Crystallex records record production

During 2001, Crystallex International (KRY-T) enjoyed its best year of gold production since beginning mining operations in 1995.

With production coming from mines in Uruguay and Venezuela, the company produced about 109,000 oz. during the year, up about 15% from 2000. During the final three months of the year, the company’s annualized production rate hit about 120,000 oz.

The bulk of production came from the San Gregorio mine in Uruguay. During the year, the operation’s mill processed 1.1 million tonnes to spit out 66,957 oz. of gold at a cash cost of US$218.55 per oz. During the fourth quarter, the mill ran through 280,630 tonnes at a head grade of 2.17 grams gold per tonne to yield about 18,000 oz., a considerable increase over previous quarters. In addition to improved head grades, a reduction in soluble losses led to an improved recovery rate of nearly 92%. Production for 2002 is pegged at about 70,000 oz. at similar cash costs.

Initial production from Santa Teresa ore bodies, 1 km west of San Gregorio’s main pit, began during the third quarter of 2001 and has exceeded the tonnage and grades outlined in the geological model.

In Venezuela, Crystallex secured control of El Callao Mining‘s (ECM-V) Lo Increible project and related assets. The deal was completed in April, giving Crystallex an 80% equity interest in El Callao. The project comprises six deposits near the Revemin gold mill. Lo Increible’s indicated resources stand at 8.87 million tonnes grading 3.39 grams gold per tonne plus 15.1 million tonnes of inferred resources running 3.26 grams gold, both at a cutoff grade of 1gram gold. More than half of the resources and reserves are contained in the La Victoria deposit.

Mining at La Victoria began in April, and by the end of 2001 amounted to 26,504 oz. with a recovery rate of 89.7%. An ongoing 10,000-metre infill drill program is aimed at upgrading resources and reserves.

Another 11,132 oz. of gold were produced from the Tomi deposit in Venezuela. The recovery rate was 91.6%. Tomi comprises four open pit deposits. During the year, Crystallex advanced a decline being driven into the Charlie Richards deposit by 50 metres. The company expects to extract first ore from the deposit in July 2002. A feasibility study by Reno, Nevada-based Mine Development Associates pegged Charlie Richards’ probable reserves at 163,000 tonnes of 14.5 grams to a vertical depth of 200 metres. The deposit remains open at depth.

At its Albino 1 concession in the Kilometre 88 district, Crystallex hopes to begin development for underground mining in the second quarter 2002, with the first ore being accessed in late 2002.

Recent modifications at Revemin allow processing of ores from both the Tomi and La Victoria mines. During the fourth quarter, the Revemin mill operated at a rate of 1,441 tonnes per day. A phased expansion of the mill to 1,800 tonnes per day in 2002 and to 3,000 tonnes per day in 2003 has begun. The mill will also handle material trucked in from the Albino 1 and Charlie Richards mines.

Crystallex’s president and CEO Marc Oppenheimer, said “Crystallex made great strides in reducing costs and increasing its production profile. We have assimilated the acquisitions made over the past few years and are bringing our operations in Venezuela up to the same operating standards that have produced lower costs and higher production at our San Gregorio mine in Uruguay.”

The Company believes that the commodity price has an upward bias to it and that firming should continue to be a factor. Accordingly, the Company will continue to maintain a flexible position with regard to enjoying the upside of the gold price movement, while protecting its balance sheet during periods of depressed prices.

At the end of 2001, the company had sold forward 287,000 oz. of gold or 27% of reserves, deliverable over the next 5 years at more than US$300 apiece.