Haywood concerned on Crystallex’s increased Las Cristinas gold project risks

Citing a high cash burn rate and negative sentiment surrounding the Las Cristinas project, Haywood Securities Wednesday cut its target price for Crystallex to 70-cents per share. Recent statements from Rodolfo Sanz, the minister of mines in Venezuela, suggest that Crystallex could lose Las Cristinas to Rusoro Mining.

Haywood Securities metals analyst Kerry Smith called Las Cristinas "one of the largest gold reserves on the planet, and, if developed, would have an enviable cost advantage, given subsidized cost of fuel in Venezuela at less than US$0.10 per liter. Thus, the lack of progress is a shame given the size and quality of this deposit."

Las Cristinas is believed to have 16.86 million ounces in proven and probable
gold reserves.

Smith said Crystallex has $44.6 million in cash and cash equivalents and had a cash burn of $16.9 million during the third-quarter 2008. "As minimizing cash burn is key, Crystallex has reduced personnel in North America by 45%, reduced the use of consultants, eliminated most EPCM activities, closed down El Callao, and is reducing security costs at Las Cristinas."

Haywood is assuming that $400 million of capital expenditures is left to spend on Las Cristinas, also forecasting that Crystallex would have a cash position in 12 months ranging from $8 million to $10 million.

Smith outlined several catalysts important to Las Cristinas over the next 12 months including:

· Issuance of an environmental permit for the Las Cristinas project

· Reduction of the burn rate to conserve cash

· Pending issuance of the permit, securing necessary financing for the project.

At Crystallex's annual general meeting Tuesday, Smith said Robert Fung, Crystallex chairman and CEO, indicated that the company had "constant dialogue with all ministries, including the ministers and the President of Venezuela, and ‘no one in government, at any level, has indicated directly or indirectly that there has been any change in the Mine Operating Contract.' "Smith called the situation "incredibly opaque" and pushed out the project start-up from 2011 to 2012.

However, he noted, "If Crystallex lost its rights to Las Cristinas, the residual asset value would not be adequate to cover existing debt, and the equity value would be effectively zero. ...Crystallex does have arbitration rights, but litigation would be expensive and time consuming."