Filing Compare · CRYSTALLEX INTERNATIONAL CORP

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

For the month of ~~June~~July 2012

Commission File Number 001-14620

CRYSTALLEX INTERNATIONAL CORPORATION

(Translation of registrant’s name into English)

8 King Street East, Suite 1201

Toronto, Ontario, Canada M5C 1B5

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Rule 101(b)(1):

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Rule 101(b)(7):

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

On ~~June~~July 2513, 2012, ~~the Board of Directors of~~ Crystallex International Corporation (the “Company”) ~~adopted~~made available afor ~~Certificate~~review ofunder ~~Amendment~~the toCompany’s ~~the~~profile ~~articles~~at ofwww.sedar.com ~~the~~its ~~Company~~Information (Document, dated July 13, 2012, its audited Consolidated Financial Statements for the ~~“Certificate~~year ofended ~~Amendment”).~~December 31, A2011 ~~copy~~and ofits Management’s Discussion and Analysis for the ~~Certificate~~year ended December 31, 2011, copies of ~~Amendment~~which ~~has~~are ~~been~~attached ~~made~~to ~~available~~this ~~for~~Form ~~review~~6-K ~~under~~as Document 1, Document 2 and Document 3, respectively. On July 16, 2012, the Company’s ~~profile~~issued ata press release announcing the filing of the above ~~www.sedar.com~~referenced documents, a copy of which is attached ~~hereto~~to this Form 6-K as ~~Exhibit~~Document 34.1.

DOCUMENTS INCLUDED AS PART OF THIS REPORT

Document

1	Information Document, dated July 13, 2012.

2	Consolidated Financial Statements for the year ended December 31, 2011.

3	Management’s Discussion and Analysis for the year ended December 31, 2011.

4	News Release, dated July 16, 2012.

Document 1

LOGO

INFORMATION DOCUMENT

July 13, 2012

INFORMATION DOCUMENT

TABLE OF CONTENTS


DATE OF INFORMATION DOCUMENT			1

OVERVIEW			1

VOTING SHARES AND PRINCIPAL SHAREHOLDERS			2

DIRECTORS			2

STATEMENT OF EXECUTIVE COMPENSATION			3

Compensation Discussion and Analysis			3
Management Incentive Plan			4
Performance Graph			7
Summary Compensation Table			8
Outstanding Share-Based Awards and Option-Based Awards			9
Incentive Plan Awards – Value Vested or Earned During the Most Recently Completed Financial Year			10
Pension Plan Benefits			10
Termination of Employment, Change in Responsibilities and Employment Contracts			10
Report on Executive Compensation			12
Director Compensation			12
Outstanding Share-Based Awards and Option-Based Awards			13
Directors and Officers Insurance			15
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS			15

EQUITY COMPENSATION PLANS			15

Equity Compensation Plan Information			15
New Incentive Share Option Plan			15
New SOP Activity			17
Former Incentive Share Option Plan			18
Former SOP Activity			19
Directors’ Remuneration Plan			19
Directors’ Remuneration Plan Activity			20
Summary Information			20
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS			21

AUDIT COMMITTEE INFORMATION			21

AUDITORS			21

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON			21

MANAGEMENT CONTRACTS			21

OTHER MATTERS			21

Glossary			21
Additional Information			22
BOARD APPROVAL			22

CRYSTALLEX INTERNATIONAL CORPORATION

Suite 1201, 8 King Street East, Toronto, Ontario M5C 1B5

Telephone: (416) 203-2448

DATE OF INFORMATION DOCUMENT

Information contained in this Information Document is given as at July 13, 2012 unless otherwise indicated.

OVERVIEW

Crystallex International Corporation (the “Corporation”) is a company continued under the Canada Business Corporations Act. The registered and head office of the Corporation is located at 8 King Street East, Suite 1201, Toronto, Ontario, M5C 1B5.

On December 23, 2011, the Corporation obtained an order from the Ontario Superior Court of Justice (Commercial List) (the “Court”) for protection under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”) until January 21, 2012. Under the order, proceedings by creditors or others cannot be continued or commenced without the consent of the Corporation and Ernst & Young Inc., the monitor, or leave of the Court. The stay has been extended by the Court several times and is currently scheduled to expire on September 11, 2012.

On December 28, 2011, the Corporation obtained an order from the United States Bankruptcy Court for the District of Delaware under Chapter 15 of the U.S. Bankruptcy Code recognizing the initial CCAA order. The United States Bankruptcy Court has recognized the Corporation’s CCAA proceedings as well as the initial order and subsequent stay extensions of the Court.

As a result of the Corporation’s failure to file, by the deadline of March 30, 2012, its audited financial statements for the fiscal year ended December 31, 2011, related management’s discussion and analysis, 2011 annual information form and CEO and CFO certificates related to the foregoing, the Corporation was in default of its continuous disclosure requirements. The Corporation therefore applied to the Ontario Securities Commission and the securities regulatory authorities in British Columbia, Alberta, Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland for a management cease trade order under National Policy 12-203 which would have only prohibited trading in securities of the Corporation by certain insiders of the Corporation. The Corporation’s application was denied and, accordingly, a general cease trade order has been issued and in effect since April 13, 2012 (“CTO”). The cease trade order prohibits the trading of the Corporation’s securities, other than for trades made pursuant to debtor-in-possession (“DIP”) financing as approved by the Court in connection with the proceedings under the CCAA and trades for nominal consideration to realize tax losses. The Corporation is reviewing all options, with the goal of ultimately meeting its continuous disclosure obligations and lifting the cease trade order. The Corporation’s shares continue to trade on the OTC Bulletin Board.

On April 5, 2012, the Corporation sought an order from the Court approving the $36 million DIP financing facility from a fund managed by Tenor Capital Management Company, L.P. (“Tenor”), which financing was approved by the Court on April 16, 2012. As a result, the Corporation entered into a senior secured credit agreement dated April 23, 2012 (the “Credit Agreement”). Further details regarding the DIP facility and the Credit Agreement can be found in the Corporation’s management’s discussion and analysis for the fiscal year ended December 31, 2011 and under the Corporation’s profile at www.sedar.com. Pursuant to the provisions of the Credit Agreement and a conversion and voting agreement and the terms of the Series 1 Shares (see “Voting Shares and Principal Shareholders” below), Mr. Robin Shah and Mr. David Kay were nominated to the board of directors of the Corporation (the “Board”) as nominees of the lender under the DIP facility. Both Messrs Shah and Kay are employed by Tenor.

On June 15, 2012, the Corporation obtained an order from the Court relieving the Corporation from any obligation to call and hold an annual meeting of its shareholders until further order of the Court.

VOTING SHARES AND PRINCIPAL SHAREHOLDERS

As at the date of this Information Document, there were 365,417,737 common shares (“Common Shares”), 100 Class A Preference Shares and no Class B Preference Shares of the Corporation issued and outstanding. The holders of the Common Shares are entitled to receive notice of and to attend all meetings of shareholders of the Corporation and to one vote in respect of each Common Share held. The holder of the 100 Class A Preference Shares is Tenor KRY Coöperatief U.A. The outstanding Class A Preference Shares have been issued in a series designated as Class A preference shares, Series 1 (“Series 1 Shares”) and are entitled, until a specified date, to receive notice of and to attend all meetings of shareholders and to vote, exclusively and separately as a class, on the basis of one vote per share, to nominate and elect two of the directors of the Corporation. The Series 1 Shares have no other voting rights except as provided under the Canada Business Corporations Act.

As at the date of this Information Document, to the knowledge of the directors and executive officers of the Corporation, no person beneficially owns or controls or directs, directly or indirectly, securities of the Corporation carrying 10% or more of the voting rights attached to any class of voting securities of the Corporation other than Tenor KRY Coöperatief U.A. in respect of the Series 1 Shares.

DIRECTORS

The table below sets out the following information for all the directors of the Corporation: (a) name and province or state and country of residence and position with the Corporation; (b) principal occupation during the past five years; (c) the period during which the individual has served as a director; (d) the number of voting securities of the Corporation beneficially owned or controlled or directed, directly or indirectly; and (e) the Board committees of which the individual is a member.


Name, Residence and Position with Corporation⁽¹⁾	Principal Occupation During the Past 5 Years ⁽¹⁾	Director Since	Number of Voting Securities Beneficially Owned or Controlled or Directed, Directly or Indirectly⁽¹⁾

Robert A. Fung^(2)(4)(5) Ontario, Canada Chief Executive Officer and Chair of the Corporation	Chief Executive Officer of the Corporation⁽⁷⁾	December 3, 1996	319,500 Common Shares

David Kay^(2)(3)(4)(6) New York, U.S.A. Director	Employee, Tenor Capital Management Company, L.P.⁽⁸⁾	June 25, 2012	Nil

Harry J. Near ^(3)(4)(6) Ontario, Canada Director	President, Near Consultants & Associates; Principal, The Earnscliffe Strategy Group	May 5, 1997	392,683 Common Shares

Marc J. Oppenheimer^(2)(5)(6) New Jersey, U.S.A. Director	President, Octagon Assoc. Inc.; Chief Operating Officer, Chief Financial Officer and Treasurer of IDT Corporation; Executive Vice President of Kenmar Global Investment Management Inc.	February 20, 1995	835,399 Common Shares

Robin Shah⁽²⁾⁽³⁾ New York, U.S.A. Director	Partner, Tenor Capital Management Company, L.P.	June 25, 2012	100 Series 1 Shares⁽⁹⁾

Notes:

(1)

Information on the province or state and country of residence, the principal occupation and the number of voting securities beneficially owned or controlled or directed, directly or indirectly, by each director is not within the knowledge of management of the Corporation and has been furnished by the director. The number of voting securities beneficially owned or controlled or directed, directly or indirectly, by each director is as at the date of this Information Document.

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(2)	Member of the Finance and Risk Committee.

(3)	Member of the Audit Committee.

(4)	Member of the Nominating and Governance Committee.

(5)	Was a member of the Environment, Health and Safety and Operations Committee (EHSO). The EHSO Committee was discontinued in January 2011.

(6)	Member of the Compensation Committee.

(7)	Mr. Fung was appointed as Chief Executive Officer of the Corporation in June 2008 and prior thereto was an employee of Macquarie Capital Markets Canada Ltd. (formerly Orion Securities Inc.).

(8)	Mr. Kay joined Tenor Capital Management Company, L.P. in October 2009 and from 2008 to such date was a senior associate of Jefferies & Company and prior thereto was an attorney of Akin Gump Strauss Hauer & Feld.

(9)	Tenor KRY Coöperatief U.A. beneficially owns these shares; however Mr. Shah as the founder and a partner of Tenor Capital Management Company, L.P. may be considered to exercise control or direction over these shares.

Other than as described below or in respect of the Corporation as noted above, no director or senior officer of the Corporation is, at the date of this Information Document, or has, within ten years prior to the date of this Information Document:

(a)

been a director, chief executive officer or chief financial officer of any company that (i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days; or (ii) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer;

(b)

been a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

(c)	become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.

Other than as described below, no director or senior officer of the Corporation is, at the date of this Information Document, or has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for a proposed director.

In connection with a proposal with certain creditors filed on February 29, 2008, Mr. Fung reached a settlement with these creditors on March 12, 2009.

STATEMENT OF EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The Compensation Committee, which is composed of Messrs. Kay (Chair), Near and Oppenheimer, reviews and makes recommendations to the Board with respect to the compensation of the executive officers of the Corporation.

Directors who are also members of management absent themselves from a meeting, or portion of a meeting, of the Board where such individual’s compensation is discussed and refrains from voting in respect of the approval of such compensation.

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Objectives of Compensation Program

The Corporation’s principal goal is to create value for its stakeholders, primarily its shareholders. The Corporation believes that the compensation policies and practices of the Corporation should reflect the interests of its stakeholders in achieving this goal.

The Corporation’s compensation philosophy is based upon the following principal objectives: (i) aligning the interests of the Chief Executive Officer and the other executive officers of the Corporation with the interests of the Corporation; (ii) linking executive compensation to the performance of the Corporation and each executive officer of the Corporation; and (iii) attracting, motivating and retaining individuals with exceptional executive, technical, financial and other relevant skills.

The Compensation Committee reviews compensation as a whole, taking into account salary, bonuses, stock options and any other form of compensation.

Annual Salaries

To ensure that the Corporation attracts and retains qualified and experienced executives, the Compensation Committee annually reviews and, if appropriate, adjusts the base salaries of its executive officers.

Performance Bonuses

Historically, the performance criteria considered in determining performance bonus awards vary in accordance with the position and responsibilities of the executive of the Corporation. While not solely based on any one item, key considerations in determining performance bonuses for executives of the Corporation included the operating performance of the Corporation, the guidance and strategic vision for growth and business goals of the Corporation, the performance of the Common Shares and other organizational indicators, as well as individual achievements that demonstrate a contribution by the executive officer to the Corporation. The Compensation Committee also considered industry peer compensation in assisting it to arrive at its recommendations.

2011 Compensation

The components of the executive compensation are comprised of base salary and bonuses. In December 2011, a performance review was performed in respect of all executive officers of the Corporation. In reviewing the compensation of executive officers, the Compensation Committee reviewed such compensation as a whole, taking into account salary and bonuses. The main consideration in establishing base salary ranges for the executive officers was the evaluation of market comparables for similar positions. For the year 2011, the Compensation Committee took note of the following factors: (a) the particular responsibilities related to the position; (b) salaries paid by comparable businesses; (c) the experience level of the executive officer; and (d) his or her overall performance. The Compensation Committee did not retain outside consulting or advisory service providers with respect to its review of the compensation of executive officers of the Corporation in respect of fiscal 2011.

Management Incentive Plan

Need for the MIP

In light of the changed circumstances of the Corporation, the independent directors of the Corporation have approved a Management Incentive Plan (“MIP”) for certain key employees of the Corporation, and a retention advance agreement with Robert Fung (the “Retention Agreement”). The Court has issued an order in respect of these programs.

The main business objective of the Corporation is at present to pursue an arbitration before the Additional Facility of the International Center for Investment Disputes (the “Arbitration”) against the Bolivarian Republic of Venezuela (“Venezuela”) arising out of actions taken by Venezuela in breach of the bilateral investment treaty between Canada and Venezuela dated 1 July 1996 that deprived the Corporation of the right to build and operate a mine to exploit the Las Cristinas gold reserve. Much of the key factual knowledge and information necessary to advance the

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Arbitration rests with the key employees who would be beneficiaries of the MIP and the Retention Agreement. Their knowledge concerns the detailed history of the acquisition of the property, and correspondence and negotiations with various government officials over the past ten years ranging from front line workers to the highest levels of the Venezuelan government. Without their ongoing proactive involvement in providing information to the Corporation’s arbitration counsel and, in certain cases, attendance to give evidence at the Arbitration hearing, currently scheduled to take place in November 2013, chances of success in the Arbitration will be materially compromised. In the absence of an otherwise operating business that would permit, among other things, the payment of incentives at competitive market rates the employees in question would ordinarily be expected to leave the Corporation. Continued employment by the Corporation does not advance their careers or skill set in the same manner as continued employment in an operating company would. This is an opportunity cost that the employees would have no particular incentive to bear unless otherwise compensated for it.

It is also important to note that incentives to induce management to remain with the Corporation during the Arbitration were also raised by prospective lenders to the Corporation, including the provider of the Corporation’s DIP financing.

Terms of the MIP and Retention Agreement

The purpose of the MIP and the Retention Agreement are to ensure that the Corporation is able to retain and incentivize key management employees to remain with the Corporation and vigorously prosecute the Arbitration against Venezuela over the next few years.

The essence of the MIP is to reserve up to 10% of the net proceeds of the Arbitration award as a discretionary retention pool for key management employees. The essential terms of the MIP are as follows:

(a)

A discretionary retention pool is to be established as and when there are recoveries received by the Corporation from the arbitration proceedings in excess of the amount required to pay the following:

(i)

any outstanding DIP loan (principal and interest) and any outstanding operating and professional expenses of the Corporation incurred up to that time;

(ii)

the unpaid claims of stayed unsecured claims with post filing interest (to the extent paid) calculated at the rate applicable pre-filing (without regard to the terms of any restructuring plan); and

(iii)

any taxes payable by the Corporation as a result of the received recoveries, having regard for any deductions which may be payable as a result of payments from the retention pool.

(b)

The size of the discretionary retention pool is to be in the discretion of the Committee (as defined below) but is not to exceed either (i) 10% of the net proceeds referred to in sub-paragraph (a) above or (ii) one quarter of the portion of that amount that is available to the shareholders of the Corporation after satisfaction of any Additional Compensation owing to Tenor Special Situation I LLC pursuant to the Credit Agreement but before the establishment of the retention pool.

(c)

If shares of the Corporation are issued to satisfy indebtedness or the Additional Compensation referred to above, in whole or in part, the calculation under sub-paragraph (b)(ii) above is to be adjusted to reflect the dilution.

(d)

If the net proceeds calculated under sub-paragraph (a) above are more than $700,000,000, the percentage applicable under sub-paragraph (b) (i) above would be reduced to 2% in relation to the amount of net proceeds of the arbitration award in excess of $700,000,000.

(e)

There shall be deducted from any retention amount payable under the MIP an amount as determined by the Committee, acting reasonably, equal to the difference between (i) the amounts (determined on an after-tax basis) received by the participant from the exercise of all stock options

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to acquire securities of the Corporation, during the period commencing on the effective date of the MIP and ending on the day prior to the date a retention amount is paid to the participant, calculated by considering the difference between the exercise price of each such exercised option and the market price of the security underlying such option on the business day prior to the exercise of such option; and (ii) any taxes paid by the participant, from and after the effective date of the MIP and prior to the date a retention amount is paid to the participant, in respect of all stock options to acquire securities of the Corporation held by the participant which have not been exercised prior to the date a retention amount is paid to the participant.

The Retention Agreement provides that at the end of each calendar quarter during 2012 and 2013 the Board will pay a retention advance of $125,000 per quarter to Mr. Fung. The making of each payment will be at the discretion of the Board but only to the extent that he remains properly engaged in the arbitration. Those payments are to be treated as if they were pre-payments of any payments that would otherwise be awarded to Mr. Fung from the discretionary retention pool and therefore reduce any such amount he may receive from the pool.

The Committee has the authority to include anyone within the discretionary retention pool if, in the view of the Committee, he or she has materially assisted in the Arbitration.

Determination of Retention Amounts to Individuals

The amount of the payment, if any, to which any MIP beneficiary is entitled, will be determined by Messrs. Michael Brown, Harry Near and Johan van’t Hof (the “Committee”). Members of the Committee are not eligible to receive a payment from the discretionary retention pool.

The Committee may, in its sole discretion, distribute none, some or all of the discretionary retention pool. Any balance remaining in the discretionary retention pool after the payment of all retention payments shall be returned to the Corporation. In exercising its discretion to consider whether and in what amount a payment should be paid, the Committee will take the following factors into account:

(a)

The amount of money recovered by the Corporation in the Arbitration.

(b)

How quickly Arbitration proceeds are recovered.

(c)

The impact the premature resignation of the individual from the Corporation would or could have had upon the results of the Arbitration.

(d)

The amount of time and energy spent by the individual on the Arbitration proceedings.

(e)

The personal and legal risks and stresses incurred by the individual in light of the security situation in Venezuela and the general position of the Corporation.

(f)

The scale and scope of the balance of the compensation package provided by the Corporation to the individual.

(g)

The opportunity cost to the individual in staying with the Corporation in terms of professional experience, money and the development of new opportunities.

(h)

The amount of any severance payments a participant would receive on termination if such termination is reasonably foreseeable and will be accompanied by a severance payment.

(i)

The extent to which the Arbitration cost was more than anticipated to prosecute and the degree to which it may be appropriate to reduce the discretionary retention pool as a result.

(j)

Any other relevant matter.

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Benchmarks for the MIP

The Corporation has measured the proposed MIP against various benchmarks to ensure its fairness to all stakeholders. The Corporation asked its financial advisor in respect of the CCAA proceedings for information about management incentive plans. The financial advisor conducted a market canvass in the United States, which canvass indicates a market norm of share options equal to 10% of the company upon an exit from Chapter 11 proceedings in the United States. Given that the Corporation is likely to be liquidated after receipt of the total award, it was thought that this amount was a fair proxy for a MIP.

To allay concerns, the Corporation also retained a senior partner of a prominent independent Canadian law firm to determine, from the perspective of an independent director, what an appropriate MIP would be. In coming to that determination, the independent lawyer was told he could retain such advisors as he saw fit and take such steps as he saw fit. The independent lawyer retained Hugessen Consulting Inc. In the exercise of his independent business judgment, the independent lawyer concluded that the overall compensation proposal for the establishment of the MIP for the benefit of the management group of the Corporation is reasonable.

MIP Charge

The beneficiaries of the MIP have been provided, pursuant to an order of the Court, with a charge on the property of the Corporation to secure the payment of all obligations under the MIP.

Performance Graph

The following performance graph compares the cumulative return to shareholders of the Corporation of an investment in Common Shares with the cumulative return to them of an investment in the Standard & Poor’s/Toronto Stock Exchange Composite Index (“TSX Composite”) and the Standard & Poor’s/Toronto Stock Exchange Global Gold Index (formerly, the S&P/TSX Capped Gold Index) (“TSX Gold”) assuming an investment of CAD$100 on December 31, 2005 and, where applicable, the reinvestment of dividends.

LOGO


Index	Dec 31/05		Dec 31/06		Dec 31/07		Dec 31/08		Dec 31/09		Dec 31/10		Dec 23/11
Corporation	$	100.00	$	169.20	$	92.00	$	7.60	$	15.80	$	12.40	$	2.55
TSX Composite	$	100.00	$	114.51	$	122.72	$	79.73	$	104.20	$	119.26	$	106.14
TSX Gold⁽¹⁾	$	100.00	$	127.52	$	121.50	$	123.36	$	131.88	$	166.09	$	142.34

No part of discretionary bonus payments that were made were as a direct result of the share price and financial status of the Corporation during the year ended December 31, 2011.

Note:

(1)	The index methodology change from S&P/TSX Capped Gold Index to S&P/TSX Global Gold Index was effective on December 18, 2006.

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Summary Compensation Table

The following table sets out information concerning the compensation paid during the most recently completed financial years that end on or after December 31, 2009 to (a) each individual who served as the chief executive officer or the chief financial officer of the Corporation during the most recently completed financial year; (b) each of the three most highly compensated executive officers of the Corporation, other than the chief executive officer and the chief financial officer, who were serving as executive officers at the end of the most recently completed financial year and whose total salary and bonus exceeds CAD$150,000; and (c) each of the individuals who would have been included in (b) if they had been serving as an officer of the Corporation at the most recently completed financial year end (the “Named Executive Officers”). All compensation amounts are reported in U.S. dollars. For 2011, compensation paid in Canadian dollars has been translated to U.S. dollars using an average exchange rate of US$1.017 per CAD$1.00. Option-based awards calculated with reference to Canadian dollars have also been translated to U.S. dollars using the 2011 average exchange rate of US$1.017 per CAD$1.00. For 2010, compensation paid in Canadian dollars has been translated to U.S. dollars using an average exchange rate of US$0.9657 per CAD$1.00. For 2009, compensation paid in Canadian dollars has been translated to U.S. dollars using an average exchange rate of US$0.8775 per CAD$1.00.


									Non-Equity Incentive Plan Compensation
Name and Principal Position	Year		Salary ($)		Share- Based Awards⁽¹⁾		Option- Based Awards		Annual Incentive Plans⁽²⁾		Long- Term Incentive Plans⁽¹⁾		Pension Value⁽¹⁾		All Other Compensation		Total Compensation
Robert Fung⁽³⁾ Chief Executive Officer		2011	$	400,000		15,435	$	51,437	$	500,000		n/a		n/a		Nil	$	966,872
		2010	$	400,000		n/a	$	241,333	$	389,710		n/a		n/a		Nil	$	1,031,043
		2009	$	400,000		n/a	$	136,254	$	100,000		n/a		n/a		Nil	$	636,254
Robert Crombie⁽⁴⁾ President		2011	$	409,493		n/a	$	18,240	$	5,085		n/a		n/a	$	58,113	$	490,931
		2010	$	386,707		n/a	$	77,770	$	24,143		n/a		n/a	$	14,047	$	502,667
		2009	$	351,000		n/a	$	22,215	$	4,388		n/a		n/a	$	12,002	$	389,605
Hemdat Sawh⁽⁵⁾ Chief Financial Officer		2011	$	83,615		n/a		Nil		Nil		n/a		n/a	$	26,980	$	110,595
		2010	$	236,058		n/a	$	100,689	$	19,314		n/a		n/a	$	14,047	$	370,108
		2009	$	214,110		n/a	$	14,810	$	26,325		n/a		n/a	$	12,002	$	267,247
William A. Faust⁽⁶⁾ Senior Vice-President and Chief Operating Officer		2011	$	146,000		n/a	$	Nil		Nil		n/a		n/a	$	330,466	$	476,466
		2010	$	292,000		n/a	$	79,212		Nil		n/a		n/a	$	16,500	$	388,412
		2009	$	292,000		n/a		Nil	$	1,000		n/a		n/a	$	16,500	$	309,500
Richard Marshall⁽⁷⁾ Vice-President Investor Relations		2011	$	183,340		n/a	$	7,296	$	10,000		n/a		n/a	$	7,191	$	207,827
		2010	$	178,000		n/a	$	62,203	$	17,000		n/a		n/a	$	7,191	$	264,394
		2009	$	178,000		n/a	$	66,646	$	64,333		n/a		n/a	$	7,191	$	316,170

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Notes:

(1)	The Corporation does not have share-based, long-term incentive or pension plans.

(2)	Annual bonuses are reported in the year in which they were earned, not the year in which they were paid.

(3)

Mr. Fung was appointed Chief Executive Officer on June 3, 2008. Effective January 1, 2009, Mr. Fung’s annual salary as Executive Chairman and CEO was increased to US$400,000 and the annual Chairman’s fee of CAD$180,000 was eliminated. In 2009, 2010 and 2011, Mr. Fung received no additional compensation for serving as a director other than an annual grant of stock options to acquire Common Shares, and a share grant under the directors remuneration plan.

(4)	Mr. Crombie was appointed President on June 1, 2008, prior to that he held the position of Senior Vice-President, Corporate Development. His annual salary in 2009, 2010 and 2011 was CAD$400,000.

(5)

Mr. Sawh was appointed Chief Financial Officer on May 15, 2007. Mr. Sawh’s annual salary was CAD$244,000 in 2009, CAD$244,442 in 2010 and CAD$246,652 in 2011. Mr. Sawh ceased to be Chief Financial Officer effective April 30, 2011, after which time Mr. Crombie assumed the duties of V.P. Finance in addition to his role as President.

(6)	Mr. Faust was appointed Senior Vice President and Chief Operating Officer on April 16, 2007. His annual salary in 2009, 2010 and 2011 was US$292,000. Mr. Faust ceased to be Senior Vice President and Chief Operating Officer effective June 30, 2011.

(7)	Mr. Marshall was appointed Vice President Investor Relations in 2003. His annual salary in 2009 and 2010 was US$178,000. His annual salary in 2011 was US$183,340.

Outstanding Share-Based Awards and Option-Based Awards

The following table sets out information concerning all awards outstanding at the end of the most recently completed financial year. This includes unexercised options held by the Named Executive Officers during 2011 and the value of unexercised options held by the Named Executive Officers as at December 31, 2011. The closing price of the Common Shares on the TSX on December 23, 2011 (the last trading day for the Common Shares on the TSX prior to the fiscal year-end) was CAD$0.065. The Corporation does not have a share-based plan.


Name	Number of Securities Underlying Unexercised Options		Option Exercise Price (CAD$)		Option Expiration Date	Value of Unexercised In- the-Money Options(CAD$)
Robert Fung		55,000	$	2.23	July 16, 2012		Nil
		50,000	$	2.14	Jan. 14, 2013		Nil
		45,000	$	1.90	June 26, 2013		Nil
		525,000	$	3.00	Aug. 10, 2013		Nil
		40,000	$	3.17	June 17, 2014		Nil
		25,000	$	4.65	June 23, 2015		Nil
		55,000	$	3.45	June 21, 2016		Nil
		55,000	$	4.46	June 28, 2017		Nil
		920,000	$	0.24	June 24, 2019		Nil
		755,000	$	0.45	June 23, 2020		Nil
		705,000	$	0.10	June 21, 2021		Nil

		3,230,000

Hemdat Sawh		150,000	$	4.79	May 17, 2012		Nil
		90,000	$	4.64	June 6, 2012		Nil
		25,000	$	2.30	Dec. 3, 2012		Nil
		100,000	$	0.24	June 24, 2014		Nil
		315,000	$	0.45	June 23, 2015		Nil

		680,000

Robert Crombie		25,000	$	4.23	April 2, 2012		Nil
		25,000	$	2.30	Dec. 3, 2012		Nil
		50,000	$	3.00	Aug. 10, 2013		Nil
		150,000	$	0.24	June 24, 2014		Nil
		243,300	$	0.45	June 23, 2015		Nil
		250,000	$	0.10	June 21, 2016		Nil

		743,300

- 9 -


Name	Number of Securities Underlying Unexercised Options		Option Exercise Price (CAD$)		Option Expiration Date	Value of Unexercised In- the-Money Options(CAD$)
William A. Faust		25,000	$	2.30	Dec. 3, 2012		Nil
		193,429	$	4.87	April 16, 2017		Nil
		31,571	$	4.86	May 9, 2017		Nil
		250,000	$	0.45	June 23, 2015		Nil

		500,000

Richard Marshall		20,000	$	2.30	Dec. 3, 2012		Nil
		130,000	$	3.00	Aug. 10, 2013		Nil
		450,000	$	0.24	June 24, 2014		Nil
		194,600	$	0.45	June 23, 2015		Nil
		100,000	$	0.10	June 21, 2016		Nil

		894,600

Incentive Plan Awards – Value Vested or Earned During the Most Recently Completed Financial Year


Name	Option-Based Awards – Value Vested During the Year (US$)		Share-Based Awards – Value Vested During the Year (US$)		Non-Equity Incentive Plan Compensation – Value Earned During the Year (US$)
Robert Fung	$	77,008	$	15,435		Nil
Robert Crombie	$	47,615		Nil		Nil
Hemdat Sawh	$	76,715		Nil		Nil
William A. Faust	$	71,921		Nil		Nil
Richard Marshall	$	28,648		Nil		Nil

Pension Plan Benefits

The Corporation has no pension plan benefits in place.

Termination of Employment, Change in Responsibilities and Employment Contracts

The Corporation entered into: (1) an agreement effective as of January 1, 2004 with Robert Fung to serve as Chair of the Board; (2) an employment agreement effective as of May 15, 2007 with Hemdat Sawh to serve as the Chief Financial Officer of the Corporation; (3) an employment agreement effective as of June 1, 2008 with Robert Crombie to serve as President of the Corporation; (4) an employment agreement effective as of March 15, 2007 with William A. Faust to serve as Senior Vice-President and Chief Operating Officer of the Corporation; (5) an employment agreement effective as of June 9, 2008 with Richard Marshall to serve as Vice-President, Investor Relations of the Corporation; and (6) an independent contractor agreement effective as of December 1, 2011 with Marc Oppenheimer for certain contracted services in connection with the operation of the business of the Corporation.

The Corporation has entered into an agreement dated January 1, 2004 with Robert Fung to serve as Chair of the Board. Under the agreement, Mr. Fung received annual compensation of CAD$180,000 payable monthly in arrears, and an annual bonus of not less than US$100,000. On June 3, 2008, Mr. Fung was appointed CEO for which he received an additional annual compensation of CAD$100,000. Mr. Fung’s annual compensation as Executive Chairman and CEO was changed to US$400,000 effective January 1, 2009 with an annual bonus of not less than US$100,000. In the event of a change of control of the Corporation which results in Mr. Fung’s termination as Chair of the Board and CEO, Mr. Fung is entitled to receive a lump sum payment equal to three times his combined annual compensation including the bonus described above. In addition, the Retention Agreement provides that the Corporation is to pay to Mr. Fung retention advances of US$125,000 on the last business day of each calendar quarter during the calendar years 2012 and 2013, commencing on March 30, 2012 (see “Management Incentive Plan – Terms of the MIP and Retention Agreement”), subject to the ability of the Board in its discretion to defer any or all of such advances.

- 10 -

Under Mr. Sawh’s employment agreement, he was entitled to receive an annual base salary of CAD$244,000 and participate in the Corporation’s benefit programs. He was also eligible to receive an annual bonus up to a maximum target of 50% of his annual base salary based on satisfactory achievement of performance objectives established for such year and to receive grants of stock options under and in accordance with the New SOP (as defined below) equal in value, as at the date of grant of such options, of up to a maximum target of 50% of his annual base salary. In the event that his employment was terminated for disability, Mr. Sawh was entitled to continue to receive his annual base salary and benefits for a period of one year. In the event that his employment was terminated for any reason other than disability or cause, Mr. Sawh was entitled to receive a lump sum payment equal to two times his annual base salary and a continuation of his benefits for a period of two years. In the event that his employment was terminated within six months after a change of control of the Corporation (which includes the acquisition of ownership of or control or direction over more than 50% by value of the assets of the Corporation), Mr. Sawh was entitled to receive: (a) a lump sum payment equal to two times his annual base salary; (b) an amount equal to the aggregate of: (i) his maximum target bonus for the year in which the termination occurred pro-rated to the date of termination; and (ii) his maximum target bonus for a period of two years; and (c) a continuation of his benefits for a period of two years. Mr. Sawh ceased to be Chief Financial Officer of the Corporation effective April 30, 2011.

Under Mr. Crombie’s employment agreement, he is entitled to receive an annual base salary of CAD$400,000 and participate in the Corporation’s benefit programs. He is also eligible to receive an annual bonus up to a maximum target of 50% of his annual base salary based on satisfactory achievement of performance objectives established for such year and to receive grants of stock options under and in accordance with the New SOP equal in value, as at the date of grant of such options, of up to a maximum target of 50% of his annual base salary. In the event that his employment is terminated for disability, Mr. Crombie is entitled to continue to receive his annual base salary and benefits for a period of one year. In the event that his employment is terminated for any reason other than disability or cause, Mr. Crombie is entitled to receive a lump sum payment equal to two and one-half times his annual base salary and a continuation of his benefits for a period of two and one half years. In the event that his employment is terminated within six months after a change of control of the Corporation (which includes the acquisition of ownership of or control or direction over more than 50% by value of the assets of the Corporation), Mr. Crombie is entitled to receive: (a) a lump sum payment equal to two and one-half times his annual base salary; (b) an amount equal to the aggregate of: (i) his maximum target bonus for the year in which the termination occurred pro-rated to the date of termination; and (ii) his maximum target bonus for a period of two and one-half years; and (c) a continuation of his benefits for a period of two and one-half years.

Under Mr. Faust’s employment agreement, he was entitled to receive an annual base salary of US$292,000 and participate in the Corporation’s benefit programs. He was also eligible to receive an annual bonus up to a maximum target of 50% of his annual base salary based on satisfactory achievement of performance objectives established for such year and to receive grants of stock options under and in accordance with the New SOP equal in value, as at the date of grant of such options, of up to a maximum target of 50% of his annual base salary. In the event that his employment was terminated for disability, Mr. Faust was entitled to continue to receive his annual base salary and benefits for a period of one year. In the event that his employment was terminated for any reason other than disability or cause, Mr. Faust was entitled to receive a lump sum payment equal to two times his annual base salary and a continuation of his benefits for a period of two years. In the event that his employment was terminated within six months after a change of control of the Corporation (which includes the acquisition of ownership of or control or direction over more than 50% by value of the assets of the Corporation), Mr. Faust was entitled to receive: (a) a lump sum payment equal to two times his annual base salary; (b) an amount equal to the aggregate of: (i) his maximum target bonus for the year in which the termination occurred pro-rated to the date of termination; and (ii) his maximum target bonus for a period of two years; and (c) a continuation of his benefits for a period of two years. Mr. Faust ceased to be Senior Vice President and Chief Operating Officer effective June 30, 2011.

Under Mr. Marshall’s employment agreement, he is entitled to receive an annual base salary of US$178,000 and participate in the Corporation’s benefit programs. He is also eligible to receive an annual bonus up to a maximum target of 50% of his annual base salary based on satisfactory achievement of performance objectives established for such year and to receive grants of stock options under and in accordance with the New SOP equal in value, as at the date of grant of such options, of up to a maximum target of 50% of his annual base salary. In the event that his employment is terminated for disability, Mr. Marshall is entitled to continue to receive his annual base salary and benefits for a period of one year. In the event that his employment is terminated for any reason other than disability or cause, Mr. Marshall is entitled to receive a lump sum payment equal to two times his annual base salary and a

- 11 -

continuation of his benefits for a period of two years. In the event that his employment is terminated within six months after a change of control of the Corporation (which includes the acquisition of ownership of or control or direction over more than 50% by value of the assets of the Corporation), Mr. Marshall is entitled to receive: (a) a lump sum payment equal to two times his annual base salary; (b) an amount equal to the aggregate of: (i) his maximum target bonus for the year in which the termination occurred pro-rated to the date of termination; and (ii) his maximum target bonus for a period of two years; and (c) a continuation of his benefits for a period of two years.

Under Mr. Oppenheimer’s independent contractor agreement, he is entitled, as of December 1, 2011, to receive US$30,000 per month plus reimbursement for all pre-approved expenses, but is not eligible to participate in the Corporation’s benefit programs.

The following table shows the estimated compensation where a Named Executive Officer’s employment is terminated for disability, without cause or following a change of control of the Corporation as if the termination occurred on December 31, 2011:

Named Executive Officer

Title

Termination for
Disability

Termination Without
Cause

Termination
Following Change of
Control

Robert Fung

Chair of the Corporation and Chief Executive Officer

n/a

US$

1,500,000

Robert Crombie

President

CAD$

400,000

CAD$

1,000,000

CAD$

1,700,000

Richard Marshall

Vice-President Investor Relations

US$

183,340

US$

366,680

US$

641,690

Report on Executive Compensation

Executive compensation may be comprised of any combination of cash (in the form of salary and bonus), benefits and stock options.

Executive compensation is based on an evaluation of individual qualifications and performance, a comparison of compensation packages in peer group companies and the performance of the Corporation. A new executive compensation system was unanimously approved by the Board in December 2004 and became effective January 1, 2005. The new system is based on the findings of Enns and Company and Towers Perrin, whose services were engaged to assist the Corporation in developing an executive compensation system appropriate for the Corporation’s organizational structure. The objective of the exercise was to make executive compensation consistent with industry standards and practices. Under the system, executive compensation has three principal components: a base salary that is a function of industry norms and relevant experience; a cash bonus that is a function of achieving defined performance goals determined by the Compensation Committee; and a long-term incentive share option plan that is also a function of achieving such performance goals. However, as a result of the CTO, no options may currently be issued to executives.

The performances of the President and the Chief Executive Officer are evaluated annually by the Compensation Committee. The Compensation Committee has determined that the compensation package remains consistent with the industry compensation benchmarks reviewed by the Compensation Committee at the time of hiring.

Director Compensation

The following table sets out all amounts of compensation provided to the directors in 2011, other than directors who are Named Executive Officers, for the Corporation’s most recently completed financial year. All compensation amounts are reported in U.S. dollars. Option-based awards calculated with reference to Canadian dollars have been translated to U.S. dollars using the year end exchange rate in effect at the grant date.

- 12 -


Name	Fees Earned		Share-Based Awards		Option-Based Awards		Non-Equity Incentive Plan Compensation		Pension Value		All Other Compensation		Total
Michael J. H. Brown	$	76,500	$	10,290	$	35,021		Nil		n/a		Nil	$	121,811
Harry J. Near	$	74,500	$	10,290	$	35,021		Nil		n/a		Nil	$	119,811
Marc J. Oppenheimer	$	237,950	$	15,435	$	50,707		Nil		n/a		Nil	$	304,092
Johan C. van’t Hof	$	76,500	$	10,290	$	34,291		Nil		n/a		Nil	$	121,081
C. William Longden	$	26,000		Nil		Nil		Nil		n/a		Nil	$	26,000
Gordon M. Thompson	$	20,000		Nil		Nil		Nil		n/a		Nil	$	20,000
Armando F. Zullo	$	20,000		Nil		Nil		Nil		n/a		Nil	$	20,000

Other than Messrs. Fung, Kay and Shah, directors of the Corporation are compensated for their services as directors through a combination of annual fees, stock options and, in the discretion of the Board in certain circumstances, special payments. Messrs. Fung, Kay and Shah receive no additional compensation for serving as a director other than an annual grant of stock options to acquire Common Shares.

Mr. Oppenheimer receives an annual fee of US$25,000 and a meeting fee of US$2,000 payable, at the option of the Corporation, in Common Shares for acting as a director of the Corporation (see “Equity Compensation Plans – Directors’ Remuneration Plan”). During 2011, Mr. Oppenheimer also received fees of US$185,000 in respect of consulting services, based on a daily rate. In 2011, directors received payments aggregating US$531,450 in semi-annual retainer and meeting fees, together with service fees, which were paid in cash.

In 2011, all directors received an annual grant of options to acquire 400,000 Common Shares of the Corporation. The Chairman of the Board and the Chair of the Finance and Risk Committee received an additional grant of options to acquire 250,000 Common Shares. Additionally, with the exception of the Audit Committee, the Chair of a Board committee received an additional annual grant of options to acquire 20,000 Common Shares and a member of a Board committee (other than the Chair) received an additional annual grant of options to acquire 15,000 Common Shares. The Chair of the Audit Committee received an additional annual grant of options to acquire 30,000 Common Shares and a member of the Audit Committee (other than the Chair) received an additional annual grant of options to acquire 20,000 Common Shares. The options are customarily granted immediately after the annual general meeting of shareholders of the Corporation in each year.

Outstanding Share-Based Awards and Option-Based Awards

The following table sets out information concerning all awards outstanding at the end of the most recently completed financial year, held by directors, other than directors who are Named Executive Officers, of the Corporation. This includes unexercised options held by the directors during 2011 and the value of unexercised options held by the directors as at December 31, 2011. The closing price of the Common Shares on the TSX on December 23, 2011 (the last trading day for the Common Shares on the TSX prior to the fiscal year-end) was CAD$0.065.


Name	Number of Securities Underlying Unexercised Options		Option Exercise Price (CAD)		Option Expiration Date	Value of Unexercised In-the-Money Options
Michael J.H. Brown		80,000	$	1.90	June 26, 2013		Nil
		65,000	$	3.17	June 17, 2014		Nil
		75,000	$	4.65	June 23, 2015		Nil
		75,000	$	3.45	June 21, 2016		Nil
		20,000	$	3.57	Mar. 19, 2017		Nil
		95,000	$	4.46	June 28, 2017		Nil
		325,000	$	0.24	June 24, 2019		Nil
		370,000	$	0.45	June 23, 2020		Nil
		480,000	$	0.10	June 21, 2021		Nil

		1,585,000

- 13 -


Name	Number of Securities Underlying Unexercised Options		Option Exercise Price (CAD)		Option Expiration Date	Value of Unexercised In-the-Money Options
Harry J. Near		45,000	$	2.23	July 16, 2012		Nil
		50,000	$	1.90	June 26, 2013		Nil
		180,000	$	3.00	Aug. 10, 2013		Nil
		60,000	$	3.17	June 17, 2014		Nil
		65,000	$	4.65	June 23, 2015		Nil
		65,000	$	3.45	June 21, 2016		Nil
		45,000	$	4.46	June 28, 2017		Nil
		630,000	$	0.24	June 24, 2019		Nil
		480,000	$	0.45	June 23, 2020		Nil
		535,000	$	0.10	June 21, 2021		Nil

		2,155,000

Marc J. Oppenheimer		40,000	$	2.23	July 16, 2012		Nil
		50,000	$	2.14	Jan. 14, 2013		Nil
		25,000	$	1.90	June 26, 2013		Nil
		375,000	$	3.00	Aug. 10, 2013		Nil
		50,000	$	3.17	June 17, 2014		Nil
		55,000	$	4.65	June 23, 2015		Nil
		55,000	$	3.45	June 21, 2016		Nil
		55,000	$	4.46	June 28, 2017		Nil
		530,000	$	0.24	June 24, 2019		Nil
		780,000	$	0.45	June 23, 2020		Nil
		695,000	$	0.10	June 21, 2021		Nil

		2,710,000

Johan van’t Hof		75,000	$	4.65	June 23, 2015		Nil
		75,000	$	3.45	June 21, 2016		Nil
		90,000	$	4.46	June 28, 2017		Nil
		320,000	$	0.24	June 24, 2019		Nil
		235,000	$	0.45	June 23, 2020		Nil
		470,000	$	0.10	June 21, 2021		Nil

		1,265,000

C. William Longden		35,000	$	2.23	July 16, 2012		Nil
		30,000	$	1.90	June 26, 2013		Nil
		60,000	$	3.17	June 17, 2014		Nil
		65,000	$	4.65	June 23, 2015		Nil
		65,000	$	3.45	June 21, 2016		Nil
		65,000	$	4.46	June 28, 2017		Nil
		315,000	$	0.24	June 24, 2019		Nil
		226,500	$	0.45	June 23, 2020		Nil

		861,500

Armando F. Zullo		30,000	$	2.23	July 16, 2012		Nil
		50,000	$	3.17	June 17, 2014		Nil
		55,000	$	4.65	June 23, 2015		Nil
		55,000	$	3.45	June 21, 2016		Nil
		55,000	$	4.46	June 28, 2017		Nil
		305,000	$	0.24	June 24, 2019		Nil
		165,000	$	0.45	June 23, 2020		Nil

		715,000

Gordon M. Thompson		133,333	$	3.41	Feb. 1, 2012		Nil
		30,000	$	2.23	July 16, 2012		Nil
		150,000	$	2.13	Dec. 24, 2012		Nil
		25,000	$	4.46	June 28, 2017		Nil
		305,000	$	0.24	June 24, 2019		Nil
		80,000	$	0.45	June 23, 2020		Nil

		723,333

- 14 -

Directors and Officers Insurance

The Corporation maintains directors’ and officers’ liability insurance for itself and its directors and officers. Under the insurance policy, the Corporation is entitled to be reimbursed, subject to a deductible of US$250,000, (US$1,000,000 for Securities Claims) for indemnity payments made by it to its directors and officers for losses suffered by them, and the directors and officers are entitled to be reimbursed for losses suffered by them if they are not indemnified by the Corporation. The policy has a limit of US$20,000,000 per occurrence. The annual premium payable by the Corporation under the policy, based on the pricing for a five month extension of the existing policy, is US$725,000.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

None of the directors or executive officers of the Corporation, proposed nominees for election as a director of the Corporation or their respective associates were indebted at any time during the most recently completed financial year to the Corporation or its subsidiaries, excluding routine indebtedness or indebtedness that has been entirely repaid. There was no indebtedness, as of the date of this Information Document, to the Corporation and its subsidiaries, excluding routine indebtedness or indebtedness that has been entirely repaid, owing by present and former officers, directors and employees of the Corporation and its subsidiaries or by proposed nominees for election as a director of the Corporation.

EQUITY COMPENSATION PLANS

As at the end of the Corporation’s most recently completed financial year, the Common Shares that were authorized for issuance under the Corporation’s equity compensation plans are set out below.

Equity Compensation Plan Information


Plan Category	Number of securities issuable upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (CAD) (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity Compensation plans approved by securityholders (Category 1)		20,425,233	$	1.08		1,042,100
Equity Compensation plans not approved by securityholders (Category 2)		Not Applicable		Not Applicable		Not Applicable

Total		20,425,233	$	1.08		1,042,100

The numbers in Category 1 refer to the new incentive share option plan (the “New SOP”), the former incentive share option plan (the “Former SOP”) and the Directors’ Remuneration Plan (the “DRP”) as at December 31, 2011, details of which are contained below.

New Incentive Share Option Plan

Background

On June 24, 2009, shareholders of the Corporation approved the New SOP. As at the date of this Information Document, there are 16,000,000 Common Shares of the Corporation reserved for issuance under the New SOP.

The purpose of the New SOP is to provide certain directors, officers and key employees of the Corporation and certain other persons who provide services to the Corporation (“eligible persons”) with an opportunity to purchase Common Shares and benefit in any appreciation in the value of the Common Shares.

- 15 -

Summary of Material Terms of the New SOP

There is a maximum of 16,000,000 Common Shares reserved for issuance under the New SOP, representing approximately 4.4% of the issued and outstanding Common Shares as at the date of this Information Document. The New SOP provides that any one individual cannot receive options under the SOP which will entitle such individual to receive more than 5% of the issued and outstanding Common Shares of the issuer. The New SOP limits insider participation such that the number of Common Shares issuable at any point in time and issued to insiders over any one year period, under the New SOP and any other security-based compensation arrangement, does not exceed 10% of issued and outstanding Common Shares.

The Board will set the term of options granted under the New SOP and such term cannot exceed 10 years. The Board fixes the vesting terms it deems appropriate when granting options. The exercise price and the exercise periods of options granted under the New SOP are determined at the time of grant. Previously granted options under the New SOP will be available for re-allocation if they expire or are cancelled prior to their exercise. If the holder of an option ceases to be an eligible person for any reason (including termination of their employment with the Corporation for cause), unless otherwise determined or provided in an employment agreement between the holder and the Corporation, all unvested options held by the holder expire and all vested options held by the holder must be exercised, in the case of death, within the lesser of the remainder of the exercise period and 24 months after the holder ceased to be an eligible person and, in all other cases, during the remainder of the exercise period. Options may not be assigned or transferred with the exception of an assignment made to a personal representative of a deceased participant.

The Corporation does not provide financial assistance to holders of options to facilitate the purchase of Common Shares on the exercise of their options. Options granted under the New SOP may be transferred only on death and are exercisable during the lifetime of the holder only by the holder and after the death of the holder only by the holder’s legal representative.

The New SOP permits the exercise of certain options which would otherwise have expired during or within 10 business days following a period in which trading in the Common Shares is restricted by the policies of the Corporation. The New SOP also provides the Board with the flexibility to permit eligible participants in the New SOP to receive, without payment by the participant of any additional consideration, Common Shares equal to the value of the option (or the portion thereof) being exercised by surrender of the option to the Corporation.

The Board may amend or terminate the New SOP at any time in accordance with its terms subject to any applicable regulatory or other approvals. The Board has the discretion to make amendments which it may deem necessary, without having to obtain shareholder approval. Such changes include, without limitation:

(a)

minor changes of a “house-keeping” nature;

(b)

amending options under the New SOP, including with respect to the option period (provided that the period during which an option is exercisable does not exceed 10 years from the date the option is granted and that such option is not held by an insider), vesting period, exercise method and frequency, exercise price or purchase price, assignability of grants of options required for estate planning purposes and effect of termination of a participant’s employment or cessation of the participant’s directorship;

(c)

advancing the date on which any option may be exercised or extending the expiration date of any option, provided that the period during which an option is exercisable does not exceed 10 years from the date the option is granted;

(d)

changing the terms and conditions of any financial assistance which may be provided by the Corporation to participants to facilitate the purchase of Common Shares under the New SOP; and

(e)

amending a cashless exercise feature, payable in cash or securities, whether or not providing for a full deduction of the number of underlying Common Shares from the New SOP reserve.

- 16 -

Notwithstanding the amendment provisions contained in the New SOP, approval of the shareholders of the Corporation will be required in the case of (i) any amendment to the amendment provisions of the New SOP, (ii) any increase in the maximum number of Common Shares issuable under the New SOP, (iii) any reduction in the exercise price or any extension of the term of outstanding options, (iv) any changes to the insider participation limits which result in the security holder approval to be required on a disinterested basis, (v) any amendment to the eligibility requirements for eligible participants under the New SOP and (vi) any amendment which would allow awards granted under the New SOP to be transferable or assignable other than for normal estate settlement purposes, in addition to such other matters that may require shareholder approval under the rules and policies of the TSX. No amendment or termination of the New SOP may change any rights of a holder of options without the consent of the holder.

The full text of the New SOP is available for review on the Corporation’s website www.crystallex.com.

New SOP Activity

The following table sets out New SOP activity from June 24, 2009 to December 31, 2011.


	Maximum Number of Common Shares Issued and Issuable under the New SOP		Common Shares Issuable Under Outstanding Options		Common Shares Available for Future Grant⁽¹⁾
Established – June 24, 2009		8,000,000		—		8,000,000
Options granted in 2009		—		6,175,000		(6,175,000	)
Options exercised in 2009		—		—		—
Options cancelled in 2009		—		—		—

Balance – December 31, 2009		8,000,000		6,175,000		1,825,00

Authorized increase in 2010		5,000,000		—		5,000,000
Options granted in 2010		—		4,902,900		(4,902,900	)

Balance – December 31, 2010		13,000,000		11,077,900		1,922,100

Authorized increase in 2011		3,000,000		—		3,000,000
Options granted in 2011		—		3,880,000		(3,880,000	)

Balance – December 31, 2011		16,000,000		14,957,900		1,042,100

Notes:

(1)	The maximum number of Common Shares issued and issuable under the New SOP less all Common Shares issuable under outstanding options.

Summary Information

The following table sets out summary information with respect to the New SOP as at December 31, 2011.


Maximum Number of Common Shares Issued and Issuable Under the New SOP		Common Shares Issued Under Exercised Options		Common Shares Issuable Under Outstanding Options		Common Shares Available for Future Grant⁽¹⁾
#	% of Common Share Capital	#	% of Common Share Capital	#	% of Common Share Capital	#	% of Common Share Capital
16,000,000	4.4%	—	—	14,957,900	4.1%	1,042,100	0.3%

Notes:

(1)	The maximum number of Common Shares issued and issuable under the New SOP less all Common Shares issuable under outstanding options.

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Former Incentive Share Option Plan

Background

The shareholders of the Corporation approved the Former SOP in June 2002. Subsequently, shareholders of the Corporation approved an amendment to the Former SOP to increase the maximum number of Common Shares issued and issuable under the Former SOP in June 2005, and certain amendments to the Former SOP relating to blackout periods, cashless exercise and the addition of detailed amendment provisions in June 2007. Effective June 24, 2008, the Corporation ceased to grant options under the Former SOP. The Former SOP provided that the maximum number of Common Shares issuable under the Former SOP be equal to 10% of the issued and outstanding Common Shares from time to time. As at the date of this Information Document, options to purchase an additional 5,468,233 Common Shares under the Former SOP were outstanding. No additional options to acquire Common Shares are available for grant under the Former SOP. The purpose of the Former SOP was to provide additional economic incentive to the directors, officers, employees and consultants of the Corporation and its associated and affiliated companies, to encourage stock ownership by eligible persons, to increase the proprietary interest of eligible persons in the success of the Corporation and to assist the Corporation and its subsidiaries in attracting talented new directors, officers and employees. The Board or the Compensation Committee administers the Former SOP.

2005 Amendment of Former SOP

On June 24, 2005, the shareholders approved an amendment to the Former SOP to change the maximum number of Common Shares issued and issuable thereunder from 13,500,000 to 10% of the issued and outstanding Common Shares from time to time (otherwise known as a “rolling plan”). The purpose of the change was to facilitate the use of options to assist the Corporation in attracting and retaining experienced and skilled employees. In 2004, the Corporation commenced a program of granting options to employees at its Venezuelan operations.

2007 Amendments of Former SOP

On June 28, 2007, the shareholders approved certain amendments to the Former SOP to reflect the introduction of new rules affecting equity compensation plans introduced by the TSX in 2006, together with certain other minor amendments of a conforming and clerical nature.

The Former SOP was amended to permit the exercise of certain options which would otherwise have expired during or within 10 business days following a period in which trading in the Common Shares is restricted by the policies of the Corporation. The Former SOP was also amended to provide the Board with the flexibility to permit participants in the Former SOP to receive, without payment by the participant of any additional consideration, Common Shares equal to the value of the option (or the portion thereof) being exercised by surrender of the option to the Corporation. In addition, the Former SOP was amended to include certain amending provisions required by the TSX and, in addition, to specify those amendments which require shareholder approval.

2008 Cessation of Former SOP

The rules of the TSX require that, if a listed issuer has a stock option plan that does not have a fixed maximum number of shares issuable thereunder, the directors and shareholders of the issuer must approve and reaffirm the unallocated options under the plan every three years. If shareholder approval is not obtained within three years of either the institution of a rolling plan or subsequent approval, as the case may be, all unallocated entitlements will be cancelled and the issuer will not be permitted to grant further entitlements under the rolling plan. However, all allocated awards under the rolling plan, such as options that have been granted but not yet exercised, will continue unaffected. Approval of the unallocated options under the Former SOP was not put forward for consideration by the shareholders at the Corporation’s annual meeting convened on June 25, 2008 and the special meeting of shareholders of the Corporation which was held on November 18, 2008. Accordingly, the Corporation ceased to grant any further options under the Former SOP.

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Former SOP Activity

The following table sets out Former SOP activity from December 31, 2009 to December 31, 2011.


	Maximum Number of Common Shares Issued and Issuable under the Former SOP		Common Shares Issuable Under Outstanding Options		Common Shares Available for Future Grant⁽¹⁾
Balance – December 31, 2009		29,467,085		9,078,768		Nil
Options exercised in 2010		—		—		—
Options cancelled in 2010		—		1,760,035		—

Balance – December 31, 2010		29,467,085		7,318,733		Nil

Options exercised in 2011		—		—		—
Options cancelled in 2011		—		1,851,400		Nil

Balance – December 31, 2011		29,467,085		5,467,333		Nil

Notes:

(1)	The maximum number of Common Shares issued and issuable under the Former SOP less all Common Shares issued under previously exercised options and issuable under outstanding options.

(2)	The Corporation ceased to grant any further options under the Former SOP after June 24, 2008.

Summary Information

The following table sets out summary information with respect to the Former SOP as at December 31, 2011.

Maximum Number of

Common Shares Issued

and Issuable Under

the Former SOP

Common Shares

Issued Under

Exercised Options

Common Shares

Issuable Under

Outstanding Options

Common Shares

Available for

Future Grant⁽¹⁾

% of

Common

Capital

% of

Common

Capital

% of

Common

Capital

% of

Common

Capital

29,467,085

8.1%

6,836,008

1.9%

5,467,333

1.5%

Nil

N/A

Notes:

(1)	The maximum number of Common Shares issued and issuable under the Former SOP less all Common Shares issued under previously exercised options and issuable under outstanding options.

(2)	The Corporation ceased to grant any further options under the Former SOP after June 24, 2008.

Directors’ Remuneration Plan

Background

The shareholders of the Corporation approved the DRP of the Corporation in December 1998 and again in November 2008.

The DRP is administered by the Compensation Committee. The purpose of the DRP is to provide for the issue of Common Shares to the directors of the Corporation and its associated and affiliated companies in lieu of cash compensation payable to them in respect of their service as directors of the Corporation and its associated and affiliated companies. The Board made a number of minor housekeeping amendments to the DRP effective as of January 1, 2005. None of these amendments were material or required shareholder approval.

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2008 Amendment of DRP

On November 18, 2008, the shareholders approved certain amendments to the DRP to increase the number of Common Shares issuable under the DRP by a further 600,000, to a total of 1,200,000.

Summary of Material Terms

The maximum number of Common Shares issued and issuable under the DRP is 1,200,000, representing 0.3% of the issued and outstanding Common Shares as of the date of this Information Document. The maximum number of Common Shares issued over any one year period or issuable at any one time to insiders under the DRP and any other share compensation arrangement of the Corporation is 10% of the Common Shares outstanding at that time on a non-diluted basis. The maximum number of Common Shares which may be issued to any one insider within a one-year period under the DRP and any other shareholder compensation agreement is 5% of the issued and outstanding Common Shares of the Corporation.

The Board may amend or terminate the DRP at any time subject to any required regulatory or other approvals. The maximum number of Common Shares issued and issuable under the DRP may not be increased without the approval of the shareholders of the Corporation.

Directors’ Remuneration Plan Activity

The following table sets out the DRP activity from December 31, 2007 to December 31, 2011.


	Maximum Number of Common Shares Issued and Issuable Under the DRP		Common Shares Issued		Common Shares Available for Future Issue⁽¹⁾
Balance – December 31, 2007		600,000		423,359		176,641
Common Shares issued in 2008		—		172,527		(172,527	)
Approval for increase Nov. 18, 2008		600,000		—		600,000

Balance – December 31, 2008		1,200,000		595,886		604,114
Common Shares issued in 2009		—		—		—

Balance December 31, 2009		1,200,000		595,886		604,114
Common Shares issued in 2010		—		—		—

Balance – December 31, 2010		1,200,000		595,886		604,114
Common Shares issued in 2011		—		600,000		(600,000	)

Balance December 31, 2011		1,200,000		1,195,886		4,114

Notes:

(1)	The maximum number of Common Shares issued and issuable under the DRP less all Common Shares previously issued.

Summary Information

The following table sets out summary information with respect to the DRP as at the date of this Information Document.

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Maximum Number of Common Shares Issued and Issuable Under the DRP				Common Shares Issued				Common Shares Available for Future Issue⁽¹⁾
#	% of Common Share Capital			#	% of Common Share Capital⁽¹⁾			#	% of Common Share Capital
1,200,000		0.33	%	1,195,886		0.33	%	4,114		0.00	%

Notes:

(1)	The maximum number of Common Shares issued and issuable under the DRP less all Common Shares previously issued.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Except as otherwise set out in this Information Document, none of the informed persons of the Corporation or their respective associates or affiliates has any material interest, direct or indirect, in any transaction since the commencement of 2011 or in any proposed transaction which has materially affected or would materially affect the Corporation or any of its subsidiaries.

AUDIT COMMITTEE INFORMATION

The audit committee information required by Multilateral Instrument 52-110 is located in the Corporation’s Form 20-F for the period ended December 31, 2011 under the heading “Audit Committee.”

AUDITORS

PricewaterhouseCoopers LLP, Chartered Accountants (“PwC”) are the auditors of the Corporation. PwC was first appointed auditor of the Corporation on June 28, 2007.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

Except as otherwise set out in this Information Document, none of the individuals who are or were at any time since the beginning of 2011 directors or executive officers of the Corporation or are proposed nominees for election as directors of the Corporation and their respective associates and affiliates has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter described in this Information Document.

MANAGEMENT CONTRACTS

No management functions of the Corporation or any of its subsidiaries are to any substantial degree performed by any person other than the directors and executive officers of the Corporation.

OTHER MATTERS

Glossary

The terms “affiliate”, “associate”, “insider” and “senior officer” used in this Information Document have the meanings given to them in the Securities Act (Ontario). The terms “executive officer” and “informed person” used in this Information Document have the meanings given to them in National Instrument 51-102 issued by the Canadian Securities Administrators.

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Additional Information

Additional information relating to the Corporation is available on SEDAR at www.sedar.com. Shareholders may obtain copies of the Form 20-F, the audited consolidated financial statements of the Corporation and the related MD&A for the year ended December 31, 2011 that contain additional financial information concerning the Corporation by contacting Crystallex International Corporation, Suite 1201, 8 King Street East, Toronto, Canada M5C 1B5.

BOARD APPROVAL

The contents and the sending of this Information Document have been approved by the Board of Directors.

DATED: July 13, 2012.

BY ORDER OF THE BOARD OF DIRECTORS

“Robert A. Fung”

Robert A. Fung, Chair of the Corporation and Chief Executive Officer

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Schedule A

CORPORATE GOVERNANCE DISCLOSURE

This Statement sets out the principal corporate governance practices of Crystallex International Corporation (“Corporation”) as required by National Instrument 58-101 “Disclosure of Corporate Governance Practices”. See also Exhibit A hereto. The documents referred to in this Statement may be viewed in electronic format at www.sedar.com or the Corporation’s website at www.crystallex.com.

Board of Directors

Disclosure Concerning Director Independence

The Nominating and Governance Committee has assessed the independence of each of the directors and reported the results of its assessment to the Board. Based on the report of the Nominating and Governance Committee and the application of the criteria set out in the National Instrument 52-110 “Audit Committees” as reflected in the Policy on Independence of Directors, the Board has determined that three of the five current directors are independent: Messrs. Kay, Near and Shah.

The following sets out the directors who are not independent and describes the basis for that determination:

Robert A. Fung serves as Chair of the Corporation and Chief Executive Officer. Mr. Fung is not independent.

Marc J. Oppenheimer provides oversight and consulting services and has served as President and Chief Executive Officer (1995 – 2003) of the Corporation. Because of his consulting services, Mr. Oppenheimer is not independent.

The independent directors hold meetings or portions thereof at which non-independent directors and members of management are not present on an as needed basis and regularly hold meetings with the non-independent Chair of the Corporation, without management present. There were eight independent directors-only meetings held since the beginning of the Corporation’s most recently completed financial year.

The Board has appointed a Designated Director, the responsibilities of whom are set out in the Charter attached hereto as Schedule “D”.

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Attendance Record of Directors – From January 1, 2011 to December 31, 2011


Board Committees		Robert A. Fung		Michael J. H. Brown		C. William Longden⁽¹⁾		Harry J. Near		Marc J. Oppenheimer		Gordon M. Thompson⁽²⁾		Johan C. van’t Hof		Armando F. Zullo⁽³⁾
Board	# of meetings attended		14		14		5		13		14		5		13		5
Board	total # of meetings		14		14		5		14		14		5		14		5
Audit⁽⁴⁾	# of meetings attended		N/A		2		3		4		N/A		N/A		5		N/A
Audit⁽⁴⁾	total # of meetings		N/A		5		3		5		N/A		N/A		5		N/A
Nominating and Governance	# of meetings attended		1		1		N/A		1		N/A		N/A		1		N/A
Nominating and Governance	total # of meetings		1		1		N/A		1		N/A		N/A		1		N/A
Compensation	# of meetings attended		N/A		8		N/A		8		N/A		N/A		7		N/A
Compensation	total # of meetings		N/A		8		N/A		8		N/A		N/A		8		N/A
Finance and Risk	# of meetings attended		2		2		N/A		N/A		2		N/A		1		N/A
Finance and Risk	total # of meetings		2		2		N/A		N/A		2		N/A		2		N/A
Environment Health Safety and Operations⁽⁵⁾	# of meetings attended		0		0		N/A		N/A		0		N/A		N/A		N/A
Environment Health Safety and Operations⁽⁵⁾	total # of meetings		0		0		N/A		N/A		0		N/A		N/A		N/A

Notes:

(1)	Mr. Longden served as a director from July 25, 2000 to June 22, 2011.

(2)	Mr. Thompson served as a director from February 1, 2007 to June 22, 2011.

(3)	Mr. Zullo served as a director from December 3, 1996 to June 22, 2011.

(4)	In January 2011, the Audit Committee was decreased from four to three members.

(5)	In January 2011, the Environment, Health and Safety and Operations Committee was discontinued.

Robert Fung is presently a director of another reporting issuer, namely, Kingsway International Holdings Limited (TSX).

Board Mandate

The Board has adopted a Charter of the Board of Directors that, among other things, sets out the responsibilities of the Board. The full text of the Charter of the Board of Directors is attached to this Information Document as Schedule “B”.

On June 25, 2012, the Board adopted a Supplemental Charter of the Board of Directors, the redacted version of which is attached to this Information Document as Schedule “C”.

Also on June 25, 2012, the Board adopted a Charter of the Designated Director, the full text of which is attached to this Information Document as Schedule “D”.

Position Descriptions

The Board has developed a written position description for the Chairs of each Board Committee and the Chief Executive Officer.

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Orientation and Continuing Education

The Board has adopted procedures for the orientation and training of new directors. The orientation and training of new directors is overseen by the Nominating and Governance Committee. New directors are typically provided with an information package concerning the Corporation, its properties and internal policies and meet with both the Board as a whole and individual directors to obtain additional information concerning the Corporation and its business.

The Corporation provides continuing education opportunities for all directors so that they can maintain or enhance their knowledge and understanding of the business of the Corporation and their responsibilities as directors. The directors receive regular briefings on recent developments in relation to corporate governance issues and financial matters from the external legal and financial advisors to the Corporation. The Board will consider requests of individual directors for approval to pursue continuing educational opportunities on a case by case basis.

Ethical Business Conduct

The Board has adopted a written Code of Business Conduct and Ethics for all directors, officers, employees, their immediate families and, where applicable, third parties engaged to represent the Corporation, which is a practical set of policies and standards intended to guide and influence behavior. The Code of Business Conduct and Ethics may be viewed in electronic format at www.sedar.com or the Corporation’s website at www.crystallex.com, or can be obtained in paper format from the Corporation at: Crystallex International Corporation, Suite 1201, 8 King Street East, Toronto, Ontario, M5C 1B5, Canada.

The Board monitors compliance with the Code through an annual compliance review with the Chief Executive Officer.

There have been no material change reports filed in the past year that pertain to any conduct of a director or executive officer departing from the Code.

The Board requires directors to exercise independent judgment in considering agreements and transactions by requiring regular conflict declarations.

Board Committees

The Board has established five other permanent committees to assist it in carrying out its responsibilities: the Audit Committee, the Nominating and Governance Committee, the Compensation Committee, the Finance and Risk Management Committee and the Environment, Health and Safety and Operations Committee. The Environment, Health and Safety and Operations Committee was discontinued in January 2011.

Each Board committee has a charter setting out its composition, responsibilities and authority.

Other than the Chief Executive Officer, no member of management is a member of any Board committee. Members of management attend Board and committee meetings by invitation.

The function and composition of each Board committee for the Corporation’s most recently completed financial year is set out below.

Audit Committee

The Audit Committee is comprised of Messrs. Near (Chair), Kay and Shah, all of whom are independent. Mr. Oppenheimer ceased to be a member of the Audit Committee on January 25, 2011 as it was determined that he was no longer “independent” within the meaning of applicable securities regulations and listing standards of the TSX and NYSE AMEX. Messrs. Brown and van’t Hof were members of the Audit Committee during fiscal 2011 and ceased to be members of the Audit Committee on June 25, 2012, the date on which they resigned as directors of the Corporation; and Messrs. Kay and Shah joined the Audit Committee on such date.

The role of the Audit Committee is to assist the Board in fulfilling its corporate governance and oversight responsibilities with respect to accounting and financial reporting processes, internal financial control structure, financial risk management systems and external audit function.

A - 3

Nominating and Governance Committee

The Nominating and Governance Committee is comprised of Messrs. Near (Chair) and Kay who are independent and Mr. Fung who is not independent. Mr van’t Hof was a member of the Nominating and Governance Committee during fiscal 2011 and ceased to be a member of the Nominating and Governance Committee on June 25, 2012, the date on which he resigned as a director of the Corporation; and Mr. Kay joined the Nominating and Governance Committee on such date.

The role of the Nominating and Governance Committee is to assist the Board in fulfilling its responsibilities with respect to the composition and operation of the Board and Board committees and corporate governance standards and practices. The Nominating and Governance Committee is responsible for reporting to the Board at least annually with respect to appropriate candidates for nomination to the Board, for overseeing the execution of an assessment process appropriate for the Board and its committees and for evaluating the performance and effectiveness of the Board and its committees. The Board, a majority of which is independent, approves the final choice of candidates for nomination to the Board.

Compensation Committee

The Compensation Committee is comprised of Messrs. Kay (Chair) and Near who are independent and Mr. Oppenheimer who is not independent. Messrs. Brown and van’t Hof were members of the Compensation Committee during fiscal 2011 and ceased to be members of the Compensation Committee on June 25, 2012, the date on which they resigned as directors of the Corporation; and Messrs. Kay and Oppenheimer joined the Compensation Committee on such date.

The role of the Compensation Committee is to assist the Board in fulfilling its responsibilities with respect to the recruitment and assessment of the performance of the Chief Executive Officer of the Corporation, the compensation of the CEO and other officers of the Corporation and the directors of the Corporation, executive compensation disclosure and oversight of the compensation structure and benefit plans and programs of the Corporation.

Finance and Risk Management Committee

The Finance and Risk Management Committee is comprised of Messrs. Kay and Shah both of whom are independent and Messrs. Oppenheimer (Chair) and Fung both of whom are not independent. Messrs. Brown and van’t Hof were members of the Finance and Risk Management Committee during fiscal 2011 and ceased to be members of the Finance and Risk Management Committee on June 25, 2012, the date on which they resigned as directors of the Corporation; and Messrs. Kay and Shah joined the Finance and Risk Management Committee on such date.

The role of the Finance and Risk Management Committee is to assist the Board in fulfilling its policy and oversight responsibilities with respect to financial matters, including short-term and long-term financings, issuances of securities, foreign currency, hedging and derivatives transactions, capital expenditures and long-term commitments and policies and guidelines for the investment of cash, and its oversight responsibilities with respect to non-financial risk management systems.

Assessments

The Nominating and Governance Committee is responsible for at least annually assessing the effectiveness of the Board and Board Committees and the competencies and skills of the directors and reporting the results of such assessments to the Board. The Nominating and Governance Committee has developed and is continuing to refine an assessment process for the Board, each of its committees and the contribution of individual directors.

A - 4

Schedule B

CHARTER OF THE BOARD OF DIRECTORS

General

(1)	The board of directors (*Board) of Crystallex International Corporation (Corporation*) is responsible for supervising the management of the business and affairs of the Corporation.

(2)	The composition, responsibilities, and authority of the Board are set out in this Charter.

(3)	This Charter and the by-laws of the Corporation and such other procedures, not inconsistent therewith, as the Board may adopt from time to time shall govern the meetings and procedures of the Board.

Composition

(1)	The directors of the Corporation *(Directors*) should have a mix of competencies and skills necessary to enable the Board and Board committees to properly discharge their responsibilities.

(2)

The Nominating and Governance Committee annually (and more frequently, if appropriate) recommends to the Board candidates for election or appointment as Directors taking into account the Board’s conclusions with respect to the appropriate size and composition of the Board and Board committees and the competencies and skills required to enable the Board and Board committees to properly discharge their responsibilities and the competencies and skills of the current Board.

The Board approves the final choice of candidates.

The shareholders of the Corporation elect the Directors annually.

(3)	The Corporation has adopted a Policy on Independence of Directors. The purpose of the Policy is to:

(a)

set out the test that the Board will use to determine whether a Director is independent;

(b)

identify the criteria that the Board will use to assess whether a Director is independent; and

(c)

describe the disclosure that the Board will provide to shareholders of the Corporation with respect to its determination of the independence of Directors.

(4)	The Board has resolved that, commencing with the annual meeting of shareholders held in 2005, a majority of the Directors will be independent.

(5)

The Board will appoint a Chair and, if deemed appropriate, a Vice-Chair from among its members. If the Chair is not independent, the Board will designate one of the independent directors as the Lead Director. The Corporation has adopted position descriptions for the Chair, Vice-Chair and Lead Director.

(6)	The Secretary of the Corporation shall be secretary of the Board (*Secretary*).

Responsibilities

(1)	The Board is responsible for supervising the management of the business and affairs of the Corporation and its subsidiary entities (*Crystallex Group*).

(2)	In discharging their responsibilities, the Directors owe the following fiduciary duties to the Corporation:

•

a duty of loyalty: they must act honestly and in good faith with a view to the best interests of the Corporation; and

B - 1

•

a duty of care: they must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

In discharging their responsibilities, the Directors are entitled to rely on the honesty and integrity of the senior officers of the Corporation and the auditor and other professional advisors of the Corporation.

In discharging their responsibilities, the Directors are also entitled to directors’ and officers’ liability insurance purchased by the Corporation and indemnification from the Corporation to the fullest extent permitted by law and the constating documents of the Corporation.

(3)	The Board has specifically recognized its responsibilities for:

(k)

to the extent feasible, satisfying itself as to the integrity of the Chief Executive Officer and other senior officers of the Corporation and that the Chief Executive Officer and other senior officers of the Corporation create a culture of integrity throughout the Crystallex Group;

(l)

adopting a strategic planning process and approving annually (or more frequently if appropriate) a strategic plan which takes into account, among other things, the opportunities and risks of the business of the Corporation;

(m)

overseeing the identification of the principal risks of the business of the Corporation and overseeing the implementation of appropriate systems to manage these risks;

(n)

overseeing the integrity of the internal control and management information systems of the Corporation;

(o)

succession planning (including appointing, training and monitoring the senior officers of the Corporation);

(p)

adopting a disclosure policy for the Corporation; and

(q)

developing the approach of the Corporation to corporate governance.

(4)

In addition to those matters which must by law be approved by the Board, the Board oversees the development of, and reviews and approves, significant corporate plans and initiatives of the Corporation, including the annual business plan and budget, major acquisitions and dispositions and other significant matters of corporate strategy or policy.

(5)	To assist the Directors in discharging their responsibilities, the Board expects management of the Corporation to:

(r)

review and update annually (or more frequently if appropriate) the strategic plan and report regularly to the Board on the implementation of the strategic plan in light of evolving conditions;

(s)

prepare and present to the Board annually (or more frequently if appropriate) a business plan and budget and report regularly to the Board on the Corporation’s performance against the business plan and budget; and

(t)

report regularly to the Board on the Corporation’s business and affairs and on any matters of material consequence for the Corporation and its shareholders.

Additional expectations are developed and communicated during the annual strategic planning and budgeting process and during regular Board and Board committee meetings.

(6)	The Board considers that generally management should speak for the Corporation in its communications with shareholders and the public. The Corporation’s investor relations personnel are required to respond to

B - 2

inquiries from shareholders and the public after review and discussion, as appropriate, by senior management and the Board or Board committees. The Corporation’s investor relations personnel are available to shareholders by telephone, fax and e-mail. The Corporation maintains an investor relations section on its website. Presentations at investor conferences are posted promptly on the Corporation’s website. They are also available on request. The Board reviews the Corporation’s major communications with shareholders and the public.

(7)	Directors are expected to attend Board meetings, meetings of Board committees of which they are members and the annual meeting of the shareholders of the Corporation. Directors are also expected to spend the time needed, and to meet as frequently as necessary, to discharge their responsibilities.

(8)	Directors are expected to comply with the Code of Business Conduct and Ethics of the Corporation.

Authority

(1)	The Board is authorized to carry out its responsibilities as set out in this Charter.

(2)	The Board is authorized to retain, and to set and pay the compensation of, independent legal counsel and other advisors if it considers this appropriate.

(3)	The Board is authorized to invite officers and employees of the Corporation and outsiders with relevant experience and expertise to attend or participate in its meetings and proceedings if it considers this appropriate.

(4)

The Directors have unrestricted access to the officers and employees of the Corporation. The Directors will use their judgment to ensure that any such contact is not disruptive to the operations of the Corporation and will, to the extent not inappropriate, advise the Chair and the Chief Executive Officer of the Corporation of any direct communications between them and the officers and employees of the Corporation.

(5)	The Board and the Directors have unrestricted access to the advice and services of the Secretary.

(6)	The Board may delegate certain of its functions to Board committees, each of which will have its own Charter.

Meetings and Proceedings

(1)	The Board shall meet as frequently as necessary but not less than five times each year.

(2)	Any Director or the Secretary may call a meeting of the Board.

(3)

The Chair is responsible for the agenda of each meeting of the Board, including input from other Directors and the officers and employees of the Corporation as appropriate. Meetings will include presentations by management or professional advisors and consultants when appropriate and allow sufficient time to permit a full and open discussion of agenda items.

(4)	Unless waived by all Directors, a notice of each meeting of the Board confirming the date, time, place and agenda of the meeting, together with any supporting materials, shall be forwarded to each Director at least three days before the date of the meeting.

(5)	The quorum for each meeting of the Board is a majority of the Directors. In the absence of the Chair, the other Directors may appoint one of their number as chair of a meeting. The chair of a meeting shall not have a second or casting vote.

(6)	The Secretary or his delegate shall keep minutes of all meetings of the Board, including all resolutions passed by the Board. Minutes of meetings shall be distributed to the Directors after preliminary approval thereof by the Chair.

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(7)	An individual who is not a Director may be invited to attend a meeting of the Board for all or part of the meeting.

(8)	The independent Directors and the non-management Directors shall meet regularly alone to facilitate full communication.

Self Assessment

(1)	The Board shall regularly assess its effectiveness with a view to ensuring that the performance of the Board accords with best practices.

(2)	The Board shall annually review and update this Charter as required.

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Schedule C

SUPPLEMENTAL CHARTER OF THE BOARD OF DIRECTORS

General

(1)	This Supplemental Charter is supplemental to the Charter of the Board (*Charter) of Crystallex International Corporation (Corporation*).

(2)	In the event of a conflict between the terms and provisions of the Charter and this Supplemental Charter, this Supplemental Charter shall prevail.

(3)

Capitalized terms used herein and defined in the senior secured credit agreement dated as of April 23, 2012, as amended, between the Corporation and Tenor Special Situation Fund I, LLC, as assigned by Tenor Special Situation Fund I, LLC to Tenor KRY Coöperatief U.A. (Credit Agreement), shall have the meanings set forth therein, unless otherwise defined herein.

Responsibilities

(1)	No resolution of the Board relating to any of the following matters shall be approved except by a majority of the members of the Board voting on the issue, including at least one (1) Series 1 Nominee:

(a)

payment of any management compensation in excess of or in addition to that contemplated in the Initial Operating Budget, other than in connection with the MIP;

(b)

any transaction or group of related transactions with an Affiliate of the Corporation involving consideration of $50,000 or more in the aggregate;

(c)

the retention or continuance by the Corporation of any advisor other than Arbitration Counsel or advisors retained by the Corporation in respect of the Special Matters listed in clauses (i), (ii) and (iii) of section 6.15(a) of the Credit Agreement; or

(d)

[REDACTED].

(2)	None of the following actions shall be undertaken by the Corporation unless authorized by resolution of the Board approved by at least four (4) of the directors, one of whom must be the Designated Director (or if there is no Designated Director, then all four (4) of the directors):

(a)

[REDACTED];

(b)

[REDACTED];

(c)

[REDACTED];

(d)

any merger or amalgamation of the Corporation with any other Person or any sale or other disposition of all or substantially all the assets and undertaking of the Corporation or its rights under or in connection with the Arbitration Proceeding; or

(e)

[REDACTED].

(3)	[REDACTED].

(4)

In the event that there is a disagreement or material doubt by the Designated Director or amongst the other directors as to whether a particular matter is or is not a Non-Delegable Matter, then in order to resolve that question the Designated Director shall, on behalf of the Corporation, seek the advice of reputable, independent corporate counsel approved by ordinary resolution of the Board and doing no other work for the Corporation or the Lender, and the Corporation shall act on the advice of such counsel.

C - 1

Meetings and Proceedings

(1)

Members of the Advisory Panel, acting solely in such capacity, shall be entitled to attend and observe meetings of the Board but shall not be permitted to make submissions at any such meeting except with respect to any Special Matters being considered at such meeting. For the avoidance of doubt, nothing in this paragraph shall affect the rights of a director of the Corporation who is also a member of the Advisory Panel.

Special LAC Nominees

(1)	Without in any way limiting the provisions hereof, when any of the Special LAC Shares are issued, all of the rights of the Series 1 Nominees set out in this Supplemental Charter shall be attributed to and exercisable by the Special LAC Share nominees in place of the Series 1 Nominees.

Automatic Termination

(1)	The provisions of this Supplemental Charter shall terminate and be of no further force or effect as of the earliest date such provisions may terminate without the Corporation being in breach of its obligations under the Credit Agreement.

C - 2

Schedule D

CHARTER OF THE DESIGNATED DIRECTOR

General

A director of Crystallex International Corporation (Corporation) to be appointed from among its directors shall be appointed as the special managing director (Designated Director) pursuant to a senior secured credit agreement dated as of April 23, 2012, as amended, (Credit Agreement), between the Corporation and Tenor Special Situation Fund I, LLC, as assigned by Tenor Special Situation Fund I, LLC to Tenor KRY Coöperatief U.A. (Lender). The board of directors (Board) of the Corporation has appointed Harry J. Near as the Designated Director.

The Designated Director shall be independent of the Corporation and the Lender within the meaning of sections 1.4 and 1.5 of National Instrument 52-110 – Audit Committees of the Canadian Securities Administrators (as such provision reads as of April 23, 2012), and for such purposes the term “issuer” as used in section 1.4 of such National Instrument shall be read as referring to the Corporation or the Lender.

3.	Unless otherwise ordered by the Board, Harry J. Near shall continue to be the Designated Director until the expiration of his term of office as a director.

4.	The composition, responsibilities and authority of the Designated Director are set out in this Charter, subject to the provisions of the Supplemental Charter of the Board.

5.	This Charter and the by-laws of the Corporation and such other procedures, not inconsistent therewith, as the Designated Director may adopt from time to time shall govern the procedures of the Designated Director.

6.	Capitalized terms used herein and defined in the Credit Agreement shall have the meanings set forth therein, unless otherwise defined herein.

Responsibilities

The Designated Director shall have all the powers and authority of the Board to make decisions relating to any of the following matters (Special Matters) except to the extent that making a decision as to any Special Matter would require the Designated Director to exercise one or more of those powers that may not be delegated to a committee of directors or managing director pursuant to the Canada Business Corporations Act (Non-Delegable Powers):

(a)

the conduct of the Reorganization Proceedings and the efforts of the Corporation to reorganize the Prefiling Unsecured Claims;

(b)

any matters relating to the rights of the Lender and the Corporation as against the other under the Credit Agreement or any other Credit Document or the operation thereof;

(c)

the administration of the MIP, to the extent such administration has not been granted to the Retention Amount Pool Committee (as defined in the MIP plan documentation) pursuant to the provisions of the MIP plan documentation; and

(d)

retention by the Corporation of any advisor in respect of the matters set out in clauses (a), (b) or (c) above.

2.	The Designated Director shall not make any decision regarding any Special Matter without first consulting with and considering in good faith the recommendations of the Advisory Panel established by the Board if such panel is subsisting.

If and to the extent that in the opinion of the Designated Director, deciding a particular Special Matter would require the Designated Director to exercise a Non-Delegable Power, the Designated Director may consider such matter but no decision relating thereto shall be valid unless ratified by ordinary resolution of the Board.

D - 1

Automatic Termination

(2)	The provisions of this Charter shall terminate and be of no further force or effect as of the earliest date such provisions may terminate without the Corporation being in breach of its obligations under the Credit Agreement.

D - 2

Exhibit A

COMPARISON TO CANADIAN CORPORATE GOVERNANCE REQUIREMENTS

National Instrument 58-101F1 – Corporate Governance Disclosure, National Policy 58-201


Required Disclosure NI 58-101 Fl	Relevant Guideline from NP 58-201	Compliance
1. Board of Directors	Meaning of Independence/Composition of the Board/Meetings of Independent Directors
1(a)-(g)	2.1; 3.1; 3.2; 3.3	No⁽¹⁾

2. Board Mandate	Board Mandate
2	3.4(a)-(g); (i), (ii)	Yes

3. Position Descriptions	Position Descriptions
3(a)-(b)	3.5	No⁽²⁾

4. Orientation and Continuing Education	Orientation and Continuing Education
4(a) (i), (ii); (b)	3.6; 3.7	Yes

5. Ethical Business Conduct	Code of Business Conduct and Ethics
5(a) (i), (ii) & (iii); (b); (c)	3.8(a)-(f); 3.9	Yes

6. Nomination of Directors	Nomination of Directors
6(a)-(c)	3.10; 3.11; 3.12(A)-(B); 3.13; 3.14(a)-(c)	No⁽³⁾

7. Compensation	Compensation
7(a)-(c)	3.15; 3.16; 3.17 (a)-(c)	No⁽⁴⁾

8. Other Board Committees
8	n/a	Yes

9. Assessments	Regular Board Assessments
9	3.18 (a)-(b)	Yes

Notes:

(1)

Although the Corporation does not currently have a lead director, Mr. Near serves as the Designated Director and assists the non-independent Chair of the Corporation in ensuring that the Board’s agenda will enable the Board to successfully carry out its duties. The Designated Director plays an active role in leading the independent directors.

(2)

At this time the Corporation does not have a position description for the Chair of the Corporation. The Corporation has a position description for the chair of each Board committee and therefore one can delineate the role and responsibilities of the positions of Chair of the Corporation and chair of each Board committee.

(3)

Mr. Fung, a member of the Nominating and Governance Committee, is not independent. In light of the fact that the Series 1 Shares enable Tenor to appoint directly two members of the Board, the Nominating and Governance Committee had no role to play in the selection or review of the nomination of Messrs. Kay and Shah.

(4)

Mr. Oppenheimer, a member of the Compensation Committee, is not independent. The compensation of the Corporation’s current executives was fixed by the previous members of the Compensation Committee, each of whom was independent. The Corporation does not expect that such compensation will be changed during the CCAA proceedings; and in any event no compensation will be changed materially without Court and Monitor approval. With respect to the MIP, additional independent review was obtained before seeking Court approval thereof (see “Management Incentive Plan - Benchmarks for the MIP”).

Document 2

Crystallex International Corporation

LOGO

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Under Creditor Protection Proceedings as of December 23, 2011 - see Notes 1, 2 & 3)

(See Note 1 regarding the going concern uncertainties)

Crystallex International Corporation

Table of Contents


Managements Responsibility for Consolidated Financial Statements			1

Independent Auditor’s Report			2

Consolidated Statements for Financial Position (US$ thousands)			4

Consolidated Statements of Loss and Comprehensive Loss			5

Consolidated Statements of Changes in Shareholders’ Deficiency (US$ thousands)			6

Consolidated Statements of Cash Flows			7

Notes to the Consolidated Financial Statements			8

Crystallex International Corporation

Management’s Responsibility for Consolidated Financial Statements

The accompanying consolidated financial statements of Crystallex International Corporation (the “Company”) are the responsibility of management and the Board of Directors.

The consolidated financial statements have been prepared by management, on behalf of the Board of Directors, in accordance with the accounting policies disclosed in the notes to the consolidated financial statements. Where necessary, management has made informed judgements and estimates in accounting for transactions, which were not complete at the balance sheet date. In the opinion of management, the consolidated financial statements have been prepared within acceptable limits of materiality and are in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Management has established processes which are in place to provide it sufficient knowledge to support management representations that it has exercised reasonable diligence that (i) the consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of, and for the periods presented by, the consolidated financial statements and (ii) the consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented by the consolidated financial statements.

The Board of Directors is responsible for reviewing and approving the consolidated financial statements together with other financial information of the Company and for ensuring that management fulfills its financial reporting responsibilities. An Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the financial reporting process and the consolidated financial statements together with other financial information of the Company. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the consolidated financial statements together with other financial information of the Company for issuance to the shareholders. The consolidated financial statements have been audited by PricewaterhouseCoopers LLC. Their report outlines the scope of their examination and opinion on the consolidated financial statements.

Management recognizes its responsibility for conducting the Company’s affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.

DATED this 12 day of July 2012.

Crystallex International Corporation


Per:	(signed) “Robert Fung”	Per:	(signed) “Robert Crombie”
Name:	Robert Fung	Name:	Robert Crombie
Title:	Chief Executive Officer	Title:	President, acting as Chief Financial Officer

Independent Auditor’s Report

To the Shareholder Crystallex International Corporation

We have audited the accompanying consolidated financial statements of Crystallex International Corporation and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2011, December 31, 2010 and January 1, 2010 and the consolidated statements of loss and comprehensive loss, changes in shareholders’ deficiency, and cash flows for the years ended December 31, 2011 and 2010 and the related notes, which comprise a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. Canadian generally accepted auditing standards require that we comply with ethical requirements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. We were not engaged to perform an audit of the company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Crystallex International Corporation and its subsidiaries as at December 31, 2011, December 31, 2010 and January 1, 2010 and its financial performance and its cash flows for the years ended December 31, 2011 and 2010 in accordance with IFRS as issued by the International Accounting Standards Board.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which describes matters and conditions that indicate the existence of a material uncertainty that casts substantial doubt about the Company’s ability to continue as a going concern.

(Signed) “PricewaterhouseCoopers LLP”

Chartered Accountants, Licensed Public Accountants

Toronto, Canada

July 12, 2012

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Consolidated Statements of Financial Position

(US$ thousands)


	December 31, 2011 $			December 31, 2010 $			January 1, 2010 $
Assets
Current assets
Cash and cash equivalents		2,434			16,128			6,897
Restricted cash (Note 10)		—			—			4,688
Accounts receivable		297			1,042			1,877
Prepaid expenses, deposits and other assets		1,807			1,442			547
Equipment held for sale (Note 10)		1,990			—			3,180

		6,528			18,612			17,189

Non-current assets
Property, plant and equipment (Note 9)		—			33,200			39,203
Value-added taxes recoverable (Net of provision for recovery of $2,369 – Dec 2010 - $2,171 and Jan 2010 - $Nil)		—			—			1,736

Total assets		6,528			51,812			58,128

Liabilities
Current liabilities
Demand Bank loan (Note 11)		1,326			930			—
Accounts payable and accrued liabilities		7,897			11,094			9,086
Promissory note		—			—			894
Demand loan (Note 12)		—			2,500			—
Notes payable (Note 13)		—			95,035			—
Warrants – derivative financial instruments (Note 16)		3			445			2,305
Asset retirement obligation (Note 14)		1,465			798			—
Liabilities subject to compromise (Note 3)		110,194			—			—

		120,885			110,802			12,285

Asset retirement obligation (Note 14)		9,099			2,655			2,872
Notes payable (Note 13)		—			—			90,639

Total liabilities		129,984			113,457			105,796

Shareholders’ deficiency
Share capital (Note 15)		588,807			588,745			561,751
Contributed surplus		30,860			30,372			28,707
Deficit		(743,123	)		(680,762	)		(638,126	)

Total shareholders’ deficiency		(123,456	)		(61,645	)		(47,668	)

Total liabilities and shareholders’ deficiency		6,528			51,812			58,128

Nature of operations and going concern (Note 1)

Commitments and contingencies (Note 26)

Subsequent events (Note 29)

(See accompanying notes to the consolidated financial statements)

Approved on behalf of the Board of Directors


// Robert Fung, Director		// Harry Near, Director

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Consolidated Statements of Loss and Comprehensive Loss

For the year ended December 31, 2011 and 2010

(US$ thousands, except per share data)


	Year ended December 31,
	2011			2010
	$			$
(Expenses) income
General and administrative (Note 20)		(20,200	)		(12,187	)
Reorganization items – Net (Note 3)		(1,319	)		—
Foreign currency exchange gain (Note 8)		135			936
Litigation costs, net of recoveries (Note 21)		(253	)		319

		(21,637	)		(10,932	)

Finance income (Note 22)		486			5,551
Finance expense (Note 22)		(14,265	)		(14,111	)

Net finance expense		(13,779	)		(8,560	)

Loss from continuing operations		(35,416	)		(19,492	)
Loss from discontinued operations net of income taxes (Note 7)		(26,945	)		(23,144	)

Net loss and comprehensive loss for the year		(62,361	)		(42,636	)

Loss per common share from continuing operations – Basic and diluted (Note 18)		(0.10	)		(0.06	)
Loss per common share from discontinued operations – Basic and diluted (Note 18)		(0.07	)		(0.07	)

Loss per common share - Basic and diluted		(0.17	)		(0.13	)

Weighted average number of common shares outstanding		365,134,988			330,297,171

(See accompanying notes to the consolidated financial statements)

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Consolidated Statements of Changes in Shareholders’ Deficiency

(US$ thousands)


	Share capital $		Contributed surplus $		Deficit $			Total $
Balance – January 1, 2010		561,751		28,707		(638,126	)		(47,668	)

Public offering		26,994		—		—			26,994
Net loss and comprehensive loss		—		—		(42,636	)		(42,636	)
Equity portion of demand loan (Note 12)		—		200		—			200
Stock - based compensation (Note 17)		—		1,465		—			1,465

Balance – December 31, 2010		588,745		30,372		(680,762	)		(61,645	)

Balance – January 1, 2011		588,745		30,372		(680,762	)		(61,645	)

Directors fees		62		—		—			62
Net loss and comprehensive loss		—		—		(62,361	)		(62,361	)
Stock - based compensation (Note 17)		—		488		—			488

Balance – December 31, 2011		588,807		30,860		(743,123	)		(123,456	)

(See accompanying notes to the consolidated financial statements)

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Consolidated Statements of Cash Flows

For the years ended December 31, 2010 and 2011

(US$ thousands)


	2011 $			2010 $
Cash flow provided by (used in)

Operating activities
Net loss for the period		(62,361	)		(42,636	)
Adjusted for: net loss from discontinued operations		26,945			23,144
Items not affecting cash:
Interest accretion		4,965			4,596
Stock-based compensation		488			1,392
Directors fees paid in shares		62			—
Gain on revaluation of warrants		(442	)		(5,472	)
Unrealized foreign currency exchange loss		48			(512	)
Change in non-cash working capital:
(Increase) decrease in accounts receivable		(210	)		602
(Increase) in prepaid expenses, deposits and other assets		(1,317	)		(804	)
Increase (decrease) in accounts payable and accrued liabilities and liabilities subject to compromise		7,147			(76	)

Net cash used in operating activities from continuing operations		(24,675	)		(19,766	)
Net cash used in operating activities from discontinued operations (Note 7)		(4,191	)		(753	)

Net cash used in operating activities		(28,866	)		(20,519	)

Investing activities
Investment in property, plant and equipment		(2,437	)		(11,402	)
Proceeds from sale of equipment		17,238			2,794

Net cash provided by (used in) investing activities		14,801			(8,608	)

Net cash provided by investing activities from continuing operations		—			—
Net cash provided by (used in) investing activities from discontinued operations (Note 7)		14,801			(8,608	)

Financing activities
Decrease in restricted cash		—			4,688
Proceeds from demand loan (Note 12)		—			2,500
Proceeds from bank loan (Note 11)		4,611			2,953
Repayment of bank loan (Note 11)		(4,215	)		(2,023	)
Repayment of promissory note		—			(894	)
Issuance of common shares and warrants (Note 15)		—			30,605

Net cash provided by financing activities from continuing operations		396			37,829
Net cash provided by financing activities from discontinued operations		—			—

Net cash provided by financing activities		396			37,829

(Decrease) increase in cash and cash equivalents from continuing operations		(24,279	)		18,063
Increase (decrease) in cash and cash equivalents from discontinued operations		10,610			(9,361	)

(Decrease) increase in cash and cash equivalents		(13,669	)		8,702

Effects of exchange rate changes on cash and cash equivalents		(25	)		529
Cash and cash equivalents - beginning of period		16,128			6,897

Cash and cash equivalents - end of period		2,434			16,128

Supplemental disclosures with respect to cash flows (Note 23). (See accompanying notes to the consolidated financial statements)

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

1.	Nature of operations and going concern

Crystallex International Corporation (“Crystallex” or the “Company”) is a Canadian-based company, with a history of acquiring, exploring, developing and operating mining properties. The Company is domiciled in Canada with a registered office at 8 King Street East, Suite 1201, Toronto, Ontario, Canada, M5C 1B5. The Company’s common shares trade in the United States on the OTC Markets (Symbol: CRYFQ).

The Company’s principal focus since 2002 was the exploration and development of the Las Cristinas gold properties (“Las Cristinas or the “Las Cristinas Project”) located in Bolivar State in south-eastern Venezuela. Crystallex entered into a Mine Operating Contract (the “MOC”) in September 2002 with the Corporación Venezolana de Guayana (the “CVG”). The MOC granted Crystallex exclusive rights to develop and operate the Las Cristinas Project. Following the issuance of the MOC, the Company worked to bring the Las Cristinas Project to a “shovel ready” state. The Company completed all of the requirements necessary for the issuance of the Authorization to Affect Natural Resources (the “Permit”) from the Ministry of Environment and Natural Resources (“MinAmb”), while maintaining compliance with the terms of the MOC. Notwithstanding the Company’s fulfillment of the requisite conditions, Venezuela’s approval of the Environmental Impact Study and assurances that the Permit would be issued, in April 2008 MinAmb denied the Company’s request for the Permit.

On November 24, 2008, Crystallex wrote to the Venezuelan Minister of Mines to notify it of a dispute under the Agreement between the Government of Canada and the Government of the Republic of Venezuela for the Promotion and Protection of Investments (the “Treaty”). Subsequently, the CVG unilaterally terminated the MOC on February 3, 2011, despite having confirmed the validity of the MOC in August 2010.

On February 16, 2011, the Company filed a Request for Arbitration against Venezuela before the Additional Facility of the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) pursuant to the Treaty. On March 9, 2011, the Request for Arbitration was registered by ICSID.

At the initial hearing on December 1, 2011 the arbitral tribunal appointed under the rules of the additional facility of ICSID agreed upon a schedule of written submissions and set the final oral hearing date.

Based upon the schedule set for the claim, Crystallex filed its first written submission with ICSID on February 10, 2012. Venezuela’s first written submission is now due to be filed on November 2, 2012, with a translation to be filed by November 23, 2012. Both parties will file additional submissions in 2013, Crystallex on March 22, 2013 (with a translation to follow by April 12, 2013) and Venezuela on August 09, 2013 (with a translation to follow on August 30, 2013) with the final oral hearing set for November 11 – 22, 2013 in Washington, D.C.

Crystallex claims that Venezuela breached the Treaty’s protections against expropriation, unfair and inequitable treatment and discrimination. Crystallex is currently seeking the restitution by Venezuela of its investments, including reinstatement of the MOC, the issuance of the Permit and compensation for interim losses suffered, or, alternatively full compensation for the value of its investments in Las Cristinas in an amount in excess of US$3.4 billion.

On December 23, 2011 (the “Filing Date”) the Company voluntarily applied for and obtained an order (“Initial Order”) from the Ontario Superior Court of Justice (Commercial List) (“the Court”) granting protection under the Companies’ Creditors Arrangement Act (“CCAA”). The Company sought protection under the CCAA as it was unable to pay $100,000 of senior unsecured notes which became due on December 23, 2011 (see Note 13). Protection was also granted in the United States under Chapter 15 of the US Bankruptcy Code. The Company did not apply for court protection in Venezuela. Ernst & Young Inc. was appointed by the Court as Monitor in the CCAA proceedings (the “Monitor”). The Company is provided with the authority to, among other things, continue operating its business (subject to Monitor and/or Court approval for certain activities), file with the Court and submit to creditors a plan of compromise or arrangement under the CCAA (the “Plan”) in order to operate an orderly restructuring of its business and

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

1.	Nature of operations and going concern (continued)

financial affairs, in accordance with the terms of the Initial Order. All persons having agreements with the Company for the supply of goods and services must continue to provide goods and services in the normal course of business, and no person shall discontinue, fail to honour, alter, interfere with, repudiate, resiliate, cancel, terminate or cease to perform any right, renewal right, contract, agreement, license or permit in favour of or held by the Company, except with written consent of the Company and the Monitor, or with the leave of the Court.

The Initial Order also provided for a general stay of proceedings for an initial period of 30 days, which was subsequently extended to September 11, 2012 and is subject to further extension by the Court. The Initial Order may be further amended by the Court on motions from the Company, their creditors and other interested parties. For additional information see Note 2.

The Company engaged an independent financial advisor with the approval of the Monitor in an effort to raise debtor-in-possession (“DIP”) financing. The financing is required by the Company to continue to operate throughout the CCAA process and to continue to prosecute its arbitration claim against Venezuela. On April 16, 2012, the Court issued an order approving a $36 million DIP Facility and as a result the Company entered into a senior secured credit agreement dated April 23, 2012, (the “Credit Agreement”) (see Note 29).

The CCAA proceedings provide the Company with a period of time to stabilize its operations and financial condition and develop a comprehensive restructuring plan. The CCAA proceedings have had a direct impact on Crystallex’s business and have compounded the Company’s operational risks. The actions and decisions of the Company’s creditors and other third parties with interests in the CCAA proceedings may be inconsistent with the Company’s plans and therefore could cause actual events to differ materially from those contemplated by the Company. Since the Company has filed for and been granted creditor protection for the purpose of reorganizing and continuing normal business operations, the consolidated financial statements continue to be prepared using the going concern basis, which assumes that Crystallex will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. It is not possible to predict the outcome of the CCAA proceedings and, as such, as more fully described in note 2, confirmation by the court of a plan or plans of reorganization that satisfies the requirements of the CCAA.

As at December 31, 2011, the Company had negative working capital of $114.4 million, including cash and cash equivalents of $2.4 million. Although the CCAA proceedings and DIP financing arrangements allow the Company to stabilize its operations, it is not possible to predict the outcome of these proceedings or to have any assurance the Company will be successful in the restructuring process. Management estimates that proceeds from the DIP Facility and from additional equipment sales will be sufficient to meet its forecast expenditures until the conclusion of the Company’s arbitration claim with Venezuela. However, there can be no assurance that the amount of cash available under the DIP Facility will be sufficient to fund day to day operations during the proceedings under the CCAA and the restructuring costs associated with operating under the CCAA. If the DIP Facility amounts are insufficient to meet liquidity requirements, the Company will have to seek additional financing. There can be no assurance that such additional financing would be available or, if available, offered on acceptable terms. Failure to secure necessary additional financing would have a material adverse impact on the Company’s continuing operations. It is also not possible to predict the outcome of the Arbitration claim against Venezuela or to have any assurance that Crystallex will be successful in obtaining restitution of its investment in the Las Cristinas Project and the granting of Permit based on the applicable provisions of the Treaty and current ICSID case law.

These material uncertainties raise substantial doubt as to the ability of the Company to continue as a going concern. The Company may be unable to realize its assets or discharge its liabilities in the normal course of business, and may incur significant dilution to the holdings of existing shareholders in any restructuring and financing. Further, a court approved plan in connection with the CCAA proceedings could materially change the carrying amounts and classifications reported in the consolidated financial statements. (See Note 2).

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

1.	Nature of operations and going concern (continued)

These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, the reported expenses and the balance sheet classifications used, that would be necessary should the Company be unable to continue as a going concern. These adjustments could be material.

The Company was delisted by the NYSE AMEX on June 1, 2011. The decision was unsuccessfully appealed by the Company and in a letter dated August 10, 2011 from the NYSE Amex it was noted that, “The Staff had reached this determination, based on Section 1002(c) of the Company Guide, which provides that a stock may be delisted from the Exchange if the issuer ceases to be an operating company, and Section 1003(c)(1) of the Company Guide, which further provides that the Exchange should consider delisting a stock “if the issuer has sold or otherwise disposed of its principal operating assets or has ceased to be an operating company or has discontinued a substantial portion of its operations or business for any reason whatsoever, including, without limitation, such events as … condemnation, seizure or expropriation.”

On December 7, 2011 the Company was advised by the Toronto Stock Exchange that it no longer met its original listing requirements, as it had discontinued a substantial portion of its business. The Company unsuccessfully appealed this decision and was subsequently delisted on January 6, 2012 (see Note 29).

2.	Creditor Protection Proceedings

Overview

As discussed in Note 1, “Nature of Operations and Going Concern,” the Company initiated the CCAA proceedings on December 23, 2011 in order to enable it to pursue reorganization efforts under the protection of the CCAA. The Company remains in possession of its assets and is continuing to operate the business as “debtors in possession” under the jurisdiction of the Courts and in accordance with the applicable provisions of the CCAA. In general, the Company is authorized to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the approval of the Court or the Monitor, as applicable.

The commencement of the CCAA proceedings constitutes an event of default under substantially all pre-petition debt obligations, and those debt obligations became automatically and immediately due and payable by their terms, although any action to enforce such payment obligations is stayed as a result of the commencement of the CCAA proceedings. Due to the commencement of the CCAA proceedings, unsecured pre-petition liabilities of $110,194 are included in “Liabilities subject to compromise” in the Consolidated Balance Sheets as of December 31, 2011 (see Note 3).

Reorganization Process

General

The Court has issued a variety of orders on either a final or interim basis intended to support the Company’s business continuity throughout the restructuring process.

The Company has retained legal and financial professionals to advise it on the CCAA proceedings and may, from time to time, retain additional professionals, subject to any applicable Court approval.

Under the terms of the Initial Order, Ernst &Young Inc. serves as the court-appointed Monitor under the CCAA proceedings.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

2.	Creditor Protection Proceedings (continued)

Stay of proceedings

Subject to certain exceptions under the CCAA, the Company’s filings and the Initial Order, automatically enjoined, or stayed, the continuation of any judicial or administrative proceedings or other actions against the Company and its property to recover, collect or secure a claim arising prior to the filing of the CCAA proceedings. Thus, for example, most creditor actions to obtain possession of property for the Company, or to create, perfect or enforce any lien against their property, or to collect on monies owed or otherwise exercise rights or remedies with respect to a pre-petition claim, are enjoined unless and until the Court lifts such stay.

The Company began notifying all known current or potential creditors regarding these filings shortly after the commencement of the CCAA proceedings.

Rejection and repudiation of contractual obligations

Pursuant to the Initial Order issued on December 23, 2011, the Company has the right to, among other things, repudiate or reject agreements, contracts or arrangements of any nature whatsoever, whether oral or written, subject to the approval of the Monitor or further order of the Court.

Any description of an agreement, contract, unexpired lease or arrangement in these notes to the consolidated financial statements must be read in light of these overriding rights pursuant to the CCAA.

Since initiating the CCAA proceedings, the Company has engaged and will continue to engage in a review of their various agreements in light of the overriding rights described above.

Plan or plans of reorganization

In order to successfully exit the CCAA, the Company will be required to propose and obtain approval from affected creditors and confirmation by the Courts of a plan or plans of reorganization that satisfies the requirement of the CCAA. An approved plan or plans of reorganization would resolve pre-petition obligations, set forth the revised capital structure of the newly reorganized entity and provide for corporate governance following the Company’s exit from the CCAA.

The Initial Order provides for a general stay of proceedings for an initial period of 30 days. The Court extended the stay proceedings several times and the stay is currently scheduled to expire September 11, 2012. The Initial Order provides that a plan or plans of reorganization under the CCAA must be filed with the Court before the termination of the stay of proceedings or such other time or times as may be allowed by the Court. Third parties could thereafter seek permission to file a plan or plans of reorganization. In addition to being voted on by the required majority of affected creditors, a plan or plans of reorganization must satisfy certain requirements of the CCAA and must be approved or confirmed by the Court in order to become effective.

The timing of filing a plan or plans of reorganization by the Company will depend on the timing and outcome of numerous other ongoing matters in the CCAA proceedings. The Company is using its best efforts to pursue confirmation of the plan or plans of reorganization and seeking confirmation thereof by the Court. There can be no assurance that a plan or plans of reorganization will be supported and approved by affected creditors and confirmed by the Court or that any such plan will be implemented successfully.

Under the priority scheme established by the CCAA, unless creditors agree otherwise, pre-petition liabilities and post-petition liabilities must be satisfied in full before shareholders are entitled to receive any distribution

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

2.	Creditor Protection Proceedings (continued)

or retain any property under a plan or plans of reorganization. The ultimate recovery to creditors and/or shareholders, if any, will not be determined until confirmation of a plan or plans of reorganization. No assurance can be given as to what values, if any, will be ascribed to each of these constituencies or what types or amounts of distributions, if any, they will receive. A plan or plans of reorganization could result in holders of liabilities, receiving no distribution on account of their interests and cancellation of their holdings.

In addition, a plan or plans of reorganization could further result in the cancellation of all common stock for nominal or no consideration.

Significant Accounting Policies Relevant to Creditor Protection Proceedings

The Company has distinguished transactions and events that are directly associated with the reorganization process from the ongoing operations of the business as follows:

Reorganization items, net

Professional fees related to part of working towards a comprehensive restructuring plan and other expenses directly related to or resulting from the reorganization process under the CCAA proceedings have been recorded in “Reorganization items, net” in the Consolidated Statements of Loss and Comprehensive Loss.

Liabilities subject to compromise

Liabilities subject to compromise primarily represent unsecured pre-petition liabilities of the Company that are subject to impairment as part of a plan or plans of reorganization and as a result, are subject to settlement at lesser amounts. Generally, actions to enforce or otherwise effect payment of such liabilities have been stayed by the Court. Such liabilities are classified separately from other liabilities in the Consolidated Balance Sheets as “Liabilities subject to compromise” and are recorded at the amounts expected to be allowed as claims by the Courts, whether known or potential claims, under a plan or plans of reorganization, even if the claims may be settled for lesser amounts.

Liabilities subject to compromise remain subject to future potentially material adjustments arising from negotiated settlements, and actions of the Court.

The classification of liabilities as “not subject to compromise” versus “subject to compromise” is based on currently available information and analysis. As the CCAA proceedings continue and additional information and analysis is completed or as the Court rules on relevant matters, the classification of amounts between these two categories may change. The amount of any such changes could be significant.

3.	Creditor Protection Proceedings Related Disclosures

Reorganization items, Net

Reorganization items, Net for the year ended December 31, 2011 were $1,319 and were entirely comprised of professional fees directly related to the CCAA proceedings.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

3.	Creditor Protection Proceedings Related Disclosures (continued)

Liabilities subject to compromise

Liabilities subject to compromise of the debtors of the Company as of December 31, 2011 were comprised of unsecured pre-petition accounts payable and accrued liabilities in the amount of $3,306, notes payable of $100,000, demand loan payable of $2,500 and accrued interest of $4,388.


	2011 $		2010 $
Pre-petition accounts payable and accrued liabilities		3,306		—
Notes payable (Note 13)		100,000		—
Demand loan (Note 12)		2,500		—
Accrued interest		4,388		—

		110,194		—

4.	Basis of preparation and adoption of IFRS

The Company prepares its financial statements in accordance with Canadian generally accepted accounting principles as set out in the Handbook of the Canadian Institute of Chartered Accountants (“CICA Handbook”). In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and require publicly accountable enterprises to apply such standards effective for years beginning on or after January 1, 2011. Accordingly, these are the Company’s first annual consolidated financial statements prepared in accordance with IFRS as issued by the IASB. In these financial statements, the term “Canadian GAAP” refers to Canadian GAAP before the adoption of IFRS.

The consolidated financial statements have been prepared in compliance with IFRS. Subject to certain transition elections and exceptions disclosed in note 6, the Company has consistently applied the accounting policies used in the preparation of its opening IFRS statement of financial position at January 1, 2010 throughout all periods presented, as if these policies had always been in effect. Note 6 discloses the impact of the transition to IFRS on the Company’s reported financial position, financial performance and cash flows, including the nature and effect of significant changes in accounting policies from those used in the Company’s consolidated financial statements for the year ended December 31, 2010 prepared under Canadian GAAP.

5.	Significant accounting policies

The significant accounting policies used in the preparation of these consolidated financial statements, following the adoption of IFRS, are described below. These policies have been consistently applied to all the years presented unless otherwise stated.

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial assets and liabilities to fair value, including derivative instruments.

Critical estimates and judgement

The preparation of financial statements in conformity with IFRS requires management to make estimates judgements and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates, and those differences could be material.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

5.	Significant accounting policies (continued)

In addition to the appropriateness of the assumption of using the going concern basis of accounting (see Note 1), significant estimates used include those relating to the net realizable value of equipment held for sale (see note 10), value-added taxes recoverable and payable in Venezuela, and tax provisions. In addition significant estimates in cost, the timing of expenditures, discount rates and changes in environmental and regulatory requirements are used in the determination of the present values of asset retirement obligations (see note 14).

Consolidation

The financial statements of the Company consolidate the accounts of Crystallex International Corporation and its subsidiaries. All intercompany transactions, balances and unrealized gains and losses from intercompany transactions are eliminated on consolidation.

Subsidiaries are those entities which Crystallex International Corporation controls by having the power to govern the financial and operating policies. Subsidiaries are fully consolidated from the date on which control is obtained by Crystallex International Corporation and would be deconsolidated from the date that control ceases.

Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Crystallex International Corporation group subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Company has determined that the United States dollar (“US$”) is the functional currency of the parent and each of its subsidiaries.

These consolidated financial statements are presented in US$.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions or valuations where items are re-measured. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in currencies other than an operation’s functional currency are recognized in the statement of loss and comprehensive loss.

Discontinued operations

A discontinued operation is a component of the Company that either has been disposed of, or that is classified as held for sale, and: (a) represents a separate major line of business or geographical area of operations; (b) is part of a single plan to dispose of a separate major line of business or geographical area of operations; or (c) is a subsidiary acquired exclusively with a view to resale. Losses of discontinued operations are disclosed separately from continuing operations with comparatives being represented in the statement of loss and comprehensive loss.

Assets held for sale

Assets are classified as held for sale when the carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

5.	Significant accounting policies (continued)

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less.

Restricted cash

Restricted cash is cash which is not available, by agreement, for general operating purposes.

Financial instruments

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.

At initial recognition, the Company classifies its financial instruments in the following categories depending on the purpose for which the instruments were acquired:

(i)

Financial assets and liabilities at fair value through profit or loss: A financial asset or liability is classified in this category if acquired principally for the purpose of selling or repurchasing in the short-term. Derivatives are also included in this category unless they are designated as hedges.

Financial instruments in this category are recognized initially and subsequently at fair value. Transaction costs are expensed in the statement of loss and comprehensive loss. Gains and losses arising from changes in fair value are presented in the statement of loss and comprehensive loss within finance income and finance expense in the period in which they arise. Financial assets and liabilities at fair value through profit or loss are classified as current except for the portion expected to be realized or paid beyond twelve months of the balance sheet date, which is classified as non-current.

(ii)

Loans and receivables: Loans and receivables including restricted cash and deposits are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognized at the amount expected to be received less, when material, a discount to reduce the loans and receivables to fair value. Subsequently, loans and receivables are measured at amortized cost using the effective interest method less a provision for impairment loans and receivables which are expected to be settled in less than one year are classified as current. Cash and cash equivalents, restricted cash and accounts receivable and deposits have been classified as loans and receivables.

(iii)

Financial liabilities at amortized cost: Financial liabilities at amortized cost include accounts payable, bank loans, promissory notes, demand loans and notes payable. Accounts payable are initially recognized at the amount required to be paid less, when material, a discount to reduce payables to fair value. Subsequently, financial liabilities are measured at amortized cost using the effective interest method.

Financial liabilities are classified as current liabilities if payment is due within twelve months. Otherwise, they are presented as non-current liabilities.

(iv)

Derivative financial instruments: The Company has issued warrants that are treated as derivative liabilities. All derivatives are included on the balance sheet within warrants or other liabilities and are classified as current or non-current based on contractual terms specific to the instrument. Gains and losses on re-measurement are included in finance income or finance expense.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

5.	Significant accounting policies (continued)

Impairment of financial assets: At each reporting date, the Company assesses whether there is objective evidence that a financial asset is impaired. If such evidence exists, the Company recognizes an impairment loss, as follows:

Financial assets carried at amortized cost: The loss is the difference between the amortized costs of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably.

Gains and losses on disposals of property, plant and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included in the statement of loss and comprehensive loss.

Mineral properties and deferred exploration and development expenditures

Mineral exploration and evaluation costs such as topographical, geochemical and geophysical studies are capitalized and carried at cost until the properties to which they relate are placed into production, sold or where management has determined there to be impairment in value. Once a mine has achieved commercial production, mineral properties and development costs, including the mineral acquisition and direct mineral exploration costs relating to the current mining plan, are depleted and amortized using the unit-of-production method over the estimated life of the ore body based on proven and probable reserves.

Impairment of non-financial assets

Property, plant and equipment and other non-financial assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets that are not amortized are subject to a periodic impairment test. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units or CGU’s). The recoverable amount is the higher of a CGU’s fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset or CGU). An impairment loss is recognized for the amount by which the CGU’s carrying amount exceeds its recoverable amount.

The Company evaluates impairment losses for potential reversals when events or circumstances warrant such consideration.

Asset retirement obligations and provisions

Provisions for environmental restoration, where applicable, are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

5.	Significant accounting policies (continued)

Estimated environmental provisions, comprising rehabilitation and mine closure, are based on the Company’s environmental policy taking into account current technological, environmental and regulatory requirements. The provision for rehabilitation is recognized as and when the environmental liability arises and is re-evaluated annually. The effect of subsequent changes to assumptions in estimating an obligation for which the provision was recognized is classified, as an expense.

Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period, and are discounted to present value using a pre-tax rate that reflects current market measurements of the time value of money and the risk specific to the obligation. The increase in the provision due to passage of time is recognized as finance expense.

Stock - based compensation

The Company recognizes compensation expense for stock options based on the estimated fair value at the grant date using the Black-Scholes option pricing model. The cost is recognized over the vesting period of the respective option. In estimating fair value, management is required to make certain assumptions and estimates regarding such items as the life of options, volatility and forfeiture rates. Changes in the assumptions used to estimate fair value could result in materially different estimated results.

Income tax

Income tax comprises current and deferred tax. Income tax is recognized in the statement of loss and comprehensive loss except to the extent that it relates to items recognized directly in equity, in which case the income tax is also recognized directly in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted, or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect to previous years.

Deferred tax is accounted for using the liability method whereby deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax assets are recognized to the extent that it is probable that the asset can be recovered. Deferred income tax assets and liabilities are presented as non-current.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

Loss per share

Basic loss per share (“LPS”) is calculated by dividing the net loss for the period attributable to equity owners of the Company by the weighted average number of common shares outstanding during the period.

Diluted LPS is calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

5.	Significant accounting policies (continued)

Accounting standards issued but not yet applied

International Financial Reporting Standard 9, Financial Instruments (“IFRS 9”).

This standard was issued in November 2009 and it addresses the classification and measurement of financial assets and replaces the multiple category and measurement models in IAS 39 for debt instruments with a mixed measurement model having only two categories: Amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments and such instruments are either recognized at fair value through profit or loss or at fair value through other comprehensive income.

Requirements for financial liabilities were added in October 2010 and they largely carried forward existing requirements in IAS 39, Financial Instruments – Recognition and Measurement, except that fair value changes due to credit risk for liabilities designated at fair value through profit and loss would generally be recorded in other comprehensive income.

This standard is required to be applied for accounting periods beginning on or after January 1, 2015, with earlier adoption permitted. The Company has not yet assessed the impact of the standard or determined whether it will adopt the standard earlier than required.

International Financial Reporting Standard 10, Consolidated Financial Statements (“IFRS 10”)

In May 2011, the IASB issued IFRS 10 Consolidated Financial Statements to replace IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation – Special Purpose Entities. The new consolidation standard changes the definition of control so that the same criteria apply to all entities, both operating and special purpose entities, to determine control. The revised definition focuses on the need to have both power and variable returns before control is present. IFRS 10 must be applied starting January 1, 2013 with earlier adoption permitted. IFRS 10 will have no impact on the Company’s financial statements.

International Financial Reporting Standard 12, Disclosure of Interests in Other Entities (“IFRS 12”)

In May 2011, the IASB issued IFRS 12 Disclosure of Interests in Other Entities to create a comprehensive disclosure standard to address the requirement for subsidiaries, joint arrangements and associates including the reporting entity’s involvement with other entities. It also includes the requirement for unconsolidated structured entities (i.e. special purpose entities). IFRS 12 must be applied starting January 1, 2013 with early adoption permitted. The Company has not yet assessed the impact of the standard nor determined whether it will adopt the standard earlier than required.

International Financial Reporting Standard 13, Fair Value Measurements (“IFRS 13”)

IFRS 13, Fair Value Measurements, defines fair value, sets out in a single IFRS framework for measuring fair value and requires disclosures about fair value measurements. The IFRS 13 applies to IFRSs that require or permit fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements), except in specific circumstances. IFRS 13 is to be applied for annual periods beginning on or after January 1, 2013. Earlier application is permitted. The Company is assessing the effect of the changes to IFRS 13 on its financial statements.

IAS 28 Investments in Associates and Joint Ventures

In June 2011, the IASB amended IAS 28, Investments in Associates and Joint Ventures, previously IAS 28, Investment in Associates. The amended IAS 28 sets out the accounting for investments in associates and the requirements for application of the equity method when accounting for investments in associates and joint ventures. This standard is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. The Company is assessing the impact of this new standard on it consolidated financial statements.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

5.	Significant accounting policies (continued)

Certain comparative figures have been reclassified to conform to the current period’s presentation.

6.	Transition to IFRS

The effect of the Company’s transition to IFRS, described in Note 4, is summarized as follows:

(i)

Transition elections

(ii)

Reconciliation of shareholders’ deficiency as previously reported under Canadian GAAP to IFRS

(iii)

Reconciliation of consolidated statements of loss and comprehensive loss as previously reported under Canadian GAAP to IFRS

(iv)

Explanatory notes

(i)

Transition exemptions

The Company has applied the following transition exemptions from full retrospective application of IFRS:


	As described in Note 6(iv)
Cumulative translation adjustment		(a	)
Asset retirement obligations		(d	)
Business combinations		(f	)
Stock-based compensation		(g	)
Borrowing costs		(h	)

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

6.	Transition to IFRS (continued)

(ii)

Reconciliation of shareholders’ deficiency as previously reported under Canadian GAAP to IFRS


	December 31, 2010											January 1, 2010
	As described in Note 6 (iv)		Cdn GAAP			Adj			IFRS			Cdn GAAP			Adj			IFRS
Assets
Current assets
Cash and cash equivalents				16,128			—			16,128			6,897			—			6,897
Restricted cash													4,688						4,688
Accounts receivable		c		108			934			1,042			780			1,097			1,877
Prepaid expenses, deposits and other assets		c		1,435			7			1,442			515			32			547
Equipment held for sale				—			—			—			3,180			—			3,180
Discontinued operations		c		941			(941	)		—			1,129			(1,129	)		—

				18,612			—			18,612			17,189			—			17,189

Non-current assets
Property, plant and equipment				33,200			—			33,200			39,203			—			39,203
Value-added taxes recoverable				—			—			—			1,736			—			1,736

				51,812			—			51,812			58,128			—			58,128

Liabilities
Current liabilities
Accounts payable and accrued liabilities		c		9,528			1,566			11,094			8,043			1,043			9,086
Notes payable				95,035			—			95,035			—			—			—
Promissory note				—			—			—			894			—			894
Bank loan				930			—			930			—			—			—
Demand loan				2,500			—			2,500			—			—			—
Warrants		b		—			445			445			—			2,305			2,305
Current portion of asset retirement obligation		d		—			798			798			—			—			—
Discontinued operations		c		2,364			(2,364	)		—			1,043			(1,043	)		—

				110,357			445			110,802			9,980			2,305			12,285

Non-current liabilities
Notes payable				—			—			—			90,639			—			90,639
Asset retirement obligation		d		—			2,655			2,655			—			2,872			2,872
Discontinued operations		c		2,081			(2,081	)		—			2,217			(2,217	)		—

				112,438			1,019			113,457			102,836			2,960			105,796

Shareholders’ deficiency
Share capital				588,745			—			588,745			561,751			—			561,751
Contributed surplus		b		40,643			(10,271	)		30,372			35,366			(6,659	)		28,707
Accumulated other comprehensive income		a		11,959			(11,959	)		—			11,959			(11,959	)		—
Deficit		a/b		(701,973	)		21,211			(680,762	)		(653,784	)		15,658			(638,126	)

				(60,626	)		(1,019	)		(61,645	)		(44,708	)		(2,960	)		(47,668	)

				51,812			—			51,812			58,128			—			58,128

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

6.	Transition to IFRS (continued)

(ii)

Reconciliation of shareholders’ deficiency as previously reported under Canadian GAAP to IFRS


	As described in Note 6 (iv)		Dec 31, 2010 $			Jan 1, 2010 $
Deficit
Deficit as reported under Canadian GAAP				(701,973	)		(653,784	)

Cumulative translation adjustment		a		11,959			11,959
Revaluation of warrants		b		9,826			4,354
Asset retirement obligation		d		(574	)		(655	)

Deficit as reported under IFRS				(680,762	)		(638,126	)

(iii)

Reconciliation of consolidated statements of loss and comprehensive loss as previously reported under Canadian GAAP to IFRS


			Year ended December 31, 2010
	As described in Note 6 (iv)		Cdn GAAP			Adj			IFRS
(Expenses) income
General and administrative		c		(12,187	)		—			(12,187	)
Litigation costs, net of recoveries				319			—			319
Foreign currency exchange gain (loss)		c		949			(13	)		936
Write-down of property, plant and equipment		c		(18,929	)		18,929			—
Provision for value-added taxes recoverable		c		(2,171	)		2,171			—

				(32,019	)		21,087			(10,932	)

Finance income		b		79			5,472			5,551
Finance expense				(14,111	)		—			(14,111	)

Net interest expense				(14,032	)		5,472			(8,560	)

Loss from continuing operations				(46,051	)		26,559			(19,492	)
Loss from discontinued operations		c		(2,138	)		(21,006	)		(23,144	)

Net loss and comprehensive loss				(48,189	)		5,553			(42,636	)

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

6.	Transition to IFRS (continued)

(iv)

Explanatory notes:

In accordance with IFRS transitional provisions, the Company has elected to reset the cumulative translation adjustment account, which includes gains and losses arising from the translation of foreign operations, to zero at the date of transition to IFRS. Accumulated other comprehensive income has been decreased and deficit has been decreased by $11,959.

The warrants entitle the holder to acquire a fixed number of common shares for a fixed Canadian dollar price per share. In accordance with IFRS, an obligation to issue shares for a price that is not fixed in the Company’s functional currency, and that does not qualify as a rights offering, must be classified as a derivative liability and measured at fair value with changes recognized in the statement of loss and comprehensive loss as they arise. The Company has recorded these changes in finance income in the statement of loss and comprehensive loss.

Under Canadian GAAP, the warrants were classified as equity and changes in fair value were not recognized. This change in accounting increased liabilities at January 1, 2010 by $2,305, and December 31, 2010 by $445, reduced contributed surplus at January 1, 2010 by $6,659, and December 31, 2010 by $10,271 and reduced the deficit at January 1, 2010 by $4,354, and December 31, 2010 by $9,826.

Discontinued operations:

The determination and classification of discontinued operations under IFRS at transition differs from the treatment applicable under Canadian GAAP and as a result the former El Callao operations were no longer classified as discontinued operations. Accordingly, the asset, liability and expenditures accounts, previously reported as discontinued operations in the financial statements are no longer reported as such as the former operations at El Callao are not considered to be discontinued operations at transition, under IFRS.

Asset retirement obligations (see also Note 14):

In accordance with IFRS 1, the Company elected to take the exemption from full retroactive application of IFRS to asset retirement obligations on the transition date. IAS 37 requires the use of management’s best estimate of the Company’s cash outflows, rather than fair value measurement on initial recognition under Canadian GAAP, and requires provisions to be updated at each balance sheet date using a current pre-tax discount rate (which reflects current market assessment of the time value of money and the risk specific to the liability). Canadian GAAP requires the use of a current credit-adjusted, risk-free rate for upward adjustments.

Adjustment to the statement of cash flows:

The transition from Canadian GAAP to IFRS had no significant impact on cash flows generated by the Company.

Business combinations:

The Company may elect under IFRS 1 to retrospectively apply IFRS 3 Business Contributions or to not restate business combinations prior to a selected date chosen by the Company. The Company has applied the business combinations exemption in IFRS 1. Hence, it has not restated any business combinations that took place prior to January 1, 2010.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

6.	Transition to IFRS (continued)

Stock-based compensation:

In accordance with IFRS 1 transitional provisions, the Company has elected to apply the exemption from full retrospective application of IFRS 2 share-based payments with respect to unvested share options granted to directors, employees and others prior to transition. On review of the Company’s practices and transactions, no adjustments were required.

Borrowing costs:

In accordance with IFRS 1 transitional provisions, the Company has elected under IAS 23 to capitalize borrowing costs relating to qualifying assets from January 1, 2010 onward.

7.	Discontinued operations

As a result of the actions of the Government of Venezuela (Note 1) in terminating the MOC and the subsequent transfer to the CVG of the Las Cristinas property and receipt of the certificate of delivery on April 5, 2011, the Company has determined that its Venezuelan operations including the Las Cristinas project and the former El Callao operation are to be accounted for as discontinued operations as required by IFRS 5.

The results of discontinued operations for the years December 31, 2011 and 2010 are as follows:


	Years ended December 31,
	2011 $			2010 $
(Expenses) income
Operations expenses		(11,894	)		(1,632	)
Foreign currency exchange gain (loss)		21			(354	)
Write-down of equipment held for sale		(13,227	)		(6,389	)
Write-down of mineral property		(696	)		(12,540	)
Provision for value-added taxes recoverable		(1,144	)		(2,171	)

		(26,940	)		(23,086	)

Finance expense – accretion of asset retirement obligation		(5	)		(58	)
Income tax recovery		—			—

Loss from discontinued operations		(26,945	)		(23,144	)

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

7.	Discontinued operations (continued)

Cash flows from discontinued operations included in the consolidated statements of cash flows are as follows:


	December 31, 2011 $			December 31, 2010 $
Cash flow provided by (used in)

Operating activities
Loss from discontinued operations for the period		(26,945	)		(23,144	)
Items not affecting cash:
Write-down of property, plant and equipment		13,923			18,929
Increase in asset retirement obligations		7,106			756
Accretion of asset retirement obligations		5			58
Provision for value-added taxes recoverable		1,144			2,171
Unrealized foreign currency exchange (gain)		(21	)		(342	)
Change in non-cash working capital:
(Increase) decrease in accounts receivable		(1	)		187
Decrease in prepaid expenses, deposits and other assets		647			—
(Decrease) increase in accounts payable and accrued liabilities		(49	)		632

Net cash used in operating activities		(4,191	)		(753	)

Investing activities
Investment in property, plant and equipment		(2,437	)		(11,402	)
Proceeds from sale of equipment		17,238			2,794

Net cash provided by investing activities		14,801			(8,608	)

Increase in cash and cash equivalents from discontinued operations		10,610			(9,361	)

8.	Venezuelan operations

In the third quarter of 2007, Crystallex changed the rate it used to translate its Venezuelan subsidiaries’ transactions and balances from the official exchange rate of 2.15 Venezuelan bolivar fuerte (“BsF”) to 1 US dollar, to the parallel exchange rate. This was done due to the increasing spread between the official exchange rate and the parallel exchange rate, and the Company’s inability to access the official rate.

The Venezuelan subsidiaries have a US dollar functional currency. As a result of the US dollar functional currency, monetary assets and liabilities denominated in BsF generate foreign exchange gains or losses.

On January 11, 2010, the Venezuelan government devalued the BsF and changed to a two-tier exchange structure. The official exchange rate moved from 2.15 BsF per US dollar to 2.60 for essential goods and 4.30 for non-essential goods and services.

On May 17, 2010, the Venezuelan government enacted reforms to its foreign currency exchange control regulations to close down the parallel exchange market. Therefore, continued use of the parallel rate to translate BsF denominated transactions is no longer acceptable.

On June 9, 2010, the Venezuelan government enacted additional reforms to its exchange control regulations and introduced a newly regulated foreign currency exchange system; Sistema de Transacciones con Titulos en Moneda Extranjera (“SITME”), which is controlled by the Central Bank of Venezuela (“BCV”). The SITME imposes volume restrictions on the conversion of BsF to US dollar (and vice versa), currently limiting such activity to a maximum equivalent of $350 per month.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

8.	Venezuelan operations (continued)

As a result of the enactment of the reforms to the exchange control regulations, the Venezuelan subsidiaries did not meet the requirements to use the SITME to convert US dollars to BsF as at September 30, 2010. Accordingly, the Company changed the rate used to re-measure BsF-denominated transactions from the parallel exchange rate to the official rate specified by the BCV, which was fixed at 4.30 BsF per US dollar effective September 30, 2010.

Venezuelan subsidiaries had approximately $5,864 of net monetary liabilities denominated in BsF as at December 31, 2011. For every $1,000 of net monetary liabilities denominated in BsF, a 15% increase/(decrease) in the foreign currency exchange rate would increase/(decrease) the Company’s loss by approximately $150.

9.	Property, plant and equipment

December 31, 2011

Mining Equipment
$

Mineral Properties
$

Total
$

Cost

Balance at beginning of period, January 1, 2011

40,197

309,609

349,806

Additions

—

696

Reclassification to equipment held for sale

(40,197

)

—

(40,197

)

Balance at December 31, 2011

—

310,305

Write-down

Balance at beginning of period, January 1, 2011

6,997

309,609

316,606

Additions

—

696

Reclassification to equipment held for sale

(6,997

)

—

(6,997

)

Balance at December 31, 2011

—

310,305

Net book value

Balance at beginning of period, January 1, 2011

33,200

—

33,200

Additions

—

Reclassification to equipment held for sale

(33,200

)

—

(33,200

)

Balance at December 31, 2011

—

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

9.	Property, plant and equipment (continued)


	December 31, 2010
	Mining Equipment $		Mineral Properties $		Total $
Cost
Balance at beginning of year		39,203		297,069		336,272
Additions		—		12,540		12,540
Reclassification from equipment held for sale		994		—		994

Balance at December 31, 2010		40,197		309,609		349,806

Write-down
Balance beginning of year		—		297,069		297,069
Additions		6,389		12,540		18,929
Reclassification from equipment held for sale		608		—		608

Balance at December 31, 2010		6,997		309,609		316,606

Net book value December 31, 2010		33,200		—		33,200

On December 31, 2009, the Company assessed the Las Cristinas Project for impairment and concluded that, despite its continued efforts to secure the Permit and pursue accretive transactions in respect of the Las Cristinas Project, a non-cash write-down of the carrying value should be recorded as at December 31, 2009 based on certain impairment triggers noted including, but not limited to, the permitting delays described in Note 1. The Company determined that, among other things, the uncertainty regarding the Permit had a significant impact on the estimated future net cash flows associated with the Las Cristinas Project and on recoverability of the carrying value of the asset. Accordingly, the Company recorded a non-cash write-down of $297,069 as at December 31, 2009 relating to all mineral property costs, except the carrying value of the remaining mining equipment.

The Company conducted similar impairment assessments as at the end of each quarter in 2010 and for similar reasons to those indicated above; the Company recorded additional non-cash write-downs totalling $12,540.

In February of 2011, the Company ceased capitalization of expenditures on Las Cristinas due to the termination of the MOC. For January 2011, a final impairment assessment resulted in a non-cash write-down of $696. These write-downs of the Las Cristinas project are based on accounting principles only, and are thus without prejudice to the legal qualifications that Venezuelan measures may be given under Venezuelan or International law, including the Treaty.

Subsequent to the termination of the MOC, all additional costs related to Las Cristinas are recorded in discontinued operations expenses.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

10.

Equipment held for sale

Fair value less cost of sale was determined based on a range of estimated future net cash flows expected to arise from the future sale of the mine equipment, on the basis that this represents management’s likely course of action. The Company commenced a process to sell its remaining mining and milling equipment currently held in storage related to the Las Cristinas Project. There are, however, no assurances that the sale process will be successful and, if it were successful, there are no assurances as to the amount or timing of any potential proceeds.


	December 31, 2011			December 31, 2010
Balance at beginning of period	$	—		$	3,180
Transfer to property, plant and equipment (Note 9)		—			(386	)
Transfer from property, plant and equipment (Note 9)		33,200			—
Write-down (Note 7)		(13,227	)		—
Disposals		(17,983	)^(a)		(2,794	)^(b)

Balance as at December 31, 2011	$	1,990			—

^(a)

During 2011 the Company made equipment sales on June 28 for proceeds of $16,958 less commission of $1,350, on September 13, 2011 for proceeds of $1,825 less commission of $49 and on December 19 for proceeds of $631 less commission of $32. The proceeds of sale approximated the carrying values of the assets subsequent to previous write-downs.

^(b)	During 2009, the Company sold mining equipment for net proceeds of $12,361 from which $4,688 was restricted to pay the scheduled January 15, 2010 interest obligation on the Notes described in Note 12.

As at December 31, 2009, the Company was in the process of selling additional mining equipment with a net book value of $4,416 and recorded a write-down of $1,236 based on estimated net realizable value of $3,180. In December 2009, the Company received an advance of $894 from the auctioneer who subsequently sold the majority of this equipment in April 2010 for $2,794. The Company issued to the auctioneer a demand promissory note for $894 bearing interest at the Bank of America, Australia, Bank Bill Buying semi-annual rate plus 4%, which was secured by the underlying equipment. The Company repaid the promissory note and related interest charges from the auction proceeds.

In June 2010, the Company decided not to proceed further with the sale of equipment with a net book value of $386 (cost of $994 less write-down of $608) which was reallocated to mining equipment prior to the write-down recorded at December 31, 2010.

11.

Demand bank loan

At December 31, 2011, the Company’s Venezuelan Branch had a bank loan of $1,326 (December 2010: $930) to fund operations. This demand bank loan bears interest at 19% per annum and is secured by cash collateral. Interest expense of $180 has been recorded in 2011 (2010 - $204).


	December 31, 2011			December 31, 2010
Opening balance	$	930		$	—
Increase		4,611			2,953
Repayments		(4,215	)		(2,023	)

Closing balance	$	1,326		$	930

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

12.

Demand loan

In early 2010, the Company commenced negotiations with China Railway Resources Group Co. Ltd. (“CRRC”) to create a strategic partnership for the development of Las Cristinas. The proposed transaction was never completed. During these negotiations, CRRC loaned Crystallex $2,500 with an interest rate of 6%, which is repayable on demand and ranks subordinate to the Notes described in Note 13. At the time of the loan advance, it was contemplated that, upon closing of the proposed transaction with CRRC, the loan would be convertible at the option of CRRC into common shares of Crystallex at a price of Cdn$0.40 per common share of Crystallex. The conversion feature of the loan was ascribed a fair value of $200 using the Black-Scholes option pricing model and recorded as contributed surplus. The residual liability component of the loan of $2,300 was accreted up to its face value using the effective interest method, and, accordingly, interest accretion of $200 was recorded during the year ended December 31, 2010 as a component of interest expense.

Following the initial order of December 23, 2011 and commencement of creditor protection proceedings the $2,500 principle of the demand loan along with accrued unpaid interest of $272 was transferred to Liabilities Subject to Compromise ( Note 3).


	December 31, 2011			Dec 31, 2010
Opening balance	$	2,500		$	—
Increase		—			2,500
Transfer to Liabilities subject to compromise (Note 3)		(2,500	)		—

Closing balance	$	—		$	2,500

13.

Notes payable

In conjunction with a unit offering on December 23, 2004 comprising notes and shares, the Company issued $100,000 of senior unsecured Notes with a coupon rate of 9.375% due on December 23, 2011 and 6,500,000 in aggregate shares, for net proceeds of $75,015 after expenses and implicit equity proceeds allocation. Interest is payable semi-annually on January 15 and July 15 of each year, beginning on July 15, 2005.

The initial carrying value of the Notes was derived from a unit structure that contained both a Note and a share component. As a result, the share component was determined based on the fair value of the common shares issued with the unit offering, calculated at $21,450 with $78,550 being the discounted fair value of the Notes. The discounted fair value of the Notes, net of expenses, is accreted up to the face value of the Notes using the effective interest method over its seven-year term, with the resulting charge recorded to interest finance expense. Interest accretion of $4,965 (2010 - $4,396) on the Notes was recorded during the year ended December 31, 2011 as a component of interest expense.

Following the Initial Order of December 23, 2011 and commencement of CCAA proceedings, the principal of the $100 million Notes payable along with accrued unpaid interest of $3,876 was transferred to Liabilities Subject to Compromise (Note 3).

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

13.

Notes payable (continued)

The change in the carrying value of the notes payable during the year ended December 31 is as follows:


	December 31, 2011			Dec 31, 2010
Opening balance at January 1	$	95,035		$	90,639
Accretion		4,468			3,796
Amortization of financing fees		497			600
Transfer to liabilities subject to compromise (Note 3)		(100,000	)		—

Closing balance	$	—		$	95,035

14.

Asset retirement obligations

The Company plans to address remediation of its asset retirement obligations for Las Cristinas and Revemin during the next 12 months and estimates total remediation costs of $1,465.

The Company has updated its asset retirement obligation estimate for the former LaVictoria mining operation based on a letter from the Venezuelan Government dated December 9, 2011 confirming the final scope of the reclamation activities required for LaVictoria. Total undiscounted estimated costs of $9,405 have been discounted by a risk free rate of 0.95% give an estimated asset retirement obligation of $9,099.

A 10% change in the discount rate, assuming all other variables remain constant, would result in a liability change of $30. A 10% change in the undiscounted remediation estimate, assuming all other variables remain constant, would result in a liability change of $1,056. A 10% change in the foreign exchange rate of

the BSF from the official rate of 4.3 BSF to the US$ assuming all other variables remain constant would result in a liability change of $1,000.

The Company has not been able to measure with sufficient reliability its asset retirement obligation at its former Tomi mining operation at December 31, 2011. Following the shutdown of mining operations at Tomi in 2008 the Company was instructed by the Ministry of Mines not to perform any reclamation work until the government determined what it wanted to do with the Tomi concession. Subsequent to these instructions, mining operations were restored by the Venezuelan state mining company and then shutdown again after a short period of time.

As a result the Company is not able to estimate the scope nor timing of the reclamation activities which will be required at Tomi and therefore no asset retirement obligation has been recognized at December 31, 2011. There could be a future material adjustment in respect of the Company’s asset retirement obligation at Tomi.

The movement of the asset retirement obligations during years ended December 31, 2010 and 2011 is as follows:

Asset retirement obligations are as follows:


	December 30, 2011			December 31, 2010
Asset retirement obligations, beginning of year	$	3,453		$	2,872
Reclamation expenditures		(380	)		(233	)
Accretion expense		5			58
Revision in estimated cash flows		7,486			756

Asset retirement obligations, end of period		10,564			3,453
Less current portion		1,465			798

	$	9,099		$	2,655

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

15.

Share capital

Authorized

Unlimited common shares, no par value

Unlimited Class A preference shares, no par value

Unlimited Class B preference shares, no par value

Issued


	Number of Shares		Amount $
Balance January 1, 2010		294,817,719		561,751
Public offering, June 30, 2010		70,000,000		26,994

Balance December 31, 2010		364,817,719		588,745

Director remuneration plan		600,000		62
Share exchange		18		—

Balance December 31, 2011		365,417,737		588,807

Financing transaction

On June 30, 2010, the Company completed a public offering of 70 million units at Cdn $0.50 per unit for gross proceeds of Cdn $35,000 (US$33,000).

Each unit consisted of one common share of the Company and one half of one common share purchase warrant. Each whole warrant entitles the holder to purchase a further common share of the Company at an exercise price of Cdn $0.70 which expired June 30, 2011.

The net proceeds received by the Company, after payment of issuance costs of $2,396, was $30,605, of which $26,994 was recorded as share capital and $3,611 was recorded as warrants – derivatives financial instruments. The warrants were valued using Black-Scholes Valuation model assuming expected dividend yield, risk-free interest rate, expected life and volatility of 0.0%, 0.70%, 12 months and 108.34% respectively.

Shareholder rights plan

On June 24, 2009, the shareholders of the Company approved the continuation of the Company’s shareholder rights plan (the “Rights Plan”), which was previously approved on October 30, 2006. The rights issued under the Rights Plan are subject to reconfirmation at every third annual meeting of shareholders and will expire at the close of the Company’s annual meeting in 2016. The Rights Plan is designed to ensure the fair treatment of shareholders in connection with any takeover bid for the Company and to provide the board of directors and shareholders with sufficient time to fully consider any unsolicited takeover bid. The Rights Plan also provides the board of directors with time to pursue, if appropriate, other alternatives to maximize shareholder value in the event of a takeover bid.

Pursuant to the Rights Plan, one right (a “Right”) is attached to each outstanding common share of the Company held by shareholders of record at the close of business on the record date. The Rights will separate from the common shares at the time that is the close of business on the eighth trading day (or such later day as determined by the board of directors of the Company) after the public announcement of the acquisition of, or intention to acquire, beneficial ownership of 20% of the common shares of the Company by any person other than in accordance with the terms of the Rights Plan.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

15.

Share capital (continued)

In order to constitute a permitted bid, an offer must be made in compliance with the Rights Plan and must be made to all shareholders (other than the offeror), must be open for at least 60 days and be accepted by shareholders holding more than 50% of the outstanding voting shares and, if so accepted, must be extended for a further period of ten business days.

On March 16, 2012 the Company announced that its Board of Directors voted to adopt an additional rights plan, and on June 25, 2012, the Company announced that the Rights Plan had terminated. (See Note 29)

16.

Warrants

As at December 31, 2011 common share purchase warrants were outstanding enabling the holders to acquire common shares as follows:


Exercise price December 31, 2011	Number of Warrants (thousands)
$0.29 (Cdn$0.30)		3,000	^(a)
$2.89 (Cdn$3.00)		16,445	^(b)
$4.25		12,250	^(c)

		31,695

a)	These warrants expired on April 23, 2012.

b)	These warrants expire six months following the date that is 45 days following the receipt of the Permit for the Company’s Las Cristinas Project.

c)	These warrants become exercisable for an 18-month period commencing on the date which is 45 days following the receipt of the permit for the Company’s Las Cristinas Project

Derivative liability (see also Note 6 iv (b))

Under IFRS, warrants with an exercise price in a currency other than the functional currency are to be recorded as a derivative liability and carried at fair value. The liability is re-measured at each reporting date with the change in value recorded as finance income or finance in the consolidated statement of loss and comprehensive loss. The warrants were valued using the Black-Scholes valuation model assuming expected divided yield, risk-free interest rate, expected life and volatility of 0.0%, 0.97%, 4 months and 129% respectively.

The change in the derivative liability for the year ended December 31, 2011 is as follows:

Warrants

Issued

Expired

Outstanding

Fair value
estimate at
Dec 31, 2010

Fair value
estimate
adjustments

Fair value
estimate at
Dec 31, 2011

Cdn$0.70

35,000

(35,000

)

—

(35

)

—

Cdn$0.30

3,000

—

3,000

410

(407

)

Cdn$3.00

16,445

—

16,445

—

54,445

(35,000

)

19,445

445

(442

)

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

16.

Warrants (continued)

The change in the derivative liability for the year ended December 31, 2010 is as follows:


Warrants	Issued		Fair value estimate at Jan 1, 2010		Issued		Fair value estimate adjustments			Fair value estimate at Dec 31,2010
Cdn$0.70		—		—		3,611		(3,576	)		35
Cdn$0.30		3,000		860		—		(450	)		410
Cdn$3.00		16,445		1,445		—		(1,445	)		—

		19,445		2,305		3,611		(5,471	)		445

17.

Stock Options

Effective June 24, 2009, shareholders of the Company approved a Fixed Share Option Plan (the “New Plan”), which provides for the granting of a maximum 8,000,000 stock options to acquire common shares of the Company to executive officers, directors, employees and service providers of the Company. Under the New Plan, the exercise price of each stock option cannot be less than the closing price of the Company’s common shares on the Toronto Stock Exchange, on the trading day immediately preceding the date of the grant. Stock options have a life of up to ten years and may vest immediately, or over periods ranging from one year to three years. In addition, the directors of the Company may permit an optionee to elect to receive, without payment by the optionee of any additional consideration, common shares equal to the value of stock options surrendered.

Effective June 22, 2011, shareholders of the Company approved an increase in the number of stock options in the New Plan, authorizing an additional 3,000,000 stock options (on June 23, 2010 shareholders had approved an increase of 5,000,000 stock options) to acquire common shares of the Company to executive officers, directors, employees and service providers of the Company. As at December 31, 2011, 14,957,900 stock options were granted under the New Plan.

As at December 31, 2011, stock options were outstanding enabling the holders to acquire common shares as follows:


	Outstanding stock options						Exercisable stock options
Range of exercise prices (Cdn$)	Number of stock options (thousands)		Weighted average remaining contractual life (years)		Weighted average exercise price (Cdn$)		Number exercisable (thousands)		Weighted average exercise price (Cdn$)
$0.10		3,880		8.13		0.10		3,880		0.10
$0.24		6,175		5.44		0.24		6,175		0.24
$0.45		4,903		6.68		0.45		4,903		0.45
$1.90 to $2.60		1,359		0.85		2.21		1,359		2.21
$3.00 to $3.57		2,638		2.24		3.14		2,638		3.14
$4.05 to $4.87		1,470		3.78		4.62		1,470		3.78

		20,425		5.59		1.08		20,425		1.08

The Company determines the fair value of the employee stock options using the Black-Scholes option pricing model. The estimated fair value of the stock options is expensed over their respective vesting periods. The fair value of stock options granted was determined using the following assumptions.

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

17.

Stock Options (continued)


Year ended December 31,
	2011			2010
Risk-free interest rate		2.25	%		1.7	%
Expected life (years)		3			3
Expected volatility over expected life		120	%		127	%
Expected dividend rate		0	%		0	%
Weighted average fair value of stock options granted	$	0.07		$	0.33

The fair value compensation recorded for stock options that have vested for the year ended December 31, 2011 was $488 (2010 - $1,292) of which $488 (2010 - $1,218) was expensed and $Nil (2010 - $74) was capitalized to mineral properties prior to the write-down described in Note 9.

A summary of the outstanding stock options as at December 31 and changes during each of the years then ended are as follows:

Year ended December 31,

2011

2010

Number
of options
(thousands)

Weighted
average
exercise
price (Cdn$)

Number
of options
(thousands)

Weighted
average
exercise
price (Cdn$)

Balance, beginning of period

18,397

1.49

15,254

1.94

Issued

3,880

0.10

4,903

0.45

Expired or forfeited

(1,852

)

3.07

(974

)

2.48

Balance, end of period

20,425

1.08

19,183

1.53

18.

Loss per share

Basic loss per share is calculated by dividing the net loss for the period attributable to equity owners of the Company by the weighted average number of ordinary shares outstanding during the year:


	Year ended December 31,
	2011 $			2010 $
Loss from continuing operations		(35,416	)		(19,492	)
Loss from discontinued operations net of income taxes		(26,945	)		(23,144	)

Loss for the period		(62,361	)		(42,636	)

Weighted average number of outstanding shares		365,134,988			330,297,171

Basic and diluted (loss) per common share from continuing operations		(0.10	)		(0.06	)
Basic and diluted (loss) per common shares from discontinued operations		(0.07	)		(0.07	)

Basic and diluted (loss) per common share		(0.17	)		(0.13	)

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

18.

Loss per share (continued)

Diluted loss per share equals basic loss per share as, due to losses incurred in both periods, there is no dilutive effect from outstanding stock options and warrants.

19.

Income taxes

A reconciliation between tax expense and the product of accounting profit multiplied by the Company’s domestic tax rate for the years ended December 31, 2011 and December 31, 2010 is as follows:


	Years ended December 31
	2011			2010
Statutory tax rate		27.03	%		28.93	%

Loss from continuing operations	$	(35,416	)	$	(19,492	)

Income tax benefit	$	(9,573	)	$	(5,639	)
Change in unrecognized deductible temporary differences		4,653			(1,315	)
Change in foreign exchange rates		2,966			(6,171	)
Non-deductible (non-taxable) items		1,954			2,449
Reduction in losses carry forward		—			10,676

Total income tax expense (recovery)	$	—		$	—

The 2011 statutory tax rate of 27.03% differs from the 2010 statutory tax rate of 28.93% because of the reduction in both federal and Ontario substantively enacted tax rates.

Deferred income tax

Significant components of the Company’s deductible temporary differences for which no deferred tax asset is recognized are shown below:


	Year ended December 31,
	2011		2010
Deferred income tax assets:
Losses carry forward	$	55,992	$	49,769
Financing fees		638		1,091
Asset retirement obligations		3,362		979
Property, plant and equipment		83,732		88,211

	$	143,724	$	140,050

Crystallex International Corporation

(Under Creditor Protection Proceedings as of December 23, 2011 – Notes 1, 2 & 3)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2011 and 2010

(US$ thousands, except as noted)

19.

Income taxes (continued)

At December 31, 2011 the Company had the following non-capital losses for income tax purposes which may be used to reduce future taxable income:


	Country
Year of Expiry	Canada		Venezuela
2012	$	—	$	3,560
2013	$	—	$	802
2014	$	17,169	$	1,344
2015	$	36,099	$	—
2016	$	27,531	$	—
2027	$	24,387	$	—
2028	$	23,611	$	—
2029	$	23,722	$	—
2030	$	20,230	$	—
2031	$	43,461	$	—

	$	216,210	$	5,706

20.

General and administrative expenses


	Year ended December 31,
	2011 $			2010 $
Professional fees		(14,658	)		(5,038	)
Salaries and Benefits		(3,028	)		(2,835	)
Stock option expense		(488	)		(1,292	)
Insurance expense		(751	)		(720	)
Other		(1,275	)		(2,302	)

General and administrative expense		(20,200	)		(12,187	)

21.

Litigation costs, net of recoveries

Year ended December 31,

2011
$

Litigation costs

Recoveries