Liquidity and Capital Resources
Crystallex’s principal sources of liquidity have been equity and debt financings. The
Company does not expect to generate positive cash flow until the Las Cristinas project
is operating at planned full capacity of 20,000 tonnes per day. If and when the
Company is in a position to commence development activities at Las Cristinas, it will
determine its overall funding requirements to cover the period through to commercial
production at Las Cristinas. The funding requirement will include the balance of capital
required to complete the development of Las Cristinas, and funds to meet the
Company’s general and administrative expenses, debt service and financing fees. The
Company will consider various financing alternatives, including project finance debt and
other capital and equity markets opportunities. There can be no assurances that such
financing will be available, or if available, on acceptable terms.
As at September 30, 2009, the Company had positive working capital of $9.2 million,
including cash and cash equivalents of $4.9 million. The Company has subsequently
received $11.3 from sales of mining equipment. Management estimates that these
funds will be sufficient to meet the Company’s obligations through the first quarter of
2010.
The Company continues with cost cutting measures instituted since December 2007;
however it is still faced with significant legal and advisory costs relating to the
bondholders’ actions, the proposed class action lawsuit and being prepared for
international arbitration if deemed necessary. Expenditures in Venezuela have been
reduced, yet the Company remains in compliance with the MOC in order to preserve the
option of international arbitration as it awaits a resolution to the permitting issue.
The Company has a number of financing options available to generate sufficient cash to
fund ongoing operations and service its debt requirements as they come due including,
but not limited to, the following:
a) sale of equity securities;
b) further expenditure reductions;
c) additional sales of mining equipment held in storage;
d) introduction of joint venture partners; and
e) negotiating a settlement with its Noteholders to reduce, eliminate or otherwise
decrease its obligations, particularly, interest costs.
There is, however, no assurance that these sources of funding or initiatives will be
available to the Company, or that they will be available on terms that are acceptable to
the Company.