Gold Reserve, Inc.

Introduction

Gold Reserve Inc. has a history in mining dating back to 1956 and was originally formed for the purpose of acquiring, exploring, and developing mining properties and placing them into production. The Company is incorporated under the laws of the Province of Alberta, Canada and is listed on the TSX Venture Exchange and the OTCQX Markets Exchange.

In 1992, the Company acquired and began developing what is now known as the Brisas gold and copper project, located in the historic Km 88 mining district of the State of Bolivar in southeastern Venezuela (the “Brisas Project”). The Brisas deposit is estimated to be one of the largest undeveloped gold/copper deposits in the world. From 1992 to 2009, the Company invested close to US $300 million in acquisition, land exploration, development, equipment, and engineering costs, developing the Brisas Project into what management believes is a world class mining project.

In April 2008, the Bolivarian Republic of Venezuela revoked the previous authorization to proceed with construction of the Brisas Project. As a result of this and other acts by or on behalf of Venezuela, in October 2009 the Company filed a Request for Arbitration under the Additional Facility Rules of the International Centre for Settlement of Investment Disputes (“ICSID”) of the World Bank, in Washington D.C., against Venezuela seeking compensation for the losses caused to the Company by what the Company believed were Venezuela’s violations of the Agreement between the Government of Canada and the Government of the Republic of Venezuela for the Promotion and Protection of Investments (“Canada-Venezuela Treaty”) in regard to the Company and its investments in Venezuela.

In September 2014, the ICSID Tribunal unanimously awarded to the Company an Arbitral Award (the “Award”) totaling (i) $713 million in damages, plus (ii) pre-award interest from April 2008 through the date of the Award based on the U.S. Government Treasury Bill Rate, compounded annually totaling, as of the date of the Award, approximately $22.3 million and (iii) $5 million for legal costs and expenses, for a total of $740.3 million. The Award (less legal costs and expenses) accrued post-award interest at a rate of LIBOR plus 2%, compounded annually.

In June 2017, we signed an amended settlement agreement with Venezuela which contemplated payment of the Award (including interest) and the purchase of our mining data by Venezuela. Under the terms of the agreement, Venezuela agreed to pay the Company $797 million to satisfy the Award and $240 million for the Mining Data for a total of approximately $1.037 billion. In addition, Venezuela irrevocably waived its right to appeal the February 2017 judgment issued by the Cour d’appel de Paris dismissing the annulment applications filed by Venezuela in respect of the Award, agreed to terminate all other proceedings seeking annulment of the Award and refrain from commencing or pursuing any further proceedings including those in France, England, Luxembourg and the United States, to seek any such annulment. Venezuela also agreed to place Venezuelan financial instruments with a face value of US $350 million in trust as collateral for the future payments. As of October 15, 2017, the Company had received the first five payments under the settlement agreement totaling $158 million which, according to the terms, are allocated solely to the sale of the mining data.

In August 2016, we executed an agreement (“Mixed Company Agreement”) with Venezuela for the formation of a jointly owned company (“Mixed Company”) and in October 2016, together with Venezuela, we established Empresa Mixta Ecosocialista Siembra Minera, S.A. (“Siembra Minera”), the entity whose mission is to develop the Brisas Cristinas Project.

Management’s recent activities have included:

  • Concluded efforts to finalize a Settlement Agreement in which Venezuela agreed to payment of the Award (including interest) in the amount of approximately $797 million in respect of the Brisas project and to acquire the Mining Data for $240 million.;
  • Continued activities related to the development of the Brisas Cristinas Project through Siembra Minera;
  • Solidified the Company’s posture for potential future collection activities related to enforcement of the Award in the event all payments under Settlement Agreement are not received; and
  • Redeemed, in the third quarter 2017, all of the Company’s 2018 Notes.

News & Events

Gold Reserve Enters into Amendment to Settlement Agreement with Venezuela, Establishes Mixed Company to Develop Brisas-Cristinas Project (16-14)

Bolivarian Republic of Venezuela Agrees to Pay Gold Reserve Arbitral Award and Acquire Mining Data and Executes an Agreement to Jointly Develop the Brisas Cristinas Gold Copper Mining Project (16-13)

Gold Reserve Announces Closing of Private Placement and Extension of Memorandum of Understanding with Venezuela (16-08)

Gold Reserve Enters Into Memorandum of Understanding with the Government of Venezuela to Settle Gold Reserve’s Arbitration Award and Jointly Develop the Brisas and Las Cristinas Projects (16-04)

Gold Reserve Completes Issuance of US $12.3 Million of New Convertible Notes and Modifies Terms of Existing US $44 Million of Convertible Notes and Related Interest Notes (15-14)

US District Court for the District of Columbia Enters Judgement Against Venezuela in Excess of $760 Million; Denies Motion to Stay Enforcement (15-13)