (the MOC) with the Corporacion Venezolana de
Guayana (the CVG) which grants Crystallex exclusive rights to develop and mine the gold
deposits on the Las Cristinas property.
    
    The Company has not received a response from the Minister of Environment and Natural
Resources (MinAmb) to its June 16, 2008 appeal of the Director General of the
Administrative Office of Permits at MinAmb denying its request for the Permit for the Las
Cristinas project.
    
    On March 2, 2009, the CVG confirmed that the Company was in compliance with the MOC.
This corroborates the Companys position that is not in default of the MOC and there is no
change in control under the terms of the MOC.
    
    The Company plans to remain compliant with the MOC in order to protect the option of
proceeding to arbitration, if necessary.
 Liquidity and Capital Resources
 §

Cash and cash equivalents at December 31, 2008 were $34.5 million.§

The Company forecasts that it will have sufficient cash to fund its operations through
the end of 2009 (see Liquidity and Capital Resources section).
 Financial Results
 §

Losses from continuing operations were $21.8 million ($0.07 per share) and $22.2 million
($0.09 per share) for 2008 and 2007, respectively.§

Losses from discontinued operations at El Callao were $3.9 million and $8.2 million for
2008 and 2007 respectively.§

Losses from operations were $25.7million ($0.09 per share) and $30.5 million ($0.12 per
share) for 2008 and 2007, respectively.
 Legal Matters
 §

The Company is currently in the early stages of preparing for its defence against an
action taken by holders of its $100 million notes due December 2011. The Company has strong
defences to this action which it vigorously opposes and believes to be without merit.§

The Company and certain officers and/or directors have been named as defendants in a
proposed class action lawsuit commenced in the United States. This action is in its
preliminary stage, however, Crystallex believes that the complaint is without merit and
will vigorously defend itself against this action.
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Las Cristinas Permit
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El Callao Discontinued Operations
  Noteholders Action
  5




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Proposed Class Action
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Financing
   Selected Annual Information
 2008

2007

2006Financial results ($000, except per share)Loss from continuing operations


(21,807
)


(22,230
)


(34,096
)Loss from discontinued operations


(3,913
)


(8,221
)


(1,588
)Net loss


(25,720)
)


(30,451
)


(35,684
)Loss per share from continuing operations
  Basic and diluted


(0.07
)


(0.09
)


(0.15
)Loss per share Basic and diluted


(0.09
)


(0.12
)


(0.15
)Weighted average shares  Basic and
diluted (millions)


291.0



256.7



230.2Cash flow used in operating activities


(22,775
)


(29,393
)


(29,355
)Investing activitiesExpenditures on Las Cristinas


(28,097
)


(26,893
)


(49,788
)Sale of equipment


6,039







Financing activities


64,326



51,320



85,001Cash and cash equivalents


34,520



16,065



28,573Total assets


382,464



339,240



324,695Outstanding debt


86,746



83,291



87,697Shareholders equity


267,796



228,407



199,481
 

Loss from continuing operations was slightly lower in 2008 than 2007 due to a 39% reduction
of general and administrative expenses of $8.4 million, a gain on sale of equipment of $1.8
million offset by a reduction in foreign exchange gain of $9 million mostly relating to the
foreign exchange translation of future income tax liability.
 

Loss from continuing operations was lower in 2007 than 2006 due to an increase in foreign
exchange gain of $10.4 million mostly relating to the foreign exchange translation of future
income tax liability.
 

Loss from discontinued operations relate to the gold mining operations at El Callao. As at
September 30, 2008, the Company ceased mining operations at El Callao due to the handover of
the Revemin mill to the State of Venezuela on October 1, 2008.
 

Cash flow used in operating activities from continuing operations declined in 2008 due
mostly to the reduction in general and administrative expenses.
 

Expenditures on Las Cristinas increased by $1.2 million in 2008 compared to 2007 as the
Company increased construction activities to meet its social commitments under the MOC.
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

Expenditures on Las Cristinas decreased by $22.9 million in 2007 compared to 2006 as a
result of the reduction of expenditures relating to engineering and equipment procurement
which had peaked in 2005.
 

The Company completed a public offering in 2008 for $64.1 million and in 2007 also
completed a public offering for net proceeds of $50.7 million.
 

In 2006 the Company completed a public offering for $26.9 million, a private placement for
$30.3 million, and received $4.3 million under an equity drawdown facility, in addition to
$6.0 million that was received upon the exercise of warrants. Debt repayments were $5.2
million on debt that was subsequently paid off during early 2007.
 

Cash and cash equivalents were $34.5 million at December 31, 2008 compared to $16.1 million
at December 31, 2007.
 Summary of Quarterly Results (Unaudited)
 $,000 except per share

2008Q4

Q3

Q2

Q1(Loss) income from
continuing operations


3,457



(1,613
)


(10,210
)


(13,441
)(Loss) income from
discontinued operations


(407
)


(5,960
)


215



2,239Net (loss) income


3,050



(7,573
)


(9,995
)


(11,202
)Unrealized (loss) gain on
translation of future
income taxes included in
loss from continuing
operations


4,212



6,504



(3,769
)


(6,139
)Loss per share from
continuing operations 
Basic and diluted


(0.01
)


(0.01
)


(0.03
)


(0.05
)Loss per share  Basic and
diluted


(0.01
)


(0.03
)


(0.03
)


(0.04
)
 $,000 except per share

2007Q4

Q3

Q2

Q1(Loss) income from
continuing operations

$
(9,169
)

$
(4,957
)

$
(8,997
)

$
893(Loss) income from
discontinued
operations

$
382



(1,765
)


(3,126
)


(3,712
)Net loss

$
(8,787
)

$
(6,722
)

$
(12,123
)

$
(2,819
)Unrealized (loss) gain
on translation of
future income taxes
included in loss from
continuing operations


956



2,534



1,580



9,252(Loss) income per
share from continuing
operations  Basic and
diluted

$
(0.03
)

$
(0.02
)

$
(0.03
)

$
0.00Loss per share  Basic
and diluted

$
(0.03
)

$
(0.03
)

$
(0.05
)

$
(0.01
)
 

The results of operations in the four quarters of 2008 indicate a significant decline in
losses from the first quarter to the fourth quarter. These results, however, include
unrealized losses on translation of future income tax liability in the first two quarters
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followed by unrealized gains for the last two quarters. These
unrealized gains/losses reflect declining BsF/USD rates (BsF  Venezuelan Bolivares Fuertes), at the end of the first
and second quarter followed by increasing BsF/USD in the third and fourth quarters. After giving
effect to these unrealized gains/losses, the losses from continuing operations show a general
decline as the Company undertook significant cost reductions due to the lack of progress on the
Permit. The income for the fourth quarter of 2008 also include $6.7 million of foreign exchange
gains related mostly to the settlement of BsF denominated expenditures at Las Cristinas using
U.S. dollars that have been converted at a more favourable rate than the rate used for recording
the expenditures.

The El Callao mining activities ceased as at September 30, 2008. The Company continues to
incur expenditures for maintaining an office at El Callao to conclude reclamation of the mines
and to negotiate a transfer of the mining concessions to the State of Venezuela. The loss in
the fourth quarter of 2008 reflects a $0.5 million provision taken against VAT receivables.
 Results of Operations
 Continuing operations
  General and administrative expenses
  Interest on debt
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Foreign exchange gain
    Gain on sale of equipment
  Interest and other income
  Discontinued operations  El Callao
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Cash and Cash Equivalents
   Cash and cash equivalents, December 31, 2007

$
16.1Cash used in operating activities


(22.8
)Capital expenditures  Las Cristinas


(28.1
)Cash used in discontinued operations


(1.0
)Total outflow of cash and cash equivalents


(51.9
)Proceeds from sale of equipment


6.0Cash from issuance of common shares


64.3Total inflow of cash and cash equivalents


70.3Cash and cash equivalents, December 31, 2008

$
34.5
 Cash Flow used in Operating Activities
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Investing Activities
    Financing Activities
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Notes Payable
   Liquidity and Capital Resources
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(d)

negotiated settlement with its note holders to reduce, eliminate
or otherwise decrease
its obligations, particularly interest costs.
  Contractual Obligations and Commitments
 Less than

1 - 3

4 - 5

More ThanMillions

One Year

Years

Years

5 Years

TotalNotes payable

$



$
100.0


$



$



$
100.0Interest on notes payable


9.4



18.8











28.2Asset retirement obligations
at El Callao


2.3















2.3Social commitments at Las
Cristinas


1.5















1.5Total contractual obligations

$
13.2


$
118.8


$



$



$
132.0
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Off-Balance Sheet Arrangements
  Related Party and Other Transactions
  a)

Paid underwriting fees of $2.3 million (2007  $2.3 million) to Macquarie Capital
Markets Ltd. (formerly Orion Securities Inc.) which retains the Chairman of the Company
as an employee.b)

Paid consulting fees of $NIL (2007  $0.09 million) and office rent of $.01 million
(2007  $NIL) to Kingsway Capital of Canada Inc. (Kingsway) which retains the Chairman
of the Company as a director. The office rent was paid as a result of the Company
downsizing its previous head office by 50% and sharing space with Kingsway under a
subleasing arrangement with Kingsway at market rates.
  Fourth Quarter Results
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Critical Accounting Estimates and Uncertainties
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Going concern
   Mineral properties and equipment
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Asset retirement obligations
   Income taxes
  Fair value of notes payable
  Litigation
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Changes In Accounting Policies and Future Accounting Pronouncements
 Changes in accounting policies  Sections 1400 and 3031
    Future accounting pronouncements
 (i)

The CICA has issued a new accounting standard, Handbook Section 3064 Goodwill and Intangible
Assets, which is effective for the Companys interim and annual financial statements
commencing January 1, 2009. This standard establishes revised standards for recognition,
measurement, presentation and disclosure of goodwill and intangible assets. Concurrent with
the introduction of this standard, the CICA withdrew EIC 27, Revenues and Expenses during the
Pre-Operating Period.There is expected to be no impact to the Companys consolidated financial statements on
adoption of Section 3064 effective January 1, 2009.(ii)

The CICA has issued EIC-173 Credit Risk and the Fair Value of Financial Assets and Financial
Liabilities which is effective for the Companys interim and annual financial statements
commencing January 1, 2009. In this EIC, the Committee reached a consensus that in determining
the fair value of financial assets and financial liabilities an entity should take into
account the credit risk of the entity and the counterparty. The Company has not yet determined
the impact of the adoption of this standard on its consolidated financial statements.(iii)

In February 2008, the Canadian Accounting Standards Board confirmed that International
Financial Reporting Standards (IFRS) will replace current Canadian GAAP for publicly
accountable companies. The official change over date is for interim and annual financial
statements for fiscal years beginning on or after January 1, 2011. IFRS will be required for
the Companys interim and annual consolidated financial statements for the fiscal year
beginning on January 1, 2011. The Company is currently formulating and developing an
implementation plan to comply with the new standards and its future reporting requirements.
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Financial Instruments
 Outstanding Share Data
  Common Shares Issued


294,817,719Common Share Options


10,417,522Warrants


28,695,000Fully Diluted Common Shares


333,930,241
 Controls and Procedures
 Disclosure controls and procedures
  Internal control over financial reporting
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Remediation of weaknesses in internal controls identified in 2007 and changes to internal
controls in 2008
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Conclusion
  Changes in Internal Control
  U.S. GAAP Results Pertaining to Las Cristinas
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Risk Factors
 www.sedar.com
 Risks Associated with Operating in Developing Countries
  RISKS SPECIFIC TO OPERATIONS IN VENEZUELA
 Political and Economic Instability
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Environmental Permit Still Required
  Exchange Controls
  Lack of Ownership Rights
 VML
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Lack of Copper Rights
   (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 Mine Operating Contract
to negotiate the exploitation of the copper with the Company; and
 (b)

if the MIBAM grants the right to exploit the copper contained in the Las Cristinas deposits
to a third party, the Companys right under the Mine Operating 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.
  Proposed Amendments to Mining Laws
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Arbitration Proceedings
   Unauthorized Miners
  Imataca Forest Reserve
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GENERAL RISK FACTORS
 Current Global Financial Condition
  Mineral Properties
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Environmental Regulation and Liability
     Additional Funding Requirements
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Reserve and Resource Estimates
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Mineral Exploration and Exploitation
  Uninsurable Risks
  Dependence on One Mining Property
  Production Risks
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Regulations and Permits
  Gold Price Volatility
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Currency Fluctuations
  Credit and Market Risks
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Dependence on Key Employees
  Compliance with Sarbanes-Oxley Act of 2002
   Common Share Price Volatility
  

the Companys operating performance and the performance of competitors and other
similar companies;

the publics reaction to the Companys press releases, other public announcements
and the Company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 arrival or departure of key personnel;

the current global economic crisis;

acquisitions, strategic alliances or joint ventures involving the Company or its
competitors;

gold price volatility; and

Outcomes of litigation.
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Potential Dilution
  Enforcement by Investors of Civil Liabilities
  Operating Losses are Expected to Continue in the Near Future
  Future Hedging Activities
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No Payment of Cash Dividends in the Near Future
  Litigation
  35