775-856-5700

210 South Rock Blvd.
Reno, Nevada 89502
FAX: 775-856-6053

775-856-5700

210 South Rock Blvd.
Reno, Nevada 89502
FAX: 775-856-6053

775-856-5700

210 South Rock Blvd.
Reno, Nevada 89502
FAX: 775-856-6053

The Las Cristinas mineralization has a number of features in common with porphyry gold-copper deposits, including hydrothermal quartz-tourmaline breccias at the core of the mineralized system, alteration zoning, and the metal association of gold with copper and minor molybdenum. However, unlike typical porphyry systems, there is no evidence of either a closely related porphyry intrusion or abundant quartz veins at Las Cristinas.

There is a strong relationship between mineralization and structure at Las Cristinas. Specifically most of the mineralization lies parallel to the foliation and is influenced by the stretching orientation defined by a mineral lineation. This structural information is consistent with mineralization being coeval with shearing over an interval in excess of a kilometer in width.

Recent drilling at Las Cristinas has been focused on extension of resources both laterally and down dip with more of a development focus rather than an exploration focus.

Most of the exploration work at Las Cristinas has been performed by Placer Dome Inc. ("Placer"), who worked on the property from 1991 to 2001. Placer completed line cutting, mapping, rock and soil sampling, geophysics, trenching, and drilling. Since acquiring the property in 2002, Crystallex has focused its exploration on drilling, with particular attention paid to the studies of the alteration, stratigraphy and structure of the deposit to define the controls on mineralization so as to improve confidence in the validity of correlating mineralized zones between adjacent drill-hole intersections.

The current database for Las Cristinas has 189,026m of trench and drill-hole samples from 108 individually named trenches and 1,321 drill holes. There are a total of 187,226 gold assays, 168,020 copper assays, 43,830 cyanide-soluble copper assays, and 145,021 silver assays. Drilling alone totals 187,165m. The average drill spacing over the entire modeled area at Conductora is roughly 70m, dropping to about 30m in the core area where economic mineralization is shallowest and where mining is planned to commence. The Mesones-Sofia area has an average drill spacing of 55m, while Morrocoy, a newly estimated deposit lying between Cordova and Mesones-Sofia, has a drill spacing of about 85m.

Placer drilled 1,174 drill holes for a total of 158,738m and excavated all of the 108 trenches; 77% of the holes had at least one down-hole survey. Placer tried several different drilling techniques in order to overcome the challenges of drilling in an intensely weathered tropical environment and chose triple-tube diamond drilling. They found that PQ tools provided the best recovery in saprolite, with HQ in bedrock. NQ was used systematically in bedrock during the infill-drilling phase and occasionally in difficult drilling situations. Placer's drilling was conducted in essentially three phases – shallow drilling to test saprolite, bedrock drilling and infill drilling in saprolite, and finally infill drilling of the pit area. Placer had a quality control program in place evaluating sampling and sub-sampling procedures and results.

Crystallex drilled 90 holes for a total of 28,427m from 2003 through early 2007, generally using HQ tools for saprolite and NQ for bedrock. Crystallex's 2003 drilling twinned selected Placer holes to independently evaluate a portion of the Placer drill-hole database and assay data. Crystallex's twin holes were drilled with smaller diameter core than Placer's had been, and Crystallex sampled with 2m continuous sample intervals in contrast to Placer's 1m sample intervals. Crystallex's subsequent drilling, conducted from 2004 through 2007, focused on increasing the reserve and resource through infill drilling, drilling down-dip extensions of the stratiform mineralized zone, and exploring strike extensions of the deposit. This drilling used blanks and pulp standards for quality control, and for their 2006-2007 drilling. Crystallex also conducted check assaying with a second assay lab. Checks on Placer's sample data verified the general tenor of grades reported by Placer.

Issues of variability and biased-low samples were addressed in a heterogeneity study. The high variability must be addressed prior to and during production to avoid massive misclassifications of ore and waste rock during production. This material heterogeneity or grade variability has negatively impacted the ability to make any resource estimate precisely reflect local estimated grades. Importantly, the style of mineralization and its natural variability are the likely causes of the underlying difference in grades between Placer data and Crystallex data, where Crystallex samples are both smaller and slightly lower grade than Placer's samples. It has been demonstrated that this is likely due to sample size. Taking this further, the entire sample database might be understating the mean grade of the deposit, even Placer's data. While this appears possible, there is no way to quantify this potential underreporting of grade or any way to incorporate this into the database or resource model.

Duplicate bench-scale tests on a series of samples containing 20% CLB and 80% CSB and between 1 and 2 g Au/t yielded an average of 88.7% overall gold recovery (gravity and leaching) with no measurable dependency on head grade.

A 2 kg/h pilot plant was operated for three weeks in which batch-ground/gravity concentrated Conductora ore was subjected to carbon-in-leach ("CIL") processing. During the first 13 days (PP1), a blend of 20% SAPO and 80% CSB was leached with an addition of 0.7 kg/t of cyanide (0.3 kg/t consumed) to give a final overall gold extraction of 89.6% (tailings average of 0.15 g Au/t). A SAPO-SAPS-CLB-CSB blend was processed for the last week (PP2). The plant tailing was 0.15 g Au/t for an extraction of 89.3% with a cyanide addition of 0.8 kg/t (0.3 kg/t consumed).

Viscosity measurements by Lakefield indicated nothing problematical in the mixtures that will be handled in the Las Cristinas plant.

Outokumpu conducted high-rate thickening tests on nine sample blends, ranging from pure SAPO to pure bedrock, using its pilot-scale thickener. At 50% solids in the underflow, all blends containing 50% SAPO or less could be processed at 0.46 t/m ² /h or greater. Allowing for a 15% scale-up, the data showed that a 50m diameter thickener would give at least 47% solids in the underflow when processing up to 20,000 t/d of a 50% SAPO, 50% CSB mixture.

The total resource at Las Cristinas as reported herein represents a significant increase since the previous resource reported in 2005 and since Crystallex initially obtained the rights to production in 2002. The increase is the result of drilling that expanded Conductora (inclusive of Cuatro Muertos and Potaso) down dip, drilling that expanded and allowed for inclusion of Morrocoy, and the first-time inclusion of Cordova resources, located west of Mesones-Sofia, and Morrocoy.

The mineralized zones at Conductora were defined in 2002, but Crystallex's exploration and geological studies have yielded new insight into the gold distribution. The controls on mineralization are lithological with the more-favorable units having more primary porosity and permeability. In addition to lithology, alteration and sulfide content also correlate with the mineralization. Higher-grade zones can be visually identified by lithology, alteration, and sulfides.

Table 1.1 and Table 1.2 show the updated Measured and Indicated resources and Inferred resources, respectively, for the entire Las Cristinas project area. These resources are inclusive of the areas a) Conductora-Cuatro Muertos-Potaso ("Conductora"), b) Mesones-Sofia, c) Morrocoy, and d) Cordova. The deposit is bounded at the south by a property boundary and ends at Mesones-Sofia, Cordova and

Morrocoy in the north. The deposit is open at depth. This report is the first to disclose a resource estimate for Morrocoy and Cordova, the latter of which is classified as Inferred only.

Table 1.1 Las Cristinas Total Measured and Indicated Resources
(Including Reserves*)

*Note: Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

Table 1.2 Las Cristinas Total Inferred Resources
(Including Reserves*)

*Note: Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

It is important to note that since the first estimate was made of the Las Cristinas deposit resources by Crystallex in 2003, all new drilling done in 2004 (18 holes), 2005 (14 holes), and 2006-2007 (46 holes) has supported the model in that the defined zones needed little modification even at a drill-hole spacing of over 100m, i.e. , the high-grade/high-sulfide and low-grade/low-sulfide zone gradational contacts needed only minor changes to fit the new drill-hole data. This fact is a testament to the predictability of the Las Cristinas deposit in general, but Conductora particularly, where most of the drilling took place.

The economic and design criteria used to determine the reserves in this report were derived from existing reports. MDA believes that there is enough information in prior reports concerning the appropriate mining, processing, economic and other factors to support Proven and Probable reserves. The work undertaken by MDA in 2007 consisted of updating mining costs using factors and estimates provided by Crystallex, developing Lerchs-Grossmann ("LG")ultimate pits using current economics, redesigning the ultimate pits, and reporting reserves. Because the updated economic data have not been rigorously verified by MDA, the 2007 work should be considered pre-feasibility level. The Proven and Probable mineral reserve estimates by area are given in Table 1.3. Along with the reserves reported, within the boundaries of the pit design there are an additional 1.6M contained ounces of Inferred material. These are shown in Table 1.4 below.

In addition, operating costs have changed since 2005 as shown in Table 1.6.

Note: Does not include any off-site costs or royalties

Since the 2005 update to the 2003 feasibility study, there have also been some changes in plans for mining and processing.

The increase of reserves is the result of additional drilling defining additional resources downdip. The consequence is a larger and deeper ultimate pit design. The current 2007 ultimate pit is designed to be approximately 1,250m wide, 3,100m long, and up to 490m deep. Mining is planned using truck and shovel methods. Current plans include processing 20,000 t/d with a variable strip ratio averaging 1.38 and ranging from 0.30 to 3.29 tonnes of waste per tonne of ore mined.

Water flow into the pit has been determined to be greater than what was estimated in the 2005 study. MDA has not addressed the potential flow increase in detail, but given the significance of dewatering to the project, more detailed analyses and engineering are needed. Dewatering costs are estimated at $0.185 per tonne mined, and the dewatering cost estimate is thought to be within accuracy for pre-feasibility work. Nevertheless, MDA cautions that the practical aspects of dealing with the extra volume of water will be challenging. If these costs increase significantly, the economics of the deeper reserves may be affected.

There has also been a change with regard to cyanide destruction. The cyanide destruction process is air/SO2 using sodium metabisulphite as the source of SO2. Originally it was envisioned that the excess reclaim water from the tailings management facility (“TMF”) would be treated; however, it is now Crystallex's intent to treat the entire stream of CIL tailings.

Delays in acquiring the environmental permits allowing construction to commence have impacted the overall project startup. It is now expected that project start up completion will be achieved approximately 24 months following the receipt of the full permits and the mobilization of the early works-construction contractors.

1.8

Conclusions and Recommendations

Since signing the MOA for Las Cristinas, Crystallex has successfully increased both the estimated resources and reserves. Las Cristinas presents a well-defined resource that has undergone extensive engineering and economic studies. The project is waiting for government permitting to begin production of the defined reserves.

At this stage, while waiting for final government permission to begin construction, multiple tasks in differing disciplines should be accomplished to optimize expected production. Crystallex should continue with at least a) exploration, b) geological studies, c) sub-sampling evaluation for production samples, d) metallurgical testing, e) water flow studies, f) detailed engineering work, and g) optimizing the production schedule.

Analysis of the drilling results has further defined controls on mineralization in the various portions of the property and will aid in future exploration. To potentially continue the expansion of reserves, MDA recommends that two areas deserve attention in the near term. Infill drilling is needed immediately south of the Sofia area, beneath the Quebrada Amarilla, to upgrade the Inferred resource there. It is recommended that three holes totaling about 1,200m be drilled in this area. The second area with an Inferred resource that needs to be upgraded is Cordova. A lack of continuity of gold zones demonstrated by Placer's drilling may actually reflect intense folding. Detailed stratigraphic analysis, perhaps combined with lithogeochemistry to attempt to distinguish volcanic units, should be followed by about 1,500m of drilling in five holes.

MDA is not reporting copper resources or reserves because CVG, who has granted mining rights to Crystallex, currently only has the rights to the gold in Las Cristinas. Since copper has a negative effect on cyanide recovery of gold in the saprolite sulfide material, MDA has modeled copper.

MDA believes that the single most important factor influencing mining will be the amount of water entering the pit. As the detailed engineering stage of project development proceeds, MDA recommends an aggressive program of testing under the guidance of groundwater hydrologists. Capturing as much water as practical on upper benches and channeling it to sumps in the upper elevations of the pit can reduce pit-pumping requirements.

The acid-generating material management plans require mining of saprolite-sulfide waste material which must be encapsulated within waste dumps to prevent the production of acid drainage, requiring detailed short-term planning to ensure that potential acid-generating material being dumped is properly managed.

Due to the increase in reserves, additional work is needed for the increased dump size and TMF. It is strongly recommended that a geotechnical investigation program be carried out to confirm the subsurface conditions under the proposed new dump location and stability analysis undertaken to verify design recommendation provided above. Should the option to expand the TMF footprint be carried forward, substantial dam alignment optimization and geotechnical field investigation would be required for the detail design and due to the height increase to about 100 m, additional field investigation and tests are required to confirm the analysis. Recommendations presented in 2005 design report regarding site preparation, construction and monitoring should be still followed.

The expanded pit, which is a result of the increase in reserves, is now within about 30m of the project's primary crusher. Consideration should be made to minor relocation of the crusher. This would provide a cushion against any future modifications to pit designs based on slope reconfigurations or further expansion of reserves.

2.0

INTRODUCTION

2.1

Introduction

Crystallex International Corporation (“Crystallex”) is exploring and developing the Las Cristinas project in southeastern Venezuela. Mine Development Associates (“MDA”) has been engaged in estimating and updating the mineral resource and reserves for the property since 2003. In July 2007, MDA was contracted to prepare this Technical Report for the purpose of reporting the most recent updated resources and reserves. This report also describes the property as known by prior exploration and provides an update on the 2006-2007 drilling, new information gained from that exploration, and results of continuing data verification. The 2006-2007 drilling that has led to the updated mineral resource and reserve estimates in this report was designed to bring the Morrocoy area into a defined resource and to increase resources and reserves down dip in the Conductora area. It was successful in both tasks. This most recent update also includes the first time reporting of Inferred resources at Cordova. The current report updates the 2003 Feasibility Study by SNC-Lavalin Engineers and Constructors Inc. (“SNC-Lavalin”) and their subsequent Technical Report (SNC-Lavalin, 2005a). The total resource at Las Cristinas as reported herein represents a significant increase since the previous resource reported in 2005 (Ristorcelli, 2005; SNC-Lavalin, 2005a). The current reported reserve has a production rate of 20,000 t/d with an option to expand to 40,000 t/d.

Crystallex is a Canadian corporation listed on the Toronto Stock Exchange (“TSX”) and the American Stock Exchange (“AMEX”). This report was written in compliance with disclosure and reporting requirements set forth in the Canadian Securities Administrators' National Instrument 43-101, Companion Policy 43-101CP, and Form 43-101F1. The mineral resources and reserves reported in Section 17.0 were classified to the standards and requirements stipulated in Canadian National Instrument 43-101. It is intended that this report may be submitted to those Canadian stock exchanges and regulatory agencies that may require it. It is further intended that Crystallex may use it for any lawful purpose to which it is suited.

MDA prepared two previous 43-101 Technical Reports on the Las Cristinas project for Crystallex (Ristorcelli, Hardy, and Prenn, 2002; Ristorcelli and Hardy, 2003) as well as reports that were not filed. The 2002 report described historic work on the property and results from previous operators. The 2003 report presented the first resource and reserve estimations of Crystallex's tenure on the property, which are included in this report in the section on historic resources and reserves (Section 6.4.2). These reports form the basis for much of this report to which more recent information has been added, principally from new co-authors.

2.2

Terms of Reference

The resource estimates for this report have been prepared by Steven Ristorcelli, P. Geo, Principal Geologist, Mine Development Associates, principal author of the report. Thomas Dyer, P. Eng., Mine Development Associates was responsible for mine design, planning and mineral reserve estimates, and Dyer was assisted by MDA associate Scott Hardy, P.Eng. Richard Spencer, PhD, P. Geo., of Crystallex provided updated information on geology, mineralization, and exploration by Crystallex, ran the exploration at Las Cristinas and had overall supervision and planning responsibility for those programs, and had significant input to this report. Mr. John Goode, P.Eng., independent metallurgist, has been involved with Las Cristinas and Crystallex since 2003 and has written, compiled and interpreted the metallurgical data for this project. Mr. David Evans, P. Eng., of SNC-Lavalin, was heavily involved in previous feasibility work on this project and has taken the lead role in this recent work on behalf of SNC-Lavalin, principally in coordinating SNC-Lavalin's work on capital and operating costs. Ms. Ljiljana Josic, P.Eng, of SNC-Lavalin, was responsible for the geotechnical study of the deepened open pit. Mr. Henri Sangam, P. Eng, was responsible for evaluating the geotechnical aspects of the tailings management facility and waste dumps. Ms. Helen Jackson, P. Geol, was responsible for the mine dewatering section. Each of these co-authors is a qualified person under Canadian Securities Administrators' National Instrument 43-101 for their area of responsibility. Certificates of these qualified persons are provided in Section 24.0.

2.3

Sources of Information

MDA has relied almost entirely on data and information derived from work completed by Placer Dome Inc. (“Placer”) and given to MDA by Crystallex. Crystallex acquired the Placer database in electronic form and received ~99% of the known drill data. Hard copies of the assay data and drill logs are not available. This is one aspect of the project that may never be able to be audited or checked. Validation drilling and re-assaying of pre-existing samples permit MDA to present a conclusion under Data Verification of adequacy, reasonableness and accuracy for the underlying database. Furthermore, an additional 12 twin drill holes completed in 2003, 18 drill holes completed in 2004, 14 drill holes drilled in 2005, and 46 drill holes in 2006-2007 have further verified the location and tenor of the mineralization. Though MDA has reviewed much of the available data, made site visits and taken independent samples, these tasks and data validate only a portion of the entire data set. MDA therefore has made judgments about the general reliability of the underlying data. Where deemed either inadequate or unreliable, the data were either eliminated from use or procedures were modified to account for lack of confidence in that specific information. Underlying this assessment on data quality and integrity is a level of confidence instilled in the project data and work completed because of the technical ability of the company involved with the project during the 1990s. In general, Placer's work appears to meet or exceed industry standards.

In addition, the scope of this study included a review of pertinent technical reports and data provided to MDA by Crystallex relative to the general setting, geology, project history, exploration activities and results, methodology, quality assurance, interpretations, drilling programs, and metallurgy. For this report, MDA relied heavily for background information on its prior technical reports described above and on the feasibility report and its updates by SNC-Lavalin described above. Prior reports that the authors used in preparation of this report are listed in Section 22.0. In addition to the company data and documents, public domain information has been gathered from a number of sources. The authors have also had numerous conversations with employees and management of Crystallex, who have provided information used in this report.

2.4

Personal Inspection by the Authors

MDA's mandate required on-site inspections at Las Cristinas and to that end Mr. Ristorcelli has visited the property on numerous occasions since 2002. In addition, MDA associate, Mr. Greg Maynard, has been to the site, and Mr. Trevor Nicolson of Nicholson Analytical Consulting, independent sampling consultant, spent 29 days on the project during the 72-day 2006 and 2007 drilling campaign. Mr. David Evans and Henri Sangam have been to the project site but only in relation to their specific endeavors.

2.5

Effective Date

The resource and reserve estimates reported here were completed in August and September 2007, respectively. The results of these estimates were made public on September 24, 2007. The date of this report as shown on the cover page and in the authors' certificates is the date on which writing of the report was completed and is the effective date of this report.

2.6

Note on Language, Terminology and Definitions

Unless otherwise indicated, all references to dollars ($) in this report refer to currency of the United States. This is a technical report, and the use of some technical terms is unavoidable.

2.7

Definitions

Some frequently used acronyms and abbreviations that appear in this report are listed below.

3.0

RELIANCE ON OTHER EXPERTS

The authors wish to make clear that they are qualified persons only in respect of areas in this report identified in their Certificates of Qualified Persons submitted with this report to the Canadian Securities Administrators. The authors have relied, and are unaware of any reason not to have relied upon the following individuals and companies who have contributed the sample quality control, engineering, legal, environmental, administration, taxation and financial information stated in this report, as noted below:

Mr. Trevor Nicholson, Independent Consultant, 2006-2007 drill program data and sample quality control and reliability;

Mr. Scott Hardy, P. Eng., associate to MDA, engineering for reserves;

SNC-Lavalin for historic work on feasibility study issues and environmental; and

Crystallex staff and legal counsel on environmental issues, permitting, taxation, finance and contract rights.

Crystallex has provided its opinions and opinions of its legal counsel regarding the status of mining rights to the property. MDA is not qualified for assessing the validity of these issues and therefore presents its opinions for completeness and without comment. The classification of reserves is given by MDA from a technical standpoint, while Crystallex's legal work for mining rights and contractual issues provides the information for contractual rights' obligations for resource and reserve classification.

MDA did not investigate the environmental issues associated with the property, and none of the authors is qualified for environmental issues in Venezuela. However, Crystallex did address environmental and permitting issues updating historic work.

MDA is of the opinion that each of the other contributors to this report represented as a Qualified Person (“QP”) is a QP with respect to the work for which such QP is taking responsibility. Except as may be stated in this report, none of the QPs coauthoring this Technical Report has taken steps to verify data identified as having been prepared by or under the supervision of another QP identified in this report. The reason for not verifying such data is that another QP has stated that it was prepared by or under the supervision of that QP.

4.0

PROPERTY DESCRIPTION AND LOCATION

All information in this Section 4.0 is derived from others, and MDA has relied entirely on Crystallex to update the environmental Section 4.4 (unless otherwise specifically noted) from SNC-Lavalin (2005a). Crystallex is entirely responsible for Sections 4.2 and 4.3. MDA is not qualified to assess mineral rights, contract law, or environmental law or regulations in Venezuela and therefore cannot and does not give any opinion on the information given in Section 4.0 but presents this information to fulfill requirements of Canadian Instrument 43-101.

4.1

Location

The Las Cristinas property is located in the southeastern part of Venezuela in the Municipality of Sifontes in the State of Bolivar. Bolivar is the largest of the three states comprising the Guyana Region, the remaining states being the Amazonas and Delta Amacuro. The project site is located approximately 670km directly southeast of Caracas, 30km west of the border with Guyana, and 200km north of the border with Brazil (Figure 4.1). The property is 6km west of the village of Las Claritas. The project's approximate geographical coordinates are N 006 ^o 12' Latitude and W 061 ^o 29' Longitude.

The name “KM 88” for the district came from the area being located near kilometer 88 marker of the road linking El Dorado with the Brazilian border.

4.2

Land Area

The property consists of 3,885.6 hectares in four concessions (Table 4.1). Although Crystallex has not legally surveyed the property, the concession boundaries are presented in the underlying agreement between Crystallex and Corporación Venezolana de Guayana (“CVG”) (Appendix A). Figure 4.2 shows the general outline of the concessions and includes an outline of mineralized areas. Details of these four concessions are given in Appendix A, including surface area and corner coordinates given in UTM (Universal Transversal Mercator) coordinates using the “Canoas” datum. There are four main mineralized areas at Las Cristinas: the Conductora area (including the Cuatro Muertos, Potaso and Conductora zones), the Mesones-Sofia area (including both the Mesones and the Sofia zones), the Morrocoy area and the Cordova area.

4.3

Agreements and Encumbrances

Under the Venezuelan constitution, all hydrocarbon and mineral resources belong to the Republic. The Mining Law of 1999 (“VML”) regulates the exploration and exploitation of mineral resources (other than some industrial minerals not found on government lands). The Ministry of Basic Industries and Mining (“MIBAM”) (formerly, the Ministry of Energy and Mines) is responsible for administering the VML. The VML permits the exploration and exploitation of mineral resources in several ways, including concessionary exploration and exploitation by private companies pursuant to mineral concessions granted by the MIBAM and direct exploration and exploitation by the Government of Venezuela.

The Government of Venezuela may reserve for itself through a decree the right to directly explore and exploit specific areas or some or all of the minerals within specific areas. Direct exploration and exploitation may be carried out either by the Government itself through the MIBAM or by a public entity such as CVG. The effect of such a reservation is to prohibit the granting of mineral concessions within the reserve area to private parties. If the Government of Venezuela has reserved direct exploration and exploitation of minerals for itself, the MIBAM or the public entity may enter into operation agreements with third parties with respect to the exploration and exploitation of the reserved minerals.

Crystallex's interests in the Las Cristinas deposits are derived from:

• a Presidential decree pursuant to which the Government of Venezuela reserved for itself, through the then Ministry of Energy and Mines, the direct exploration and exploitation of the gold located in the Las Cristinas deposits and granted to the Ministry of Energy and Mines the right to contract with CVG the activities required to carry out such exploration and exploitation;
   

• an agreement between the Ministry of Energy and Mines and CVG pursuant to which the Ministry of Energy and Mines granted to CVG the right to explore and exploit the gold mineral located in the Las Cristinas deposits and to enter into operations agreements with third parties for such purposes; and
   

• a mine operation agreement between CVG and Crystallex (Appendix A).

On September 17, 2002, Crystallex and CVG signed a Mining Operation Agreement (“MOA”) for the development of a mine on the Cristina 4, 5, 6 and 7 concessions. The MOA provides Crystallex with the exclusive right to explore, design and construct facilities, exploit, process, and sell gold from Las Cristinas but does not transfer property rights to Crystallex. An official translated version of the MOA is included as an appendix to the Crystallex Annual Information Form and is available at www.sedar.com and in Appendix A. A summary of the agreement is presented below (italicized) in its original text from Crystallex.

CRISTINAS MINING OPERATION AGREEMENT – EXECUTIVE SUMMARY
(September 30, 2002)

The Corporación Venezolana de Guayana and Crystallex International Corporation on September 17, 2002, entered into a mining operation agreement whereby Crystallex has been granted the exclusive right to develop the Las Cristinas 4, 5, 6 and 7 deposits. A point form summary of the agreement follows…

The MOA has been entered into in accordance with applicable Venezuelan laws and under authority granted to CVG by the Ministry of Energy and Mines. A report in late February 2003 from the Commission of Energy and Mines of the National Assembly of Venezuela confirms the legal and administrative process by which the contract rights of MINCA, a previous partner with CVG, were terminated. The report also confirms the process by which the Republic of Venezuela acquired the related assets and by which the government, through CVG, entered into the MOA with Crystallex.

As described in the executive summary of the MOA, the term of the MOA is 20 years subject to extension by both parties for two renewal terms each of 10 years. At a processing rate of 20,000 tonnes per day (“tpd”) the expected mine life, based on the current proven and probable reserve estimate, is 64 years, which exceeds the term of the Mine Operation Agreement. However, the process plant has been designed to accommodate an expansion to 40,000 tpd, and Mr. Robert Crombie, Senior Vice President, Corporate Development, for Crystallex reports that Crystallex intends to increase the capacity as soon as practicable. SNC-Lavalin completed a full feasibility study for a 40,000 tpd project in 2004 (SNC-Lavalin, 2004a), followed by a pre-feasibility expansion study in October 2005, which contemplated expanding from an existing 20,000 tpd operation to a 40,000 tpd operation (SNC-Lavalin, 2005e). At a processing rate of 40,000 tpd, the current reserves would be depleted in approximately 32 years.

4.4

Environmental Reports and Liabilities

Information in the following section was modified from SNC-Lavalin's (2005) development plan by Crystallex with updated information added where applicable. SNC-Lavalin has done no environmental work since their 2005 report.

Crystallex undertook an Environmental Impact Study (“EIS”) (SNC-Lavalin, 2004b) for Las Cristinas at the same time as the 2003 feasibility study and submitted the EIS to the Ministry of the Environment (whose acronym was “MARN” at the time and has now changed to “MinAmb”) for review in April 2004. The EIS was a new one, required as a result of the changes to the Las Cristinas project relating to Crystallex becoming the operator in 2002 and undertaking a fundamental re-design of the project. In addition, an Environmental Supervision Plan was prepared in September 2004. The EIS was formally accepted by MinAmb on May 16, 2007 in MinAmb document number 0000328.

4.4.1

Regulatory Framework

The Las Cristinas project is being designed to meet and exceed Venezuelan environmental laws and standards, as well as World Bank guidelines and targets. Together, these regulations and standards provide the framework for the environmental assessment and environmental design for the Las Cristinas project. Venezuelan Decree No. 1257 defined the environmental assessment requirements for the Las Cristinas gold-copper project development as envisioned by Placer. These requirements were modified somewhat by MinAmb as a result of changes in the scope of the project planned by Crystallex, such as the project now being gold only. The EIS that was submitted to MARN addressed the requirements defined in Decree 1257 as well as the additional requirements in various addenda to the original EIS document.

4.4.2

Existing Environment

As described in Section 5.0, the Las Cristinas site is located within the sub-equatorial tropical zone in a flat area with minor undulations, parts of which, under normal conditions, are subject to flooding. Although much of the site has been previously disturbed by small-scale mining, the area can generally be characterized as tropical rain forest with a distinct rainy season between May and September and a drier period from January to April. Despite the fact that the Las Cristinas area has been designated as a mining district, it lies within the boundaries of the Imataca Forest Reserve and therefore is subjected to more stringent environmental controls than areas outside of the Imataca Reserve.

A significant portion of the concession area (approximately 34% of total area of the concessions, and 53% of area required to develop the project) has been intensely disturbed by previous mining activities. Although the surficial laterite soils are not very productive, vegetation grows very quickly, and biological diversity of the area is high. Crystallex has updated air quality, soil, flora and fauna baseline studies of the area and continues to monitor water quality within the project area.

Ethnically the population is divided between indigenous and “ criollos ” (individuals of mixed blood). According to a national census in 2001, approximately 57% of inhabitants in the project's zone of influence are indigenous. Artisanal or small-scale mining is considered the most economically important activity in the area.

Updates to the Acid base accounting (“ABA”) and humidity-cell tests was done by SNC-Lavalin. ABA and humidity-cell tests were conducted by SGS Lakefield Research Ltd. (“Lakefield”) to determine the balance between acid-generating and acid-consuming components of mine waste as described in (SNC-Lavalin, 2005d). In March 2004, 103 samples containing ore and waste were submitted for ABA testing (SNC-Lavalin, 2005d). After the initial assessment of the ABA results, nine waste-rock samples and one ore sample were prepared for 21-week humidity-cell testing, of which five of the waste-rock samples were tested for additional time; four of the five were also submitted for net acid generation (“NAG”) tests. Through the ABA, NAG, and humidity-dell testing, “ it was confirmed that waste rock samples of SAPO and CSB-C had very low potential for acid generation and actually they were acid consuming, whereas waste rock samples of CLB-C, SAPRK-CM, CSB-M and CLB-M had high potential to generate acid. Special attention will be focused on these samples during the operation to reduce or eliminate the acid leachate generation by implementing best management practices ” (SNC-Lavalin, 2005d). In addition, two tailings samples were also subjected to 25-week humidity-cell testing, which indicated that the sulfides in the samples were depleted at a much faster rate than the neutralizing materials, while maintaining neutral pH and low metal concentrations in the leachate. No concentrations of any elements in the leachate were measured at values higher than the limits specified by Venezuelan regulation or World Bank guidelines (SNC-Lavalin, 2005d).

4.4.3

Analysis of Alternatives

A comparative analysis was carried out to rank alternatives for infrastructure components, based on environmental, socio-economic, constructability and other technical issues, permitting, cost, and where applicable, safety. Briefly, the analysis determined:

Diversion Channel

Three alternatives were assessed to divert the watercourses that cross the project area. The alternative that diverts the waters through the southern border of the Las Cristinas concessions and discharges them into the Quebrada Amarilla channel (approved by MARN for the original project) was chosen for the following reasons:

• This would minimize the potential biophysical impact;

• Water would be contained within one watershed and would only affect either previously disturbed areas or areas planned for development of the mine;

• This would provide flooding protection up to a 1-in-200 year flood event;

• This does not require approval of third parties for its construction, operation and maintenance;

• It represents the shortest channel length and therefore the lowest impact to soils (less excavation and movement of soil overall) and vegetation; and

• The flow of the water within the channel makes use of the topography and the natural slope of the terrain, and therefore the water does not have to be pumped.

Since the completion of the feasibility study in 2003 (SNC-Lavalin, 2003), the design of the diversion channel has been modified and its length reduced from approximately 8.5 km to 6.9 km, as the Morrocoy Creek will no longer be included in the initial development of the channel. This current design emphasizes the reasons that made this route the best alternative. A change has recently been made to the southern part of the route to accommodate the layback of the designed pit on the adjacent Brisas del Cuyuni deposit.

Power Transmission Line

From two alternatives, the most direct power transmission line route from the existing CVG-Edelca substation at Kilometer 86 to the process plant location was selected over the alternative route that would have followed the national highway, Troncal 10, to Las Claritas, and from there continued past the villages of Santo Domingo and Nuevas Claritas. The cross-country route was selected because of its shorter distance, lower cost and lower impact on local residents, and favorable topography, despite greater loss of forest vegetation.

Tailings Management Facility Location

The tailings management facility (“TMF”) was located in the only area large enough within the concession boundaries that would not be used for mining or processing. The location suitable for the TMF is further restricted by the location of areas currently assigned to artisanal mining activities in the eastern part of the Cristinas 5 concession.

Mine Access Road

From three alternatives, each along existing roads, the preferred mine access road from Troncal 10 to the process plant is the northerly route, exiting Troncal 10 at Kilometer 84. Despite its greater length (19 km) and associated costs, it is the only alternative that avoids local communities, providing greater safety and minimal impacts of noise and dust to the residents. This access route was constructed in 2005-2006.

Plant Site

No alternatives were examined for the plant site, as, for efficiency reasons, it will be located on the highest land with the most stable underlying soils, in proximity to the open pit mines and TMF.

4.4.4

Assessment of Impacts to the Bio-Physical Environment

The project's potential, direct and indirect, positive and negative impacts, impact duration, probability, and reversibility, mitigation, and net effects have been assessed. Overall, it is expected that the environmental impact of the development of the Las Cristinas project can be minimized through the implementation of best management practices, responsible design and operations, and monitoring. It is of particular importance that the project is operated to protect the environmental quality of the Imataca Forest Reserve. This will be achieved by protecting water quality, minimizing erosion and geomorphological processes, protecting air quality, limiting clearing, controlling noise and dust, and ensuring that the site is closed responsibly once mining is completed, including re-vegetation and reforestation.

Construction Phase

During the construction phase, environmental impacts can result from site preparation including deforestation, clearing and earthworks, and construction of the mine facilities. The impacts from construction of the mine facilities may involve the initial footprint of the pit, initial construction of the TMF, watercourse diversions, waste rock storage area footprints and the site drainage management system, site access roads, power lines, process plant, ancillary facilities, warehouses, and concrete plant.

Surface-water impacts from erosion and sediment transport will be minimized through a properly designed and maintained site-drainage management system, including collection ditches and runoff-collection ponds. Potential contamination of surface and ground waters and soils by spills or improper storage, handling, or use of fuel, lubricants, and other chemicals will be minimized by spill-contingency and response-measures training, on-site clean-up kits, hazardous-materials management procedures, and containment systems and by using designated equipment refueling and maintenance areas.

Apart from the creation of two artificial lakes, the impacts to the physical environment are generally anticipated to be reversible and not significant with proper implementation of control measures.

From a terrestrial, biological perspective, the site, which has been previously disturbed, does not represent habitat that is not readily available or unique from the habitat adjacent to the site. It is also noteworthy that many of the previously disturbed areas of the site have naturally recovered over time. Regardless, lost forest habitat will be replaced through site and environmental rehabilitation at closure. Reclamation will include conversion of the open pits into lakes. Overall, impacts to biological resources are not expected to be significant or permanent as a result of construction.

An Environmental Supervision Plan (“ESP”) has been developed for implementation during construction, as described in Section 4.4.6. The ESP provides direction for proper management of construction activities to minimize environmental effects, prescribes mitigation measures, and provides an organizational framework for implementation and reporting to the authorities.

Operations Phase

Many of the mitigation measures implemented during construction will also be applied during operations, including sediment and erosion controls and prevention of contamination. Runoff from on-site facilities will be directed to a series of runoff collection ponds and monitored for compliance prior to release to the environment. Rock facing on the downstream face of the TMF dam and a collection ditch at the toe of the dam will also be provided, with runoff and seepage being pumped back to the tailings basin.

ABA tests to date indicate that there is low potential for acid mine drainage from waste-rock dumps or temporary ore stockpiles adversely affecting surface-water quality. Potentially acid-generating rock will be encapsulated or buffered by acid-neutralizing rock within the dumps. Runoff and seepage from all waste-rock dumps and temporary stockpiles will be collected in perimeter ditches, directed to a runoff pond, and monitored. Effluent that does not meet acceptable discharge standards will be pumped to the cyanide-destruction plant.

The cyanide concentration in the tailings basin are expected to meet Venezuelan and World Bank standards because all the effluent will be treated in a cyanide-destruction plant prior to its disposal in the TMF. All sanitary waste from on-site buildings will be directed to the proposed wastewater treatment plant for treatment, and effluent from the treatment plant will be discharged to the polishing pond. Impacts on wildlife and vegetation and impacts of dust, noise and vibration will be minimized through special blasting procedures (e.g., low-frequency and low-shock blasting techniques); hunting will be prohibited within the concession lands and adjacent natural areas.

Overall impacts to the biophysical environment resulting from operations of the mine are anticipated to be reversible and not significant with the implementation of controls and mitigation measures.

Closure

During closure it is intended to return the site as close as possible to pre-project conditions consistent with the objectives of the Imataca Forest Reserve Plan. Active monitoring, inspection, and intervention will continue until acceptable chemical, physical, and biological stability has been achieved.

4.4.5

Assessment of Impacts to the Socio-Economic Environment

The socio-economic impact assessment for the Las Cristinas Project is based on historic information developed in 1996, plus a 2004-updated characterization and analysis conducted by the Venezuelan firm ProConsult C.A. (“ProConsult”). SNC-Lavalin has edited the information provided by ProConsult for content and consistency with the format of the report.

Overall, ProConsult expects that the project will result in many positive benefits at the national, regional, and local levels, such as: generation of a dynamic effect on the economy, contribution to the gross domestic product, increase of tax collection, creation of jobs, inclusion of workers into the social security system and improved work conditions, improvement of infrastructure and implementation of social strengthening and job plans, technical assistance to small-scale miners, and improvement in health conditions of population and quality of life.

Negative impacts are also expected as a result of introducing a large-scale industrial project into a stable, rural community. These negative impacts include accelerated migration, drastic changes in the labor market and local economy, risk of social conflicts, increased lack of public security, potential for inflation, impacts to cultural traditions and cultural landscapes, synergic increase in loss of cultural values among the indigenous population, and impact on the demand for public and social services.

However, it is also recognized by ProConsult that some or all of these impacts may already have been experienced due to the rapid influx of thousands of small-scale miners over the course of 2003. The recent significant reduction in the number of these small-scale miners reported by Crystallex has resulted in many positive improvements, such as reduced demand on community services, increased community stability, and reduced crime rates. In addition, Crystallex has already implemented a number of programs to add benefits to the local communities, including: the construction of 30 houses; construction of three water treatment plants and piped-water supply systems for eight communities; construction of a sewage collection system for three communities and is currently constructing a sewage treatment system; monthly medicine supply and improvements to a local health center; the sponsoring of two doctors; and the training of up to 25 university and college graduates on an annual basis. Crystallex has been instrumental in working with the State in the control of malaria, the incidence of which was increasing exponentially. With the implementation of mobile clinics and frequent testing of the local population, the number of diagnosed malaria cases has declined significantly.

Crystallex has indicated that additional mitigation measures will be implemented over the course of the construction and operations period to minimize socio-economic impacts. These measures will include training programs; technical assistance to local communities in the area of waste management and administrative management; continued technical assistance to the authorized small-scale miners; and continuation of the company and community liaison program to ensure that community issues are identified and addressed.

In the opinion of ProConsult, the Las Cristinas project can be developed in a manner that minimizes impacts to the socio-economical environment.

4.4.6

Environmental Supervision Plan

Crystallex has prepared an ESP for the construction phase of the Las Cristinas mining project, with the purpose of providing an overall plan for the supervision and management of construction activities to minimize the environmental effects, both biophysical and socio-economic, and to ensure compliance with regulatory requirements and environmental commitments made during the environmental planning process. The ESP includes comprehensive environmental protection procedures and guidelines for execution during a range of typical and emergency conditions; organizational structure and reporting requirements; personnel training requirements; and an environmental follow-up (monitoring) plan. The ESP intended to develop the environmental mitigation measures identified for the construction phase in the EIS into a comprehensive plan and framework for implementation by personnel who will work in the field during this phase.

4.4.7

Site Closure and Rehabilitation

Preliminary objectives and general concepts for a Closure and Rehabilitation Plan were developed as part of the EIS prepared in 2004. The overall strategy of the closure plan is to comply with the project's environmental obligations so that the facility can achieve acceptable chemical, physical, and biological stability by meeting all regulatory requirements and standards without human intervention.

Crystallex and CVG will maintain an active presence at the site for an interim period following termination of mine production. During this interim period they will continue to actively operate the site water-management system, monitor for contamination, and intervene as required to ensure compliance with applicable standards and regulations. The interim period will end once the physical stability of all remaining structures is demonstrated and site drainage meets regulatory discharge standards and can be released directly to the environment without treatment.

4.4.8

Conclusions

Based on all of the above, Crystallex believes that the Las Cristinas project can be developed in a manner that minimizes impacts to the biophysical environment. Main projected measures include:

• The waste-rock dumps will be designed to ensure that potentially acid-generating waste is placedover the low-permeability saprolite soils and covered/buffered by non-acid-generating or net-acid-consuming waste.

• A cyanide destruction plant will treat the entire discharge from the gold processing facility. The cyanide-free slurry will then be pumped from the cyanide destruction plant for deposition in the TMF.

• Treated effluent from the sewage treatment plant will be discharged to the polishing pond. Leachate collected from the sanitary landfill will be transferred to the TMF.

• The TMF dam is designed with appropriate standards and safety factors to guarantee its stability and is also designed to contain a 24-hour Probable Maximum Precipitation (“PMP”) event. The Las Cristinas site area is in a zone with the lowest possible risk of seismic activity.

• The entire tailings basin is founded on a low-permeability saprolite soil layer, providing a competent containment barrier to contaminant migration, as demonstrated by contaminant transport modeling (SNC-Lavalin, 2005b). Crystallex and CVG will maintain an active presence at the site for an undefined interim period following termination of mine production and prior to their leaving the site permanently.

• Proposed measures to prevent, mitigate or compensate socio-economic impacts, as recommended in the Detailed Evaluation of Socio-economic Impacts of Las Cristinas Project, prepared by Proconsult C.A., 2004, and submitted to the MARN as Addendum #3 to the EIS, will be implemented [MDA has not reviewed this report].

5.0

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, PHYSIOGRAPHY

5.1

Accessibility

The Las Cristinas project area lies 370km by road south-southeast of the city of Puerto Ordaz. The first 55km of this highway, called Troncal 10, is a four-lane road between Puerto Ordaz and Upata; the highway continues as a well-maintained two-lane paved road to the border with Brazil at Santa Helena de Uairén. The Las Cristinas project can be accessed via two alternative routes from Troncal 10. The shortest access is westwards via a 6km unpaved road from the village of Las Claritas, through which Troncal 10 runs. The alternative route, which was designed to bypasses the local villages, is an upgraded, unpaved 19km access road from the highway at Kilometer 84. Under normal conditions, the drive from Puerto Ordaz to the camp takes about five hours. The Las Cristinas camp is located in the sub-Amazon rainforest of the Imataca Forest Reserve.

Puerto Ordaz is a port city on the Orinoco River, which flows into the Atlantic Ocean. The city of Puerto Ordaz is served by three airlines, with numerous daily flights to Caracas and other major Venezuelan cities. The nearest commercial airstrips to Las Cristinas are at El Dorado, 80km and approximately one hour by highway north of the camp, and at Luepa, 80km to the south. A charter flight from Puerto Ordaz to El Dorado takes about one hour. A 980m-long air strip with 6m-wide asphalt paving at Las Cristinas allows for the landing of small aircraft.

5.2

Climate

The climate at Las Cristinas is tropical and humid, with wet and dry seasons. The monthly temperature average rises to a 26.3ºC peak in March and 25.7ºC in September. In February and July the temperature reaches minimums of 24.3ºC and 24.5ºC respectively. The seasonal climate variation results from fluctuations in the location of the Inter-Tropical Convergence Zone (“ITCZ”) throughout the year, between summer and winter solstices. The overriding atmospheric circulation in this location causes the winds to be from the northeast.

Precipitation falls as tropical showers that are mainly short-term events of a few hours duration or less. Data obtained from the Las Cristinas weather station between 1992 and 2000 and from December 2003 until present indicate that the project area experiences a dry season (lower than average monthly rainfall, 273mm) that extends from January to April, and a wet season (higher than average rainfall) that extends from May to September, with a transitional period between October and December. The area receives an annual average of 3,283mm of rainfall. Monthly averages reach a maximum of 454.8mm and 437.8mm in June and July respectively, and a minimum of 76.6mm and 120.1mm in March and April respectively.

The average regional evaporation is equivalent to 58% of average annual precipitation. This results in an estimate of average annual evaporation at the Las Cristinas site of 1,904mm (=3,283mm x 0.58).

The average annual relative humidity on site is 81% with maximums in June, July and August (84%) and minimums in April and October (78.2 and 75.6% respectively). The average wind speed is consistent through the year and overall is determined to be 0.90m/s. The wind category of 0.5 - 2.1m/s is rarely exceeded.

Operations can be conducted year round.

The site is located in Seismic Zone 1 with a LOW Seismic Hazard in accordance with the recent Venezuelan Code.

5.3

Physiography

Las Cristinas lies in the physiographic region known as the Guyana Shield, a natural peneplain characterized by flat topography which is crossed by streams and rivers and, under normal conditions, is subject to flooding. The most prominent local topographic features are isolated hillocks or ranges of low hills that rise up to a maximum of about 80m above the peneplain; these features correspond to the location of diorite intrusions.

The geomorphological features of the Las Cristinas area are influenced by topography, slope, vegetation, soil, hydrography and climate, combined with anthropogenic physiographic disturbances resulting from years of small-scale gold mining activity. Climatology, hydrology and vegetation are considered the most important factors that control and regulate morphodynamic processes, especially erosion, weathering, sedimentation and flooding. Disturbed areas are particularly susceptible to erosion primarily due to the exposure of the clayey layers of the soil resulting from the removal of the uppermost, organic layer.

The most comprehensive report on anthropogenic disturbances of the area was provided in a study spanning the 1992-1994 period (cited in SNC-Lavalin, 2005a; MDA has neither seen nor reviewed this report, and this is provided for information purposes only). Since this study was conducted, small-scale mining activity has increased significantly, although the extent of the additional area affected is not expected to have increased significantly as most of the activities are focused in the areas of the main deposits of Mesones and Conductora.

There is very little topographic relief within the concession area. The average elevation is 130m above sea level, with small rounded hills reaching a maximum elevation of 160m above sea level. Four streams flow through the property: Amarilla, Las Claritas, Sofia and Morrocoy. These streams are wide and shallow, and occasionally flood during the rainy season. Much of the project area has been deforested and hydraulically mined by itinerant miners. As a result, there are numerous water-filled pits and large areas of tailings material. Some areas of poorly consolidated tailings are unstable and cannot support the weight of a vehicle, making access to some areas difficult.

Las Cristinas is contained within the sub-equatorial tropical zone. Although small-scale mining has previously disturbed much of the site, the area can generally be characterized as tropical jungle with distinct rainy and dry seasons. The surficial laterite soils, which are typical of tropical habitats, are not very productive, containing very low percentages of organic material and nutrients, but vegetation grows very quickly and biological diversity of the area is high.

Undisturbed primary vegetation is typical of the Sub-Amazon type rain forest. Large trees dominate the forest, with their canopy up to 30m above the ground. The forest floor is relatively open. Secondary vegetation, which has now invaded the mined or otherwise disturbed areas, consists of small “weed” trees, bushes, creeping vines and various grasses. This secondary growth is often quite dense and can be difficult to penetrate on foot.

5.4

Local Resources

The infrastructure in the region will require some improvement to support the proposed mining operation. The local population is not sufficient to fully operate the mine, and additional personnel will have to be brought in for construction and mining operations. Improvements to sewer, water and other local facilities will be made in order to accommodate the additional workers. There are sufficient water sources and land surface areas for mining, tailings disposal, and plant sites. Improvements have been made to the on-site airstrip.

Existing facilities include the exploration camp, whose electricity is supplied by a link to the national grid (there is a stand-by generator on site), sample preparation facilities, offices, dormitories, sample storage and seven core sheds.

The construction camp built by Placer Dome has been extensively refurbished. The camp consists of an office block, administration units, dormitory units, maintenance units, a kitchen and dining facility, gym, recreation center, a clinic permanently manned by a doctor, and outdoor basketball and mini-soccer courts. Catering is currently undertaken by contract with Universal Sodexho, and several hundred people can be fed at a time with little trouble. The camp is powered with electricity from the national grid, and two stand-by generators are located on site. A cell phone repeater station has also recently been constructed adjacent to the administration building, and thus the whole of the Las Cristinas project area now has cellular phone reception.

Significant power demands are required and will increase from an average of about 10 MW to 45 MW when the plant is in full production. Maximum demand could reach 55 MW. A 400 KVA power line has been installed near the project to supply power to Brazil. EDELCA, a State utility company, has installed a substation near the town of Las Claritas that is capable of supplying the electricity required by the project.

6.0

HISTORY

6.1

General History

General Fernandez Amparan first discovered gold in the Las Cristinas region in 1920, and gold mining at the site was initiated in the 1930s. During the 1940s, an underground mine was operated by New Goldfields de Venezuela, reportedly called “Mina Alto-Cuyuni,” whose shaft was in the vicinity of what is now the Hoffman pit (David Rogerson, personal communication, 2007). Mining continued sporadically on a minor scale until the early 1980s when a gold rush occurred. Some 5,000 to 7,000 small-scale miners worked alluvial and saprolite-hosted gold deposits using hydraulic mining techniques. Many square kilometers of jungle were stripped of soil and saprolite. This material was processed in sluices and small hammer mills. The amount of gold recovered is unknown, and much of the area of the concessions is now covered with tailings.

After extensive exploration, Placer Dome Inc. (“Placer”) announced commencement of construction of the Las Cristinas mine on August 2, 1997. The inauguration took place at the site with officials of Placer, CVG, and representatives of the Venezuelan government present. On January 20, 1998, Placer announced that its operating company in Venezuela, Minera Las Cristinas C.A., had decided to suspend construction. Construction resumed in May 1999 but was again suspended on July 15, 1999 due to uncertainty with respect to gold prices and title. Up until that time, Placer had reportedly spent US$168 million on the project.

CVG took possession of the property in 2001 and in 2002 signed a mine operating agreement (MOA) whereby Crystallex is required to explore, mine, and produce gold at Las Cristinas.

6.2

Ownership History

An outline of the history of property ownership was described by Crystallex on its website (2002), and the following was copied from that source:

• May 1986 – Inversora Mael, C.A. receives rights to Las Cristinas property (4&6) from Mr. Ramon Torres. Mr. Torres received the titles one month earlier from Ms. Dot Culver de Lemon who was granted the title for Cristina 4 in February 1964 and Cristina 6 in August of that same year. (Notices of the transfers were recorded on the Registry, but not published in the Official Gazette of Venezuela as required under the Venezuelan mining law).
• November 1988 – Following various refusals by the Ministry of Energy and Mines (MEM) to publish notice of the transfers of the concessions, Mael commences lawsuit seeking invalidation of MEM action.
• January 1989 – Mael files petition with MEM to renew Cristinas 4 concession, which MEM denies.
• February 1989 – MEM purports to extinguish Cristinas 4 concession.
• March 1989 – MEM purports to extinguish Cristinas 6 concession.
• May 1991 – The Supreme Court of Venezuela rules that the transfer from Ms. de Lemon to Mr. Torres, then from Mr. Torres to Inversora Mael, C.A. was “perfectly valid.” The court orders MEM to publish the notice of the transfers in the Official Gazette.
• June 1991 – Corporación Venezolana de Guayana (CVG), a state-owned corporation, awards Placer Dome a contract for the right to form a corporation (MINCA) to explore and mine Las Cristinas 4, 5, 6 and 7. [Placer stated in its 1996 feasibility study (Placer Dome Technical Services Ltd., March 1996) that Las Cristinas was controlled by two Venezuelan companies, which were formed in 1992: Minera Las Cristinas, C.A. (“MINCA”), 70% owned by Placer Dome de Venezuela, C.A. (“PDV”) and 30% owned by Corporación Venezolana Guyana (“CVG”), a state-owned resource company, and Relaves Mineros Las Cristinas, C.A. (“Reminca”), 51% owned by PDV and 49% by CVG.]

• April 2002 – By Presidential Decree, Venezuela reserves for the MEM the direct exercise of the mining rights over Las Cristinas, through decree 1757 published in the Official Gazette #37,437 dated May 7th, 2002.
• May 2002 – Through Agreement entered during May 2002 between MEM and CVG, MEM granted mining rights over Las Cristinas to CVG.
• September 2002 – Crystallex and Venezuela(CVG) to develop Las Cristinas

6.3

Previous Work

Placer conducted essentially all of the modern exploration on Las Cristinas prior to acquisition of the property by Crystallex. During their tenure on the property from 1991 to 2001, Placer completed line cutting, mapping, rock and soil sampling, geophysics, and drilling. These are described in Section 10.1.

Golder and Associates (“Golder”) was contracted by Placer to collect drill core and surface geotechnical data in the spring of 1993, culminating in a preliminary draft report covering pit slope stability, availability of construction aggregates, tailings disposition, and waste disposal. Bruce Geotechnical Service from Vancouver completed complementary studies in 1994. Water Management Consultants (Denver, Co.) and Hay and Co. (Vancouver, B.C.) completed hydrological and hydrogeological studies (pumping test, mine dewatering, etc .) during 1996. MDA has not reviewed any of these reports. Placer completed a comprehensive feasibility study on the project in 1996 that was updated in 1998, which MDA has reviewed (Placer Dome Exploration and/or Placer Dome Technical Services Ltd., 1996a-f; 1998a, b).

After acquiring the property, Crystallex engaged MDA to review the geology at Las Cristinas, estimate resources and reserves, and provide a mine plan (Ristorcelli, Hardy, and Prenn, 2002; Mine Development Associates and Kappas, Cassiday and Associates, 2003; Ristorcelli and Hardy, 2003; Ristorcelli and Hardy, 2004a and Ristorcelli and Hardy, 2004c; Ristorcelli, 2005; Hardy, 2006; Hardy, 2007). The 2002 technical report prepared by MDA (Ristorcelli, Hardy, and Prenn, 2002) described the historic work and results of that work done by previous operators and discussed the adequacy of that data. Because the work, data, and studies were from others, the recommendations made in MDA's 2002 report were aimed at validating the previous work and revising the engineering studies culminating in a feasibility study of the project. Based on Placer's descriptions, MDA concluded that their exploration and sampling procedures conformed to or exceeded industry standards, but because all prior exploration had essentially been done by only one company and because hard copies of assay data were not available, substantial data verification was necessary. Placer had extensive checks and quality assurance/quality control (“QA/QC”) protocols incorporated throughout the process and had noted no major problems. Placer reported minor biases in the laboratory results on the order of 5% to 10%, but believed that these were not material and that the groups of samples used often compensated for each other. Preliminary sampling by Crystallex verified the presence of gold and copper. Though inconclusive because of their small number, MDA's sampling found some grade differences, which they thought needed to be addressed during the then-upcoming validation program. MDA recommended that this validation program twin drill holes, conduct infill drilling, and take additional check samples on core splits, coarse rejects and pulps. During this program, Crystallex planned to assess sample preparation procedures and conduct a heterogeneity study to determine gold distribution in the rock and appropriate sample and sub-sample preparation procedures.

Crystallex undertook drilling to confirm results of the previous operator prior to their first resource estimate. Crystallex drilled 12 holes totaling 2,199m in 2003 to confirm the tenor of mineralization presented in the pre-existing database and also assayed check samples as described in Section 10.2. The drill holes were designed to twin existing drill holes as a check of the Placer drilling data. MDA's analysis (Ristorcelli and Hardy, 2003) of the twin holes indicated that while the comparison of location of gold grades was found to be reasonable, analyses on a hole-by-hole basis yielded highly variable results. Overall, the average gold grades for Crystallex's drilling were 15% lower than the Placer results, with more similarity in the twin-hole-sample assays in Conductora in general than in Mesones-Sofia. For additional confirmation, Crystallex re-assayed 262 pre-existing pulps, 200 pre-existing coarse rejects, and 342 pre-existing quarter-core samples. Although mean grades are similar for both datasets, there is a large variance in grade between individual pairs of Placer's core assays and Crystallex's core check samples. As expected, the variance is lower in the pulp and coarse reject checks. MDA evaluated the relationship between metal grades and core recovery and found a bias in the saprolite gold data, most prevalent in low-grade samples. This bias was not found in bedrock, which makes up the majority of the resource and reserve. MDA (Ristorcelli and Hardy, 2003) concluded, “ The bias should not materially affect the global estimated gold and silver grades; however within the saprolite in areas where core recovery is low, grades may be lower than predicted .” Overall, based on the 2003 program, MDA (Ristorcelli and Hardy, 2003) concluded that “ The Las Cristinas database can be used for feasibility-level study and resource estimation. Having said this, all future work must be cognizant of the underlying difference in grades between Placer data and the Crystallex verification drilling and the difference must be explained. It cannot be stated which is the more accurate at this time but the data remains sufficiently accurate for further use. Negligible contamination during sample preparation may have occurred during sample preparation of the Crystallex samples. The larger concern is the high variance noted in check assays, which should not affect the global metal estimate but could affect local estimates. This concern can be mitigated by completing a heterogeneity study of gold in the rock .” Crystallex's work corroborated the general tenor of gold mineralization reported by Placer. MDA completed a resource model at the conclusion of this work (Ristorcelli and Hardy, 2003) that is discussed in Section 6.4.2.

Crystallex completed an 18-hole, 7,131m drill program in 2004 and an additional 5,419m in 14 drill holes in 2005. Drilling in these two programs was focused in the western and southern parts of the modeled Conductora – Cuatro Muertos pit shell. The objective of these programs was to infill drill those poorly drilled areas to upgrade resource classification and ultimately increase the reserve. MDA took independent samples from the 2004 drill program, which verified the general tenor of mineralization. When the resource was evaluated in 2003, a difference in mean grades had been noted between Placer's data and Crystallex's initial verification drilling, and during the 2004 drilling and resource estimation, a similar difference in global mean grades ranging between 6% and 8% was noted, although differences are not statistically significant due to the small number of Crystallex drill holes (30) compared to over 1,000 Placer drill holes (Ristorcelli and Hardy, 2004a). These mean grade differences, though not statistically significant, were thought (Ristorcelli and Hardy, 2004a) to potentially indicate a sampling and sub-sampling issue related to heterogeneity of Las Cristinas, raising the possibility of a difference in mean grade of the deposit, possibly even higher grade than is presently noted. The 2004 drilling showed that while local grades were difficult to predict, the general form and continuity of the deposit was very predictable.

The objective of the 14-hole drill program in 2005 in the Conductora area was to increase material in the Measured and Indicated categories. During the course of the drill data verification and the resource expansion drilling, it was noted (Ristorcelli, 2005) that some biases existed between Crystallex and Placer data, the latter of which represent by far the bulk of the exploration data. A heterogeneity study was undertaken to better understand the grade biases noted, to define more appropriate sub-sampling procedures and protocol, and to maximize the efficiency of the upcoming grade-control program during mining operations. A report by Francis Pitard (2005) suggested that the grade bias of Crystallex grades being lower than Placer grades likely was due to the difference in size of the core samples. He further pointed out that the samples taken by Placer also could be understating the global grade of the Las Cristinas deposit.

Crystallex completed a 46-hole drill program in February 2007. Drilling during this campaign was done down dip of the Conductora - Cuatro Muertos deposit and along strike into the Morrocoy area, which lies between Cordova and Mesones-Sofia. The objective of this program was to better delineate the Morrocoy area into a defined resource and to increase resources and reserves down dip along the Conductora area. The results of this drilling are incorporated into the resource estimation in this technical report.

Crystallex commissioned a feasibility study by SNC-Lavalin that was completed in September 2003 (SNC-Lavalin, 2003) and updated in 2004 and 2005 (SNC-Lavalin, 2004a, 2005). These studies are more fully described in Section 6.5.2.

6.4

Historical Mineral Resource and Mineral Reserve Estimates

6.4.1

Estimates by Placer

Placer completed its most recently reported resource for Conductora-Cuatro Muertos and Mesones-Sofia in 1997, summarized in its 1998 Feasibility Study Update (Placer Dome Exploration and Placer Dome Technical Services, 1998a). MDA cannot verify that the calculations for Placer's resource and reserve estimates met NI 43-101 standards; these resources and reserves are provided here for historic perspective only. Placer first reported Measured and Indicated resources for the property in 1993, although the Mesones and Sofia areas were not included in the totals until 1997. Table 6.1 is a summary of the Placer resources completed prior to 1997. Table 6.2 summarizes the 1997 Placer's Measured and Indicated Las Cristinas resources, and Table 6.3 is a summary of the 1997 reported Inferred resource.

MDA reviewed the modeling methodology of the resources reported in Placer's 1998 feasibility study update. While MDA believes that Placer has done careful work from the fieldwork to database quality control and believes that the resource is reliable, MDA has neither audited nor checked Placer's reported resources. They are reported here only for historic perspective.

Placer also calculated reserves for Las Cristinas, but again MDA cannot verify that these calculations met NI 43-101 standards; they are provided here for historic perspective only. The results of these studies, conducted between 1996 and 1999 and presented in Table 6.4, were taken from the public domain (annual reports and press releases). The March 1996 calculation did not include the Mesones-Sofia deposit, but all later calculations did. The 1996 calculations were based on a $375 per ounce gold price and a $1.00 per pound copper price. The 1999 reserves were based on a lower gold price of $325 per ounce and $1.00 per pound copper price, hence the drop in reserve. Placer did not report its reserves broken out by Proven and Probable as is now required by National Instrument 43-101.

*In-situ contained metal

Grill (1999) reported several geological resource estimates for other mineralization on the Las Cristinas concessions; MDA cannot confirm this information, but it is presented for historical perspective. With regard to a low-grade gold model for the Cantera-Cordoba area, Grill (1999) reported “ the recompilation and reinterpretation of geologic data from Cantera-Cordoba did not yield a geologic model significantly different from the 1995 model which is estimated to contain 20.7 Mt grading 1.30 g/t at a

0.6 g/t cut-off ,” and no updated resource was estimated in 1999. A “rough polygonal resource estimate for high-grade gold” was also made for the Cantera-Cordoba area, where selective mining of high-grade vein material by underground methods may be possible, according to Grill (1999). The study estimated a total of 569,000 tonnes of mineralized material grading 5.11 g Au/t, for a total of 93,400 ounces of gold, based on a model in which gold is concentrated in tabular veins and/or stockwork-like layers (Grill, 1999).

In the South Cantera (near the Hoffman) areas, Grill (1999) reported that, based on a manual resource estimate using data from 24 diamond drill holes, the area is “roughly estimated” to contain 3.22 million tonnes of mineralized material grading 1.46 g Au/t for a total of 149,000 oz of gold. Grill (1999) noted that “ full development of the South Cantera resource would require further plant design modifications as the approximate pit limit would significantly overlap the area currently occupied by the high grade stockpile, located on the southeast side of the plant site .”

Based on limited, widely spaced diamond drilling, Grill (1999) reported that using a manual resource estimate, the main mineralized parts of the Morrocoy zone were “ roughly estimated to contain 9.12 million tons of mineralized material grading 1.36 g/t Au for a total of 411,000 ounces of gold ” but noted that the overall drill-hole density in the Morrocoy area was very low in some parts. Data from 20 diamond drill holes and 13 trenches were used in this estimate.

Grill (1999) reported that based on data from 31 drill holes, a manual polygonal resource estimate for the Potaso area yielded a gold resource of 6.2 million tonnes of combined saprolite and bedrock resource material, with an average grade of 1.04 g Au/t at a 0.5 g Au/t cutoff for a total of 206,000 oz of gold.

6.4.2

Estimates by MDA

MDA has been contracted by Crystallex since 2002 to estimate resources and reserves for and report on the Las Cristinas project. Following the initial estimate, updates have been completed each year warranted by new drill data and/or changing economics.

2003

In 2003, Crystallex commissioned MDA to estimate a resource and a reserve for Las Cristinas, which were reported in a technical report (Ristorcelli and Hardy, 2003). This represented the first work by Crystallex in estimating a resource and reserve for the property. The following discussion is taken from that technical report.

MDA classified the resource by a combination of distance to the nearest sample, the number of samples used to estimate a block, and the number of drill holes used to estimate a block. As gold is the dominant metal from a value standpoint, all blocks were classified based on a modified distance calculated during gold estimation. A resource was estimated for the Conductora and Mesones-Sofia areas. The estimated resource for Conductora does not represent the entire body of mineralization at Conductora but does represent the most prolific of the resources and best understood and defined. The deposit is open ended at depth but is bounded at the south by a property boundary and the north by Mesones-Sofia. Combined resources are given in Table 6.5.

MDA noted that Placer's estimates of resources represented material inside an “optimistic-floating-cone” pit (MDA had no information defining their term “optimistic”). Placer's method of resource definition results in fewer tonnes at higher grades than an in situ method. The Placer methodology eliminates lower-grade resources outside an optimized pit shell but above cutoff that would become available for conversion to reserves with reasonable changing economics, metallurgy or economics. MDA's resources are tabulated by a cutoff close to economic so as to also report material that could become economic with reasonable technological and economic changes.

The principal resources outside of Conductora (including Cuatro Muertos and Potaso) and Mesones-Sofia lie in the Cordova and Morrocoy areas, which had not been estimated in 2003. In their 2003 report, Ristorcelli and Hardy remarked that these latter areas would require geological and data compilation prior to any estimation, but they do represent areas deserving of work. These areas are reported in the current report for the first time.