FK,

If our prospects of getting our investment back at $x.xx are so dim, why not just go for bankruptcy?

My response:

I'm in this play for XXX,XXX shares at an avg of $0.XX.

I generally don't like providing advice to others on what they should do with their investment unless I know them and their situation personally.

However, I can only say why I continue to hold, and believe i will get my money back.

First off, I am unhappy with my investment in Crystallex, I got greedy when I could have made a quick profit a long time ago. I also didn't anticipate how far Chavez would go especially considering the contract was signed during his presidency, but, lets face it, the guy has lost his mind, and he's taking all of venezuela down with him. And probably most importantly, I gave managment too much credit for getting things done, and being in the shareholders best interest. This could turn out to be an expensive lesson.

Now, why do i think I'll get my money back?

Well, I've averaged down to a level (0.xx) where I think I'll be able to at least get my money back. I feel, based on what we've spent in the country, plus applicable interest, finance costs, expenses for security, the other properties we've given up, and added costs of arbitration and financing for the next 2-3 years, etc. We should get at a minimum $500-$600 million. Doing some DD on some other arb cases, this seems to be the norm at the minimum, as the investment needs to be made 'whole', or breakeven. More recently, it seems, there has been a lot of talk of 'fair value' and 'lost profits' in arb cases, etc. And while some of the firms being expropriated are units of larger, well diversified corporations in traditional indutries, and have pretty much just been getting their money back plus interest lately, I feel our situation may get more financial sympathy. After all, we are just a small speculative mining play, who has taken a lot more risk putting all their investment in venezuela, with a contract signed by the current administration (not some other one prior). Not to mention the price of gold has risen exponentially since we first started investing in Venezuela, and evidence that its pretty well known (with all the cases in front of the tribunal now from venezuela) that Chavez is taking advantage of the system. I'm sure the tribunal judges aren't blind to whats going on. I think there are going to be quite a few judgements coming up that will suprise the venezuelan Government as to how much exproriating all those assets is gonna cost them. And that in turn, should benefit us. We just need to survive to see it.

Why the financing vs bankruptcy?

When I posted the smaller numbers when doing calculations, it was mostly just to show the leverage of the new debt deal, where at small settlements, the new investors get most of the action, and at higher settlements, us common shareholders do. Personally, I would have preferred we did an equity financing to get rid of debt all together, as I'm not a fan of debt. But as with most debt, its about leverage. If we get an arb settlement over $600 million, then things can start get interesting for shareholders, every $100 million is pretty much an extra 12.5 cents for common shareholders. We've filed for $3.8 billion remember. Now, i don't think we'll get anything near that amount, but $1 billion is definitely possible I think. At that point, I'm definitely making a good profit. I still think we gave up too much in this debt deal, it should have been handled better, but it is what it is.

Bankruptcy is uncertain. First off, the share price, whether warranted or not, will take a big hit.I know it can't really drop much lower from here, but it will still drop. Second, we'll be fighting on two fronts. We'll have a case against venezuela, and we'll have a case against us. It also, even if we can hold off the bondholders for a while, weaken our position in arbitration i believe as venezuela can continue to lowball/delay us. A judge can only keep us alive for so long, if at all. In bankruptcy court, we will eventually have to restructure/sell off any assets, etc. Someone is not going to give us $300-$400 million right now for a potential $600 million+ arbitration 2 to 4 yrs out, especially in bankruptcy. We'll most likely have to come to a deal with the hostile noteholders. How much we give up will be anyone's guess, but I can't imagine it being anywhere less than 50%, and most likely 90%+. We're giving up a lot of pie right now in this current potential deal, but I think we'd have to give up a lot more in bankruptcy, and thus, a lower potential payback.

Like I said, I think the financing deal will get done because we've given a large piece of the pie away, and its a lucrative investment for the new investors.

Then there is always the wild card, Chavez dies, loses the election, etc. If we get this deal done and survive, and somewthing like this happens, I think it could be huge for us. Remember what we were being valued at before all this exproriation talk happened like 5 years ago? While I feel we'll never reach those heights again after all that has happened, it could prove very lucrative financially.

But its a gamble in the end. I try to apply some logic, some math, eliminate the emotion, and apply some common sense. But as life goes, you just never really, truly know, whats gonna happen next. You do your DD, and you put your money where your mouth is. Its Risk vs reward, right?

Just make sure you have enough money to live a good life, be happy, and healthy. After that amount, its just play money. Its a game.
lol.

Cheers,
FK.