Crystallex International

Don-wys, you have a valid point when discussing the history of LC and KRY. No matter what we think there is always a chance things could go wrong. That is the nature of all investing but especially true when dealing in VZ. If Australia can try and tax mining companies to squeeze more money from them then it shouldn't shock anyone that countries like VZ will do whatever they want. I believe a deal in Australia is close but not until the Prime Minister resigned.

In Canada, Danny Williams took on oil companies and won for more money through more royalties. He has been referred to as "In winning the deal, the man Newfoundlanders call Danny Millions acquired a new mainland nickname: Danny Chavez, after Venezuelan President Hugo Chavez."

Given what has transpired in Australia and Canada does VZ look that much worse when factoring in risk. Sure it does because we have been beaten over the head many times about the VZ discount and how screwed up Hugo is. I agree that dealing with VZ worries me a lot more than dealing with Canada.

With that said there is also a big difference when comparing VZ with so called stable countries. Hugo has burned just about everyone so far. His friends are few and his political allies are even fewer. Nobody trusts him because his main goal isn't what is good for VZ and its people. Hugo's goal is simple, stay in power for as long as he can. To accomplish this he has chosen to pick a fight with the most unpopular country in the world. He has taken up the fight against the evil empire of the US. Doing this has given Hugo the world spot light he craves so much.

The problem for Hugo now is like any good slogan or catch phrase, his cache is gone. People and countries have heard all the rhetoric and are now realizing Hugo is all smoke and mirrors, Even the people of VZ are starting to see clearly now. Hugo has been able to distract the people with threats of invasion by the US and other outlandish tales to keep them focused away from their impoverish plight.

Time has run out on Hugo. Elections in September that would have been won before by rallying the people against the enemy are now in jeopardy. Hugo himself comes up for election in 2012. The people are now focused on the economy not shooting at alleged US or Columbian spy planes. The threat of presidential assassination isn't looked on as so bad now.

So why do I and others believe Hugo will not screw the Chinese and KRY in this new attempt to get the permit to mine and sell gold at a fair price. It could be as easy as the Chinese are one of the few countries still working with Hugo but that may be to simplistic. Why not burn the Chinese?

The Chinese are the new USA of the world. The Chinese have billions of dollars worth of deals all around the world. Most of the companies doing these deals are directly related to the government of China. When you screw Kry, we ask the government of Canada to help us in talks to cut through the red tape. ( we all know how that has worked) When you screw CRRC and CREC you are directly screwing the Chinese government. There is no need to ask for help because they are directly involved.

Very little of the billions available for VZ from China has been allocated to VZ so far. Our deal with CRRC and CREC has a very short time frame. The A&F should be completed by the end of the month. The shareholders of KRY will approved the deal in late August. To close the deal in September the Chinese have to deliver the permit to the new JV. The only thing stopping the permit would be Hugo. Given what we know from the AGM about China meeting twice with VZ officials including Hugo himself and getting the needed sign off on doing this deal with KRY I find it unthinkable that Hugo would turn around and say sorry I've changed my mind, screw you!

Could it happen, yes but I think there is a better chance of Hugo resigning than saying no to the Chinese right now.

The second part of the equation is the sale of gold and at what price. I can't imagine the Chinese not discussing the sale of gold with VZ and Hugo before proceeding with the JV with KRY. It would go against everything I know about how they do business. They leave no stone unturned when doing DD on making a deal. If the Chinese were told by VZ that instead of getting spot price for the gold they would have to sell the majority to the BCV at a rate of 4.15 bolivar I believe they would have walked away from the deal with KRY. Could I be wrong, yes but I'm betting the farm I'm not.

Sorry for the long post but I have actually cut it down. Bottom line is nobody knows for sure what will happen. If we could invest under the umbrella of certainty it would be a lot easier but that is why there is always risk.

This is only my opinion based on what I believe to be true.

Financing closes. Done

A&F agreement this month.

Kry shareholders approve the deal in August.

VZ releases the permit to the new JV in early to mid Sept.

Construction starts in the 4th quarter.

First gold in early 2013.

Along the way we will see new reserve figures pushing 30 million ounces based on $1200 gold.

JJ