For Immediate Release

RM: 14-03

TORONTO, ONTARIO, May 30, 2003 – Crystallex International Corporation (TSX, AMEX: KRY) today filed first quarter 2003 results. 

HIGHLIGHTS

• Gold production for the quarter was 22,754 ounces at a total cash cost of US$259 per ounce.
• Las Cristinas Feasibility Study is advancing on budget and on schedule for completion by September, 2003.
• Las Cristinas metallurgical and pilot plant testwork is ongoing at Lakefield Research and will be completed in June.
• Independent Las Cristinas proven and probable estimate of reserves at 9.5 million ounces of gold.
• Net loss for the quarter of Cdn $29,000.
• Non-hedge derivative gain of Cdn $3.9 million

 Management’s Discussion and Analysis follows:

Management’s Discussion and Analysis

For the Three Month Period Ended March 31, 2003

(in Canadian dollars, except where noted)

 Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of the operations of Crystallex International Corporation (“Crystallex” or the “Company”) should be read in conjunction with the unaudited consolidated financial statements and the notes.  The Company prepares and files its consolidated financial statements and MD&A in Canadian dollars.

Crystallex and its subsidiaries are engaged in gold mining and related activities, including exploration, extraction, processing and reclamation.  Crystallex produces gold in Uruguay and Venezuela.

KEY STATISTICS

¹ Includes Royalties and Production Taxes.

² Total Cash Costs and Total Production Costs are calculated in accordance with The Gold Institute Standards.  For an explanation, refer to the section of NON-GAAP measures.

³ Impacted by the reduction of the gold hedge book in excess of production for the period.

SUMMARY FINANCIAL RESULTS

For the three months ended March 31, 2003, Crystallex had a net loss of $29,395 or $nil per share, as compared with a net loss of $5.6 million, or $0.07 per share for the similar period in 2002.  The operating loss was reduced, in part, by a non-hedge (non-cash) derivative gain of $3.9 million (as compared with a non-hedge loss of $2.9 million for the corresponding quarter in 2002).

Gold sales revenue was $9.3 million for the quarter, a decline from $11.3 million for the first three months of 2002.  The reduction in sales revenue was attributable to both fewer ounces sold, a lower realized gold price and a stronger Canadian dollar relative to the US dollar.  The average realized gold price during the quarter was US$285 per ounce.  The Company’s average realized price per ounce was below the average quarterly spot price of US$352 per ounce as a result of delivering against forward sales positions with exercise prices below the prevailing spot gold price and financially settling gold contracts in excess of ounces produced for the period as part of the Company’s continuing program to reduce its hedge position.

Gold production for the first quarter of 2003 was marginally lower than the comparable quarter in 2002 at 22,754 ounces and 23,877 ounces respectively.  Although unit operating costs were higher in the first quarter of 2003 as a result of fewer ounces produced, total operating costs were slightly lower.  However, lower revenue and higher general and administrative costs contributed to a utilization of cashflow from operations (after changes in working capital) of $5.5 million during the first quarter of 2003 as compared with a utilization of $3.9 million for the similar period in 2002. 

OPERATIONS REVIEW

San Gregorio

San Gregorio achieved excellent operating results during the first quarter of 2003.  Gold production during the quarter was 18,429 ounces, almost 2,000 ounces more than the comparable quarter in 2002 and 14% above budget for the period.  Tonnes of ore processed, gold grades and gold recovery were all above budget for the quarter.  Operating results during the quarter reflect higher than planned head grades due to ore blending, and better than expected operation of the leaching, absorption and stripping circuit, which was aided in part by the higher than planned gold grade and ore that was very amenable to leaching.  Gold grades were 10% higher than budget for the quarter, averaging 2.1 grams per tonne.  However, the mining plan forecasts a lower average grade for the balance of the year. For the year, the grade is estimated to average 1.7 grams per tonne.

Total cash operating costs averaged US$211 per ounce for the first quarter, an improvement of 5% over the comparable period in 2002. 

A life of mine plan for San Gregorio was updated in April 2003 and forecasts gold production of 52,000 ounces in 2003.  Cash operating costs are expected to increase to approximately US$250 per ounce as lower grade ore is processed.  The updated plan anticipates mining operations ending by late 2003 or early 200[MB1] 4.  In an effort to extend the mine life, the Company is presently evaluating the feasibility of accessing ore to the west of the San Gregorio pit by underground mining.  A drilling program and an underground engineering and costing study are presently underway to determine the viability of this option.  Presently, there is a resource in the west extension of approximately 500,000 tonnes grading 2.5 grams per tonne, representing about 40,000 contained ounces. 

Environmental closure and severance costs at San Gregorio are estimated at approximately US$2.3 million.  These costs will be incurred in late 2003 and during 2004.  Re-vegetation has already commenced and is forty percent complete. 

La Victoria

Gold production from the La Victoria open pit mine was 3,176 ounces for the first quarter of 2003.  Ore production for the first quarter, at 48,000 tonnes, was about 50% of the rate required to feed the Revemin mill at normal operating rates.  Ore production was low due principally to insufficient funding of the mining contractor at La Victoria.  Gold recovery rates also remained low, averaging 71% for the quarter, as the mill continued to process refractory sulphide ores from La Victoria.  To improve recoveries, the Company plans to install a flotation circuit at the Revemin mill during the fourth quarter of 2003 after completion of confirmatory testwork.  

Low gold production for the quarter significantly increased unit operating costs, which averaged US$461 per ounce for the first quarter of 2003, as compared with US$280 per ounce for the similar period in 2002.  (Total cash costs per ounce are an average for Venezuelan production, including La Victoria and Tomi.  Ore from both mines is processed at the Revemin mill. For the past year, La Victoria has accounted for about 90% of the ore feed to Revemin and is expected to continue to provide this proportion of the total feed).

Tomi

The principal activity on the Tomi property during the quarter was the ongoing development of the Tomi underground mine.  By quarter end, the first ore lenses were encountered and production of ore started during the second quarter.  Production during the second and third quarters will be modest at about 1,500 tonnes per month, ramping up to full production of 6,000 tonnes per month (200 tonnes per day) by early 2004.  The present focus is upgrading mine equipment and improving the ventilation system.  A new single-boom jumbo drill has been purchased and will be operational during June.  The jumbo will be primarily used to re-activate development of the main decline to the lower ore zones, but may also be used selectively for production mining.  With the commissioning of the jumbo, the decline should be advanced to stopes #2, #3 and #4 by year end, which will allow for steady state mining at full production rates in 2004. Additionally, a third underground truck and third scooptram were purchased in May of this year.  Work is also underway for improving the ventilation system.  A fan-house will be built on top of the new ventilation raise and a larger fan is to be installed.  This will improve ventilation to the main production level and provide for ventilation for further development of the main ramp below the present workings.   

During March a decision was made to reactivate the Mackenzie pit on the Tomi property to temporarily supplement the ore from La Victoria for feeding to the Revemin mill.  The pit was dewatered and access ramps were upgraded.  The plan is to mine approximately 100,000 tonnes of ore from March through October 2003, which will add about 9,000 ounces of gold production this year. 

The Tomi concession produced 387 ounces of gold during the first quarter, with ore production coming from the re-activated Mackenzie pit and from the Milagrito pit.

Revemin Mill

The Revemin mill operated at approximately 50% of its 1,500 tonne per day capacity during the first quarter of 2003.  This was due to insufficient ore feed from the La Victoria mine.  Gold recoveries have been low since April of last year when the milling of sulphide ore from La Victoria began.  For the first quarter of 2003, the average gold recovery rate was 71%, as compared with 90% during the comparable period in 2002.  The Company plans to improve recoveries from the La Victoria ore by adding a flotation circuit and regrind mill at Revemin.  This project is scheduled for completion by the end of 2003 at a capital cost of US$1.2 million.  During 2004, the capacity of the plant will be increased to 1,800 tonnes per day from the current capacity of 1,500 tonnes per day.  Upon completion of both projects and when the La Victoria and Tomi underground mines are operating at design rates, ore to Revemin will be supplied at the rate of 1,550 and 250 tonnes per day from La Victoria and Tomi respectively. 

The Company’s consolidated cash and total production costs per ounce of gold, calculated in accordance with the Gold Institute Standard, are as follows:

Las Cristinas

The Las Cristinas Feasibility Study and Environmental Impact Study, both being undertaken by SNC Lavalin Engineers and Constructors, (SNC) are progressing on budget and on schedule for completion by September 2003.  The metallurgical testwork and pilot plant at Lakefield Research will be completed in June.  The Lakefield Research program to date has confirmed the process flowsheet selected for the Feasibility Study.  Tests are being conducted on grinding size, gravity concentration, cyanide leaching and viscosity on various ore blends.  In addition, a pilot plant is operating to determine results of cyanide leaching various blends of ore that have been ground and gravity concentrated.

Engineering work is also progressing on components of the Las Cristinas social program.  Costs for water supply and treatment and sewerage systems for nearby villages are being developed by SNC. 

GOLD PRODUCTION STATISTICS

¹Crystallex owns 80% of El Callao Mining Corp, which in turn has an indirect 51% equity interest in La Victoria.  However, Crystallex has an 87.5% share of the cashflow from La Victoria until US$4.0 million of debt relating to the La Victoria project is repaid.  Thereafter, Crystallex has a 75% share of the cashflow from La Victoria until the La Victoria debt is fully repaid.  Presently, there is no distributable cashflow, and Crystallex reports all reserves, resources and production for its account.

² Includes approximately 500 tonnes of ore from development workings at the Tomi underground mine in March.

³Ore from La Victoria, Tomi and purchased material is processed at the Company’s Revemin mill.

ADMINISTRATION

General and Administrative expenses were $3.2 million for the first quarter of 2003, up from $1.7 million for the corresponding quarter in 2002.  The increase was primarily attributable to the hiring of additional management and operational staff.

FORWARD SALES AND WRITTEN CALL OPTIONS

At March 31, 2003, Crystallex had committed a total of 447,589 ounces at an average price of US$303 per ounce, including 223,420 ounces under call options sold at an average price of US$303 per ounce. As at March 31, 2003, Crystallex’s gold hedge program, which represents approximately 4.5% of the Company’s reserves, consisted of the following:

As previously noted, the Company’s objective is to both restructure and reduce the size of its hedge book by negotiating with hedge counterparties to move certain commitments to future periods and by delivering into forward sales contracts without replacing those contracts. 

Non-Hedge Derivative Gains (Losses)

Crystallex treats its forward sales contracts as hedges as they represent agreements to sell gold produced at pre-determined quantities and prices. 

Crystallex follows the CICA Emerging Issues Committee recommendations, “Accounting by Commodity Producers for Written Call Options” (“EIC 113”).  This policy establishes accounting and reporting standards for such derivative instruments.  The standard requires recognition of written call options on the balance sheet measured at fair market value.  Changes in the fair market value of the call options are recorded in the Statement of Operations in each period. 

The variation in fair market value from period to period can cause significant volatility in earnings, however, the fair market value adjustment is a non-cash item that will not impact the Company’s cashflow.  For the three months ended March 31, 2003, the Company incurred a non-hedge, non-cash derivative gain of $3.9 million. 

In circumstances where the Company is unable to meet the obligations under the call options, the Company will either defer the expiry date of the call option, purchase gold in the market, or settle the positions financially.  If the Company were to purchase gold in the market or settle the positions financially, it would result in a reduction of the Company’s cashflow.

LIQUIDITY AND CAPITAL RESOURCES

Net Operating Cashflow (after working capital changes) was a utilization of $5.5 million for the three months ended March 31, 2003 as compared with a utilization of $3.9 million for the comparable period in 2002.  The decrease in cashflow was principally attributed to lower gold sales combined with higher general and administrative costs. 

At March 31, 2003, cash and cash equivalents were $3.2 million.

FINANCING ACTIVITIES

During the first quarter, the Company completed a private placement of 2,562,500 special warrants at $1.60 per special warrant for net proceeds of $3.8 million.  Each special warrant is convertible, into a unit consisting of one common share and one-half of one common share purchase warrant.  Each whole warrant is exercisable for one common share for a period of two years at $2.00 per common share.

The Company also issued US$3.0 million in non-interest bearing notes and 450,000 common share purchase warrants, each exercisable for one common share of the Company at 140% of the volume weighted average price of the Company’s shares for five trading days prior to closing.  The transaction was comprised of three tranches as follows: (i) US$1.5 million received on March 14, 2003; (ii) US$1.0 million received on May 2, 2003 and (iii) US$0.5 million received May 15, 2003.

Subsequent to quarter end, the Company closed a private placement of 2,400,000 special warrants at a price of $1.25 per special warrant for net proceeds of $2.85 million.  Each special warrant is convertible, at no additional consideration, into one common share and one-half of one share purchase warrant.  Each whole warrant is exercisable for one common share for a period of two years at $1.60 per common share.

INVESTING ACTIVITIES

Capital expenditures for the first quarter totalled $2.7 million.  Investments were principally for the Las Cristinas project ($1.7 million), with the balance related to the operating mines in Uruguay and Venezuela.

RISK FACTORS

The profitability of the Company depends upon several identified factors including levels of production, commodity prices, costs of operation, financing costs, the successful integration of acquired assets and the risks associated with mining activities.  Profitability will further vary with discretionary expenditures such as investments in technology, exploration and mine development.  The Company operates in an international marketplace and incurs exposure to risks inherent in a multijurisdictional business environment including political risks, varying tax regimes, country specific employment legislation and currency exchange fluctuation.  The Company seeks to minimize its exposure to these factors by implementing insurance and risk management programs, monitoring debt levels and interest costs, and maintaining employment and social policies consistent with sustaining a trained and stable workforce.

Reclamation and Environmental Risks

The Company takes care to maintain compliance with the regulations prevalent in the countries within which it has activities.  Concern for the environment has spawned several regulations with regard to mining in various countries.  The Company believes that its environmental programs, developed internally in conjunction with local advisors, not only complies with but in some cases exceeds prevailing regulations.  The Company accrues for its estimated future reclamation and remediation liability over the life of its mines, while costs relating to ongoing site restoration are expensed when incurred.  The Company’s estimate of its ultimate reclamation liability may vary from current estimates due to possible changes in laws and regulations and changes in costs estimated.  The Company will accrue additional liabilities for further reclamation costs as and when evidence becomes available indicating that its reclamation liability has changed.

NON GAAP MEASURES

The total cash cost per ounce data is presented below to provide additional information and is not prepared in accordance with Canadian or U.S. GAAP.  The data should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.  The measures are not necessarily indicative of operating profit or costs of operations as determined under Canadian or U.S. GAAP.  The total cash cost per ounce calculation is derived from amounts included in the Operating Expense line on the Statement of Operations.  As this line item is unchanged under US GAAP, the total cash cost per ounce figure is similarly unchanged using US GAAP results of operations.

Total cash costs per ounce are calculated in accordance with “The Gold Institute Production Cost Standard.”  Crystallex has not changed the components of these costs from period to period.  Adoption of this standard reporting is voluntary, and the data may not conform to other similarly titled measures provided by other precious metals companies.  Management uses the cash cost per ounce data to access profitability and cashflow from Crystallex’s operations and to compare it with other precious metals producers.  Total cash costs per ounce are derived from amounts included in the Statement of Operations and include mine site operating costs such as mining, processing, administration, royalties and production taxes but exclude amortization, reclamation, capital expenditures and exploration costs.

Total cash costs per ounce may be reconciled to our Statement of Income as follows:

As filed on SEDAR and EDGAR, the Crystallex Quarter ending March 31, 2003 Financial Statements will also be available on the Crystallex website:  www.crystallex.com

About Crystallex

Crystallex International Corporation is a Canadian based gold producer with operations and exploration properties in Venezuela and Uruguay. Crystallex shares are traded on the TSX and AMEX Exchanges. Crystallex is focused on growth in South America and recently signed a definitive agreement with respect to the Las Cristinas mining properties in Venezuela and has taken possession of those properties. Crystallex is currently working on a Feasibility Study to support its development plans for Las Cristinas.

For further information:

Investor Relations: A Richard Marshall, VP (800) 738-1577

Internet address: http://www.crystallex.com

Email us at: info@crystallex.com

Note:
This news release may contain certain "forward-looking statements" within the meaning of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included in this release, including, without limitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives of Crystallex, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed under the heading "Risk Factors" and elsewhere in documents filed from time to time with The Toronto Stock Exchange, the United States Securities and Exchange Commission and other regulatory authorities.

The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this news release.