Mining Work Completed on the Brisas Project1 and Related Project Developments

The information regarding the Company’s Venezuelan properties contained herein should be considered in context of our October 21, 2009 news release “Gold Reserve Files International Arbitration Against Venezuelan Government.”

Work completed on Brisas property

Since first acquiring rights at Brisas in 1992, the Company has spent nearly $300 million on the Project (including capitalized costs and equipment recorded in the Consolidated Balance Sheet and financial, legal, administrative and engineering costs incurred in support of our Venezuelan operations recorded in the Consolidated Statement of Operations). These costs have included property and mineral rights, acquisition costs, equipment expenditures, litigation settlement costs, exploration costs and development costs. Considerable work has taken place to establish the mineral resource and proven and probable reserves outlined in the 2008 CSA National Instrument 43-101 Technical Report.

Work activities on the property included:

  • Extensive geology, geophysics and geochemistry performed
  • 834 exploration diamond drill holes totaling approximately 208,000 meters
  • Independent audits by Behre Dolbear of exploration drilling, sampling, assaying procedures and ore reserves methodology
  • Environmental baseline work
  • Socioeconomic studies
  • Hydrology studies
  • Extraction of an approximately 700 tonne bulk sample from an underground shaft for large scale metallurgical testing and production of a copper concentrate for further on-site recovery testing
  • Pit designs, mine planning and production scheduling
  • Advanced stage grinding and metallurgical testwork
  • Tailings dam designs
  • Milling process flow sheet designs
  • Detailed project engineering
  • Procurement of major equipment and construction machinery
  • Independent audit of all technical aspects of the Brisas Project by Micon

Milestones of the Brisas Project (2003 – 2008):

  • January 6, 2003 – The Ministry of Energy and Mines (“MEM”) approved the Brisas Project operating plan. The project contained proven and probable reserves of 6.7 million ounces of gold and 871 million pounds of copper. This approval is a prerequisite to submitting the Environmental and Social Impact Assessment to the Ministry of Environment and Natural Resources (MARN).
  • March 10, 2003 – Gold Reserve (2) announced that it engaged Behre Dolbear & Company to perform a mine reserve analysis and long-term production schedule for the Brisas Project.
  • November 20, 2003 – Gold Reserve announced it had selected Aker Kvaerner to assist with Brisas Project Bankable Feasibility Study.
  • August 3, 2004 – Gold Reserve announced an increase in Brisas Project proven and probable reserves to 9.1 million ounces of gold and 1.15 billion pounds of copper.
  • September 30, 2004 – Gold Reserve announced it had selected AATA and Ingenieria Caura, S.A., a Venezuelan environmental consulting firm, to complete the Environmental and Social Impact Assessment (ESIA) for the Brisas Project.
  • January 26, 2005 – Gold Reserve announced that it received Aker Kvaerner Metals Inc.’s completed Project Feasibility Study and Pincock, Allen & Holt prepared the initial NI 43-101 Technical Report.
  • May 17, 2005 – Gold Reserve announced an increase in Brisas Project proven and probable reserves to10.1 million ounces of gold and 1.29 billion pounds of copper.  Pincock Allen & Holt, Inc. completed the reserve analysis incorporating the recent 15,000 meter drilling program, the mining and milling costs for the 70,000 tonne per day flotation-cyanidation plant, and the smelter treatment and refining charges for the gold/copper concentrates from the recently completed bankable feasibility study.
  • May 20, 2005 – Gold Reserve announced the selection of SNC-Lavalin and affiliates (SNC) to undertake the Engineering, Procurement, and Construction Management (EPCM) for the Brisas Project.
  • August 4, 2005 – Gold Reserve announced it had formally filed on July 29, 2005 the Venezuela Environmental and Social Impact Assessment (V-ESIA) with MARN, which is required to obtain the permit to construct (and exploit) the Brisas Project.  In addition, Gold Reserve submitted to MIBAM the V-ESIA on August 3, 2005. This study is complemented by the Brisas Project International Environmental and Social Impact Assessment (I-ESIA) related to the project debt financing.
  • August 10, 2005 – Gold Reserve submitted to the Minister of MIBAM an update on the Brisas Project.
  • January 4, 2006 – Gold Reserve announced that MARN granted additional permits for geotechnical drilling to support detailed engineering related to pit slope analysis, crusher design, process facility design, tailing dam design, and overall site development for the Brisas Project.
  • April 24, 2006 – Gold Reserve announced the completion of the initial engineering definition phase (including detailed engineering, procurement and construction management for the process, infrastructure, tailings and camp facilities) of the Brisas Project by SNC.  Initial capital costs for the project increased to US$638 million compared to the January 2005 capital cost estimate of US$552 million.
  • May 16, 2006 – Gold Reserve submitted to MIBAM a detailed report on the revised and updated Brisas Project operating plan.
  • November 7, 2006 – Gold Reserve announced the appointment of Corporacion Andina de Fomento (CAF), Export Development Canada (EDC), UniCredit Group (HVB) and WestLB AG (WestLB) as Mandated Lead Arrangers (MLA’s) to arrange up to US $425 million of project debt for the Brisas Project.
  • November 2006 – Gold Reserve submitted the International Environmental and Social Impact Assessment (I-ESIA) in conformity with the Equator Principles to the project debt banking group.
  • November 13, 2006 – Gold Reserve announced the completion of an updated NI 43-101 Technical Report prepared by Pincock Allen & Holt, including updated resource and reserve estimates, capital and operating costs, and current project economics.  The updated operating plan assumed a large open pit mine containing proven and probable reserves of approximately 10.4 million ounces of gold and 1.3 billion pounds of copper, yielding annual production of 456,000 ounces of gold and 60 million pounds of copper.
  • February 4 – 10, 2007 – Representatives from the Project Debt Financing Banks visited the Brisas Project and also met with MIBAM (formerly MEM) and MinAmb (formerly MARN) officials in Ciudad Bolivar and Caracas, Venezuela.
  • February 9, 2007 – MinAmb approved the V-ESIA for the exploitation and processing of gold and copper mineralization at Brisas.
  • March 27, 2007 – MinAmb issued the permit or authorization to affect natural resources for the construction phase of the Brisas Project.
  • April 25, 2007 – Gold Reserve announced the addition of senior technical professionals for the Brisas Project.
  • May 18, 2007 – Gold Reserve submitted to MinAmb the final technical requirements set forth in the March 27, 2007 permit or authorization to affect natural resources for the construction phase of the Brisas project.
  • May 18 – 29, 2007 – Gold Reserve announced it obtained US$172.5 million of external financing for the Brisas Project.
  • May 31, 2007  –  SNC completed approximately 230,000 man hours of work on the Brisas Project engineering, procurement and environmental activities.
  • June 12, 2007 – Gold Reserve announced that SNC had mobilized to the Brisas Project for the commencement of site preparation work.
  • June 20, 2007  –  Gold Reserve announced that it had finalized negotiations with Caterpillar Inc. and its local Venezuelan dealer, Venequip S.A. to provide haulage and construction machinery for the construction and operation of the Brisas Project.  Gold Reserve ordered approximately US$10 million of equipment, to be delivered before the end of 2007, to be used for early earthworks projects and to initiate construction of the tailings dam facility.  The agreement with Venequip and Caterpillar represented an initial 3 year capital investment of approximately US$80 million and nearly US$500 million in capital and spare parts purchases over the estimated life of mine operation.
  • June – July 2007 – Gold Reserve placed orders totaling approximately US$ 102.5 million for the fabricating of a gyratory crusher, pebble crushers, Semi Autogenous Grinding (SAG) and ball mills and other processing equipment from Metso Minerals and related motors from Siemens and GE.
  • July 2007 – Sergio Brito Consultoria Ltda and Vector Colorado LLC updated the geotechnical parameters of the pit slopes for the Brisas Project.
  • August 29, 2007 – Gold Reserve announced that it had entered into a partnership with Conservation International (CI) to advance the Company’s commitment to environmental and social responsibility, including preserving biodiversity in and around the Brisas Project.
  • October 4, 2007 – Authorized representatives from the 21 nearby Indigenous and Creole communities, the Sifontes Municipality, the Parish authority, local chamber of commerce, small miners association and local unions formed a Community Liaison Commission for the Brisas Project.   Upon request from the Vice-minister of Mines, the local MIBAM representative joined the Community Liaison Commission.
  • October 4, 2007 – Gold Reserve announced that it initiated a partnership with Fundacion para el Desarrollo Sostenible (FDS) to implement sustainable development projects in the Brisas Project area.
  • March 25, 2008 – Gold Reserve announced the completion of an updated NI 43-101 Technical Report prepared by Pincock, Allen & Holt updating the Brisas Project gold and copper resource and reserve estimates, capital and operating costs, and current project economics.  Marston & Marston, Inc. developed a new mine design and production schedule based on the new project costs.  Gold Reserve and SNC, the project’s EPCM contractor, updated the capital costs with minor modifications to the process flow sheets.  The estimated capital costs increased 14% from US$638 million to US$731 million with 25% of the increase due to project scope changes such as increasing the SAG mill size.
  • April 14, 2008 – MinAmb arbitrarily revoked the March 2007 permit to affect natural resources for the construction phase of the Brisas Project.  Gold Reserve was notified of this decision on May 5, 2008.
  • April 2008 – SNC’s detailed engineering and procurement services were approximately 85% complete, with over 404,000 man hours of work on the Brisas Project.
  • September 2008 – Micon International Limited completed an independent review accepting and endorsing all major technical aspects of the Brisas Project.
  • September 2, 2008 – MIBAM issued certificates of compliance for the alluvial and hardrock concessions and other properties that comprise the Brisas Project.  Compliance certificates also had been issued in prior years.

Recent Developments Related to the Brisas Project:

  • January 2009 – President Chávez announced that Venezuela would take control of the Brisas concession in 2009.
  • March 2009 – MIBAM ordered the immediate suspension of work on the Brisas alluvial concession.
  • May 2009 – MIBAM improperly denied the Company’s request for an extension of the Brisas alluvial concession.
  • October 2009 – MIBAM initiated an administrative proceeding to revoke the Brisas hardrock concession.
  • October 2009 – Venezuela took physical possession of the Brisas property.
  • January 2010 – President Chávez announced that Venezuela took control of the Brisas concession.

Click here for a list of Consultants and Experts for the Brisas Project.

Click here for a list of Technical Reports completed for the Brisas Project.

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1. The term “Brisas Project,” “Brisas Property,” and “Brisas” are used interchangeably.
2. The terms “Gold Reserve” and “Company” are used interchangeably and include, where appropriate, relevant subsidiaries.