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Gold/Mining/Energy : Crystallex (KRY) -- Ignore unavailable to you. Want to Upgrade?

To: Michael Bidder who wrote (4114)	12/22/1997 12:44:00 AM
From: E. Charters	Read Replies (2) \| Respond to of 10836

As a matter of fact the board of KRY are net holders of the stock. Marc Oppenheimer is the only one who sold most of his position. Marshall, the VP told me Oppenheimer owns 1,000,000 shares and options. It is not uncommon in companies for board members to sell shares and exercise options. It is quite frequently the only way they can cheaply excercise the options and that is to sell stock. If the stock is going up it is cheaper and far less risk to hold the options and not the shares. It also puts money directly into the company to exercise and is a form of investment. And it provides liquidity. In fact some insiders and board members will buy the stock that others sell. Before a major material change of the company's affairs it is not uncommon for board members to sell rather than to buy so as not to be seen to be insider trading. This is based on the Texas Gulf decision of 1964, where the SEC took members of that company's geological staff to court over what they called investment in the company based on the 652 foot massive sulfide intersection of ore grade material. This decision has since affected the habits of management with regards to trading in company stock. KRY's chances are based on a court decision and some other political factors. Since nobody on the KRY board sits on the Supreme Court of Venzuela it is not known to them more than anyone else what the outcome of the court will be. So in the absence of that knowledge how they manage their risk is their business. Holding options in my opinion unles you are extremely wealthy is the low risk way to play the game and still show faith in the company. Fung is wealthy, so can afford to hold stock. Oppenheimer is probably less so and options may be his best shot. I wish I were in his shoes. There have been two previous decisions by the Supreme Court in favour of KRY. One in 1991 and one in 1996. Without title to the property it is impossible in Venezuelan Law to sue another party for and infraction with regards to it. The only titleholder to the property at present is the subsidiary of KRY in Venezuela, Placer Dome's name does not appear on any Venezuelan property documents. In fact KRY could just sit back and let Placer Dome sue them. But due to the strange political position of the now toothless CVG they want a speedy resolution to the matter. Dome has known for some time now as evinced by a leaked internal memo that they may lose the case as CVG was known under the organic mining law to have no constitutional right to mine or hold claims. As a matter of fact the courts have been rolling back every decision and and agreement in mining and other matters that CVG has entered into which flowed out of corruption of the previous regime. It should be noted too that this present Supreme Court put the President of that previous regime in jail for that corruption and he only recently got out. The former head of the Mines Ministry who now sits on the KRY board has publically said that "we made big mistake in letting CVG have the Los Cristinas property." Now if that isn't a startling admission of a change in the status quo from someone who should know, I don't know what is. I would say that it is Dome, who has a long and illustrious history of guessing wrong with foreign governments, that is sweating now. The fundamental reason Dome seems to eff up is that the management hasn't got much at stake. They are hired hands who can walk tothe next job if all goes wrong as we have seen time after time. Oppenheimer, Fung and Marshall are much more visible as the responsible people who have put this bet together and therefore are much more at home with it. It has been a five year struggle to get to where they are. The reason to push it in the past two years is that the VZ gov't is much more flexible now with foreign mining development, sale of gold and ownership. It is still far from perfect. Some have stayed the course, others got discouraged. I would say KRY has a bet and should stay with it. It takes deep pockets to explore in BC and Venezuela and you have to have the right situation to attract me. So far KRY has it. echarter@vianet.on.ca