For Immediate Release 

TORONTO, ONTARIO, August 29, 2003 – Crystallex International Corporation (TSX, AMEX: KRY) today reported its second quarter 2003 results.  

HIGHLIGHTS 

• Gold production was 21,011 ounces for the second quarter at a total cash cost of US$316 per ounce.
• Las Cristinas Feasibility Study will be completed on schedule by mid September.  The Preliminary Environmental Impact Study is scheduled for completion by the end of September.
• Metallurgical testing of Las Cristinas ore at SGS Lakefield confirmed the selection of a conventional carbon-in-leach circuit processing circuit.  Gold recovery averages 89%.
• As previously reported on July 31,2003, reserves at Las Cristinas have increased to 246 million tonnes at an average grade of 1.29 grams/tonne, containing 10.2 million ounces.
• Debt during the second quarter was reduced from $31.3 million to $15.1 million.
• Net loss for the quarter of $4.9 million. 

Management’s Discussion and Analysis

For the Six Month Period Ended June 30, 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 Includes Working Capital changes.

 SUMMARY FINANCIAL RESULTS

 During the second quarter 2003, Crystallex incurred a loss, prior to adjustments for non-hedge derivative gains/losses, of $2.9 million, as compared with a loss of $3.6 million in the second quarter of 2002.  A non-cash adjustment for non-hedge derivative losses of $1.9 million, (and a loss of $5.3 million in 2002)  resulted in a net loss of $4.9 million, or $0.05 per share for the second quarter, as compared with a net loss of $8.9 million, or $0.11 per share, for the same period in 2002. 

Revenue for the second quarter was $11.7 million on gold sales of 21,011 ounces, compared to $13.3 million in revenue on gold sales of 23,531 ounces for the year earlier quarter.  The decrease in sales revenue was attributable to fewer ounces sold, a stronger Canadian dollar and a lower realized gold price.  The average realized gold price during the quarter was US$294 per ounce as compared with $327 per ounce in 2002.  The Company’s average realized price per ounce was below the average quarterly spot price of US$347 per ounce as a result of delivering against forward sales positions with exercise prices below the prevailing spot gold price.  

Cashflow from operating activities (after changes in working capital) was a utilization of $214,000 during the second quarter of 2003.  For the first six months of 2003 cashflow from operating activities was a utilization of $5.7 million, as compared with a utilization of $8.5 million for the similar period in 2002.  The utilization of cash was due, in part, to operating costs that exceeded realized revenue, (during the second quarter), increasing general and administrative expenses and a stronger Canadian dollar.  

LAS CRISTINAS 

The Las Cristinas Feasibility Study being undertaken by SNC-Lavalin Engineers and Constructors (SNCL) will be completed, as scheduled, by mid September.  Once completed, it will be presented to the CVG for review and approval.  The metallurgical testwork and pilot plant testing at SGS Lakefield Research was completed in June and the results confirm the choice of a conventional carbon-in-leach gold processing circuit for the Las Cristinas ore.  Further details will be released with the Feasibility Study results in mid September. 

Social program projects for the benefit of the local communities are being advanced.  Medical equipment and medicines have been supplied to the Las Claritas medical clinic.  Detailed engineering is in progress for upgrading the sewerage system for surrounding communities and for building thirty houses for residents of the area.  An upgraded water treatment system and road upgrading in local villages are also planned.

OPERATIONS REVIEW

San Gregorio

Gold production from the San Gregorio mine in Uruguay was 14,452 ounces during the second quarter, as compared with 16,841 ounces for the comparable period in 2002.  Reduced production was due largely to the processing of lower grade ore and to six lost production days in June resulting from the failure of the ball mill gear reducer shaft.  A temporary solution allowed for processing to re-start, but only continue until July 6.  While a new shaft was on order, the mill was down between July 6 and August 11.    As a result of the shutdown, third quarter production will be lower than budget, and operations, originally scheduled to be completed by year end, will now continue into the first quarter of 2004.

 Total cash operating costs averaged US$296 per ounce for the second quarter, an increase from US$211 per ounce in the first quarter due, in part, to the processing shutdown late in June and a drop in the grade of ore processed from 2.09 g/t in the first quarter to 1.79 g/t in the second quarter. 

The current life of mine plan forecasts production in 2003 of approximately 58,000 ounces.  Mining is planned to be completed by the end of the year, however, there will be modest production (between 5,000 and 10,000 ounces) during the first quarter of 2004 through processing of stockpiled ore.  The Company is continuing its evaluation of mining the west extension of the San Gregorio pit by underground mining methods.  A drilling program and an independent underground engineering and cost study are presently underway to determine the viability of this option.  The study report should be completed during the second half of September.  Presently, there is a resource in the west extension of approximately 450,000 tonnes grading 2.8 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.   

Venezuela Overview

During the second quarter of 2003, the Revemin Mill processed ore from the La Victoria open pit mine and the Charlie Richards underground and Mackenzie open pit mines on the Tomi concessions as tabled below:

Total gold production from the Revemin Mill was 10,885 ounces for the first six months of 2003, approximately 23% less than produced during the comparable period in 2002.  Gold production from the Venezuelan operations continued to be below budget due to a lack of capital investment.  This impacted the availability of contractor mining equipment at La Victoria, equipment for underground development at Tomi and general operating performance at Revemin.  The mill operated at approximately 50% of its 1,500 tonne per day capacity during the first half of 2003, due largely to insufficient ore feed from the La Victoria mine.  Although gold recoveries have been below historical levels since April of last year when the milling of sulphide ore from La Victoria began, the second quarter 2003 average recovery of 82% was considerably higher than 71% achieved in the first quarter.  This was attributable to processing a higher proportion of ore from the Mackenzie open pit mine on the Tomi concession, which does not have the refractory characteristics as the ore from La Victoria. 

The Company has commenced a comprehensive program to determine the extent of the refractory ore at La Victoria and the optimum processing design circuit for Revemin.  The program will include pilot plant testwork.

La Victoria

 Gold production from the La Victoria open pit mine was 1,402 ounces during the second quarter of 2003 and 4,578 ounces for the first six months of the year.  For the comparable six month period in 2002, gold production was 9,798 ounces.  Ore production was low due principally to insufficient funding and, to a lesser extent, from a shift to mining at the Mackenzie pit on the Tomi property.  Recovery of gold from La Victoria remained low, averaging 72% for the first half, due to processing the refractory sulphide ore. 

Tomi

The Mackenzie pit on the Tomi concession was reactivated late in the first quarter and produced 3,779 ounces of gold during the second quarter of 2003.  Mining was initiated at the Mackenzie pit to supplement ore feed from La Victoria.  During the second quarter, Mackenzie provided higher grade ore, at 3.24 grams per tonne, and higher recoveries than La Victoria.  Mining is continuing at Mackenzie during the third quarter as well as opening the Milagrito deposit, also on the Tomi concession.

Development continued on the first ore stope at the Tomi underground mine.  Development work produced approximately 4,900 tonnes of ore during the second quarter.  Gold production for the quarter was 575 ounces.  Production at design levels of about 200 tonnes of ore per day has been delayed due to a change in the mining method from cut and fill to longhole stoping, inconsistent development funding and poor equipment availability due to a shortage of spare parts.  The mining change was initiated after a review of the project by the Company’s new mining team upon reaching the first mining stope.  With capital funding, it is anticipated that continuous production from the first stope can be achieved by October, reaching design levels by November 2003.  

At the Venezuelan operations, low gold production for the quarter resulted in high unit operating costs, which averaged US$365 per ounce for the second quarter of 2003, as compared with US$353 per ounce for the similar period in 2002.  However, both production and operating costs in the second quarter improved from the first quarter 2003.  Production increased from 4,325 ounces in the first quarter to 6,559 ounces in the second quarter, while operating costs improved from US$461 per ounce to US$365 per ounce.  The improvement is attributable to mining and processing a higher proportion of ore from the Tomi open pit deposits during the second quarter.  The Tomi ore is higher grade and has higher recovery rates than the La Victoria ore.  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.

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

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.

²Ore from La Victoria, Tomi and purchased material is processed at the Company’s Revemin mill.

ADMINISTRATION 

General and Administrative expenses were $2.1 million for the second quarter of 2003, and $5.3 million for the first six months of 2003.  These are up from up from $1.7 million and $3.4 million for the corresponding periods in 2002.  The increase was primarily attributable to the hiring of additional management and operational staff and higher audit and legal expenses.

FORWARD SALES AND WRITTEN CALL OPTIONS 

At June 30, 2003, Crystallex had committed a total of 429,981 ounces at an average price of US$303 per ounce, including 224,169 ounces under call options sold at an average price of US$303 per ounce. At June 30, 2003, Crystallex’s gold hedge program, which represents approximately 4% of the Company’s reserves, consisted of the following:

As previously noted, the Company’s objective is both to 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. 

ACCOUNTING FOR DERIVATIVE INSTRUMENTS 

Written call options 

Upon re-examination of the accounting for the Company’s written call options, management determined that call option contracts outstanding at the end of 1999, 2000 and 2001 had not been properly accounted for and, as a result, the Company had reflected premiums received in income on the date of receipt and had not reflected the amount of the related mark to market adjustments for changes in estimated fair values within the consolidated financial statements. Accordingly, management has reclassified premiums received, previously reported in revenue, as a liability (deferred credit) on the balance sheet and has recorded the mark to market adjustments to the recorded liabilities for options outstanding at the end of each year.  The change in fair value of the liability has been recorded as a non-hedge derivative (loss) gain.

Fixed forward contracts

Previously, the Company treated fixed forward contracts as transactions qualifying as hedges for accounting purposes and recorded the contracts off balance sheet until the settlement date at which time the contract settlement amount was recorded in mining revenue. Upon re-examination, it has been determined that certain restructuring transactions with the counterparty modified the fixed forward contracts prior to their maturity resulting in a reassessment of hedge designation and effectiveness. Consequently, the Company has redesignated its forward contracts as trading activity and accordingly has recorded the estimated fair values of these contracts on the balance sheets and related mark to market adjustments for changes in estimated fair values in the statements of operations as non-hedge derivative (loss) gain.

The variation in fair market value of options and forwards 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 month period ended June 30, 2003, the total mark to market loss on the non-hedge derivative positions was $1.9 million.  For six months of 2003, the Company reported a non-hedge derivative gain of $6.6 million. 

In circumstances where the Company is unable to meet the obligations under the fixed forward sales or call options, the Company will defer the expiry date of the forward sale or call option, or 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 $214,000 for the three months ended June 30, 2003 as compared with a utilization of $4.6 million for the comparable period in 2002.  At June 30, 2003, cash and cash equivalents were $5.9 million.  At quarter end there was a working capital deficiency of $8.6 million.  Subsequent to quarter end, the Company issued US$10 million common share units at US$2.20 per unit.  Each unit consists of one common share and one half of one common share purchase warrant.  Each whole purchase warrant entitles the holder to acquire, for a period of three years, one common share at a price of US$2.75 per share.

Total debt at the end of the second quarter was $15.1 million, a significant reduction from $31.3 million outstanding at the beginning of 2003.  This was attributable to a US$3.0 million principal repayment of a project finance bank loan, which was repaid with cash of US$1.3 million and through issuing common shares of the Company.  In addition, $10.8 million of convertible notes were converted into common shares of the Company.

FINANCING ACTIVITIES

During the second quarter of 2003, the following financing transactions were completed:

On March 14, 2003, the Company arranged a US$3,000,000 non-interest bearing promissory note financing, which closed in three tranches as follows: US$1,500,000 on March 14, 2003, US$1,000,000 on May 2, 2003 and US$500,000 on May 15, 2003. The transaction included 450,000 common share purchase warrants, of which 300,000 are exercisable for one common share of the Company at a price of US$1.32 per share and 150,000 are exercisable at a price of US$1.27 per share.   

On May 9, 2003, the Company completed a private placement of 2,400,000 special stock warrant units at a price of $1.25 per special warrant for net proceeds of $2,718,976 million.  Each unit consisted of one common share warrant and one half of one share special purchase warrant.  Each whole common share special purchase warrant entitles the holder to acquire from the Company, for a period of two years, at a price of $1.60 per warrant, one additional common share.  

On June 20, 2003 the Company closed a private placement of 5,500,000 special warrants at $1.25 per special warrant for net proceeds of $6,475,500.  Each special warrant is convertible into a unit consisting of one common share, and one-half of one common share purchase warrant.  Each whole common share purchase warrant entitles the holder to acquire from the Company, for a period of two years, at a price of $1.60, one additional common share.

INVESTING ACTIVITIES 

Capital expenditures during the second quarter totalled $5.2 million, compared with $1.5 million for the same period in 2002.  Investments were principally for the Las Cristinas project ($3.6 million), with the balance related to the operating mines in Uruguay and Venezuela.

NON GAAP MEASURES

The total cash cost per ounce data are presented below to provide additional information and are 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:

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.

As filed on SEDAR and EDGAR, the Crystallex Quarter ending June 30, 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 strategic growth in South America. The Company’s principle asset is the Las Cristinas property in Venezuela. The Mining Agreement gives Crystallex 100 percent control of the reserves and resources of this project. Crystallex is currently working on the final 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: mail@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.