Crystallex International Corporation -
The Never Ending Story II: Crystallex
Crystallex International Corporation KRY
Shares issued 34,000,000 1998-11-13 close $1
Monday Nov 16 1998
by Stockwatch Business Reporter
"The Never Ending Story" is a delightful children's video chronicling the adventures of Bastian Balthazar Bux in Fantasia, a mystical land populated with fantastic creatures. Like most children's stories in a Disneyfied world, the video has a happy ending; young Bastian saves Fantasia from the dark forces. For more than a year, a 'grown-up' textual version of a never ending story featuring the exploits of Canadian junior mining company Crystallex International has been unfolding on Internet stock forums, particularly on the KRY thread on the StockHouse site and, following an exodus, on Raging Bull. The multi-authored labyrinthine tale is not entirely fantasy. At its core is (or was) a real dispute between Crystallex and Placer Dome over the rights to mine the approximately 12 million ounce gold deposit proved up by Placer on the Las Cristinas 4&6 concessions in Venezuela. The amazing and twisted skein of fiction spun around this central fact provides an extreme example of how distorted the subjective beliefs and expectations fostered on Internet chat sites can become. Unlike the video, this seemingly never ending story has some very real and tragic victims; many of whom participated in writing the script.
Most works of fiction turn on some basic antagonism, and the Internet Crystallex saga is no exception. It is structured as a classic tale of struggle between good and evil. While the basic antagonism is as old as story-telling itself, the Crystallex tale has some very unique and interesting features. It would require a book, or perhaps several, to trace out the various plots, sub-plots, and 'write-your-own-ending' spin-offs of this tale. The cast of author-characters is large and includes at least one mining analyst, one journalist, newsletter writers, a lawyer, brokers, a university professor, a trust company representative and a host of others with varying roles. All were important to the tale but the focus here must be on some of the key figures.
Without a doubt, a central figure is Roy S. Carson, editor of the Caracas based on-line VHeadline/VENews. Using the Internet publication, a confidential subscription e-mail service, and various stock forums, Mr. Carson kept the Crystallex supporters supplied with 'news' from Venezuela, always favourable to Crystallex. Mr. Carson was not without a few detractors but, as was the case with anyone daring to question the Crystallex mythology, they were dealt out harsh abuse and, for the most part, driven from the discussion. Appealing to various high-level, close-to, un-named, credible sources and supported by many of the most respected posters on the discussion forums 'Da Man,' as he was often called, authoritatively and repeatedly claimed the inevitability of a Crystallex victory. His optimistic and seldom corroborated 'reporting' may have been lent some credibility by his seemingly easy access to the generally media-shy Crystallex executives, particularly Marc Oppenheimer. Crystallex, by Mr. Carson's account, was going to become the "gate-keeper" of the Venezuelan mining industry and anyone who refused to accept that fact was simply uninformed or, worse yet, an enemy disinformation agent.
This was a legal dispute and, as such, begged for legal analysis. Mr. Carson, based on confidential consultation with un-named but eminently qualified legal authorities, reviewed the issues for his followers, confirming the inevitable victory. VHeadline/VENews even carried the uniquely styled analysis of James L. Ebersohl, a lawyer from Worth, Illinois who also laid out the unassailable Crystallex position. On the discussion forums, 'Teddie' provided the legal insights. By some coincidence, 'Teddie' is also from the Chicago suburbs, follows the unique style of Mr. Ebersohl, shares at least the same real first name, and reaches the same incontrovertible conclusion. 'Teddie' authored the widely taken up "The worst case scenario is we win!" rallying cry. The few attempts to debate the legal issues were rebuffed with an appeal to 'Teddie's' mantra or the abuse liberally showered on perceived heretics.
The Crystallex forum discussions had the benefit of participation from at least two brokers, 'TheListener' and 'Mesa1', both bullish on the stock. The fantastic contributions of 'TheListener', believed by some to be a Morgan Stanley Dean Witter broker, were not accepted by all the Crystallex supporters. Nonetheless, they served an important function for even those who discounted them by establishing the limit of what counted for a reasonable price prediction. The imminent $50 - $100 valuations bandied about by 'TheListener' might be ridiculous but they had the effect of making $25 - $35 predictions less so. His stories of the role of the IMF and Cordiplan, an alliance with Barrick, and so on fit well with Mr. Carson's "gate-keeper" of Venezuela's mining industry tale. The more measured posts of Robert Van Santen ('Mesa1'), a former Vancouver broker who was sanctioned for a number of regulatory transgressions, were given considerably more weight than those of 'TheListener'. In his more than 1,500 posts, 'Mesa1' provided regular technical analysis and, more importantly, much appreciated insights into the stellar capabilities of Crystallex executives.
Many supporting members of the cast, such as University of Victoria professor Andrew Weaver ('Crystal Ball') who contributed a modest 350 posts, played a crucial but often unacknowledged role in maintaining the integrity of the saga. Professor Weaver, whose University of Victoria Climate Modelling Group's advertisement was prominently featured on VHeadline, was unstinting in his support of Mr. Carson and other prominent Crystallex supporters. When a Crystallex informational meeting was held in Victoria, 'Crystal Ball' provided the stock forum with a glowing account of his positive impressions of Crystallex management and the company's prospects. So convinced was he of the outcome of the dispute that he once again took up a position in Crystallex shares that he had previously sold. When it came to 'TheListener', 'Crystal Ball' was at first highly doubtful, claiming not to believe that he was actually a broker. Later, however, he had a change of mind after spending an hour on the phone with him. "This guy is legit!" he told the forum. While supportive of pro-Crystallex posters, 'Crystal Ball' seemed to abandon the academic principles of free discussion when it came to those who were perceived as critics; for example, he dismissed an article by a Stockwatch business reporter as being the work of a "punk 'W5 reporter Wannabe'" who had been put in his place by Vice President of Corporate Relations Richard Marshall.
The most famous 'Crystallite' of all, is former Canada Trust employee Clive DeSouza ('Avalon') who, during the course of his more than 3,500 posts, assumed virtually unchallenged leadership on the discussion forums. Once the mantle of authority was conferred, support for 'Avalon' was unflagging and any questioning of his pronouncements was met with a rash of abusive posts. In relative terms, 'Avalon' was the voice of level-headed moderation. The operative phrase here is "in relative terms". 'TheListener's' valuation of $50 - $100 might be extreme but, relatively speaking, $25 or so was not unreasonable. The 'fourth Supreme Court ruling' might not result in the immediate securing of mining rights to Las Cristinas for Crystallex but, relatively speaking, the inevitability of securing those rights following that ruling was not unreasonable. Silencing critics with a stream of abusive posts might not be in the best interests of proper due diligence but, in relative terms, dismissing claims deemed to "have no merit" or falling into the "already asked and answered" category was not at all unreasonable. The wild and baseless claims of someone like 'Fletch' might be filled with contradictions but, relatively speaking, 'Avalon's' unsubstantiated pronouncements and specious opinions were tightly reasoned arguments. And so it went.
Fans of Arthurian legend will recognize "Avalon" as the name of the place to which King Arthur was carried after his death. It is perhaps only a coincidence that Crystallex's premier poster assumed the identity 'Avalon', but it is a very fitting coincidence nonetheless. In some respects, the Internet Crystallex supporters seem to resemble the Knights of the Round Table fighting the good fight against the forces of darkness in the name of righteous virtue and seeking their own Holy Grail, Las Cristinas. The legendary quest of the Arthurian knights, however, was an unremitting, fearless search for truth. 'Avalon' and the Crystallites, on the other hand, had the truth as far as they were concerned and were simply awaiting the riches that would follow an official confirmation of it. Discussion, unless it supported that truth, was pointless and those who persisted in attempts to challenge the truth could only be Placer Dome plants, dull-witted, shorters, liars, or worse.
On the morning of June 11, the Internet Crystallex supporters were strong in their convictions. For more than a year, many of them had been engaged in a self-reinforcing dialogue that, for the most part, excluded critical discussion perceived as negative; had accessed reams of information, some of it entirely irrelevant; had waded through tens of thousands of posts, many of which consisted of poorly argued and unsubstantiated claims; had frequently relied on misinterpretations of legal and other documents; had been the recipients of one-sided and seemingly tailor-made 'news' from an on-line publication; had apparently discounted any analysts' thoughts other than those of Dorothy Atkinson; either bristled at or ignored credible media accounts of the situation; and, unfortunately, did not have the rumours discredited by Crystallex management who, according to many, were well aware of what was transpiring on the forums. On the afternoon of June 11, the distorted beliefs and expectations of the Internet Crystallex supporters collided with the real fact that the Venezuelan Supreme Court had ruled that Crystallex's challenge to the awarding of mining rights to Las Cristinas was inadmissible.
One might have thought that the denouement to the Crystallex saga would have followed shortly thereafter. Once a mythology has taken root, however, it is often difficult to displace. Many shareholders were either forced out or decided to cut their losses but a core group remained and soon rationalized the Supreme Court decision as a case of corruption or a poorly reasoned miscarriage of justice. 'Teddie' offered the latter opinion prior to abandoning forum discussion. Mr. Carson soon followed with tales of an investigation into the decision. Others suggested that the Ministry of Energy and Mines would soon right matters. 'Avalon' persisted in claiming that Crystallex would soon mount another legal challenge for Las Cristinas, one which would undoubtedly be successful. The saga and the dynamics of its creation continue much the same as before.
"The Never Ending Story of Crystallex" turned into a multi-faceted tragedy. The most obvious tragedy, of course, is the tremendous financial loss suffered by so many that led, in several cases, to the wiping out of life-time savings, the loss of homes, break-up of families, and impaired health, among other things. Perhaps less obvious is the tragedy of the unrealized potential of the Crystallex forum discussions. An incredible amount of effort was expended in researching and making available information concerning Crystallex. The "Crystallex links page" and contributions such as Graham Thorne's chronology of events related to Las Cristinas are but two examples. A predominantly one-sided presentation of facts and a decidedly one-sided consideration of the interpretation of facts, prevented that potential from developing as it might otherwise have done. A further tragedy is that the Crystallex saga has contributed to a very low opinion of the utility of Internet stock discussion sites. Finally, it is also a tragedy that many find the rooted Crystallex mythology so difficult to relinquish.
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
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