Crystallex's recently released financial statements are a disgrace. The company is producing a product at a greater cost that what it is sold for and there are other questionable comments which may be discussed in a future article.

One need only look at Crystallex's attempt to prop up the share price yet again by issuing a press release on August 20th to understand what is truly meant by the word desperate. The press release provides no news and could almost be considered misleading as it fails to disclose all of the facts surrounding the information that was provided. This is a hallmark of Crystallex so one need not be surprised as the press release only reinforced the reputation of the company of not being transparent and open to investors.

That was more than enough to send Crystallex speculators into the after hours buying frenzy, at least until the Dow Jones article appeared, as it provided a clearer description of the events and comments as they transpired. According to Raul Gallegos of Dow Jones Newswires, Chavez did indeed say that "a mining industry nationalization is not contemplated in the constitutional reform," but then goes on to quote him as saying that no reform was needed as the Venezuelan government already had the power to nationalize the mining industry. Indeed, it is the same power that Venezuela exercised when it forced government majority ownership in oil industry in 2006.

This kind of blindness to plain common sense and this type of investment fervor has occurred many times over the years, more recently during the era of the Dot.com stocks that were afforded share prices that could never be justified. Recently, however, there have been signs that Crystallex’s appeal has reached a plateau and is slowly but surely descending. This is not to say that further promotion and a higher share price is not in the cards, but more and more it seems investors are looking beyond the hype and to the facts. This cannot be welcome news for either Crystallex’s executives or its investors.

On May 14th, Crystallex released its unaudited first quarter financial report for 2007. For most companies the report itself would have been damaging to the share price but it was more or less ignored as the short term infatuation with Las Cristinas and some overly optimistic comments from CEO Gordon Thompson were more than enough to offset that. The report itself is bleak and paints a picture of a company caught in the tug of the quicksand of failed corporate management. The only thing keeping it afloat being a contract to mine Las Cristinas which could itself eventually prove to be of less worth than the paper it was printed on.

While the presentation, made by Thompson and co-speaker Robert Crombie was essentially the same as those given during past presentations, the most interesting comments from Thompson came during the question and answer session. When asked about the status of the Environmental Approval and Construction Permit, Mr. Thompson launched into an excuse riddled explanation that did nothing to engender confidence in investors. As noted in a previous article, after Crystallex’s neighbor Gold Reserve Inc. (GRZ) received it’s permit, Thompson offered up the excuse that, unlike Gold Reserve, Crystallex has a mining contract [MOA], not a concession, and as such the Corporation Venezolano de Guayana or CVG, the quasi governmental company that has the mining rights to Las Cristinas and awarded the MOA to the company in 2002, was acting as intermediary in the permitting process. That, according to Thompson, “takes a little longer.”

Crystallex, on the other hand, has been promising approval of its ESIA study for more than three years but is still lodged firmly somewhere on the waiting list, despite submitting its study for approval a year and a half before Gold Reserve Inc. In what could only be considered an attempt at damage control, Crystallex trotted out its CEO, Gordon Thompson, for an interview with the Globe and Mail to explain how extremely positive and happy they were that Gold Reserve had received its approval, as it is “proof that the Chavez government, which others fear will follow through on threats to nationalize the mining industry, is in fact looking to develop its resources with the private sector to create jobs and government income.” That would have been enough to sustain investors but Thompson went on, throwing another wrench into the mix by saying that “We got our permit under the new process established by the Chavez government, which creates a situation where we have a partner, (the Corporation Venezolano de Guayana or CVG), that takes a little longer,"

A year and a half in mining circles may constitute “a little longer”, but that comment has doubtlessly caught investors by surprise as the notion of a new process seems to have come out of left field. After all, since submitting the EISA in 2004, Crystallex has been touting the receipt of the permit as being a short term wait. In fact, mine plan documents released to the public show an initial anticipated timetable of just eight months, as Crystallex suggested it would begin construction of the Las Cristinas mine by the fourth quarter of 2004 with mining operations to begin by the third quarter of 2006. The time table has been adjusted forward every subsequent quarter since then and gold production is now slated for sometime in 2009.