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Exhibit 1.3



Managements Discussion and Analysis
For the Year Ended December 31, 2010

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Managements Discussion and
Analysis

Table of Contents

|Special Note Regarding Forward Looking
      Statements                 | 1 
|----------------------------------------------------------------------- | --
|Cautionary Note to U.S. Investors                                       | 1 
|General                                                                 | 2 
|Overview                                                                | 2 
|Liquidity and Capital Resources                                         | 2 
|Financial Results                                                       | 3 
|Las Cristinas Project and Arbitration
      Request                     | 3 
|Strategic Partnership Discussions                                       | 4 
|Noteholders Appeal Dismissed with Costs                                | 5 
|Proposed Class Action Dismissed                                         | 5 
|Claims by Former Employees                                              | 5 
|Selected Annual Information                                             | 6 
|Results of Continuing Operations                                        | 8 
|Results of Discontinued Operations  El Callao                          | 10
|Cash and cash equivalents                                               | 11
|Cash Used in Operating Activities                                       | 11
|Investing Activities                                                    | 11
|Financing Activities                                                    | 11
|Liquidity and Capital Resources                                         | 12
|Contractual Obligations and Commitments                                 | 12
|Off-Balance Sheet Arrangements                                          | 12
|Related Party and Other Transactions                                    | 12
|Fourth Quarter Results                                                  | 13
|Venezuelan Operations                                                   | 13
|Critical Accounting Estimates and
      Uncertainties                   | 14
|International Financial Reporting Standards                             | 16
|Outstanding Share Data                                                  | 19
|Disclosure Controls and Internal Control over Financial
      Reporting | 20
|Risk Factors                                                            | 21

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Special Note Regarding Forward Looking
Statements

Certain statements included or incorporated by reference in
this MD&A, including information as to the future financial or operating
performance of the Company, 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 Company, are inherently subject to significant
business, economic, competitive, political and social uncertainties and
contingencies. Many factors could cause the Companys actual results to differ
materially from those expressed or implied in any forward-looking statements
made by, or on behalf of, the Company. Such factors include, among others, risks
relating to additional funding requirements, political and foreign risk,
uninsurable risks, competition, environmental regulation and liability,
government regulation, currency fluctuations, recent losses and write-downs and
dependence on key employees. See Risk Factors section of this MD&A. Due to
risks and uncertainties, including the risks and uncertainties identified above,
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 MD&A and the
Company 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.

Cautionary Note to U.S.
Investors

The terms "proven mineral reserve" and "probable mineral
reserve" used in this report are Canadian mining terms as defined in accordance
with National Instrument 43-101 - Standards of Disclosure for Mineral Projects
under the guidelines set out in the Canadian Institute of Mining, Metallurgy and
Petroleum ("CIM") Standards on Mineral Resources and Mineral Reserves, adopted
by the CIM Council on August 20, 2000 as may be amended from time to time by the
CIM. These definitions differ from the definitions in the SEC's Industry Guide
7. The terms, "measured mineral resource", "indicated mineral resource" and
"inferred mineral resource" used in this report are Canadian mining terms as
defined in accordance with National Instrument 43-101. While the terms "measured
mineral resource", "indicated mineral resource", and "inferred mineral resource"
are recognized and required by Canadian regulations, they are not defined terms
under Industry Guide 7 and normally are not permitted to be used in reports and
registration statements filed with the SEC. As such, information contained in
this report concerning descriptions of resources under Canadian standards may
not be comparable to similar information made public by U.S. companies in SEC
filings. With respect to "indicated mineral resource" and "inferred mineral
resource" there is a great amount of uncertainty as to their existence and a
great uncertainty as to their economic and legal feasibility. It cannot be
assumed that all or any part of an "indicated mineral resource" or "inferred
mineral resource" will ever be upgraded to a higher category. Investors are
cautioned not to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves.

1

Crystallex International Corporation
Year Ended December 31, 2010

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General

This Managements Discussion and Analysis (MD&A) of
Crystallex International Corporation (Crystallex or the Company) provides an
analysis of the Companys audited consolidated financial statements and the
related notes as at and for the year ended December 31, 2010. This MD&A
should be read in conjunction with those audited consolidated financial
statements.

The Company prepares its consolidated financial statements in
United States (U.S.) dollars and in accordance with Canadian Generally
Accepted Accounting Principles (GAAP). The accounting policies have been
consistently followed in preparation of these consolidated financial
statements.

This MD&A was prepared on March 31, 2011. The Companys
public filings, including its most recent Financial Statements and Annual
Information Form, can be accessed through the System for Electronic Document
Analysis and Retrieval (SEDAR) website at www.sedar.comand the Companys website at www.crystallex.com.

The Companys common shares are traded on both the Toronto
Stock Exchange (symbol: KRY) and the NYSE Amex Exchange (symbol: KRY).

Overview

Crystallex is a Canadian-based company which entered into a
Mine Operating Contract (the MOC) in September 2002 with the Corporacion
Venezolana de Guayana (the CVG). The MOC granted Crystallex exclusive rights
to develop and operate the Las Cristinas gold properties (Las Cristinas
Project or Las Cristinas) located in Bolivar State, Venezuela. Since the
issuance of the MOC, the Company has worked vigorously to bring the Las
Cristinas Project to a shovel ready state. The Company completed all of the
requirements necessary for the issuance of the Authorization to Affect Natural
Resources (the Permit) from the Ministry of Environment and Natural Resources
(MinAmb) while maintaining compliance with the terms of the MOC.
Notwithstanding the Companys fulfilment of the requisite conditions,
Venezuelas approval of the Environmental Impact Study and assurances that the
Permit would be issued, in April 2008, MinAmb denied the Companys request for
the Permit. The Company appealed the Permit denial and did not receive a
response from MinAmb.

On February 3, 2011, the MOC was unilaterally terminated by the
CVG, despite the CVG confirming the validity of the MOC in August 2010.
Following the termination of the MOC, on February 16, 2011, the Company filed a
Request for Arbitration (Arbitration Request) before the Additional Facility
of the World Banks International Centre for Settlement of Investment Disputes
(ICSID) against the Bolivarian Republic of Venezuela (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 claim is for breach of the Treatys protections against
expropriation, unfair and inequitable treatment and discrimination. The
Arbitration Request was registered by ICSID on March 9, 2011.

Crystallex is seeking the restitution by Venezuela of its
investments, including the MOC, and the issuance of the Permit and compensation
for interim losses suffered, or, alternatively full compensation for the value
of its investment in an amount in excess of US$3.8 billion.

The Companys immediate plans are as follows:

- Seek settlement alternatives with Venezuela while pursuing the arbitration
  claim;
- Proceed with an orderly withdrawal from Las Cristinas;
- Sell the remaining mining equipment;
- Negotiate with the Noteholders to restructure the terms of the $100
  million Notes that are due in December 2011; and
- Pursue alternate financing.

Liquidity and Capital
Resources

- Cash and cash equivalents at December 31, 2010 was $16.1 million.

2

Crystallex International Corporation
Year Ended December 31, 2010

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Financial Results

- Losses from continuing operations were $46.1 million ($(0.14) per share)
  and $312.7 million ($(1.06) per share) for the years ended December 31, 2010
  and 2009, respectively.
- Losses from discontinued operations at El Callao were $2.1 million
  ($(0.01) per share) and $1.2 million ($(0.01) per share) for the years ended
  December 31, 2010 and 2009, respectively.
- The resulting losses from continuing and discontinued operations were
  $48.2 million ($(0.15) per share) and $313.9 million ($(1.07) per share) for
  the years ended December 31, 2010 and 2009, respectively.

Las Cristinas Project and Arbitration
Request

On September 17, 2002, Crystallex entered into a non-assignable
MOC with the CVG, acting under the authority of the Ministry of Energy and Mines
of Venezuela, under which Crystallex was granted the exclusive right to explore,
develop and exploit the Las Cristinas 4, 5, 6 and 7 concessions including the
processing of gold for its subsequent commercialization and sale. The Las
Cristinas Project is one of the worlds largest undeveloped gold deposits with
Measured and Indicated resources of 21 million ounces of gold containing 17
million ounces of proven and probable reserves calculated at a gold price of
$550 per ounce. Crystallexs exploration efforts indicate that gold
mineralization at Las Cristinas remains open at depth and in certain areas at
surface. Las Cristinas thus has considerable potential to grow even further.

With the approval of the Feasibility Study in 2004 and the
Environmental Impact Study (EIS) in 2007, the CVG was formally notified in May
2007 by the Vice-Minister of MinAmb that all requirements had been fulfilled for
the issuance of the Permit which is required to commence construction of the
mine. The Company then proceeded to post the required construction guarantee
bond and paid the environmental disturbance taxes. In June, 2007, the CVG
confirmed that the approval of the EIS, the posting of the construction
guarantee bond and the payment of the environmental disturbance taxes
represented the final and conclusive step in the procedure for the issuance of
the Permit. Crystallex adhered to the legal framework applicable to the Las
Cristinas Project with respect to obtaining the Permit and fully complied with
its obligations under the MOC, as acknowledged on various occasions by the CVG
and the Ministry of Basic Industries and Mining (MIBAM).

In April, 2008, the Director General of the Administrative
Office of Permits at MinAmb issued a letter to the CVG denying its request for
the Permit. In May 2008, the Company filed a challenge to this denial. This
challenge was denied by the Director General on May 30, 2008 and the Company was
advised by the Director General to appeal directly to the Minister of
MinAmb.

On June 16, 2008, the Company filed an appeal (the Appeal)
with the Minister of MinAmb. The Company has not received a response to this
Appeal. In accordance with Venezuelan law, a decision should have been rendered
within 90 business days of the appeal, that is by October 31, 2008. No decision
was ever rendered. On April 21, 2009, the Workers Union of Crystallex de
Venezuela C.A., as an interested party, filed before the Political
Administrative Chamber of the Supreme Tribunal of Justice an action for
annulment (recurso de nulidad) against MinAmb in view of the lack of response
within the prescribed period provided in the Organic Law of Administrative
Proceedings (LOPA).

In August 2008, the Company, at the request of the
Vice-Minister of MinAmb, filed a report that dealt with modifications to the
project, which were accepted by the Vice-Minister. The Vice-Minister of MinAmb
issued an official letter which indicated that the modifications complied with
government guidelines on environmental and social matters. The letter further
noted that the foregoing was relevant in the context of the decision to be made
by the Ministry of MinAmb with respect to the Permit.

On November 24, 2008, the Company delivered a letter to the
Government of Venezuela notifying it of the existence of a dispute between the
Company and Venezuela under the Treaty. Following delivery of the notification
letter, the Treaty allows for a six month amicable period to settle disputes
prior to submitting a dispute to arbitration. This six month amicable period
lapsed at the end of May 2009, at which time the Company had the option of
submitting its dispute to international arbitration under the terms of the
Treaty. The Company chose not to submit its dispute to international arbitration
at that time as it continued to seek a resolution of the notified dispute,
including the possibility of securing a strategic joint-venture partner
acceptable to the Venezuelan Government. During this period, the Company
continued to remain in full compliance with the terms of the MOC. The Venezuelan
Government ultimately failed to propose any resolution to the notified
dispute.

3

Crystallex International Corporation
Year Ended December 31, 2010

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Crystallex has fully and continuously complied with all its
obligations under the MOC and has advanced Las Cristinas to a shovel ready
state while awaiting the issuance of the Permit from MinAmb. The latest
confirmation of compliance with the MOC was received from the CVG in August
2010. Notwithstanding its compliance with the MOC, the fulfilment of all the
requisite conditions for the grant of the Permit and assurances that the Permit
would be granted, on February 3, 2011, the Company received a letter from the
CVG which stated that the MOC has been unilaterally terminated by the CVG
citing as the basis for the termination of the MOC, Crystallexs lack of
activity to progress the Las Cristinas Project for more than one year and 
for reasons of opportunity and convenience. The Company believes that
the rationale provided for the termination of the MOC is baseless and furthermore
that the unilateral termination was conducted in a manner which, in itself,
violates Venezuelan law.

On February 16, 2011, the Company filed the Arbitration Request
before ICSID against Venezuela pursuant to the Treaty. The arbitration has been
commenced as a result of the failure of the Government of Venezuela to grant the
Permit, despite Crystallexs fulfilment of all conditions established by
Venezuela, and the arbitrary unilateral termination of the MOC. The claim is for
breach of the Treatys protections against expropriation, unfair and inequitable
treatment and discrimination. Crystallex is seeking the restitution by Venezuela
of Crystallexs investments, including the MOC, and the issuance of the Permit
and compensation for interim losses suffered, or, alternatively full
compensation for the value of its investment in an amount in excess of US$3.8
billion.

As a precondition for initiating an arbitration under the
Treaty, the Company notified Venezuela that it has waived its right to commence
or continue any other proceedings in relation to the measures that are alleged
to be in breach of the Treaty before the courts or tribunals of Venezuela or in
a dispute settlement procedure of any kind, including the Appeal. The Company
believes the CVGs termination was unlawful and without merit. The Company
notified the CVG that it will not appeal the CVGs unilateral termination of the
MOC, but rather will seek redress under the Treaty, as required pursuant to the
terms of the Treaty.

On March 9, 2011 the Arbitration Request was registered by the
Secretary-General of ICSID. The next step in the arbitration process is the
constitution of a Tribunal which will establish among other things the
procedural calendar for the Arbitration. The Arbitration procedure allows for
the Companys filing of its written submission and accompanying evidence; a
response from Venezuela and accompanying evidence; oral hearings and a written
reasoned decision by the Tribunal which could be contested by either party. This
process can last a number of years in the absence of a negotiated settlement
with Venezuela.

The Companys current focus is the pursuit of the arbitration
claim. At the same time, the Company is implementing its withdrawal from Las
Cristinas and the handover of the property to the Government of Venezuela.

The Company incurred non-cash write-downs of Las Cristinas
capitalized costs (except equipment) of $297.1 million in 2009 and $12.5 million
in 2010. These non-cash write-downs have been taken to comply with accounting
requirements and are thus without prejudice to the legal qualification that the
Venezuelan measures may be given under Venezuelan or international law,
including the Treaty. As at December 31, 2010, capitalized costs of $33.2
million relate to the estimated net realizable value of remaining mining
equipment which was purchased in anticipation of the development of Las
Cristinas. The Company commenced the process of selling this equipment following
the unilateral termination of the MOC by the CVG.

Strategic Partnership
Discussions

On June 7, 2010 Crystallex announced a proposed transaction
with China Railway Resources Group Co. Limited (CRRC) to create a strategic
partnership to develop Las Cristinas. CRRC is the resource subsidiary of China
Railway Engineering Corporation (CREC) which is the worlds largest
contracting and engineering company and one of Chinas largest state-owned
companies with its majority shareholder being the Peoples Republic of China.
The proposed transaction was never completed.

CRRC previously provided Crystallex with a $2.5 million loan,
repayable on demand. This loan was advanced to the Company as a component of
developing the strategic relationship.

4

Crystallex International Corporation
Year Ended December 31, 2010

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Noteholders Appeal Dismissed with
Costs

In December 2008, the Company was served with a notice of
application (the Application) by the trustee for the holders (the
Noteholders) of the $100 million unsecured notes (the Notes). The trustee,
on behalf of certain Noteholders sought, among other things, a declaration from
the court that there had been a project change of control (a Project Change of
Control) event, as defined in the First Supplemental Indenture made as of
December 23, 2004, thereby requiring Crystallex to accelerate payment and
purchase all of the Notes of each Noteholder who has so requested, together with
accrued and unpaid interest to the date of purchase.

A Project Change of Control is defined as the occurrence of any
transaction as a result of which Crystallex ceases to beneficially own, directly
or indirectly, at least a majority interest in the Las Cristinas Project.

On December 16, 2009, the Ontario Superior Court of Justice
dismissed all of the Noteholders claims against Crystallex and ordered the
Noteholders to pay Crystallex its costs incurred with respect to the
Application. In detailed reasons, the court held that Crystallex and its Board
acted reasonably and in accordance with its obligations to all stakeholders
including the Noteholders. The Noteholders appealed this decision, which was
heard in late April 2010.

On May 9, 2010, the Court of Appeal for Ontario dismissed the
Noteholders appeal and awarded costs to Crystallex.

On May 11, 2010, the Company was served with a statement of
claim by the trustee for the Noteholders seeking indemnification of costs.

On June 16, 2010, the Company and the trustee agreed to a cost
settlement to Crystallex of $0.8 million on account of Crystallexs costs in
defending the litigation. That payment was effected by netting against the July
15, 2010 semi-annual interest payment on the Notes. The Noteholders also signed
a release against the Company and its directors at the same time.

The Company has held preliminary discussions with various
significant Noteholders regarding a possible restructuring of the Notes which
mature in December 2011. If the Company is not successful in negotiating an
acceptable restructuring of the Notes, the Company intends to seek refinancing
opportunities with other parties. There are no assurances that such discussions
will be successful, and if the Company is not successful in this initiative,
then the Company will need to raise substantial additional funds to repay the
Notes.

Proposed Class Action
Dismissed

The Company and certain officers and directors were named as
defendants (the Defendants) in a putative securities fraud class action that
commenced on December 8, 2008, in the United States District Court for the
Southern District of New York. The plaintiffs in the lawsuit were described as
investors who acquired the Companys common shares during the period from March
27, 2006 to April 30, 2008, inclusive (the Proposed Class Period). The
complaint alleged that the Defendants made several statements during the
Proposed Class Period about the Companys Las Cristinas Project, and that the
issuance of the required Venezuelan government Permit in connection with that
project was imminent and guaranteed to be issued to the Company. The complaint
asserted that the Defendants did not have, during the Proposed Class Period, a
reasonable expectation that the Company would receive the required Permit, and
that on April 30, 2008, the Permit was, in fact, denied. The proposed class
action sought compensatory damages plus costs and fees, alleging violations of
Section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act) and
Rule 10b-5 promulgated thereunder by each of the Defendants, and a violation of
Section 20A of the Exchange Act by one of the individual Defendants.

On March 28, 2011, the court dismissed this lawsuit in its
entirety and without prejudice. The court allowed the plaintiffs to file a
second amended complaint if they have reason to do so in good faith within 21
days of the court order.

Claims by Former
Employees

The Companys subsidiaries in Venezuela have been served with
statements of claim from several former employees for additional severance and
health related issues for an aggregate claim of approximately $1.1 million. The
Company believes these claims are without merit and is vigorously defending
against them. However, as the outcome of these claims cannot be determined at this
time, the Company has made no provision for these claims as at December 31,
2010.

5

Crystallex International Corporation
Year Ended December 31, 2010

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Selected Annual
Information

2010
    2009
    2008Financial results ($000, except per share)Loss from continuing operations
    (46,051)
    (312,699)
    (21,807)Loss from discontinued operations
    (2,138)
    (1,200)
    (3,913)Net loss
    (48,189)
    (313,899)
    (25,720)Loss per share from continuing operations  Basic
    (0.14)
    (1.06)
    (0.07)and dilutedLoss per share  Basic and diluted
    (0.15)
    (1.07)
    (0.09)Weighted average shares  Basic and diluted
    330.3
    294.8
    291.0(millions)Cash and cash equivalents used in operating
    (19,753)
    (20,349)
    (22,648)activitiesInvesting activitiesExpenditures on Las Cristinas
    (11,402)
    (15,079)
    (28,224)Proceeds from sale of equipment
    2,794
    12,361
    6,039Financing activities
    37,829
    (3,794)
    64,326Cash and cash equivalents
    16,128
    6,897
    34,520Total assets
    51,812
    58,128
    382,464Outstanding debt
    98,465
    90,639
    86,746Shareholders deficiency
    (60,626)
    (44,708)
    267,796


- Loss from continuing operations in 2010 included a non-cash write-down of
  $12.5 million in the carrying value of Las Cristinas compared to a non-cash
  write-down of $297.1 million in 2009. The first non-cash write-down was
  recorded in 2009. General and administrative expenses increased by $2.1
  million in 2010 which related mostly to the negotiations with CRRC. In
  addition, the Company recorded a provision of $2.2 million in 2010 for
  value-added taxes recoverable relating to Las Cristinas and $6.4 million
  write-down of mining equipment to estimated net realizable value.
- Loss from continuing operations was $290.9 million higher in 2009 compared
  to 2008 due to a $297.1 million non-cash write-down on the carrying value of
  the Companys interest in Las Cristinas; loss on sale/write-down of equipment
  of $8.3 million in 2009 compared to a gain of $1.8 million in 2008; an
  increase of $2.0 million in litigation costs in 2009 relating to the
  Noteholders action; a reduction in 2009 in foreign currency exchange gain of
  $1.3 million; offset by a future income tax recovery of $17.5 million; a 28%
  reduction, or $2.9 million, in general and administrative expenses in 2009.
- Loss from discontinued operations relate to the former 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. Losses relate mostly to maintaining personnel
  to oversee reclamation, revisions to estimated cash flows related to reclamation and
  surface taxes.
- Cash flows used in operating activities have been fairly stable over the
  past three years.
- In 2009, the Company reduced expenditures at Las Cristinas by $13.1
  million, due to the lack of the Permit. The Company continued expenditures in
  2009 and 2010 as required under the MOC. In 2010, expenditures were reduced by
  $3.9 million compared to 2009 as the Company continued with its cost reduction
  initiatives at Las Cristinas.
- The Company completed public offerings in 2010 and 2008 for net proceeds
  of $30.6 million and $64.1 million, respectively. In 2010, the Company
  received a $2.5 million demand loan from CRRC. There were no financings in
  2009 other than a $0.9 million promissory note advance received on equipment
  which was sold at auction in March 2010. This promissory note was repaid in
  2010 from the auction proceeds.

6

Crystallex International Corporation
Year Ended December 31, 2010

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Summary of Quarterly Results (Unaudited)

$,000 except per share
    2010Q4
    Q3
    Q2
    Q1Loss from continuing operations
    (15,798)
    (8,357)
    (12,792)
    (9,104)Loss from discontinued operations
    (525)
    (941)
    (379)
    (293)Net loss
    (16,323)
    (9,298)
    (13,171)
    (9,397)Write-down of Las Cristinas included in loss from
      continuing operations
    (1,716)
    (3,150)
    (4,064)
    (3,610)Provision for value-added taxes recoverable included in
      loss from continuing operations
    (89)
    (146)
    (1,936)
    -Loss on write-down of equipment included in loss from
      continuing operations
    (6,389)
    -
    -
    -Loss per share from continuing operations  Basic and
      diluted
    (0.05)
    (0.02)
    (0.04)
    (0.03)Loss per share  Basic and diluted
    (0.05)
    (0.03)
    (0.04)
    (0.03)


$,000 except per
      share
    2009Q4
    Q3
    Q2
    Q1Loss from continuing operations
    (281,417)
    (19,889)
    (6,319)
    (5,074)Loss from discontinued operations
    (406)
    (229)
    (431)
    (134)Net loss
    (281,823)
    (20,118)
    (6,750)
    (5,208)Write-down of Las Cristinas included in loss from continuing
    operations
    (297,069)
    -
    -
    -Future income tax recovery
    17,459
    -
    -
    -Unrealized gain (loss) on translation of future income
      taxes included in (loss) income from continuing operations
    1,659
    (3,298)
    679
    2,209Gain (loss) on write-down of equipment sold and held for
      sale included in loss from continuing operations
    1,968
    (10,263)
    -
    -Loss per share from continuing operations  Basic and
      diluted
    (0.95)
    (0.07)
    (0.02)
    (0.02)Loss per share  Basic and diluted
    (0.96)
    (0.07)
    (0.02)
    (0.02)


- The El Callao mining activities ceased as at September 30, 2008. The
  Company continues to incur expenditures for maintaining a very small office at
  El Callao to oversee the closure plans for past mining activities. The Company
  has transferred the Tomi and La Victoria mining concessions to Minerven, a
  Venezuelan state controlled mining company, and is currently reviewing its
  reclamation obligations with MinAmb and MIBAM.

7

Crystallex International Corporation
Year Ended December 31, 2010

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Results of Continuing
Operations

The Company recorded losses from continuing operations of $46.1
million ($(0.14) per share) in 2010 and $312.7 million ($(1.06) per share) in
2009. The decreased loss of $266.6 million in 2010 is mainly due to the initial
write-down Las Cristinas in 2009, at which time the asset was written down by
$297.1 million, as compared with a write-down in 2010 of $12.5 million. The
difference in the loss from continuing operations between 2010 and 2009 is also
attributable to the following: mining equipment write-down of $6.4 million in
2010 compared to combined write-down and loss on equipment held for sale of $8.3
million in 2009; provision for value-added taxes recoverable at Las Cristinas of
$2.2 million in 2010 compared to $nil in 2009; future income tax recovery
relating to Las Cristinas of $nil in 2010 compared to $17.5 million in 2009 as a
result of the initial write-down as at December 31, 2009; general and
administrative expenses of $12.2 million in 2010 compared to $10.1 million in
2009; and recovery of Noteholders litigation of $0.3 million compared to
expenses of $2.3 million in 2009.

Write-down of
the carrying value of Las Cristinas, provision for VAT and future income tax
recovery

On December 31, 2009, the Company assessed the Las Cristinas
Project for impairment based on the guidance in EIC 174 "Mining Exploration
Costs", AcG11 "Enterprises in the Development Stage", and CICA Handbook Section
3063, Impairment of Long-Lived Assets and concluded that, despite its
continued efforts to secure the Permit and pursue accretive transactions in
respect of the Las Cristinas Project, a non-cash write-down of the carrying
value should be recorded as at December 31, 2009 based on certain impairment
triggers noted including, but not limited to, the permitting delays. The Company
determined that, among other things, the uncertainty regarding the Permit had a
significant impact on the estimated future net cash flows associated with the
Las Cristinas Project and on recoverability of the asset. Accordingly, the
Company recorded a non-cash write-down of $297.1 million as at December 31, 2009
relating to all mineral property costs, except the carrying value of the
remaining mining equipment. The accumulated non-cash write-down resulted in the
reversal of future income tax liabilities of $17.5 million as at December 31,
2009 relating to temporary differences between book and tax values previously
recorded.

The Company continued to perform similar impairment
assessments as at the end of each quarter in 2010 and for similar reasons to
those indicated above; the Company recorded non-cash write-downs totalling $12.5
million in 2010. In addition, the Company recorded a provision of $2.2 million
against Venezuelan value-added taxes recoverable (VAT) from cumulative
expenditures incurred on Las Cristinas. This provision was recorded as this VAT
was only recoverable from future operations at Las Cristinas which could not be
transferred or assigned.

The Companys main focus since receiving the MOC from CVG in
September, 2002, was the development of Las Cristinas. The Company incurred
costs such as interest on the Notes and general and administrative costs which
have not been capitalized on the Las Cristinas Project for accounting purposes.
Accordingly, the write-downs relate only to the direct costs capitalized for accounting
purposes and do not include the indirect costs which have been expensed by the
Company in its pursuit of the development of Las Cristinas.

These write-downs of the Las Cristinas Project are based on
accounting principles only, and are thus without prejudice to the legal
qualification that the Venezuelan measures may be given under Venezuelan or
international law (including the Treaty).

8

Crystallex International Corporation
Year Ended December 31, 2010

---

Losses on
write-down and sale of mining equipment

During 2009, the Company sold generic mining equipment for net
proceeds of $12.4 million from which $4.7 million was set aside and restricted
to pay the scheduled January 15, 2010 interest obligation on the Notes.

As at December 31, 2009, the Company was in the process of
selling additional mining equipment with a net book value of $4.4 million and
recorded a write-down of $1.2 million based on estimated net realizable value of
$3.2 million. In December 2009, the Company received an advance of $0.9 million
from the auctioneer who subsequently sold the majority of this equipment in
April 2010 for $2.8 million. The Company issued to the auctioneer a demand
promissory note for $894 bearing interest at the Bank of America, Australia,
Bank Bill Buying semi-annual rate plus 4%, which was secured by the underlying
equipment. The Company repaid the promissory note and related interest charges
from the auction proceeds.

Subsequent to the year ended December 31, 2010, and upon the
unilateral cancellation of the MOC by the CVG in February 2011, the Company
commenced a process to sell its remaining mining equipment having a net book
value of $39.6 million. The Company recorded a write-down of $6.4 million as at
December 31, 2010 based on estimated net realizable value of $33.2 million. Fair
value was determined based on a range of estimated future net cash flows
expected to arise from the future sale of the mine equipment, on the basis that
this represents managements likely course of action.

General and
administrative expenses

General and administrative expenses increased by $2.1 million
to $12.2 million in 2010 (2009 - $10.1 million). The increase was due to
increases in legal expenses of $1.7 million mostly related to pursuing the
strategic partnership with CCRC and preparing for arbitration, an increase in
compensation of $0.4 million and non-cash stock-based compensation of $0.4
million, offset by a $0.4 million decrease in other administration expense.

Litigation
expenses

A net recovery of litigation expenses of $0.3 million was
recorded in 2010 compared to an expense of $2.3 million in 2009.

The Noteholders litigation was concluded in the second quarter
of 2010 with the Company being awarded costs of $0.8 million.

The Company expects to incur significant legal and advisory
costs relating to the Arbitration claim.

Interest on
Notes

Interest expense on the Notes was $13.8 million in 2010 and
$13.3 million in 2009. These expense amounts include cash interest payments of
$9.4 million on the Notes which bear interest at 9.375% per annum, payable
semi-annually in January and July. Interest expense on the Notes also includes
amortization of debt transaction costs related to this debt and non-cash
interest accretion of $4.4 million in 2010 and $3.9 million in 2009 as the Notes
were originally derived from a financial instrument that contained both
liability and equity components.

Interest on
promissory note and demand loan

Interest expense on the promissory note and convertible loan
was $0.3 million in 2010 and $nil in 2009.

The promissory note provided to an auctioneer was repaid in the
second quarter of 2010 from proceeds received from the auction of generic mining
equipment.

Interest expense included $0.2 million of non-cash interest
accretion on the $2.5 million loan which was received in March 2010 as part of
the ongoing negotiations with CRRC. The conversion feature of the loan was
ascribed a fair value of $0.2 million and recorded as contributed surplus, using
the Black-Scholes pricing model. The residual liability component of the loan of
$2.3 million was accreted up to its face value using the effective interest
method.

9

Crystallex International Corporation
Year Ended December 31, 2010

---

Foreign
currency exchange gain

The Company recorded foreign currency exchange gains of $0.9
million in both 2010 and 2009.

The foreign currency exchange gain in 2009 includes an
unrealized foreign currency translation gain of $1.2 million in 2009 as a result
of translation of future income tax liabilities recorded in the Venezuelan
Branch prior to the write-down of Las Cristinas as at December 31, 2009. The
components of the Companys future income tax balance included a future income
tax estimate of 34% of the carrying value of costs incurred for the Las
Cristinas asset recorded in the parent entity for accounting purposes which may
not have deductibility for income tax purposes in the Venezuela Branch. Prior to
the write-down, it was determined that the parent entity may not be able to
utilize in Canada the benefits derived from any foreign tax credits generated in
Venezuela as a result of the possible reduced Venezuelan tax base of the Las
Cristinas asset. These foreign currency translation gains resulted from the
translation into U.S. dollars at the end of the each reporting period in 2009 of
the Venezuelan-denominated future income tax liabilities that were recognized in
connection with expenditures on the Las Cristinas asset. A strengthening of the
BsF/USD at the parallel rate in one period relative to the previous period
resulted in an unrealized foreign currency translation loss and vice versa. In
2010, there were no such gains or losses recorded as the future income tax
liability was eliminated as a result of the write-down of Las Cristinas.

Results of Discontinued Operations  El
Callao

At the end of September 2008, the Company ceased mining
operations at El Callao due to the transfer of the Revemin mill to the State of
Venezuela on October 1, 2008.

The Company maintains three employees at El Callao to oversee
the remediation of previous mining activities. Losses from discontinued
operations were $2.1 million in 2010 compared to $1.2 million in 2009.

The Company has $0.9 million of accounts receivable and other
assets related to the previous El Callao operations, the majority of which
consists of VAT refundable from the Venezuelan tax authorities. The Company is
awaiting the refund of its VAT claim.

The Company is in discussions with MinAmb regarding the extent
of its reclamation activities at the Revemin mill. Reclamation studies have been
undertaken for the Tomi and La Victoria concessions; however, the extent of the
Companys reclamation obligations on these mining concessions and a date for
commencing reclamation activities will not be determined until MIBAM and
Minerven determine whether they will continue mining activities on the
concessions. The Company has estimated reclamation obligations of $3.5 million,
based on internal studies, on an undiscounted basis to be incurred over a period
of two years.

Cash used in these discontinued operations was $0.8 million in
2010 compared to $0.9 million in 2009.

10

Crystallex International Corporation
Year Ended December 31, 2010

---

Cash and cash equivalents

On December 31, 2010, the Company had cash and cash equivalents
of $16.1 million compared to $6.9 million on December 31, 2009. The change in
the cash and cash equivalents balance during 2010 is reconciled as follows ($
millions):

Cash, December 31, 2009
    $ 6.9Cash used in operating activities
    (19.8)Capital expenditures  Las Cristinas
    (11.4)Proceeds from sale of equipment by
      auctioneer
    2.8Issuance of common shares and warrants
    30.6Proceeds from issuance of convertible loan
    2.5Decrease in restricted cash to pay interest on Notes
    4.7Proceeds from bank loan in Venezuela
    0.9Repayment of promissory note
    (0.8)Cash used in discontinued operations at El
      Callao
    (0.8)Effects of foreign currency exchange rate fluctuations on
      cash
    0.59.2Cash and cash equivalents, December 31,
      2010
    $ 16.1


Cash Used in Operating
Activities

Cash used in operating activities from continuing operations in
2010 was $19.8 million compared to $20.3 million used in 2009.

Cash used in 2010 and 2009 was largely attributable to
corporate general and administrative expenses (net of non-cash stock-based
compensation in both years; and warrants issued for advisory services in 2009)
and litigation, aggregating $10.8 million (2009 - $8.9 million), and cash
interest payments of $7.1 million (2009 - $9.4 million).

Investing Activities

Cash used for capital expenditures for the Las Cristinas
Project was $11.4 million in 2010 compared to $15.1 in 2009.

The majority of the expenditures in both years represent
ongoing costs for administering, securing and maintaining control over the Las
Cristinas camp, storage costs for long lead time equipment stored outside of
Venezuela, and in the first quarter of 2009, construction activities related to
the medical facility and sewage treatment plant as required under the MOC.

Subsequent to the sale of some mobile equipment in the second
quarter of 2010, the Company has in storage mining and milling equipment,
purchased originally in 2004 and 2005. The equipment is stored outside of
Venezuela, is regularly inspected and maintained while in storage and is insured
under a marine insurance policy. This remaining equipment is currently listed
for sale with an estimated net realizable value of $33.2 million.

Financing Activities

In January 2010, the Company used the restricted cash balance
of $4.7 million dollars, to pay its semi-annual interest liability of $4.7
million which was due on January 15, 2010.

In March, 2010 the Company received a $2.5 million convertible
loan from CRRC.

On June 30, 2010, the Company completed a public offering of 70
million units at Cdn$0.50 per unit for gross proceeds of Cdn$35.0 million. Each
unit consists of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant entitles the
holder to purchase a further common share of the Company at an exercise price of
Cdn$0.70 for a period expiring on until June 30, 2011. The net proceeds received
by the Company, after payment of issuance costs of $2.4 million, was $30.6
million, of which $27 million was recorded as share capital and $3.6 million was
recorded as contributed surplus.

11

Crystallex International Corporation
Year Ended December 31, 2010

---

Liquidity and Capital
Resources

The Company expects to continue to incur operating losses
throughout the period of pursuing its arbitration claim. Crystallexs principal
sources of liquidity have been equity and debt financings and the sale of mining
equipment acquired in 2004 and 2005.

In April 2010, the Company sold equipment for net proceeds of
$2.8 million and repaid the promissory note and related interest charges.

In June of 2010, the Company raised $30.6 million through a
public offering of 70 million units consisting of 70 million common shares and
35 million common share purchase warrants.

The Company continues with cost cutting measures initiated in
December 2007, however, it may still be faced with significant legal and advisory
costs relating to the Arbitration claim.

See discussion at the section entitled Going concern basis of
accounting.

Contractual Obligations and
Commitments

The Companys significant contractual obligations and
commitments, as at December 31, 2010, are tabled below:

|(in $millions)                                  |   |           |  |   |        |  |   |          |  |   |             |  |   |       | 
|----------------------------------------------- | - | --------- |  | - | ------ |  | - | -------- |  | - | ----------- |  | - | ----- | 
|                                                |   | Less than |  |   | 1 - 3  |  |   | 3 months |  |   | 1 year to 5 |  |   |       | 
|Millions                                        |   | 1 month   |  |   | months |  |   | to 1     |  |   | Years       |  |   | Total | 
|                                                |   |           |  |   |        |  |   | Year     |  |   |             |  |   |       | 
|                                                |   |           |  |   |        |  |   |          |  |   |             |  |   |       | 
|Debt                                            | $ | -         |  | $ | 0.9    |  | $ | 102.5    |  | $ | -           |  | $ | 103.4 | 
|                                                |   |           |  |   |        |  |   |          |  |   |             |  |   |       | 
|Interest on notes payable                       |   | 4.7       |  |   | -      |  |   | 8.8      |  |   | -           |  |   | 13.5  | 
|Asset retirement
      obligations at El Callao |   | -         |  |   | -      |  |   | 0.8      |  |   | 2.7         |  |   | 3.5   | 
|                                                |   |           |  |   |        |  |   |          |  |   |             |  |   |       | 
|Total
      contractual obligations             | $ | 4.7       |  | $ | 0.9    |  | $ | 112.1    |  | $ | 2.7         |  | $ | 120.4 | 

Off-Balance Sheet
Arrangements

The Company does not have any off-balance sheet arrangements
with special purpose entities.

Related Party and Other
Transactions

In 2010, the Company paid head office rent of $122 thousand
(2009 - $126 thousand) to a subsidiary of Kingsway International Holdings
Limited, a company that retains the Chairman and Chief Executive Officer of the
Company as a director. In addition, in August 2009, another subsidiary of
Kingsway International Holdings Limited entered into an agreement with the
Company to provide advisory services. The advisory fee includes a work fee, and
a success fee which is only payable upon the fulfilment of certain conditions.
In 2010, the Company paid advisory fees of $125 thousand (2009 - $nil) under the
terms of this advisory agreement. The Kingsway advisory agreement terminated on
December 31, 2010; however, for a period of one year after the termination date,
the success fee is payable if certain conditions are met.

In 2010, the Company paid underwriting fees of $1.4 million
(2009 - $nil), relating to the June 2010 financing, to Macquarie Capital Markets
Canada Limited, a company which retains the Chairman and Chief Executive Officer
of the Company as an employee.

12

Crystallex International Corporation
Year Ended December 31, 2010

---

As at December 31, 2010 $12 thousand (2009: Nil) was receivable
from the Chairman and CEO of the Company.

These transactions were in the normal course of operations and
were measured at the exchange values, which represented the amount of
consideration established and agreed to by the related parties.

Fourth Quarter Results

The Company reported net loss from continuing operations in the
fourth quarter of 2010 of $15.8 million which is principally attributable to the
non-cash write down of the Companys carrying value of its interest in Las Cristinas of $1.7 million, the non-cash write down of equipment of $6.4 million,
and the aggregate of corporate general and administrative costs and interest
expense.

Administrative expenses increased slightly to $2.9 million in
the fourth quarter of 2010 compared to $2.8 million in the third quarter of
2010. Interest expense was $3.5 million in both the third and fourth quarters of
2010 which reflect interest of 9.375% on the Notes, amortization of debt
transaction costs and accretion of interest on the debt component of the Notes,
as well as interest of 6% on the convertible loan.

Foreign currency exchange gain was $ 0.8 million in both the
third and fourth quarters of 2010 reflecting the continuing strengthening of the
CAD$.

The write-down of the Las Cristinas mineral property decreased
to $1.7 million in the fourth quarter of 2010 compared to $3.2 million in the
third quarter of 2010. In addition, equipment with a net book value of $39.6
million was written down by $6.4 million to an estimated net realizable value of
$33.2 million in the fourth quarter of 2010. There was no equipment write-down
in the third quarter of 2010.

Cash used in operating activities was $2.6 million for the
fourth quarter of 2010 compared to a use of $7.6 million for the third quarter
of 2010. This fourth quarter reduction is due mainly to interest of $4.7 million
on notes payable which was paid in the third quarter of 2010.

There was a net outflow of cash of $2.3 million from investing
activities in the fourth quarter of 2010 relating to Las Cristinas as compared
to $4.0 million in the third quarter of 2010. These expenditures were
principally related to the continued operation of the Las Cristinas camp,
storage costs for long lead time equipment stored mainly in the United States
and various other countries.

Venezuelan Operations

In the third quarter of 2007, Crystallex changed the rate it
used to translate its Venezuelan subsidiaries transactions and balances from
the official exchange rate of 2.15 Venezuelan bolivar fuerte (BsF) to 1 US
dollar, to the parallel exchange rate. This was done due to the increasing
spread between the official exchange rate and the parallel exchange rate.

The Venezuelan subsidiaries have a US dollar functional
currency. As a result of the US dollar functional currency, monetary assets and
liabilities denominated in BsF give rise to income or expense for changes in
value associated with foreign currency exchange rate fluctuations against the US
dollar.

On January 11, 2010, the Venezuelan government devalued the BsF
and changed to a two-tier exchange structure. The official exchange rate moved
from 2.15 BsF per US dollar to 2.60 for essential goods and 4.30 for
non-essential goods and services. The 2.60 exchange rate for essential goods has
since been eliminated.

On May 17, 2010, the Venezuelan government enacted reforms to
its foreign currency exchange control regulations to close down the parallel
exchange market. Therefore, continued use of the parallel rate for BsF
denominated transactions is no longer acceptable.

On June 9, 2010, the Venezuelan government enacted additional
reforms to its exchange control regulations and introduced a newly regulated
foreign currency exchange system; Sistema de Transacciones con Titulos en Moneda
Extranjera (SITME), which is controlled by the Central Bank of Venezuela
(BCV). Foreign currency exchange transactions not conducted through SITME may
not comply with the exchange control regulations, and could therefore be considered illegal. The SITME imposes volume
restrictions on the conversion of BsF to US dollar, currently limiting such
activity to a maximum equivalent of US$350 thousand per month.

13

Crystallex International Corporation
Year Ended December 31, 2010

---

As a result of the enactment of the reforms to the exchange
control regulations, the Venezuelan subsidiaries did not meet the requirements
to use the SITME to convert US dollars to BsF as at June 30, 2010. Accordingly,
the Company changed the rate used to re-measure BsF-denominated transactions
from the parallel exchange rate to the official rate specified by the BCV, which
was fixed at 4.30 BsF per US dollar on June 30, 2010.

Venezuelan subsidiaries had approximately $0.4 million of net
monetary assets denominated in BsF as at December 31, 2010. For every $1 million
of net monetary assets denominated in BsF, a 15% increase/(decrease) in the
foreign currency exchange rate would (decrease)/increase the Companys loss by
approximately $0.2 million.

Critical Accounting Estimates and
Uncertainties

The preparation of financial statements in conformity with
Canadian GAAP requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements, and
the reported amounts of revenues and expenditures during the reporting period.
While management believes these estimates and assumptions are reasonable, actual
results could vary significantly.

The critical accounting estimates and uncertainties are as
follows:

Going
concern basis of accounting

As at December 31, 2010, the Company had negative working
capital of $91.7 million, including cash and cash equivalents of $16.1 million.
Management estimates that the existing cash and cash equivalents, without
receipt of proceeds from equipment sales or other sources of financing, will not
be sufficient to meet the Companys obligations and budgeted expenditures during
2011 including the July 15, 2011 semi-annual interest and the principal amount
of the $100 million notes payable (the Notes) due on December 23, 2011. The
unilateral cancellation of the MOC by CVG and the subsequent arbitration claim
may impact on the Companys ability to raise financing. These uncertainties
raise substantial doubt as to the ability of the Company to meet its obligations
as they come due and, accordingly, as to the appropriateness of the use of
accounting principles applicable to a going concern.

The Company has a number of financing options which could
generate sufficient cash to fund ongoing operations and/or service its debt
requirements as they come due including, but not limited to, the following:

| | a) | sale of remaining mining equipment, to which management
      has commenced a plan subsequent to year end;                                           
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | negotiating a settlement with the holders (Noteholders)
      of the Notes to extend the maturity of the Notes or reduce its
      obligations; and
| | c) | sale of equity and/or debt
securities.                                                                                                               

Subsequent to year end, the Company commenced a process to sell
its remaining mining and milling equipment currently held in storage related to
the Las Cristinas Project. If this equipment is sold for proceeds approximating
carrying value, management projects that such funds would be sufficient to fund
ongoing operations, including the July interest payment, up to December 2011
when the Notes are due. There are, however, no assurances that the sale process
will be successful and if it were successful there are no assurances as to the
amount or timing of any potential proceeds.

The Company is in discussions with the Noteholders to
restructure the Notes, including extending the maturity date beyond December
2011. There are no assurances that such discussions will be successful, and if
the Company is not successful in this initiative, then the Company will need to
raise substantial additional funds to repay the Notes. Despite the financings
that have been completed by the Company, it has limited access to financial
resources as a direct result of the unilateral cancellation of the MOC and there
is, however, no assurance that sufficient additional financing will be available
to the Company on acceptable terms, or at all, as a consequence of the
Government of Venezuelas conduct. Failure to obtain such additional financing
could result in the Company defaulting on its debt repayments.

14

Crystallex International Corporation
Year Ended December 31, 2010

---

The Companys consolidated financial statements do not reflect
the adjustments to the carrying values of assets and liabilities, the reported
expenses and the balance sheet classifications used, that would be necessary
should the Company be unable to continue as a going concern. These adjustments
could be material.

Assessment
of impairment of Las Cristinas mineral property and value-added taxes

The Company periodically evaluates the recoverability of the
net carrying value of its long-lived assets when events or changes in
circumstances indicate that their carrying values may not be recoverable. This
evaluation requires the comparison of the undiscounted future net cash flows
derived from these assets with the carrying value of the assets. Estimated
future net cash flows, on an undiscounted basis, are calculated using estimated
recoverable ounces of gold (considering current proven and probable mineral
reserves and the value beyond proven and probable which includes those mineral
resources expected to be converted into mineral reserves), estimated future
commodity price realization (considering historical and current prices, price
trends and related factors) and operating costs, future capital expenditures,
project financing costs and reclamation costs. When the carrying value of an
asset exceeds its undiscounted cash flows, the asset is written down to its fair
value, which is measured using its discounted expected future cash flows.

The Company determined that, among other things, the
uncertainty regarding the Permit had a significant impact on the estimated
future net cash flows associated with the Las Cristinas Project and on
recoverability of the carrying value of the asset.

The Company recorded an accumulated non-cash write-down totalling
$309.6 million as a result of impairment assessments conducted on Las Cristinas
from December 31, 2009 to December 31, 2010. In addition the Company recorded a
provision of $2.2 million against Venezuelan value-added taxes recoverable from
cumulative expenditures incurred on Las Cristinas.

These write-downs of the Las Cristinas Project are based on
accounting principles only, and are thus without prejudice to the legal
qualification that the Venezuelan measures may be given under Venezuelan or
international law (including the Treaty).

The Company will be reporting under International Financial
Reporting Standards (IFRS) effective January 1, 2011. Under IFRS, an entity is
required to assess at each reporting date any indication that a previously
recognized impairment loss no longer exists or has decreased. If there is such
an indication, the entity is required to estimate the recoverable amount and
determine whether an impairment reversal is appropriate.

Write-down
of equipment to estimated net realizable value

Subsequent to the year ended December 31, 2010, the Company
commenced the process of selling remaining mining equipment and as at December
31, 2010 recorded this equipment at estimated net realizable value. There can be
no assurance that the Company will obtain this estimated net realizable
value.

Asset
retirement obligations

Mining, development and exploration activities are subject to
various laws and regulations governing the protection of the environment. The
Company has recorded asset retirement obligations related to its discontinued El
Callao operations.

Significant judgments and estimates have been made in
determining the nature and costs associated with these obligations. Changes in
the underlying assumptions used to estimate these obligations as well as changes
to environmental laws and regulations could cause material changes in the
expected cost and the fair value of these obligations.

Income
taxes

In determining both the current and future components of income
taxes, the Company interprets tax legislation in a variety of jurisdictions as
well as makes assumptions as to the expected time of the reversal of future tax
assets and liabilities. If the interpretations or assumptions differ
from the tax authorities, or if the timing of the reversal is not properly
anticipated, the provision for or relief of taxes could increase or decrease in
future periods.

15

Crystallex International Corporation
Year Ended December 31, 2010

---

Financial
instruments and fair values

At December 31, 2010, the Companys financial instruments
consisted of cash and cash equivalents, accounts receivable, accounts payable
and accrued liabilities, bank loan, demand loan payable and Notes payable. The
financial instruments that are measured at fair value and classified as Level 2
are cash and cash equivalents. Accounts receivable, accounts payable and accrued
liabilities, bank loan and demand loan payable are measured at amortized cost
and their fair values approximate carrying values due to their short-term
nature. The Notes are classified as held-to-maturity and are measured at
amortized cost. The fair value of the Notes ranged from $25.0 million to $81.0
million based on very limited trading activity since October 2008.

International Financial Reporting
Standards

In February 2008, the Canadian Accounting Standards Board
confirmed that 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. As such, the
Companys first interim financial statements under IFRS will be for the three
months ending March 31, 2011 and a complete set of financial statements under
IFRS for the year ending December 31, 2011.

The Audit Committee has been provided with regular updates
concerning issues arising from the transition to IFRS. The Committee will
consider the first interim IFRS financial statements following the release of
the annual financial statements for the year-ended December 31, 2010.

The Company has utilized a documentation template prepared by a
third-party service provider as a basis for guiding its personnel through the
various elements of the conversion The Company has prepared technical papers on
functional currency, share-based payments, borrowing costs, property, plant and
equipment, impairment of assets, and asset retirement obligations. The Company
has also conducted an assessment of the significant optional IFRS 1 exemptions.
Skeleton financial statements have been drafted which have identified areas for
additional quantitative and qualitative disclosures. The Company has identified
other areas where the adoption of IFRS will have an impact on its financial
statements on transition to IFRS and in future periods, and further evaluation
is ongoing.

First-time adoption of IFRS

IFRS 1, First-Time Adoption of International Financial
Reporting Standards, provides entities adopting IFRS for the first time with
a number of optional exemptions and mandatory requirements, in certain areas, to
the general requirement of full retrospective application of IFRS. Certain
adjustments required on transition to IFRS will be made, retrospectively,
against opening deficit as of the date of the first comparative statement of
financial position presented, based on standards that will be applicable as at
December 31, 2011.

The following paragraphs outline the Companys assessment of
the significant optional IFRS 1 exemptions and elections that will be applied in
the Companys first IFRS financial statements.

Share-based payments: IFRS 1 provides the option to
adjust the share-based payments and related expense only to those instruments
that have not yet vested as at the transition date. Share-based payments that
vested prior to the transition date do not get retrospective application of IFRS
1. The Company will not utilize this election as retroactive application of the
IFRS stock-based payments standard is not expected to result in a material
adjustment to the Companys opening balance sheet.

Decommissioning liabilities: IFRIC 1 Changes in
Existing Decommissioning, Restoration and Similar Liabilities requirements,
with respect to changes in such liabilities that occurred before January 1,
2010, will not be applied. This election enables the Company to apply a
simplified approach for the determination of the provision and the corresponding
asset balance on the date of transition and is not expected to have any material
impact for the Company.

16

Crystallex International Corporation
Year Ended December 31, 2010

---

Cumulative translation account: the Company has elected
to reset to zero at transition the balance sheet line item titled Accumulated
other comprehensive income which consists entirely of gains and losses arising
from the translation of foreign operations.

The remaining optional exemptions are not expected to be
applicable to the Companys adoption of IFRS.

Accounting
policy changes and expected areas of significance

The Company has assessed the impact of accounting policy
changes and elections available under IFRS 1. Set out below are the key areas,
where changes in accounting policies are expected, and that may impact the
Companys financial statements, including presentation and disclosure.

Functional
currency

Under both IFRS and Canadian GAAP, the accounting concepts used
in the preparation of financial statements rely on a determination of functional
currency. After analyzing the operating characteristics of the parent and
subsidiary companies, the Company has concluded that the functional currency
remains the U.S. dollar in all entities.

Property,
plant and equipment

Under IFRS, the Company can elect under IAS 16 to measure
property (including Mineral Property), plant and equipment (PP&E) using
either the cost model or the revaluation model. Canadian GAAP only accepts the
cost model. The Company will retain the cost model at the date of transition and
subsequently. As a result, there will not be a significant impact on the
Companys financial statements on adoption of IFRS.

Mineral
property interest, exploration and evaluation costs

IFRS 6 applies to expenditures incurred on properties in the
exploration and evaluation (E&E) phase, which begins when an entity
obtains the legal rights to explore a specific area and ends when the technical
feasibility and commercial viability of extracting a mineral resource are
demonstrable. IFRS 6 requires entities to select and consistently apply an
accounting policy specifying which E&E expenditures are capitalized and
which are expensed. Unlike IFRS, Canadian GAAP indicates that exploration costs
may initially be capitalized if the Company considers that such costs have the
characteristics of property, plant and equipment. Exploration and evaluation
assets shall be classified as either tangible or intangible according to the
nature of the assets acquired. Under the Companys current accounting policy,
acquisition costs of mineral properties, together with direct exploration and
development expenses incurred thereon are capitalized. The Company has
determined that there will not be a material impact to its financial statements
upon transition to IFRS as all of the E&E expenditures which were recorded
as mineral properties and written off under Canadian GAAP would have been
similarly written off under IFRS.

Impairment
of assets

Canadian GAAP generally uses a two-step approach to impairment
testing: first comparing asset carrying values with undiscounted future cash
flows to determine whether impairment exists; and then measuring any impairment
by comparing asset carrying values with fair values. IAS 36 Impairment of
assets uses a one-step approach for both testing for and measurement of
impairment, with asset carrying values compared directly with the higher of fair
value less costs to sell and value in use (which uses discounted future cash
flows). This may potentially result in more write-downs where carrying values of
assets were previously supported under Canadian GAAP on an undiscounted cash
flow basis, but could not be supported on a discounted cash flow basis. However,
the extent of any new write-downs may be partially offset by the requirement
under IAS 36 to reverse any previous impairment losses where circumstances have
changed such that the impairments have been reduced. Canadian GAAP prohibits
reversal of impairment losses. The Company wrote down all of its mineral
property costs and wrote down its related mining equipment to estimated net
realizable value under Canadian GAAP. the Company has determined that there will
not be a material impact to its financial statements upon transition to
IFRS.

17

Crystallex International Corporation
Year Ended December 31, 2010

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Financial
liabilities and equity instruments

Accounting for financial instruments, including convertible
debt, warrants and stock options differs under IFRS. The Company has concluded
that certain of its warrants issued with a Canadian dollar strike price qualify
as derivative instruments and must be reclassified as debt and recorded at fair
value which will be reassessed at each reporting date under IFRS. Any resulting
change in value is considered as financing income or expense. The adjustment at
transition is a reallocation between contributed surplus, debt and deficit. The
Company has determined that there will not be any significant impact on the
financial statements resulting from this adjustment.

Share-based
payments

The Company has concluded that the methodology currently used
in accounting for stock options is, in all material respects, in accordance with
the related IFRS standard for accounting for share based payments and, as such,
no adjustments will be necessary.

Asset
retirement obligations

IAS 37 Provisions, Contingent Liabilities and
Contingent Assetsdefines site restoration and environmental provisions as
legal or constructive obligations whereas Canadian GAAP limits the definition to
legal obligations. IAS 37 requires the use of managements best estimate of the
Companys cash outflows, rather than fair value measurement on initial
recognition under Canadian GAAP, and requires provisions to be updated at each
balance sheet date using a current pre-tax discount rate (which reflects current
market assessment of the time value of money and the risk specific to the
liability). Canadian GAAP requires the use of a current credit-adjusted,
risk-free rate for upward adjustments, and the original credit-adjusted,
risk-free rate for downward revisions. As presented in the IFRS 1 section above,
the election of the exemption for the determination of the provision at the
transition date will be retained and is not expected to have any material impact
on the Company.

Income
taxes

Both Canadian GAAP and IFRS (IAS 12 Income taxes)
follow the liability method of accounting for income taxes, where tax
liabilities and assets are recognized on temporary differences. However, there
are certain exceptions to the treatment of temporary differences under IAS 12
that may result in an adjustment to the Companys disclosure of future tax
liabilities and assets under IAS 12. In addition, the Companys future tax
liabilities and assets may be impacted by the tax effects of any other changes
noted in the above areas. The Company is in the process of analyzing the impact
of IAS 12 on the disclosure in the consolidated financial statements. However,
due to the fact that future tax assets resulting from unrecognized income tax
losses carried forward and the income tax values of property plant and equipment
are significantly in excess of the accounting values as at January 1, 2010, it
is not expected that the opening financial position of the Company will be
affected.

Additional
disclosures

Notes to the financial statements are more extensive under IFRS
in a number of areas including the following:

- Accrued liabilities - Related
party transactions- Compensation- Segmented information- Expenses
classified by function (e.g. general and administrative) and by nature (e.g.
depreciation)- Additional disclosures will be required relating to critical
accounting estimates and judgments relating to the future that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.

Internal
Control over Financial Reporting (ICFR)

The Company continues to monitor the ICFR process and
procedures in place. The changeover plan incorporates full documentation, review
and approval of any adjustments required as a result of IFRS accounting and
reporting.

18

Crystallex International Corporation
Year Ended December 31, 2010

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Disclosure
Controls and Procedures

As at December 31, 2010, no significant changes in the
disclosure controls and procedures are expected as a result of the Companys
transition to IFRS. The Company will avail itself of the automatic 30 day
extension granted to all filers in respect of the initial filing of the fiscal
2011 first quarter financial statements.

Training

Finance staff and a Director attended appropriate training
programs and continue to receive IFRS-related communication from third-party
service providers with expertise in IFRS activity. Training sessions directed to
executive management and Directors originally planned for the third quarter of
2010 will take place as necessary in conjunction with the preparation of the
transition statements.

Business
activities

The Company assessed the impact on all areas of the business,
including contractual arrangements, incentive plans, foreign currency etc. which
have been concluded as minor.

IT
systems

A review of IT systems to date has not identified a need for
significant systems changes as a consequence of the changeover. The Company
continues to monitor this area to ensure that existing systems are able to
provide the information required on a timely basis. In certain cases where IFRS
adjustments are expected, the Company has developed new or modified existing
spreadsheets to ensure the availability of the required information.

These are the key areas identified to date; however, other
differences and impacts may be identified as the Company completes the
conversion project and issues its first IFRS-based interim statements for the
quarter-ending March 31, 2011. The International Accounting Standard Board
currently has projects underway that are expected to result in new
pronouncements and as a result, IFRS as at the transition date is expected to
differ from its current form. The final impact of IFRS on the financial
statements will only be determined once all applicable standards at the
conversion date are known.

Outstanding Share Data

A summary of common shares, common share options and common
share purchase warrants at March 31, 2011, are tabled below:

Common Shares Issued
    
    364,817,719Common Share Options
    
    18,396,633Warrants
    
    66,695,000Fully Diluted Common Shares
    
    449,909,352


19

Crystallex International Corporation
Year Ended December 31, 2010

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Disclosure Controls and Internal Control
over Financial Reporting

Disclosure Controls
and procedures

The Company maintains disclosure controls and procedures which
are designed to provide reasonable assurance that information required to be
disclosed by the Company is recorded, processed, summarized and reported within
the time periods specified by regulations. The Company performed an evaluation,
under the supervision and participation of management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of its disclosure controls and procedures as of the end of
the period covered by this report. Based on this evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures were not effective as of December 31, 2010 due to the
reasons described in Internal control over financial reporting. The steps
taken by management of the Company to address each of these areas of weakness
are also described under the heading Managements plans to remediate material
weaknesses.

Internal
control over financial reporting

The Companys management is responsible for establishing and
maintaining adequate internal control over financial reporting. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with policies
or procedures may deteriorate.

As of December 31, 2010, Management evaluated the Companys
internal control over financial reporting (ICFR), as defined under
Multilateral Instrument 52-109  Certification of Disclosure in Issuers Annual
and Interim Filings of the Canadian Securities Administrators.

Management has evaluated the effectiveness of the Companys
internal control over financial reporting as at December 31, 2010 based on the
criteria set forth in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).

A material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting, such that there is
a reasonable possibility that a material misstatement of the company's financial
statements will not be prevented or detected on a timely basis.

As at December 31, 2010, the Company identified material
weaknesses as follows:

| | (a) | Information and communication: The Company does not have
      a defined process to ensure all relevant events and obligations arising in
      Venezuela, including the details of contracts and other arrangements, are
      provided in a complete, accurate and timely manner to those responsible
      for the financial reporting function.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (b) | Delegation of authority: The Company does not have a
      comprehensive defined authority structure or framework to specify the
      thresholds for those acting on behalf of the
Company.                                                                                                                                                       

Either of these material weaknesses could result in a material
misstatement to the Companys annual consolidated financial statements that
would not be prevented or detected. Material weakness (b) noted above could also
result in the unauthorized acquisition, use, or disposition of the Companys
assets that could have a material effect on the consolidated financial
statements.

As a result of the material weaknesses described above,
Management has concluded that, as at December 31, 2010, the Companys internal
control over financial reporting was not effective.

20

Crystallex International Corporation
Year Ended December 31, 2010

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The effectiveness of the Companys internal control over
financial reporting as at December 31, 2010 has been audited by
PricewaterhouseCoopers LLP, our independent auditor, as stated in their report
which appears herein.

Managements plans to remediate material weaknesses

To remediate the material weaknesses in the Companys  internal control over
financial reporting, Management is designing additional controls to specifically
augment those controls relating to information and communication. Management is
redesigning the existing authority structure or framework, which specifies the
thresholds for those acting on behalf of the Company in approving transactions
relating to engineering, procurement and construction management transactions to
include all transactions.

Risk Factors

The business and operations of the Company and its affiliates
are subject to risks. In addition to considering the other information in the
Companys 2010 Annual Information Form, which is available on SEDAR at www.sedar.com, an investor should carefully consider
the following factors. Any of the following risks could have a material adverse
effect on the Company, its business and future prospects.

International arbitration against Venezuela

On February 16, 2011, the Company filed the Arbitration Request
under the Additional Facility Rules of ICSID against Venezuela. The Arbitration
Request was registered by the Secretary General of ICSID on March 9, 2011. The
arbitration, pursuant to the Treaty, was commenced by the Company following the
Venezuelan Governments failure to propose any resolution to the dispute
notified by the Company on November 24, 2008 and the subsequent unlawful
termination on February 3, 2011 of the Las Cristinas MOC.

The Companys claim is for breach of the Treatys protections
against expropriation, unfair and inequitable treatment and discrimination. The
Company is seeking restitution by Venezuela of the Companys investments,
including the MOC, the issuance of the Permit to develop Las Cristinas and
compensation for interim losses suffered, or alternatively full compensation for
the value of its investment in excess of US$3.8 billion. The arbitration claim
is the Companys principal focus at this time as it has no other projects.

The Company cannot provide assurances as to the outcome of the
arbitration process, which can last a number of years and can be costly.

Political
and economic uncertainty in Venezuela

The Companys international arbitration claim is against the
Government of Venezuela. Should the Company be successful in winning an award of
compensation to be paid by the Government of Venezuela, the Company cannot provide any assurance that it would be able to collect an
award of compensation which would materially adversely affect the Company.

Should Crystallex obtain the restitution of the MOC and the
grant of the Permit to allow development activities at Las Cristinas pursuant to
an arbitral award, then the Company may face a number of political, economic and
regulatory risks in Venezuela.

Additional
funding requirements

The Company will need to raise additional funds to service its
debt (including paying interest on the Notes and repaying the demand loan), to
pursue international arbitration and for general working capital. The Company is
currently in the process of selling equipment held in storage and, if all the
equipment is sold, the Company expects to receive sufficient proceeds to fund
interest payments, litigation and general working capital. There are however, no
assurances that the proceeds of equipment sales will be sufficient to cover
these expenses and the timing of the receipt of sales proceeds is uncertain.

21

Crystallex International Corporation Year
Ended December 31, 2010

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The Company is in discussions with the Noteholders to
restructure the Notes, including extending the maturity date beyond December
2011. If the Company is not successful in this initiative, then the Company will
need to raise substantial additional funds to repay the Notes. Despite the
financings that have been completed by the Company, the Company has limited
access to financial resources as a direct result of the cancellation of the MOC
and there is a risk that sufficient additional financing may not be available to
the Company on acceptable terms, or at all, as a consequence of the Government
of Venezuelas conduct. Failure to obtain such additional financing could result
in the Company defaulting on its debt repayments.

Current
global financial condition

In 2008 and 2009, global financial conditions were subject to
increased volatility and numerous financial institutions filed for bankruptcy or
insolvency protection, or have been rescued by governmental authorities. Access
to financing was negatively impacted by both sub-prime mortgages and the
liquidity crisis affecting the asset-backed commercial paper market. There
remains considerable uncertainty as to the strength and sustainability of the
global economic recovery. Global economic and financial conditions may impact
the ability of the Company to obtain loans, financing and other credit
facilities in the future and, if obtained, on terms favourable to the Company.
As a consequence, global financial conditions could adversely impact the
Companys financial status and share price.

Environmental regulation and liability

The Company is no longer engaged in operating activities at its
former properties near El Callao in Venezuela and has transferred ownership of
the processing facility and El Callao mining concessions to the Government of
Venezuela. The Company has environmental reclamation obligations related to its
previous mining and processing operations on the El Callao concessions. The
scope of the reclamation work required to be undertaken by the Company on the El
Callao concessions has yet to be determined as the Government of Venezuela may
continue with mining or other activities on the concessions.

The reclamation activities are subject to laws and regulations
controlling the environment. Environmental legislation may change and result in
greater reclamation costs than the Company currently estimates. In general,
environmental legislation is evolving towards stricter standards, 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. Future environmental legislation could
cause additional expense the extent of which cannot be predicted.

The Company does not maintain environmental liability
insurance. The Company 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 could adversely
affect the Company.

Currency
fluctuations

The Companys functional and reporting currency is the U.S.
dollar. A significant portion of the Companys operating and capital
expenditures are in Venezuelan BsF and Canadian dollars. Fluctuations in
exchange rate between the U.S. dollar and both the BsF and Canadian dollar,
either favourable or unfavourable, could have a material impact on the results
of operations and financial position.

Operating
losses are expected to continue in the near future

The Company expects that it will continue to incur losses and
there can be no assurance that the Company will become profitable in the near
future.

22

Crystallex International Corporation
Year Ended December 31, 2010

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Litigation

The Company is defending against several statements of claim in
Venezuela from former employees for additional severance and health related
issues. The Company believes that these actions are without merit and intends to
defend vigorously against these actions. The Company cannot provide assurances
as to the outcome of the actions, nor can the range of losses, if any, be
estimated. Accordingly, no losses have been accrued. A negative outcome from any
of these actions could result in a material loss to the Company.

Potential
dilution

As at March 31, 2011, the Company had outstanding options to
purchase 18,396,633 common shares of the Company and warrants to purchase
66,695,000 common shares of the Company (including 12,250,000 warrants that do
not become effective until after the receipt of the Permit). The issue of common
shares of the Company upon the exercise of the options and warrants will dilute
the ownership interest of the Companys current shareholders. The Company may
also issue additional stock options and warrants or additional common shares
from time to time in the future. If it does so, the ownership interest of the
Companys then current shareholders would be further diluted.

Common
share price volatility

The market price of the common shares of the Company could
fluctuate significantly based on a number of factors in addition to those listed
in this document, including:

- 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 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;
- significant global economic events;
- acquisitions, strategic alliances or joint ventures involving the Company
  or its competitors; and
- outcomes of litigation.

In addition, the market price of the common shares of the
Company are affected by many variables not directly related to the Companys
success and are, therefore, not within the Company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 Company trades has historically made the
Companys share price volatile and suggests that the Companys share price will
continue to be volatile in the future.

Dependence
on key employees

The Companys business is dependent on retaining the services
of a small number of key management personnel and directors, in particular those
who possess important historical knowledge of Las Cristinas relevant to the
arbitration claim. The loss of key personnel and/or directors could have a
material adverse effect on future operations of the Company.

Credit and
market risks

The Company may enter 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 Company to market risk and concentrations of
credit risk, consist primarily of cash and accounts receivable.

23

Crystallex International Corporation
Year Ended December 31, 2010

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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 Company 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 a counterparty might fail to
fulfil its performance obligations under the terms of a contract. The Company
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 Companys cash equivalents include deposits with Schedule 1
Canadian banks, denominated in U.S. dollars. The Company also has concentrations
of credit risk with respect to accounts receivable as the accounts receivable
are due from the Venezuelan Tax Department.

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
Company is organized under the laws of Canada, that most of its officers and
directors are residents of Canada, and that a substantial portion of the
Companys assets and the assets of a majority of the Companys directors and
officers named in the 2010 Annual Information Form are located outside the
United States. Furthermore, it may not be possible to enforce against the
Company or its directors or officers, judgments contained in U.S. courts. The
Company 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, but this area of the law is not free from doubt and there is a risk
that such a judgment will not be enforceable.

No payment
of cash dividends in the near future

The Company intends to retain cash to finance its arbitration
claim, to service debt and for working capital, including pursuing other
business opportunities. The Company 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 Company decides to declare and pay cash dividends in the future,
such a decision will be made entirely in the discretion of the board of
directors and shall be dependent on factors such as earnings, capital
requirements, future business opportunities, financing agreements and market
conditions for the Companys shares and the underlying commodities markets.

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 control over
financial reporting. The Company has complied with this particular aspect of
Sarbanes-Oxley for its fiscal year ended December 31, 2010. Managements
evaluation of, and report on, the Companys internal control over financial
reporting is set out in this MD&A 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.

To remediate the material weaknesses in the Companys internal
control over financial reporting, Management is designing additional controls to
specifically augment those controls relating to information and communication.
Management is redesigning the existing authority structure or framework, which
specifies the thresholds for those acting on behalf of the Company in approving
transactions relating to engineering, procurement and construction management
transactions to include all transactions.

There can be no assurance that the Company will be able to
adequately remediate its currently known weaknesses or that the Companys
internal control over financial reporting will be free of material weaknesses in
future periods, which could cause the market price of the Companys common
shares to decline and could lead to shareholder litigation. In addition, the
discovery of additional material weaknesses may result in the Company having to
incur costs to fix the internal control for financial reporting as well as costs
to remediate any financial inaccuracies.

24

Crystallex International Corporation
Year Ended December 31, 2010

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