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BAKER & MCKENZIE
April 20, 2005
VIA EDGAR TRANSMISSION
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Mail Stop 0404
Washington, D.C. 20549-0404
Attention: Ms. Jill S. Davis
RE: Gold Reserve Inc.
Form 20-F, Filed April 1, 2005
File No. 001-31819
Ladies and Gentlemen:
On behalf of our client, Gold Reserve Inc. (the "Company"),
set forth below is the initial response of the Company to
the comments contained in the Staff's letter to Mr. Robert
A. McGuinness, Vice President - Finance & Chief Financial
Officer, dated April 11, 2005, regarding the Form 20-F filed
April 1, 2005. For ease of reference, the comments have
been repeated below, with the initial response set forth
below the comments. The numbering below corresponds to that
used in the Staff's comment letter. The Company has
received no other comment letter from the Staff.
Form 20-F for the year ended December 31, 2004
11. Differences Between Canadian and U.S. GAAP, page 57
1. We note your accounting under Canadian GAAP
allows for the capitalization of certain exploration
costs. However, under U.S. GAAP, the costs of
acquiring unproven mining properties and any
exploration costs should be expensed as incurred in
that you have no proven and probable reserves
relating to them that support cash flow projections
or fair value measures required by SFAS No. 144 to
assess the recoverability of such costs. You should
not capitalize mining costs under U.S. GAAP until
you are in the development stage as defined in
Industry Guide 7. In addition, a contract is
required to be in place to establish proven and
probable reserves when there is not an active market
to sell the minerals. As a result, we have
traditionally required a sales contract or binding
letter of intent to buy the industrial mineral,
before we would accept proven and probable reserve
designation. Based on your disclosures on page 52
in Note 3, it appears some, if not all, of the
capitalized exploration costs should have been
expensed under U.S. GAAP. As your reconciliation to
U.S. GAAP in Note 11 does not address these
accounting differences, revisions may be required to
appropriately reflect these accounting differences.
Please revise your disclosures as necessary or
supplementally support your accounting position
under U.S. GAAP.
The undersigned and Mr. McGuinness have held various phone
conferences with Ms. Jill Davis regarding the comments and
the Company's preliminary views on the issues raised
therein. Having received insight into the Staff's comments,
the Company is preparing a formal response. However, as we
informed Ms. Davis, Mr. McGuinness has been at the Company's
properties in Venezuela since last week and is now in
transit back to the United States. In light of Mr.
McGuinness' absence, as discussed with Ms. Davis, the
Company anticipates providing its detailed responses to the
comments contained in the Staff's letter to you early next
week, but no later than Wednesday, April 27, 2005. In
advance of providing you a detailed response, we do
understand from our conversations with Ms. Davis that it has
been determined that the comment:
"In addition, a contract is required to be
in place to establish proven and probable
reserves when there is not an active market
to sell the minerals. As a result, we have
traditionally required a sales contract or
binding letter of intent to buy the
industrial mineral, before we would accept
proven and probable reserve designation."
is inapplicable to the Company since its main asset is a
gold and copper property and there are established markets
for trading gold and cooper. As such, our detailed response
will not address further the comments raised thereby.
I would appreciate it if you would please call me at (713)
427-5018 should you have any questions, including as to the
Company's proposed timetable. Thank you for your attention
to this matter.
Very truly yours,
/s/ Jonathan B. Newton
Jonathan B. Newton
cc: Mr. Robert A. McGuinness