Background Information and Previous Actions Advancing the Case Vancouver, British Columbia (ots-PRNewswire) - Crystallex International Corporation (Amex: KRY; Toronto) announced on Wednesday, August 4 1999 it commenced legal proceedings in Venezuela to enforce its rights in relation to the Cristinas 4 and 6 concessions. Crystallex issued a news release, and prepared a background paper for interested parties outlining the Company's position on issues in dispute over the ownership of Las Cristinas. In response to numerous requests, Crystallex today is releasing the background paper for general distribution. Two legal proceedings were launched. The first proceeding seeks to nullify the joint venture agreement previously entered into between Corporacion Venezolana de Guayana ("CVG") and MINCA, a Venezuelan joint venture in which Placer Dome has been a participant. In essence, this action challenges the original legal basis on which CVG purported to confer contractual rights to exploit the Concessions commercially. Crystallex also brought a motion to join in the lawsuit originally commenced by the Solicitor General of Venezuela to challenge Presidential Decree 1409 and the ability of CVG to grant mining contracts in reliance on it. The second proceeding seeks to nullify the effect of the settlement agreement entered into in 1991 regarding a lawsuit between Inversora Mael, C.A. ("Mael"), the Republic of Venezuela, CVG and Ramon Torres. The Company believes the legal proceedings it has launched, if advanced successfully, could lead to the enforcement of its rights over the Concessions. Background of Dispute over Ownership of Las Cristinas In March of 1997, the Company announced that it had acquired the rights to the Cristinas 4 and 6 Concessions located in Kilometre 88, Venezuela. Crystallex acquired the Concessions by purchasing the shares of Stay Management Ltd., the owner of Mael. The Concessions were transferred to Mael in 1986 by Torres. When Crystallex acquired the rights to the concessions in 1997, the validity of the transfer to Mael had been confirmed by rulings of the Supreme Court of Venezuela issued in 1991 and 1996. These rulings also declared the nullity of resolutions of the Ministry of Energy and Mines ("MEM") denying Mael's rights to publication in the Official Gazette of Venezuela of the transfer from Torres to Mael. The publication in the Official Gazette is a necessary step under Venezuelan mining law. At the time Crystallex acquired the rights to the Concessions, they had been the subject of investigation and exploration for several years by Placer Dome under a joint venture arrangement involving Placer Dome and CVG. The rights of the joint venture to investigate and explore the Concessions were based on contractual rights granted by CVG in connection with the joint venture agreement. In the Company's view, CVG did not have the legal authority to grant mining rights to the joint venture in which Placer Dome is participating. One of the lawsuits initiated by Crystallex challenges the legal authority for the joint venture. Moreover, the legal basis for the granting even of contractual rights by CVG in respect of the Concessions is unclear, and open to challenge under Venezuelan law as being illegal. This potential illegality is also put at issue in the lawsuit. Even Placer Dome has warned shareholders as recently as April 1999 of the risk that Presidential Decree 1409, the basis for Placer Dome's rights with respect to the Concessions, has been alleged to conflict with Venezuelan mining law. Crystallex intends to join as an interested third party in an ongoing lawsuit, commenced by the Solicitor General of Venezuela, challenging the validity of Presidential Decree 1409. From the time of the acquisition in 1997, the Company took steps to assert its ownership interest in the Concessions. These steps were actively opposed by third parties, including MEM, Placer Dome and CVG. First, Crystallex made Placer Dome aware of the conflict between the concession rights Mael enjoyed under Venezuelan mining law and the contradictory contractual rights purportedly granted by CVG. Second, around the time of its acquisition of the outstanding shares of Mael, Crystallex attempted to negotiate a joint venture arrangement with Placer Dome for the exploitation of the Cristinas properties. Crystallex advised MEM, Placer Dome and CVG of its willingness to investigate constructive means of continuing the exploration work and putting the project into production and also made known publicly its willingness to proceed in this way. The attempt to negotiate a joint venture arrangement with Placer Dome and CVG was fruitless. In April of 1997, the Supreme Court of Venezuela issued a final and binding ruling (the "1997 Order") ordering publication in Venezuela's Official Gazette of a notice of transfer of the Concessions to Mael. The 1997 Order followed orders of the Supreme Court for the publication in the Official Gazette of the transfer in each of 1991 and 1996. The 1997 Order was made necessary because the prior orders for publication had not been carried out by MEM. To ensure that its order was finally carried out, the Supreme Court of Venezuela announced in Venezuela's Official Gazette of May 15, 1997 an extraordinary edition of the Official Gazette in which the three rulings confirming the validity of the transfer were published. The extraordinary edition also published the assignment agreement through which Mael acquired the Concessions and the notice of transfer of the Concessions. Late in April of 1997 Mael continued with its attempt to enforce ownership rights by commencing an action in the Supreme Court of Venezuela seeking a ruling requiring MEM to fully recognize its ownership of the Concessions. The 1997 action sought a court declaration that various resolutions passed and actions taken by MEM purporting to affect the ownership rights of Mael over the Concessions were invalid. The action asked the Venezuelan Supreme Court to rescind: (i) the purported granting in favour of CVG of alluvial copper concessions over the Concessions, (ii) various resolutions purporting to either terminate or deny Mael's ownership rights in the Concessions, and (iii) various resolutions granting copper concessions, including vein copper titles, to CVG over Mael's objections. The 1997 action was opposed by MEM, CVG and MINCA. In June of 1998, the Political Administrative Chamber of Venezuela's Supreme Court ruled (the "June 1998 Decision") on procedural grounds that Mael did not have status to assert ownership rights over the Concessions and refused to proceed with the 1997 Mael lawsuit. The Company understands the June 1998 decision to be based on two grounds. First, the court relied on a lower court decision in 1991 that the transfer of title to Torres, Mael's predecessor in title, was invalid. The second lawsuit seeks to set aside the settlement agreement, which was the sole basis for the 1991 decision. In this respect, the June 1998 Decision conflicted with the Supreme Court's earlier decisions of 1991 and 1996 which acknowledged the validity of the transfer to Torres. Second, the court ruled that Mael had run out of time under Venezuelan procedural rules to challenge certain of the resolutions and other actions that had been taken by MEM in order to provide a foundation for the rights CVG was purporting to grant in relation to the Concessions. The June 1998 Decision included a dissenting opinion which stated that the majority opinion contradicted earlier rulings and also observed that the retroactive nature of the 1991 and 1996 Supreme Court decisions meant that the adverse finding of the majority, that Mael had run out of time to challenge the MEM action and resolutions, should not have been made. Implications of 1998 Venezuela Supreme Court Decision Under the June 1998 Decision of the Venezuela Supreme Court, Mael's registered title to the Concessions has not been altered or expunged. In the Company's view the June 1998 Decision was procedural, and did not decide the fundamental issue of the validity of the MEM actions and resolutions which were challenged by Mael in its 1997 action. Rather, in the Company's view, the June 1998 Decision conflicts with and does not overrule prior and equally valid decisions of the same Venezuelan Supreme Court. Steps Leading to Current Legal Proceedings In June of 1998, the Board of Directors pledged to swiftly conclude the review of its options with respect to the Concessions. The review of those options led to the conclusion announced later in 1998 not to write off the Company's investment in the Concessions. No intervening development has altered the view of the Board of Directors in this regard. In the months following the decision not to write off the investment in the Concessions, significant changes have occurred in the Venezuelan political and business environment. Various elections during the past year have resulted in the election of a new President and a new Constitutional Assembly. The new Constitutional Assembly has a mandate to study and, if necessary, change the constitution of Venezuela. There have also been wholesale changes made in the senior management of CVG. CVG has publicly stated that it is re- evaluating its position in relation to the Concessions in light of Placer Dome's recently announced decision to suspend development work on the Concessions. At least one other major mining company has indicated its interest in pursuing the development of the Concessions. While Crystallex's ongoing consideration of these potential legal proceedings has been publicly known for several months, the Company is determined that no action be taken in Venezuela with respect to the Concessions without full knowledge of Crystallex's intention to enforce its claims to the Concessions. As with virtually any litigated matter, the ultimate outcome cannot be predicted with any degree of certainty. Of necessity, judgments must be made. Further, adverse parties can reach different judgments on the basis of the same legal issues. Crystallex looks forward to the opportunity to finally resolve the continuing uncertainty over the ownership of the Concessions and to proceed with their development. This news release may contain certain "forward-looking statements" within the meaning of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included in this release, including, without limitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives of Crystallex, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed under the heading "Risk Factors" and elsewhere in documents filed from time to time with The Toronto Stock Exchange, the United States Securities and Exchange Commission and other regulatory authorities. The Toronto Stock Exchange has not reviewed this release and does not accept responsibility for the adequacy or accuracy of this news release. ots Original Text Service: Crystallex International Corporation Internet: http://www.newsaktuell.de Contact: A Richard Marshall, VP, (USA) 201-541-6650 ext. 26, or Andrea Boltz, (USA) 604-683-0672, ext. 1, or email, info@crystallex.com, both of Crystallex International Corporation Company News On-Call: http://www.prnewswire.com/comp/114620.html or Fax: (USA) 800-758-5804, ext. 114620 Web site: http://www.crystallex.com