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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of May 2006
Commission File Number: 001-31819
Gold Reserve Inc.
(Exact name of registrant as specified in its charter)
926 W. Sprague Avenue, Suite 200
Spokane, Washington 99201
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F _____
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-____________
Filed with this Form 6-K are the following, which are incorporated herein by
reference:
99.1 Notice of Annual and Special Meeting of Shareholders on June 2, 2005
99.2 Management Information and Proxy Circular
99.3 Report of Voting Results at Annual and Special Meeting of Shareholders
Certain statements included herein, including those that express management's
expectations or estimates of our future performance, constitute "forward
looking statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Forward looking statements are necessarily
based upon a number of estimates and assumptions that, while considered
reasonable by management are inherently subject to significant business,
economic and competitive uncertainties and contingencies. We caution that such
forward-looking statements involve known and unknown risks, uncertainties and
other risk factors that may cause the actual financial results, performance,
or achievements of Gold Reserve to be materially different from our estimated
future results, performance, or achievements expressed or implied by those
forward looking statements. Numerous factors could cause actual results to
differ materially from those in the forward-looking statements, including
without limitation, concentration of operations and assets in foreign
countries, corruption, requests for improper payments, uncertain legal
enforcement, regulatory, political and economic risks associated with
Venezuelan operations, our ability to obtain additional funding for the
development of the Brisas project, in the event any key findings or
assumptions previously determined by our experts in the final feasibility
study (including any updates thereto) significantly differ or change as a
result of actual results in our expected construction and production at the
Brisas project, risk that actual mineral reserves may vary considerably from
estimates presently made, impact of currency, metal prices and metal
production volatility, changes in proposed development plans (including
technology used), our dependence upon the abilities and continued
participation of certain key employees, and risks normally incident to the
operation and development of mining properties. These are discussed in greater
detail in Gold Reserve's filings with the U.S. Securities and Exchange
Commission at www.sec.gov and the Annual Information Form and other reports
filed with Canadian provincial securities commissions at www.sedar.com. Gold
Reserve expressly disclaims any intention or obligation to update or revise
any forward looking statement whether as a result of new information, events
or otherwise.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Gold Reserve Inc.
(Registrant)
Date: May 2, 2006
By: s/ Robert A. McGuinness
Name: Robert A. McGuinness
Title: Vice President - Finance & CFO
EXHIBIT INDEX
99.1 Notice of Annual and Special Meeting of Shareholders on June 2, 2005
GOLD RESERVE INC.
926 W. Sprague Avenue, Suite 200, Spokane, WA 99201
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that an Annual and Special Meeting (the "Meeting") of
the holders of Class A common shares and Class B common shares (collectively,
the "Shareholders") of GOLD RESERVE INC. (the "Company") will be held at the
Spokane Club, located at 1002 W. Riverside, Spokane, Washington USA, on
Thursday, the 2nd day of June, 2005 at 9:30 a.m. (Pacific daylight time) for
the following purposes:
1) To elect members to the Board of Directors of the Company to hold such
positions until the next annual meeting of Shareholders or until their
successors are elected and have qualified;
2) To appoint auditors of the Company for the year ended December 31, 2005
and any interim period;
3) To approve the increase in options available to the 1997 Incentive Stock
Option Plan by an additional 800,000 common shares;
4) To approve the issuance of 75,000 Class A common shares of the Company
for purchase by the KSOP Plan; and
5) To conduct any other business as may properly come before the meeting or
any adjournment thereof.
Shareholders who are unable to attend the Meeting or any adjournment thereof
in person and who wish to ensure that their shares will be voted are requested
to complete, sign and mail the enclosed form of proxy to Computershare Trust
Company, Inc., P.O. Box 1596, Denver, Colorado 80201-9975 not later than the
close of business on the business day immediately preceding the Meeting or any
adjournment thereof. An Information Circular and a copy of the Annual Report
accompany this notice. The specific details of the matters proposed to be put
before the Meeting are set forth in the accompanying Information Circular.
DATED at the City of Spokane, in the State of Washington, USA this 14th day of
April, 2005.
BY ORDER OF THE DIRECTORS
Rockne J. Timm
Chief Executive Officer
99.2 Management Information and Proxy Circular
GOLD RESERVE INC.
INFORMATION CIRCULAR (Containing information as of April 14, 2005)
MANAGEMENT SOLICITATION OF PROXIES
This Management Information and Proxy Circular is furnished in connection with
the solicitation of proxies by the management of GOLD RESERVE INC.
(the "Company") to be voted at the Annual and Special Meeting of Shareholders
of the Company (the "Meeting") to be held on Thursday, the 2nd day of June,
2005 at 9:30 a.m. (Pacific daylight time), at the Spokane Club located at 1002
W. Riverside, Spokane, Washington and at any adjournment thereof, for the
purposes set forth in the accompanying Notice of Annual and Special Meeting of
Shareholders. The solicitation of proxies will be primarily by mail but proxies
may also be solicited personally or by telephone by regular employees of the
Company. Employees will not receive any extra compensation for such activities.
The Company may pay brokers, nominees or other persons holding shares of the
Company in their name for others for their reasonable charges and expenses in
forwarding proxies and proxy materials to beneficial owners of such shares,
and obtaining their proxies. The Company may also retain independent proxy
solicitation agents to assist in the solicitation of proxies for the Meeting.
The cost of all solicitations of proxies will be borne by the Company. Except
where otherwise stated, the information contained herein is given as of the
14th day of April, 2005.
Unless otherwise indicated, all currency amounts referred to herein are stated
in U.S. dollars.
APPOINTMENT AND REVOCATION OF PROXIES
The individuals named in the enclosed form of proxy are Directors or Officers
of the Company. A Shareholder submitting a proxy has the right to appoint a
person or company, who need not be a Shareholder, to represent the Shareholder
at the Meeting other than the persons designated in the form of proxy furnished
by the Company. To exercise this right, the Shareholder may insert the name of
the desired representative in the blank space provided in the proxy or may
submit another appropriate form of proxy. The completed proxy must be deposited
at the office of Computershare Trust Company, Inc., P.O. Box 1596, Denver,
Colorado 80201-9975, not later than the close of business on the business day
preceding the day of the Meeting or any adjournment thereof, or with the
Chairman of the Meeting immediately prior to the commencement of the Meeting
or any adjournment thereof, otherwise the instrument of proxy will be invalid.
You may revoke or change your proxy at any time before it is exercised at the
Meeting. In the case of Shareholders appearing on the registered shareholder
records of the Company, a proxy may be revoked at any time prior to its
exercise by sending or depositing a written notice of revocation or another
signed proxy bearing a later date to the Secretary of the Company at its
principal executive office located at 926 W. Sprague Avenue, Suite 200,
Spokane, Washington 99201. You may also revoke your proxy by giving notice or
by voting in person at the Meeting.
Shareholders appearing in the name of a bank, broker or other nominee should
follow the instructions provided by their bank, broker or nominee in revoking
their previously voted shares.
EXERCISE OF DISCRETION BY PROXIES
The shares represented by the proxy will be voted or withheld from voting in
accordance with the instructions of the Shareholder on any ballot that may be
called for and, if the Shareholder specifies a choice with respect to any
matter to be acted upon, the shares will be voted accordingly. In the absence
of such choice being specified, such shares will be voted "for" the matters
specifically identified in the Notice of Annual and Special Meeting of
Shareholders accompanying this Information Circular.
The enclosed form of proxy confers discretionary authority upon the persons
named therein with respect to amendments or variations to matters identified
in the Notice of Annual and Special Meeting of Shareholders and with respect
to other matters which may properly be brought before the Meeting. At the
time of printing this Information Circular, the management of the Company
knows of no such amendments, variations or other matters to come before the
Meeting other than the matters referred to in the Notice of Annual and
Special Meeting of Shareholders.
In February 1999, the Gold Reserve Corporation became a subsidiary of the
Company, the successor issuer. For the purposes of disclosure in this
Information Circular, references to the Company prior to February 4, 1999
are references to Gold Reserve Corporation.
VOTING RIGHTS AND PRINCIPAL SHAREHOLDERS
The Company's issued and outstanding shares consist of Class A common
shares (each, a "Class A Share") and Class B common shares (each, a "Class
B Share"). Unless otherwise noted, references to Common Shares in this
Information Circular include both Class A Shares and Class B Shares.
Holders of Class A Shares and holders of Class B Shares (collectively, the
"Shareholders") are entitled to one vote per share and will vote as a
single class on all matters to be considered and voted upon at the Meeting
or any adjournment thereof. As of April 14, 2005, there were 34,649,819
issued and outstanding Class A Shares and 1,157,397 issued and outstanding
Class B Shares for a total of 35,807,216 Common Shares eligible to vote.
The Company has set the close of business on April 25, 2005 as the record
date for the Meeting. The Company will prepare a list of Shareholders of
record at such time. Shareholders will be entitled to vote the shares then
registered in their name at the Meeting except to the extent that (a) the
holder has transferred the ownership of any of his shares after that date,
and (b) the transferee of those shares produces properly endorsed share
certificates, or otherwise establishes that he owns the shares, and
demands, not later than 10 days before the Meeting, that the transferee's
name be included in the list of persons entitled to vote at the Meeting,
in which case the transferee will be entitled to vote his shares at the
Meeting or any adjournment thereof.
To the knowledge of the Directors and senior officers of the Company, as
of April 14, 2005, no person, firm or corporation beneficially owned,
directly or indirectly, or exercised control or direction over more than
10% of the voting rights attached to the Common Shares.
A quorum for the transaction of business at any meeting of the
Shareholders shall be holders of at least one-third (1/3) of the
outstanding Common Shares present in person or represented by proxy.
Except as otherwise stated in this Information Circular, the affirmative
vote of the holders of a majority of the Common Shares present at the
Meeting, in person or by proxy, is required to approve all items
presented in this Information Circular.
BUSINESS OF THE MEETING
Item 1 - Election of Directors
The articles of the Company provide that the Board of Directors (the
"Board") shall consist of a minimum of 3 and a maximum of 15 Directors,
with the actual number of Directors to be determined from time to time
by the Board. The Company's Board presently consists of seven members.
The Board held 10 meetings during 2004 at which attendance, in person or
by phone, averaged 89%. Various matters were considered and approved by
written resolution during the year.
The by-laws of the Company provide that each Director shall be elected to
hold office until the next annual meeting of the Company's Shareholders
or until their successors are elected and have qualified. All of the
current Directors' terms expire the date of the Meeting and it is
proposed by management that each of them be re-elected to serve another
term.
The following table and notes thereto states the names of each person
proposed to be nominated by management for election as a Director, the
province or state and country in which he is ordinarily resident, his
age, all offices of the Company now held by him, his principal
occupation, the period of time for which he has been a Director of the
Company and the number of Common Shares beneficially owned by him,
directly or indirectly, or over which he exercises control or direction,
as at the date hereof.
The persons named in the accompanying form of proxy intend to vote for
the election of these nominees unless otherwise directed. Management
does not contemplate that the nominees will be unable to serve as
Directors.
1) Proposed Nominee and Position in the Company
2) Age
3) Principal Occupation
4) Director Since
5) Number of Common Shares Beneficially Owned as of April 14, 2005(1)
1) Rockne J. Timm (2)(3)(6) Washington, USA Chief Executive Officer and
Director
2) 59
3) Chief Executive Officer of the Company. Mr. Timm is also a Director
and President of both MGC Ventures, Inc.
and Great Basin Energies, Inc.
4) March 1984
5) 1,442,169
1) A. Douglas Belanger (2)(3)(6) Washington, USA President and
Director
2) 51
3) President of the Company. Mr. Belanger is also a Director and
Executive Vice President of both Great Basin Energies, Inc. and MGC
Ventures, Inc.
4) August 1988
5) 1,433,192
1) James P. Geyer Washington, USA Senior Vice-President and Director
2) 52
3) Senior Vice President of the Company.
4) June 1997
5) 465,865
1) James H. Coleman (2)(3)(6), Alberta, Canada, Non-Executive Chairman
and Director
2) 54
3) Senior Partner of the law firm of Macleod Dixon LLP of Calgary,
Alberta. He is also a Director of various public companies including
Great Basin Energies,Inc. and MGC Ventures, Inc.
4) February 1994
5) 234,000
1) Patrick D. McChesney (2)(3)(5), Washington, USA Director
2) 55
3) Controller of Remtech, Inc. and Director of Remediation Technologies
Nigeria Ltd. He is also a Director of Great Basin Energies, Inc. and
MGC Ventures, Inc.
4) August 1988
5) 132,758
1) Chris D. Mikkelsen (2)(3)(4)(5), Washington, USA Director
2) 53
3) Principal in McDirmid, Mikkelsen & Secrest, P.S. (a certified public
accounting firm). Mr. Mikkelsen is also a Director of Great Basin
Energies, Inc. and MGC Ventures, Inc.
4) June 1997
5) 294,500
1) Jean Charles Potvin (4)(5), Ontario, Canada Director
2) 51
3) Director, Chairman and Chief Executive Officer of Tiomin Resources Inc.
4) November 1993
5) 104,168
(1) Includes for each individual shares issuable pursuant to presently
exercisable options for Common Shares as of April 14, 2005 or options
exercisable within 60 days of April 14, 2005 as follows: Mr. Timm,
594,617; Mr. Belanger, 504,452; Mr. Geyer, 258,874; Mr. Coleman,
161,416; Mr. McChesney, 114,072; Mr. Mikkelsen, 91,519; Mr. Potvin,
76,305.
(2) Messrs. Timm, Belanger, Coleman, McChesney, and Mikkelsen are
Directors of Great Basin Energies, Inc., which owns 516,720 Common
Shares, or 1.4% of the outstanding Common Shares. The foregoing
individuals beneficially own 9.4%, 6.1%, 2.4%, 1.6%, and 1.3%,
respectively, of the outstanding Common Shares of Great Basin Energies,
Inc. and may be deemed indirectly to have an interest in the Company
through their respective management positions and/or ownership
interests in Great Basin Energies, Inc. Each of the foregoing
individuals disclaims any beneficial ownership of the Common Shares
owned by Great Basin Energies, Inc.
(3) Messrs. Timm, Belanger, Coleman, McChesney, and Mr. Mikkelsen are
Directors of MGC Ventures, Inc., which owns 276,642 Common Shares, or
0.8% of the outstanding Common Shares of the Company. The foregoing
individuals beneficially own 10.6%, 10.5%, 4.3%, 3.3%, and 2.3%
respectively, of the outstanding Common Shares of MGC Ventures, Inc.
and may be deemed indirectly to have an interest in the Company through
their respective management positions and/or ownership interests in MGC
Ventures, Inc. Each of the foregoing individuals disclaims any
beneficial ownership of the Common Shares owned by MGC Ventures, Inc.
(4) Member of the Compensation Committee.
(5) Member of the Audit Committee.
(6) Member of the Executive Committee.
Each of the foregoing nominees has held his present principal
occupation with his current employer or other positions with the same
firm throughout the last five years, with the exception of Mr.
McChesney, who in addition to assuming his current position with
Remtech, Inc. in 2004, has been president of LMO Test Systems, Inc.
since March 1996.
Item 2 - Appointment of Auditors
It is proposed that the firm of PricewaterhouseCoopers LLP be appointed
by the Shareholders as independent certified public accountants to
examine the financial statements of the Company for the year ending
December 31, 2005.
Unless such authority is withheld, the persons named in the
accompanying proxy intend to vote for the re-appointment of
PricewaterhouseCoopers LLP as auditors of the Company until the next
annual meeting of the Company's Shareholders, or until their successors
are duly appointed, at a remuneration to be fixed by the Board.
PricewaterhouseCoopers LLP were first appointed auditors of the Company
in 1992.
Item 3 - Amendment of the 1997 Equity Incentive Plan
The Company presently has one active stock option plan, the 1997 Equity
Incentive Plan (the "Plan"), and predecessor plans that have been
terminated, except for options previously issued under the predecessor
plans that, as a result of forfeiture to the Company become subject to
reissue, shall be re-issued and administered pursuant to the Plan.
At the Meeting, the Shareholders of the Company will be asked to
consider and, if deemed advisable, to approve an ordinary resolution to
amend and increase the number of Common Shares reserved pursuant to the
Plan.
The Plan currently provides for the grant of both "incentive stock
options" and "non statutory options" to purchase Class A Shares, stock
appreciation rights ("SARs"), or up to 650,000 shares of restricted
stock. To date, 488,000 shares of restricted stock have been granted
and 1,313,867 options have been exercised under the Plan (including
predecessor plans) totaling 1,801,867 Common Shares or 5% of the
current issued and outstanding Common Shares of the Company. Options,
including options under the predecessor plans and the Plan, for the
purchase of 3,157,022 Class A Shares are outstanding, representing
approximately 8.8% of the issued and outstanding Common Shares of the
Company.
On February 24, 2005, the Board of the Company authorized an increase
in the number of Common Shares reserved pursuant to the Plan, subject
to regulatory and shareholder approval, by 800,000 Common Shares or
approximately 2.2% of the issued and outstanding Common Shares of the
Company (400,000 of which have been authorized for issuance as
restricted stock grants or options to purchase Common Shares). This
increase is intended to attract and motivate directors, officers,
employees of, and service providers to, the Company and its
subsidiaries and thereby advance the Company's interests by affording
such persons an opportunity to acquire an equity interest in the
Company through the exercise of stock options.
As of April 14, 2005, no options for the purchase of Class A Shares
remained available for grant under the Plan. Assuming the resolution
approving the amendment to the Plan is approved, 800,000 Class A Shares
would be available for issuance pursuant to the Plan, representing
approximately 2.2% of the issued and outstanding Common Shares of the
Company. When adjusted to reflect the reduction of the number of shares
available due to exercises of options previously granted and the
issuance of restricted shares, the maximum number of Common Shares
issuable under the Plan, if the resolution approving the amendment to
the Plan is approved, would be 3,957,022 Common Shares, representing
approximately 11% of the issued and outstanding Common Shares of the
Company.
Approval of this item, for the purposes of complying with the TSX's
policy limitations, requires the affirmative vote of a majority of the
Common Shares of the Company represented at the Meeting, in person or
by proxy, held by persons who are neither directors, executive
officers, or other insiders (or associates of insiders) of the Company.
As of April 14, 2005, based on information available to the Company, a
total of 2,698,370 Common Shares of the Company were held by directors,
executive officers, or other insiders (or their associates) of the
Company, representing approximately 7.5% of the total outstanding
Common Shares at such date.
For a more detailed discussion of the terms and provisions of the Plan,
reference should be made to "Executive Compensation - Equity Incentive
Plan" in this Information Circular.
The following is the form of ordinary resolution to be approved by the
Shareholders at the Meeting:
"BE IT RESOLVED THAT:
1. The amendment of the Plan to increase the number of Common Shares
subject to the Plan by 800,000 Common Shares, of which 400,000 shares
are authorized to be issued as restricted stock grants or options to
purchase Common Shares, is hereby ratified and approved;
2. The directors may revoke this resolution before it is acted upon
without further approval of the Shareholders; and
3. Any officer or director is hereby authorized to execute and deliver
any documents, instruments or other writings and to do all other acts
as may be necessary or desirable to give effect to the foregoing
resolution."
The Board has determined that the amendment to the 1997 Equity
Incentive Plan is in the best interests of the Company and recommends
that the Shareholders vote in favor of the resolution authorizing such
amendment.
Item 4 - Approval of the Purchase of Class A Shares by the KSOP Plan
The Company maintains a retirement plan, the KSOP Plan, for eligible
employees. The annual contribution to the KSOP Plan participants is
formula-driven based on a percentage of compensation and is used to
allocate Class A Shares purchased by the KSOP Plan.
The Board approved the issuance of 75,000 Class A Shares for purchase
by the KSOP Plan at a price of US $3.45295 (Cdn. $4.18), which
represents the closing market price on the TSX (converted to US $) on
March 29, 2005. As of December 31, 2004, 50,319 Class A Shares remained
in the KSOP Plan to be allocated to KSOP Plan participants, representing
approximately 0.14% of the issued and outstanding Common Shares of the
Company at that time.
Assuming the resolution approving the purchase of Class A Shares by the
KSOP Plan is approved, 125,319 Class A Shares, representing
approximately 0.35% of the issued and outstanding Common Shares of the
Company, would be available for allocation to KSOP Plan participants.
In order for the acquisition of Class A Shares by the KSOP Plan to
comply with certain requirements of the TSX, this resolution must be
approved by a majority of the votes cast on such resolution, other than
votes attaching to Common Shares beneficially owned by insiders of the
Company eligible to participate in the KSOP Plan or associates of such
insiders. In the event this resolution is approved by the holders of at
least a majority of the votes cast on this resolution at the Meeting, in
person or by proxy by disinterested Shareholders, it will be deemed
approved but will remain subject to the policy limitations of the TSX
with respect to the number of Class A Shares that may be allocated to
directors and executive officers.
As of April 14, 2005, based on information available to the Company, a
total of 2,376,256 Class A Shares, or approximately 6.6% of the issued
and outstanding Common Shares of the Company, were held by insiders, or
their associates, eligible to participate in the KSOP Plan.
Approval of this resolution pursuant to the policies of the TSX will
enable the Company to allocate the Class A Shares, pursuant to the
employee stock ownership component of the KSOP Plan, to eligible
participants in compliance with the TSX's limitations on awards to such
persons pursuant to share compensation arrangements.
For a more detailed description of the KSOP Plan, see "Executive
Compensation - KSOP Plan".
The persons named in the accompanying proxy intend to vote for the
approval of the authorization to issue 75,000 Class A Shares to the
KSOP Plan unless otherwise directed.
The following resolution in respect of the issuance of Class A Shares
for the KSOP Plan will be proposed at the Meeting:
"BE IT RESOLVED THAT:
1. The issuance of 75,000 Class A Shares for purchase by the KSOP Plan
at a price of US $3.45295 (Cdn. $4.18) be approved, and
2. Any officer or director of the Company is hereby authorized for and
on behalf of the Company to execute and deliver all such instruments
and documents and to perform and do all such other acts and things as
may be deemed advisable in such individual's discretion for the purpose
of giving effect to this resolution."
The Board has determined that the issuance to the KSOP Plan of 75,000
Class A Shares is in the best interests of the Company and recommends
that the Shareholders vote in favor of the resolution authorizing such
issuance.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation paid by the Company to
the Chief Executive Officer, the Chief Financial Officer and to each of
the next three most highly compensated executive officers who were
serving at December 31, 2004 (the "Named Executive Officers").
Long Term Compensation
Awards Payouts
Annual Compensation Restricted
Securities Shares Or
Under Restricted All Other
Name and Other Annual Options/ SARs Share LTIP Compensation
Principal Position Year Salary$ Bonus$ Compensation($) Granted(#)(1) Units($) Payouts($) ($)(2)
Rockne J. Timm 2004 $217,917 $95,000 - 45,000 - - $39,000
Chief Executive Officer 2003 195,000 - - - - - 42,000
2002 195,000 - - - - - 31,144
Robert A. McGuinness
Vice President Finance 2004 128,333 50,000 - 20,000 - - 35,667
and CFO 2003 120,000 - - 11,500 - - 26,770
2002 120,000 - - - - - 19,849
A Douglas Belanger 2004 201,250 65,000 - 30,000 - - 41,000
President 2003 175,000 - - - - - 39,040
2002 175,000 - - - - - 29,000
James P. Geyer 2004 185,417 57,500 - 25,000 - - 41,000
Senior Vice President 2003 175,000 - - - - - 39,040
2002 175,000 - - - - - 29,000
Douglas E. Stewart 2004 114,333 40,000 - 20,000 - - 30,867
Vice President - 2003 101,000 - - 25,633 - - 22,531
Project Development 2002 96,000 - - - - - 15,839
(1) Options for Common Shares granted during the year.
(2) Consists of the dollar value of Class A Shares purchased under
the Company's KSOP Plan and allocated to the account of each Named
Executive Officer during 2004, 2003, and 2002 respectively as follows:
Mr. Timm: 18,785 shares, 39,463 shares, and 49,387 shares; Mr.
McGuinness: 17,180 shares, 25,153 shares, and 31,476 shares; Mr.
Belanger: 19,749 shares, 36,681 shares, and 45,988 shares; Mr. Geyer:
19,749 shares, 36,681 shares, and 45,988 shares; and Mr. Stewart:
14,868 shares, 21,170 shares, and 25,117 shares.
Equity Incentive Plan
Key employees of the Company and its subsidiaries are eligible to
receive grants under the 1997 Equity Incentive Plan (the "Plan"). An
incentive option may be exercised during the lifetime of the optionee
only by the optionee. At such optionee's death an option or any part
thereof may only be transferable by such optionee's will or by the laws
of descent and distribution. The Board or a committee of the Board is
responsible for the administration of the Plan.
Options, stock appreciation rights ("SARs") and restricted stock
granted under the Plan are generally granted at the United States
Dollar equivalent of the closing sales price of the Class A Shares on
the day immediately preceding the grant date, as reported on the TSX .
A SAR entitles the holder of the related option, upon exercise of the
SAR, to surrender such option or any portion thereof to the extent
unexercised, and to receive payment of an amount determined by
multiplying (i) the excess of the weighted average trading price on the
open market for the Class A Shares for the five (5) trading days
immediately preceding the date of exercise of such SAR over the option
price under the related option, by (ii) the number of shares as to
which such SAR has been exercised. Notwithstanding the foregoing, the
agreement evidencing the SAR may limit in any manner the amount payable
with respect to any SAR.
The maximum number of shares for which options may be granted to any
one person in any year is 300,000 shares. In addition, the total number
of shares reserved for issuance to any one person pursuant to options
cannot exceed 5% of shares outstanding. Each option grant is limited to
a maximum duration of 10 years from the time it is granted, except that
an incentive stock option granted to a ten percent shareholder shall
have a maximum duration of five years from the time it is granted and
the vesting period is discretionary.
An incentive option may be exercised during the lifetime of the
optionee only by the optionee. At such optionee's death an option or
any part thereof may only be transfered by such optionee's will or by
the laws of descent and distribution.
The Plan provides the following for termination of employment with
regard to the options outstanding at the date of termination:
Retirement. Any then outstanding options under the Plan may be
exercised at any time prior to the earlier of the expiration date of
the outstanding options or 12 months after the date of retirement.
For Cause. Any then outstanding options become null and void.
Involuntary Termination of Employment. Any then outstanding options
that are vested at the time of termination may be exercised at any time
prior to the earlier of the expiration date of the vested outstanding
options or 30 days after the date of termination.
Voluntary Termination of Employment. Any then outstanding options that
are vested at the time of termination may be exercised at any time
prior to the earlier of the expiration date of the vested outstanding
options or 90 days after the date of termination.
The Board may, at any time and from time to time, modify, amend,
suspend or terminate the Plan in any respect. Amendments to the Plan
shall be subject to stockholder approval to the extent required to
comply with any exemption to the short swing-profit provisions of
Section 16 (b) of the U.S. Exchange Act of 1934, as amended pursuant to
rules and regulations promulgated thereunder, with the exclusion for
performance-based compensation under Code Section 162 (m), or with the
rules and regulations of any securities exchange on which the Shares
are listed.
Equity Compensation Plan Information
The following table sets forth the information regarding the Equity
Incentive Plan as of December 31, 2004:
Number of securities Weighted-average Number of
to be issued upon exercise price securities remaining
exercise of of outstanding available for future
outstanding options, options, warrants issuance under equity
Plan Category warrants and rights and rights compensation plans
Equity compensation
plans approved by
securityholders 3,316,374 $1.393050 240,937
Equity compensation
plans not approved
by securityholders - - -
Total 3,316,374 $1.393050 240,937
KSOP Plan
The Company also maintains a retirement plan, the KSOP Plan, for the
benefit of eligible employees of the Company. The KSOP Plan consists of
two components- a salary reduction component (401(k)) and stock
ownership component (ESOP) and is available to all eligible employees
of the Company. Eligible employees are those who have been employed for
a period in excess of one year and who have worked at least 1,000 hours
during the year in which any allocation is to be made.
Employee contributions to the 401(k) component of the KSOP Plan are
limited in each year to the total amount of salary reduction the
employee elects to defer during the year, which is limited in 2005 to
$14,000 ($18,000 limit for participants who are 50 or more years of
age, or who turn 50 during 2005).
Employer contributions, stated as a percentage of eligible
compensation, are determined each year by the Board of Directors and
allocations are made in the form of Class A Shares. The number of Class
A Shares released for allocation is determined by multiplying the total
eligible compensation by the contribution percentage approved by the
Board of Directors and dividing that number by the average price of the
Class A Shares remaining in the KSOP Plan for distribution. For KSOP
Plan year 2005 the Company has adopted a "Safe Harbor" contribution of
3% of eligible compensation. As of December 31, 2004, 50,319 Class A
Shares remained in the KSOP Plan to be allocated to KSOP Plan
participants, representing approximately 0.14% of the issued and
outstanding Common Shares of the Company at that time.
Total employer and employee annual contributions to an employee
participating in both the 401(k) and ESOP components of the KSOP Plan
are limited (in 2005) to a maximum of $42,000 ($46,000 limit for
participants who are 50 or more years of age or who turn 50 during
2005). The annual dollar limit is an aggregate limit which applies to
all contributions made under this plan or any other cash or deferral
arrangements.
Distributions from the KSOP Plan are not permitted before the
participating employee reaches the age of 59, except in the case of
death, disability, termination of employment by the Company or
financial hardship. The employee stock ownership component of the KSOP
Plan is qualified under Sections 421 and 423 of the U.S. Internal
Revenue Code of 1986, as amended.
The Company allocated contributions to eligible KSOP Plan participants
for plan years 2004, 2003 and 2002 were $254,779 (122,722 Class A
Shares), $216,432 (203,357 Class A Shares), and $153,003 (242,632 Class
A Shares), respectively. The aggregate number of Class A Shares for the
three-year period is 568,711, which represents 1.6% of the current
issued and outstanding Common Shares of the Company.
Options Granted For Shares of the Company to the Named Executive
Officers During the Year Ended December 31, 2004.
The following table sets forth information concerning grants of stock
options to the Named Executive Officers pursuant to the rules and
policies of the TSX and the American Stock Exchange in accordance with
the provisions of the Regulations during the fiscal year ended December
31, 2004:
Market Value of
% of Total Securities
Securities Options Exercise Underlying
Under Granted to or Options on
Options Employees in Base Price Date of Grant Expiration
Name Granted Fiscal year ($/Security) ($/Security)(1) Date
- ----------------------------------------------------------------------------------------------
Rockne J. Timm 45,000 8.83% $3.39 $3.39 July 26, 2009
Robert A. McGuinness 20,000 3.93% $3.39 $3.39 July 26, 2009
A. Douglas Belanger 30,000 5.89% $3.39 $3.39 July 26, 2009
James P. Geyer 25,000 4.91% $3.39 $3.39 July 26, 2009
Douglas E. Stewart 20,000 3.93% $3.39 $3.39 July 26, 2009
(1) Based on the closing price on the TSX converted to US dollars at
time of grant.
Aggregated Option Exercises During the Year Ended December 31, 2004 and
Option Values as of December 31, 2004.
The following table sets forth all options exercised during 2004 and
financial year-end values for options granted to the Named Executive
Officers of the Company.
Value of
Unexercised
Unexercised in-the-Money
Options/SARs Options/SARs
Name Securities Aggregate at FY-End (#) at FY-End ($)(2)
Acquired on Value Exercisable/ Exercisable/
Exercise (#) Realized (1) Unexercisable Unexercisable
- -----------------------------------------------------------------------------------
Rockne J. Timm 91,750 $230,847 649,950/- $2,284,099/-
Robert A. McGuinness 50,000 136,748 271,122/- 912,160/-
A. Douglas Belanger 35,000 88,986 568,955/- 2,014,939/-
James P. Geyer 20,000 50,736 289,209/- 999,658/-
Douglas E. Stewart 20,000 56,336 83,000/- 207,938/-
(1) The "Aggregate Value Realized", if applicable, was calculated by
determining the difference between the market value of the securities
acquired on the date of exercise (based on the closing price on the
American Stock Exchange on the date of exercise, which approximates the
closing price on the TSX also on the date of exercise) less the exercise
price of the options exercised.
(2) The "Value of Unexercised In-The-Money Options at FY-End" was
calculated by determining the difference between the market value of
the securities underlying the option at the end of the financial year
and the exercise price of such options. At December 31, 2004, the
closing price of the shares of common stock on the American Stock
Exchange was $4.47.
Report on Re-pricing of Options in Last Ten Completed Fiscal Years
During the last ten years the Shareholders approved two re-pricings of
certain options held by the Named Executive Officers. The first
re-pricing, dated April 3, 2000 and approved on June 2, 2000, was
re-priced at a 25% premium to the market price of the Company's shares.
The second re-pricing, dated December 20, 2000 and approved June 8,
2001, was re-priced at a 50% premium to the market price of the
Company's shares and fifty-percent of all vested options, or immediately
exercisable options, were unvested for the following twelve-month period.
All repriced options have five-year lives from the date of approval by
Shareholders. The following table details the re-pricing information for
options held by Named Executive Officers for the last ten years:
Securities Market Length of
Under Options/ Price of Exercise Original
Securities at Price Option Term
SARs Time of Re- at Time of New Remaining at
Re-priced pricing or Re-pricing or Exercise Date of
Date of or Amended Amendment Amendment Price Repricing
Name Repricing (#) ($/Security) ($/Security) ($/Security) or Amendment
- -----------------------------------------------------------------------------------------------------------
Rockne J. Timm June 2, 2000 209,833 $0.73 $3.75 $1.00 2.8 years
June 8, 2001 27,200 0.47 1.13 0.72 1.7 years
40,000 0.47 1.50 0.72 3.1 years
50,000 0.47 2.59 0.72 2.2 years
125,000 0.47 3.25 0.72 2.3 years
244,667 0.47 3.75 0.72 2.2 years
Robert A. June 2, 2000 92,207 0.73 3.75 1.00 2.8 years
McGuinness June 8, 2001 30,000 0.47 1.50 0.72 3.1 years
68,417 0.47 2.59 0.72 2.2 years
115,998 0.47 3.75 0.72 2.2 years
A. Douglas
Belanger June 2, 2000 172,652 0.73 3.75 1.00 2.8 years
June 8, 2001 26,000 0.47 1.13 0.72 1.7 years
30,000 0.47 1.50 0.72 3.1 years
65,000 0.47 2.59 0.72 2.2 years
50,000 0.47 3.25 0.72 2.3 years
230,303 0.47 3.75 0.72 2.2 years
James P.
Geyer June 2, 2000 84,736 0.73 3.75 1.00 2.8 years
June 8, 2001 30,000 0.47 1.50 0.72 3.1 years
64,209 0.47 2.59 0.72 2.2 years
5,000 0.47 2.88 0.72 7.0 years
100,264 0.47 3.75 0.72 2.2 years
Douglas E.
Stewart June 8, 2001 79,367 0.47 1.50 0.72 3.1 years
Termination of Employment, Change in Responsibilities and Employment
Contracts
At this time, there are no written contracts of employment as between
the Company and the Named Executive Officers.
The Company has entered into agreements with each of the Named
Executive Officers in order to induce them to remain with the Company
in the event of a change of control (as defined in the agreements) (the
"Change of Control Agreements"). The Board decided to implement such
Change of Control Agreements given, among other things, the Named
Executive Officers' familiarity and long-standing involvement with the
Brisas project and the importance of each of their continued
involvement in the on-going development of the Brisas project.
In the event of a change in control of the Company, each Named
Executive Officer is entitled to, among other things, continue his
employment with the Company and, if his employment is terminated within
seven months following such change in control (other than for cause,
disability, retirement or death) or if the Named Executive Officer
terminates his employment for good reason (as defined in the
agreements) at any time within seven months following the change of
control, such individual will be entitled to receive, among other
things, two or three times his annual salary and KSOP contributions, an
amount equal to all bonuses received during the twelve months prior to
the change of control, maintenance of health and insurance benefits for
a period of 36 months and the buy-out of the cash value of any
unexercised stock options (if so elected by the Named Executive
Officer).
Composition of the Compensation Committee
The Company's compensation program was administered during 2004 by the
Compensation Committee of the Board (the "Compensation Committee"),
composed of Mr. Mikkelsen and Mr. Potvin. The function of the
Compensation Committee was to evaluate the Company's performance and
the performance of its executive officers, approve the cash and
equity-based compensation of such executive officers and submit such
approvals to the full Board for ratification. Compensation matters
relating to the directors were administered by the full Board of
Directors.
Report on Executive Compensation
The goal of the compensation program is to attract, retain and reward
employees and other key individuals who contribute to both the
immediate and the long-term success of the Company. Contributions are
largely measured subjectively, and are rewarded through cash and
equity-based compensation vehicles.
The Company evaluates the extent to which strategic and business goals
are met and measures individual performance, albeit subjectively,
against development objectives and the degree to which teamwork and
Company objectives are promoted. The Company strives to achieve a
balance between the compensation paid to a particular individual and
the compensation paid to other employees and executives having similar
responsibilities within the Company. The Company also strives to ensure
that each employee understands the components of his or her salary, and
the basis upon which it is determined and adjusted.
The components of executive compensation are as follows:
Base Salary. The administration of the program requires the
Compensation Committee to review annually the base salary of each
executive officer of the Company and to consider various factors,
including individual performance, experience, time in position, future
potential, responsibility, and the executive's current salary in
relation to the executive salary range at other mining companies. These
factors are considered subjectively and none are accorded a specific
weight.
Bonuses. In addition to base salary, the Compensation Committee from
time-to-time recommends to the Board payments of discretionary bonuses
to executives and selected employees. Such bonuses are based on the
same criteria and determined in a similar fashion as described above.
Equity. The Compensation Committee from time-to-time recommends to the
Board grants of options and/or restricted stock awards to executives
and selected employees. In addition, the Compensation Committee
annually determines the contribution by the Company to the KSOP Plan
for allocation to individual participants. Participation in the KSOP
Plan by individual employees, including officers, is governed by the
terms of the KSOP Plan.
Chief Executive Officer's Compensation
It is the responsibility of the Compensation Committee to review and
recommend the compensation package for the Chief Executive Officer
based on the same factors as those used in determining the base
salaries for the other Named Executive Officers listed above.
The Compensation Committee has not developed specific quantitative or
qualitative performance measures or other specific criteria for
determining the compensation of the Company's Chief Executive Officer,
primarily because the Compnay does not yet have a producing mine or
other operations from which such quantitative data can be derived. As a
consequence, the determination of the Chief Executive Officer's
compensation in 2004 was largely subjective, and was based on the
Company's progress in addressing its more immediate concerns, continued
exploration, and identifying and analyzing new corporate opportunities.
Mr. Timm's annual base salary was adjusted in August 2004 to $250,000.
The adjustment was made after a review of his individual performance,
responsibility, performance of the Company and a comparison of
compensation packages in peer group companies.
Report submitted by Compensation Committee of the Board
s/ Chris D. Mikkelsen
s/ Jean Charles Potvin
Performance Graph
The following chart compares the total cumulative shareholder return
(assuming re-investment of dividends) for $100 invested in shares of
the Company with the cumulative total return of the Nasdaq Market and
the S & P Gold and Precious Metals Mining Index. for the period
commencing on December 31, 1999 and ending on December 31, 2004.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG GOLD RESERVE INC., THE NASDAQ STOCK MARKET
(U.S.) INDEX AND THE S & P GOLD INDEX
CHART
Compensation of Directors
Consistent with the Board's intent to have both Directors and
management hold shares of the Company, non-employee Directors, Messrs.
Coleman, McChesney, Mikkelsen and Potvin, were each granted 10,000
Class A Shares in February 2005 for services during the fiscal year
ended December 31, 2004. The value of each share was US $3.92524.
Mr. Coleman, a senior partner in the law firm of Macleod Dixon, was
paid approximately $86,250, for services related to his position as
director of the Company, during the fiscal year ended December 31, 2004.
Directors of the Company received no additional compensation for
serving on Board committees or for attendance at the Board or committee
meetings.
The following table sets forth information concerning grants of stock
options to the Directors pursuant to the rules and policies of the TSX
and the American Stock Exchange in accordance with the provisions of
the Regulations during the fiscal year ended December 31, 2004.
Market
Name Securities % of Total Value of
Under Options Granted Exercise or Securities
Options to Employees Base Price Underlying Options
Granted in Fiscal year ($/Security) on Date of Grant
($/Security) (1) Expiration Date
James H. Coleman 75,000 14.7 $4.00437 $4.00437 January 21, 2009
(1) Based on the closing price on the TSX converted to US dollars at time
of grant.
The following sets forth information concerning the exercise of stock
options by the non-employee Directors during the fiscal year ended
December 31, 2004:
Unexercised Value of Unexercised
Options/SARs in-the-Money
Securities at FY-End Options/SARs at
Acquired on (#) FY-End ($) (2)
Exercise Aggregate Value Exercisable/ Exercisable/
Name (#) Realized (1) Unexercisable Unexercisable
J. C. Potvin 20,000 $52,600 100,612 / - 362,771 /-
Patrick D. McChesney 5,000 12,684 127,385 / - 469,739 /-
James H. Coleman - - 174,166 / 37,500 511,136 / 17,461
Chris D. Mikkelsen 10,000 40,000 112,278 / - 373,230 / -
(1) The "Aggregate Value Realized", if applicable, was calculated by
determining the difference between the market value of the securities
acquired on the date of exercise (based on the closing price on the
American Stock Exchange on the date of exercise, which approximates the
closing price on the TSX also on the date of exercise) less the exercise
price of the options exercised.
(2) The "Value of Unexercised In-The-Money Options at FY-End" was
calculated by determining the difference between the market value of
the securities underlying the option at the end of the financial year
and the exercise price of such options. At December 31, 2004, the
closing price of the shares of common stock on the American Stock
Exchange was $4.47.
Directors and Officers Insurance
The Company recently purchased a directors and officers liability
insurance policy. Subject to its terms and conditions, the policy
provides coverage to the Directors and Officers for claims arising out
of non-indemnifiable wrongful acts to the insured entity with respect
to its indemnification of the Directors & Officers and to the entity
itself for securities claims. The policy has an aggregate limit of
$10,000,000 and an indemnifiable claim retention of $250,000. The
retention for non-indemnifiable claims is $0. The annual premium
payable by the Company under the policy is $250,000.
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS OTHER
THAN SECURITIES PURCHASE PROGRAMS
The following table sets forth the indebtedness to, or guaranteed or
supported by, the Company or any of its subsidiaries, of each Director,
executive officer, senior officer, proposed nominee for election as a
Director and each associate of any such Director, officer or proposed
nominee in respect of indebtedness to the Company, other than
indebtedness under securities purchase programs, since the beginning of
the most recently completed financial year:
Involvement of Largest Amount Amount Outstanding
Name and Principal Position Issuer or Subsidiary Outstanding During 2004(1) at April 14, 2005
Rockne J. Timm
President and CEO
and Director Lender $23,500 -
Robert A. McGuinness,
VP Finance, CFO
Lender 62,500(2) -
James P. Geyer,
Senior VP and Director Lender 18,200 -
Douglas E. Stewart
Vice President Project
Development Lender 4,900 -
Total 109,100 -
(1) The indebtedness represents amounts loaned to these individuals by
the Company. The Company held Promissory Notes for each amount loaned
at an interest rate of 4.57%. Each of the Notes was satisfied during
2004.
(2) This amount included an outstanding loan of $50,000, bearing
interest at 5.2% and secured by a second mortgage on his residence. The
loan was paid in full during 2004.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
None of the Directors, officers of the Company, nor any person or
corporation owning more than 10% or any class of voting securities of
the Company, nor any associates or affiliates of any of them, had or
has any material interest in any transaction since the commencement of
the Company's last financial year or in any proposed transaction which
has materially affected or would materially affect the Company or any
of its subsidiaries.
AUDIT COMMITTEE INFORMATION
Audit Committee Charter
The Audit Committee of the Board of Directors operates within a written
mandate, as approved by the Board of Directors, which describes the
Committee's objectives and responsibilities. The full text of the Audit
Committee Charter is attached as Appendix A to this Information Circular.
Composition of the Audit Committee
The Audit Committee is composed of the following 3 directors:
Chris D. Mikkelsen (Chair)
Jean Charles Potvin
Patrick D. McChesney
The Board of Directors has determined each member of the Audit
Committee to be "independent" and "financially literate" as such terms
are defined under Canadian securities laws. In addition, the Chair of
the Committee, Mr. Mikkelsen, is considered by the Board to qualify as
an "audit committee financial expert" as defined by the SEC. The Board
has made these determinations based on the education and experience of
each member of the Committee, as outlined below.
Relevant Education and Experience
The following is a description of the education and experience of each
member of the Audit Committee that is relevant to the performance of
his responsibilities as a member of the Audit Committee:
Mr. Mikkelsen is a Principal in McDirmid, Mikkelsen & Secrest, P.S., a
certified public accounting firm. Mr. Mikkelsen has a Professional
Accounting degree from Eastern Washington University. After working for
a national accounting firm, he left in 1976 to form McDirmid, Mikkelsen
and Secrest, P.S. He has extensive technical audit and accounting
experience related to a variety of industries. Mr. Mikkelsen has been
Chair of, and a member of, this Committee since August 1998.
Mr. Potvin is Chief Executive Officer of Tiomin Resources Inc., a
company involved in the development of several large titanium-bearing
mineral sands deposits in Kenya. Mr. Potvin holds a Bachelor of Science
degree in Geology from Carleton University and an MBA from the
University of Ottawa. He spent nearly 14 years as a mining investment
analyst for a large Canadian investment brokerage firm (Burns Fry Ltd.,
now BMO Nesbitt Burns Inc.). Mr Potvin is also Chairman of Sulliden
Exploration Inc., a public Canadian mineral exploration company, where
he sits on the audit committee. He is also a member of the audit
committee of Polaris Energy Corporation, a publicly-listed
geothermal-based power producer. Mr. Potvin has been a member of this
Committee since August 2003.
Mr. McChesney is the Controller of Remtech, Inc., a general
construction and environmental remediation company, and a Director of
Remediation Technologies Nigeria Ltd., where he is responsible for the
financial statements. He is also President of LMO Test Systems, Inc., a
manufacturer of automated test equipment for the semiconductor industry,
where he is also responsible for the company's financial statements. Mr.
McChesney graduated from the University of Portland, with a Bachelor
degree in Accounting. For his entire 32 year working career, he has
prepared and analyzed financial statements in the mining, public
accounting, retail, electronics and construction industries. Mr.
McChesney has been a member of this Committee since August 1998.
External Auditor Service Fees
Fees payable to the Company's independent external auditor,
PricewaterhouseCoopers LLP, are detailed in the following table:
Fee category Year Ended 2004 (US$) Year Ended 2003 (US$)
Audit $48,791 $44,309
Audit related 18,827 4,931
Tax 3,668 -
All other fees - -
Total $71,286 $49,240
The nature of the services provided by PricewaterhouseCoopers LLP under
each of the categories indicated in the table is described below.
Audit Fees
Audit fees were for professional services rendered by
PricewaterhouseCoopers LLP for the audit of the Company's annual
financial statements.
Audit-related Fees
Audit-related fees were for the review of the Company's quarterly
financial statements and services provided in respect of other
regulatory-required auditor attest functions associated with government
audit reports, registration statements, prospectuses, periodic reports
and other documents filed with securities regulatory authorities or
other documents issued in connection with securities offerings.
Tax Fees
Tax fees were for services outside of the audit scope and represented
consultations for tax compliance and advisory services relating to
common forms of domestic and international taxation.
All Other Fees
None.
Pre-approval Policies and Procedures
The Company's Audit Committee has adopted policies and procedures for
the pre-approval of services performed by the Company's external
auditors, with the objective of maintaining the independence of the
external auditors. The Company's policy requires that the Audit
Committee pre-approve all audit, audit-related, tax and other
permissible non-audit services to be performed by the external
auditors, including all engagements of the external auditors with
respect to the Company's subsidiaries. Prior approval of engagements
for services other than the annual audit may, as required, be approved
by the Chair of the Committee with the provision that such approvals be
brought before the full Committee at its next regular meeting. The
Company's policy sets out the details of the permissible non-audit
services consistent with the independence requirements of the United
States Sarbanes-Oxley Act of 2002 and the Canadian independence
standards for auditors. The Chief Financial Officer presents the
details of any proposed assignments of the external auditor for
consideration by the Audit Committee. The procedures do not include
delegation of the Audit Committee's responsibilities to management of
the Company.
CORPORATE GOVERNANCE
The TSX requires listed corporations to disclose their approach to
corporate governance. The Company's disclosure in this regard is set
out in Appendix B to this Information Circular.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Other than as set forth in this Information Circular, no person who has
been a Director or senior officer of the Company at any time since the
beginning of the last financial year, nor any associate or affiliate of
any of the foregoing, has any material interest, directly or indirectly,
by way of beneficial ownership of securities or otherwise, in any matter
to be acted upon.
ANY OTHER MATTERS
Management of the Company knows of no matters to come before the
Meeting other than those referred to in the Notice of Annual and
Special Meeting of Shareholders accompanying this Information Circular.
However, if any other matters properly come before the Meeting, it is
the intention of the persons named in the form of proxy accompanying
this Information Circular to vote the same in accordance with their
best judgment of such matters.
ADDITIONAL INFORMATION
Additional information about the Company may be found on the SEDAR
website at www.sedar.com on the U.S. Securities and Exchange
Commission's website at www.sec.gov and on the Company's website at
www.goldreserveinc.com. Additional financial information is provided in
the Company's comparative financial statements and management's
discussion and analysis for its year ended December 31, 2004, as
contained in the 2004 Annual Report. A copy of this document and other
public documents of the Company are available upon request to:
Gold Reserve Inc. Attention: Robert A. McGuinness 926 W. Sprague
Avenue, Suite 200 Spokane, Washington 99201 Phone: (509) 623-1500 Fax:
(509) 623-1634
APPROVAL AND CERTIFICATION
The contents and the sending of this Information Circular have been
approved by the Board.
The forgoing contains no untrue statement of a material fact and does
not omit to state a material fact that is required to be stated or that
is necessary to make a statement not misleading in light of the
circumstances in which it is made.
Dated at Spokane, Washington, this 14th day of April 2005.
Rockne J. Timm
Chief Executive Officer
Robert A. McGuinness
Vice President Finance and Chief Financial Officer
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Adopted as of September 2, 2003
Amended March 29, 2005
Purpose
The primary purposes of the Audit Committee (the "Committee") are to
oversee on behalf of the Board of Directors ("Board") of Gold Reserve
Inc. (the "Company"):
.. _ the Company's accounting and financial reporting processes and
the integrity of its financial statements;
.. _ the audits of the Company's financial statements and the
appointment, compensation, qualifications, independence and performance
of the Company's independent auditors; and
.. _ the Company's compliance with legal and regulatory requirements.
The Committee also has the purpose of preparing the report that rules
of the U.S. Securities and Exchange Commission (the "SEC") or the
Ontario Securities Commission (the "OSC") require the Company to
include in its annual proxy or information statement and Form 20-F
filed with the SEC and/or its equivalent filed with the OSC.
The Committee's function is one of oversight only and does not relieve
management of its responsibilities for preparing financial statements
that accurately and fairly present the Company's financial results and
condition, nor the independent auditors of their responsibilities
relating to the audit or review of financial statements.
Organization
The Committee shall consist of at least three directors. The Board
shall designate a Committee member as the chairperson of the Committee,
or if the Board does not do so, the Committee members shall appoint a
Committee member as chairperson by a majority vote of the authorized
number of Committee members.
All Committee members shall be "independent," as defined and to the
extent required in the applicable SEC and OSC rules and American Stock
Exchange ("AMEX") and Toronto Stock Exchange ("TSX") listing standards
and applicable laws and regulations, as they may be amended from time
to time (collectively, such SEC and exchange requirements are referred
to as the "listing standards"), for purposes of audit committee
membership.
Notwithstanding the foregoing, one director who is not independent may
be appointed to the Committee if the Board, under exceptional and
limited circumstances, determines that membership on the Committee by
the individual is required having regard to the best interests of the
Company and its shareholders, and the Board discloses, in the next
periodic filing made with the SEC subsequent to such determination, the
nature of the relationship and the reasons for that determination;
provided, however, that any such non-independent Committee member may
only serve on the Committee for two (2) years and may not serve as the
chairperson of the Committee.
Each Committee member shall be "financially literate" upon appointment
to the Committee, as such qualification is interpreted by the Board in
its business judgment pursuant to the listing standards. At all times
there shall be at least one member of the Committee who, in the Board's
business judgment, is an audit committee "financial expert" as defined
in the SEC rules and is "financially sophisticated" as defined in the
AMEX listing standards.
Subject to the requirements of the listing standards, the Board may
appoint and remove Committee members in accordance with the Company's
by-laws. Committee members shall serve for such terms as may be fixed
by the Board, and in any case at the will of the Board whether or not a
specific term is fixed.
Independent Auditors and Their Services
The Committee shall have the sole authority and direct responsibility
for the appointment, compensation, retention, termination, evaluation
and oversight of the work of the independent auditors engaged by the
Company for purposes of preparing or issuing an audit report or related
work or performing other audit, review or attest services for the
Company. The independent auditors shall report directly to the
Committee. The Committee's authority includes the resolution of
disagreements between management and the auditors regarding financial
reporting.
The Committee shall pre-approve all audit, review, attest and
permissible non-audit services to be provided to the Company or its
subsidiaries by the independent auditors. The Committee may establish
pre-approval policies and procedures in compliance with applicable
listing standards. The Committee shall obtain and review, at least
annually, a report by the independent auditors describing:
.. _ the firm's internal quality-control procedures; and
.. _ any material issues raised by the most recent internal
quality-control review, or peer review, of the auditing firm or by any
inquiry or investigation by governmental or professional authorities,
within the preceding five years, respecting one or more independent
audits carried out by the firm, and any steps taken to deal with any
such issues.
In addition, the Committee's annual review of the independent auditors'
qualifications shall also include the review and evaluation of the lead
partner of the independent auditors for the Company's account, and
evaluation of such other matters as the Committee may consider relevant
to the engagement of the auditors, including views of company management
and internal finance employees, and whether the lead partner or auditing
firm itself should be rotated.
Annual Financial Reporting
As often and to the extent the Committee deems necessary or
appropriate, but at least annually in connection with the audit of each
fiscal year's financial statements, the Committee shall:
1. Review and discuss with appropriate members of management the
annual audited financial statements, related accounting and auditing
principles and practices, and (when required of management under the
applicable listing standards) management's assessment of internal
control over financial reporting.
2. Timely request and receive from the independent auditors the report
required (along with any required update thereto) pursuant to applicable
listing standards prior to the filing of an audit report, concerning:
.. _ all critical accounting policies and practices to be used;
.. _ all alternative treatments of financial information within
generally accepted accounting principles for policies and practices
relating to material items that have been discussed with company
management, including ramifications of the use of such alternative
disclosures and treatments and the treatment preferred by the
independent auditors; and
_ other material written communications between the independent
auditors and company management, such as any management letter or
schedule of unadjusted differences.
3. Discuss with the independent auditors the matters required to be
discussed by AICPA Statement on Auditing Standards No. 61, including
such matters as:
.. _ the quality and acceptability of the accounting principles
applied in the financial statements;
.. _ new or changed accounting policies, and significant estimates,
judgments, uncertainties or unusual transactions;
.. _ the selection, application and effects of critical accounting
policies and estimates applied by the Company;
.. _ issues raised by any "management" or "internal control" letter
from the auditors, problems or difficulties encountered in the audit
(including any restrictions on the scope of the work or on access to
requested information) and management's response to such problems or
difficulties, significant disagreements with management, or other
significant aspects of the audit; and
.. _ any off-balance sheet transactions, and relationships with any
unconsolidated entities or any other persons, which may have a material
current or future effect on the financial condition or results of the
Company and are required to be reported under SEC rules.
4. Review and discuss with appropriate members of management the
Company's intended disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" (or
equivalent disclosures) to be included in the Company's annual report
on Form 20-F filed with the SEC and its equivalent filed with the OSC.
5. Receive from the independent auditors a formal written statement of
all relationships between the auditors and the Company consistent with
Independence Standards Board Standard No. 1.
6. Actively discuss with the independent auditors any disclosed
relationships or services that may impact their objectivity and
independence, and take any other appropriate action to oversee their
independence.
Quarterly Financial Reporting
The Committee's quarterly review shall normally include:
1. Review and discuss the quarterly financial statements of the
Company and the results of the independent auditors' review of these
financial statements with appropriate members of management.
2. Review and discuss with Company management and, if appropriate, the
independent auditors, significant matters relating to:
.. _ the quality and acceptability of the accounting principles
applied in the financial statements;
.. _ new or changed accounting policies, and significant estimates,
judgments, uncertainties or unusual transactions;
.. _ the selection, application and effects of critical accounting
policies and estimates applied by the Company; and
.. _ any off-balance sheet transactions and relationships with any
unconsolidated entities or any other persons which may have a material
current or future effect on the financial condition or results of the
Company and are required to be reported under SEC rules.
3. Review and discuss with appropriate members of management the
Company's intended disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" (or
equivalent disclosures) to be included in the Company's quarterly
reports prepared in accordance with Canadian requirements and filed on
Form 6-K with the SEC and its equivalent filed with the OSC.
Other Functions
The Committee shall review and assess the adequacy of this charter
annually, recommend any proposed changes to the full Board and, to the
extent required by the listing standards, certify annually to any AMEX,
TSX or other listing market that the Committee reviewed and assessed the
adequacy of the charter.
The Committee shall discuss with management earnings press releases
(including the type and presentation of information to be included,
paying particular attention to any use of "pro forma" or "adjusted"
non-GAAP information), and financial information and earnings guidance
provided to analysts and rating agencies. This may be conducted
generally as to types of information and presentations, and need not
include advance review of each release or other information or guidance.
The Committee, to the extent it deems necessary or appropriate, shall
periodically review with management the Company's disclosure controls
and procedures, internal control over financial reporting and systems
and procedures to promote compliance with applicable laws.
The Committee shall periodically:
.. _ inquire of management and the independent auditors about the
Company's major financial risks or exposures;
.. _ discuss the risks and exposures and assess the steps management
has taken to monitor and control the risks and exposures; and
.. _ discuss guidelines and policies with respect to risk assessment
and risk management.
The Committee shall conduct any activities relating to the Company's
code(s) of conduct and ethics as may be delegated from time to time to
the Committee by the Board.
The Committee shall establish and maintain procedures for:
.. _ the receipt, retention, and treatment of complaints received by
the Company regarding accounting, internal accounting controls or
auditing matters; and
.. _ the confidential, anonymous submission by employees of the
Company of concerns regarding questionable accounting or auditing
matters.
If the Committee so determines, the confidential, anonymous submission
procedures may also include a method for interested parties to
communicate directly with non-management directors.
It is the Company's policy that the Company shall not enter into
transactions required to be disclosed under item 404 of the Securities
and Exchange Commission's Regulation S-K or other applicable Canadian
requirements unless the Committee first reviews and approves such
transactions.
The Committee shall review and take appropriate action with respect to
any reports to the Committee from internal or external legal counsel
engaged by the Company concerning any material violation of securities
law or breach of fiduciary duty or similar violation by the Company,
its subsidiaries or any person acting on their behalf.
The Committee shall, from time to time as necessary, review the effect
of regulatory and accounting initiatives on the financial statements of
the Company. In addition, the Committee, as it considers appropriate,
may consider and review with the full Board, company management,
internal or external legal counsel, the independent auditors or any
other appropriate person any other topics relating to the purposes of
the Committee which may come to the Committee's attention.
The Committee may perform any other activities consistent with this
charter, the Company's corporate governance documents and applicable
listing standards, laws and regulations as the Committee or the Board
considers appropriate.
Meetings, Reports and Resources
The Committee shall meet as often as it determines is necessary, but
not less than quarterly. The Committee shall meet separately with
management and independent auditors. In addition, the Committee may
meet with any other persons, as it deems necessary.
The Committee may establish its own procedures, including the formation
and delegation of authority to subcommittees, in a manner not
inconsistent with this charter, the by-laws or the listing standards.
The chairperson or a majority of the Committee members may call
meetings of the Committee. A majority of the authorized number of
Committee members shall constitute a quorum for the transaction of
Committee business, and the vote of a majority of the Committee members
present at a meeting at which a quorum is present shall be the act of
the Committee, unless in either case a greater number is required by
this charter, the by-laws or the listing standards. The Committee shall
keep written minutes of its meetings and deliver copies of the minutes
to the corporate secretary for inclusion in the Company's corporate
records.
The Committee shall prepare any audit committee report required to be
included in the Company's annual meeting proxy or information
statement, and report to the Board on the other matters relating to the
Committee or its purposes, as required by the listing standards. The
Committee shall also report to the Board annually the overall results
of its annual review of the independent auditors' qualifications,
performance and independence. The Committee shall also report to the
Board on the major items covered by the Committee at each Committee
meeting, and provide additional reports to the Board as the Committee
may determine to be appropriate, including review with the full Board
of any issues that arise from time to time with respect to the quality
or integrity of the Company's financial statements, the Company's
compliance with legal or regulatory requirements, the performance and
independence of the independent auditors.
The Committee is at all times authorized to have direct, independent
and confidential access to the independent auditors and to the
Company's other directors, management and personnel to carry out the
Committee's purposes. The Committee is authorized to conduct or
authorize investigations into any matters relating to the purposes,
duties or responsibilities of the Committee.
As the Committee deems necessary to carry out its duties, it is
authorized to select, engage (including approval of the fees and terms
of engagement), oversee, terminate, and obtain advice and assistance
from outside legal, accounting, or other advisers or consultants. The
company shall provide for appropriate funding, as determined by the
Committee, for payment of:
.. _ compensation to the independent auditors for their audit and
audit-related, review and attest services;
.. _ compensation to any advisers engaged by the Committee; and
_ ordinary administrative expenses of the Committee that are
necessary or appropriate in carrying out its duties.
Nothing in this charter is intended to preclude or impair the
protection provided under corporation law for good faith reliance by
members of the Committee on reports or other information provided by
others.
APPENDIX B STATEMENT OF CORPORATE GOVERNANCE PRACTICES
In this Appendix, the Company's corporate governance practices are
compared with the TSX's guidelines for improved corporate governance
(the "TSX Guidelines"). The Company's Board has reviewed this response
to the TSX Guidelines.
TSX Guidelines
1. The board of directors of every corporation should explicitly
assume responsibility for the stewardship of the corporation and, as
part of the overall stewardship responsibility, should assume
responsibility for the following matters:
(a) adoption of a strategic planning process;
(b) the identification of principal risks of the corporation's
business and ensuring theimplementation of appropriate systems to
manage these risks;
(c) succession planning, including appointing, training and
monitoring senior management;
(d) a communications policy for the corporation; and
(e) the integrity of the corporation's internal control and management
information systems.
Company's Governenace Practices
1. The board of directors (the Board) has the responsibility for supervising
the conduct of the Company's affairs and the management of its business.
To assist the Board in the implementation of key policies, it delegates
some of its responsibility to committees. Although the Board has delegated
to management responsibility for the day-to-day operations of the Company,
the Board has ultimate responsibility for the stewardship of the Company.
Strategic planning is at the forefront of deliberations at meetings of
the Board. Management is responsible for the development of overall
corporate strategies. These strategies are under constant review by the
Board and senior management. The Board's duties include overseeing
strategic planning, reviewing and assessing principal risks to the
Company's business and approving risk management strategies.
The Board ensures that an appropriate risk assessment process is in
place to identify, assess and manage the principal risks of the
Company's business. Management reports regularly to the Board in
relation to principal risks which potentially could affect the
Company's business activities.
In considering and making appointments of senior management, the Board
considers it appropriate, where relevant, to address succession and
planning issues.
The Board reviews and approves, for release to shareholders, quarterly
and annual reports on the performance of the Company. It seeks to
ensure that the Company communicates effectively with its shareholders,
respective investors and the public, including dissemination of
information on a timely basis. Through its officers, the Company responds
to questions and provides information to individual shareholders,
institutional investors, financial analysts and the media.
The Board's duties include supervising and evaluating management,
authorizing significant expenditures, and overseeing the Company's
internal controls and information systems.
TSX Guidelines
2. The board of directors of every corporation should be constituted
with a majority of individuals who qualify as unrelated directors. An
unrelated director is a director who is independent of management and
is free from any interest and any business or other relationship which
could, or could reasonably be perceived to, materially interfere with
the director's ability to act with a view to the best interests of the
corporation, other than interests and relationships arising from
shareholding. A related director is a director who is not an unrelated
director. If the corporation has a significant shareholder, in addition
to a majority of unrelated directors, the board should include a number
of directors who do not have interests in or relationships with either
the corporation or the significant shareholder and which fairly reflects
the investment in the corporation by shareholders other than the
significant shareholder. A significant shareholder is a shareholder with
the ability to exercise a majority of the votes for the election of the
board of directors.
Company's Governenace Practices
2. The Board presently consists of seven members, of which four are
considered unrelated.
The Corporation does not have a significant shareholder.
TSX Guidelines
3. The application of the definition of unrelated director to the
circumstances of each individual director should be the responsibility
of the board which will be required to disclose on an annual basis
whether the board has a majority of unrelated directors, or, in the
case of a corporation with a significant shareholder, whether the board
is constituted with the appropriate number of directors which are not
related to either the corporation or the significant shareholder.
Management directors are related directors. The board will also be
required to disclose on an annual basis the analysis of the application
of the principles supporting this conclusion.
Company's Governance Practices
3. The Board believes that Messrs. Coleman, McChesney, Mikkelsen, and
Potvin are unrelated directors within the meaning of the TSX Guidelines
as none of them is an executive officer or employee of the Company or
party to any material contract with the Company and none of them
receive remuneration from the Company in excess of directors' fees and
grants of stock options. Mr. Coleman is non-executive Chairman. The
Board believes that the four Directors are free from any interest and
any business or other relationship which could, or could reasonably be
perceived to, materially interfere with their ability to act
independently from management or to act as a director with a view to
the best interests of the Company, other than interests and
relationships arising from shareholdings. The remaining Directors,
Messrs. Timm, Belanger and Geyer, are employees of the Company.
TSX Guidelines
4. The board of directors of every corporation should appoint a
committee of directors composed exclusively of outside, i.e.,
non-management, directors, a majority of whom are unrelated directors,
with the responsibility for proposing to the full board new nominees to
the board and for assessing directors on an ongoing basis.
Company's Governance Practices
4.The Company's unrelated directors are responsible for
the assessment of the effectiveness of the Board as a whole and
participate in the recruitment and recommendation of nominees for
appointment or election to the Board.
TSX Guidelines
5. Every board of directors should implement a process to be carried
out by the nominating committee or other appropriate committee for
assessing the effectiveness of the board as a whole, the committees of
the board and the contribution of individual directors.
Company's Governance Practices
5. Due to its current size, the Board does not currently have a separate
committee for assessing the effectiveness of the Board as a whole, the
committees of the Board and the contribution of individual Directors.
The Board as a whole bears these responsibilities.
TSX Guidelines
6. Every corporation, as an integral element of the process for
appointing new directors, should provide an orientation and education
program for new recruits to the board.
Company's Governance Practices
6. Due to its current size, the Board does not currently provide an
orientation and education program specifically training new recruits to
the Board. All directors are given direct access to management to provide
information on the Company and its business and affairs.
TSX Guidelines
7. Every board of directors should examine its size and, with a view
to determining the impact of the number upon effectiveness, undertake
where appropriate, a program to reduce the number of directors to a
number which facilitates more effective decision-making.
Company's Governance Practices
7. The size and composition of the Board is subject to periodic review
by the Board as a whole. Having regard to the present size and activities
of the Company, the current composition of seven members provides, in the
Board's view, an appropriate board size for the Company.
TSX Guidelines
8. The board of directors should review the adequacy and form
of compensation of directors and ensure the compensation realistically
reflects the responsibilities and risk involved in being an effective
director.
Company's Governance Practices
8. The Board reviews from time to time the compensation paid to
Directors in order to ensure that they are being adequately compensated
for the duties performed and the obligations they assume. The Board as
a whole is responsible for determining the compensation paid to the
Directors.
TSX Guidelines
9. Committees of the board of directors should generally be
composed of outside directors, a majority of whom are unrelated
directors, although some board committees, such as the executive
committee, may include one or more inside directors.
Company's Governance Practices
9. The Board has three Committees: the Audit Committee, the Compensation
Committee and the Executive Committee.
The Audit Committee, which met 4 times during 2004, in person and by
phone, consists of Chris D. Mikkelsen (Chair), Patrick D. McChesney and
J.C. Potvin, all of whom are unrelated directors.
The Compensation Committee, which met 9 times during 2004, in person
and by phone, consists of Chris D. Mikkelsen (Chair) and Jean Charles
Potvin, both of whom are unrelated directors.
The Executive Committee, which is comprised of James H. Coleman, Rockne
J. Timm and A. Douglas Belanger, meets in person or by phone on a
regular basis. Mr. Coleman is considered an outside and unrelated
director. Mr. Timm and Mr. Belanger are considered to be inside
directors.
TSX Guidelines
10. Every board of directors should expressly assume
responsibility for, or assign to a committee of directors the general
responsibility for, developing the corporation's approach to governance
issues. This committee would, amongst other things, be responsible for
the corporation's response to these governance guidelines.
Company's Governance Practices
10. The Board as a whole assumes responsibility for the Company's
approach to all matters of corporate governance, including the
Company's response to the TSX Guidelines.
TSX Guidelines
11. The board of directors, together with the CEO, should
develop position descriptions for the board and for the CEO, involving
the definition of the limits to management's responsibilities. In
addition, the board should approve or develop the corporate objectives
which the CEO is responsible for meeting.
Company's Governance Practices
11. The Board as a whole is responsible for the overall stewardship and
governance of the Company. This includes developing position
descriptions for the Board and the CEO. The Board reviews and approves
the corporate objectives the CEO is responsible for meeting and
assesses the CEO's performance against those objectives. The Board
defines the limits to management's authority. The Board expects
management to: review the Company's strategies and their implementation
of those strategies in all key areas of the Company's activities; carry
out a comprehensive budgeting process and monitor the Company's financial
performance against the budget; and identify opportunities and risks
affecting the Company's business and find ways of dealing with those
opportunities and risks as they may arise. For the Company's Governance
Practices see TSX Guideline #1.
TSX Guidelines
12. Every board of directors should have in place appropriate structures
and procedures to ensure that the board can function independently of
management. An appropriate structure would be to (i) appoint a chair of the
board who is not a member of management with responsibility to ensure the
board discharges its responsibilities or (ii) adopt alternate means such
as assigning this responsibility to a committe of the board or to a director,
sometimes referred to as the "lead director". Appropriate procedures may
involve the board meeting on a regular basis without management present or
may involve expressly assigning the responsibility for administering the
board's relationship to management to a committe of the board.
Company's Governance Practices
12. The Board has appointed James H. Coleman as its Chairman. One of his
responsibilities is to oversee the Board processes so that it operates
efficiently and effectively in carrying out its duties and to act as liason
between the Board and management. The Board believes that, in light of the
Company's size and stage of development, Mr. Coleman's background with
the Company, it is appropriate for Mr. Coleman to act as Chairman of
the Board.
TSX Guidelines
13. The audit committee of every board of directors should be composed
only of outside directors. The roles and responsibilities of the audit
committee should be specifically defined so as to provide appropriate
guidance to audit committee members as to their duties. The audit
committee should have direct communication channels with the internal
and external auditors to discuss and review specific issues as
appropriate. The audit committee duties should include oversight
responsibility for management reporting on internal control. While it
is management's responsibility to design and implement an effective
system of internal control, it is the responsibility of the audit
committe to ensure that management has done so.
Company's Governance Practices
13. The Audit Committee, consisting entirely of outside and unrelated
directors, meets regularly with the Company's financial management
team, and with the external auditors without management present, to
satisfy itself and the Board that shareholders receive timely and
accurate reports on the financial status of the Company. The Audit
Committee recommends to the Board a firm of independent certified
public accountants to audit the annual financial statements, discusses
with the auditors and approves in advance the scope of the audit,
reviews with the independent auditors the financial statements and
their audit report, reviews management's administration of the system
of internal accounting controls, and reviews the Company's procedures
relating to business ethics. The Board has delegated review of the
quarterly financial statements to the Audit Committee prior to filing
with regulatory agencies. The Audit Committee reports to the Board on
its activities and findings.
TSX Guidelines Company's Governance Practices
14. The board of directors should implement a system which enables an
individual director to engage an outside adviser at the expense of the
corporation in appropriate circumstances. The engagement of the
outside adviser should be subject to the approval of an appropriate
committee of the board.
Company's Governance Practices
14. The Board permits individual Directors, subject to the approval of the
Board, to engage outside legal, financial or other expert advisors at the
Company's expense in appropriate circumstances.
GOLD RESERVE INC.
PROXY
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
June 2, 2005
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF GOLD RESERVE INC.
The undersigned shareholder of Gold Reserve Inc. (the "Company") hereby
appoints Rockne J. Timm, Chief Executive Officer of the Company, or
failing him, Robert A. McGuinness, Vice President Finance and Chief
Financial Officer of the Company, or instead of either of them
____________________, as proxyholder for the undersigned, with power of
substitution, to attend, act and vote for and on behalf of the
undersigned at the Annual and Special Meeting (the "Meeting") of
Shareholders of the Company to be held on June 2, 2005 at 9:30 a.m.
(Pacific daylight time) and at any adjournment thereof, in the same
manner, to the same extent and with the same powers as if the
undersigned were present at the said Meeting or any adjournment or
adjournments thereof and, without limiting the general authorization
given, the person above named is specifically directed to vote on behalf
of the undersigned in the following manner:
1) On the election of directors, for the nominees set forth in the
Information Circular of the Company dated April 14, 2005:
VOTE FOR ____________ or WITHHOLD VOTE _________
(and, if no specification is made, to vote FOR);
2) On the appointment of PricewaterhouseCoopers LLP as auditors of
the Company:
VOTE FOR ____________ or WITHHOLD VOTE _________
(and, if no specification is made, to vote FOR);
3) On the approval to increase the options available to the 1997
Incentive Stock Option Plan by an additional 800,000:
VOTE FOR ____________ or VOTE AGAINST _________
(and, if no specification is made, to vote FOR);
4) On the approval of the issuance of 75,000 Class A Common Shares
of the Company for purchase by the KSOP Plan:
VOTE FOR ____________ or VOTE AGAINST _________
(and, if no specification is made, to vote FOR);
and conferring discretionary authority to vote on amendments or variations
to the matters identified in the Notice of Annual and Special Meeting
relating to the Meeting and on all other matters that may properly come
before the Meeting or any adjournment thereof in such manner as the person
above named may see fit.
The undersigned hereby revokes any instrument of proxy previously given and
does hereby further ratify all the said proxy may lawfully do in the premises.
DATED this _____ day of __________, 2005.
________________________________________ _____________________________
Print Name Print Name (if held jointly)
________________________________________ _____________________________
Signature Signature (if held jointly)
99.3 Report of Voting Results at Annual and Special Meeting of Shareholders
GOLD RESERVE INC.
Annual and Special Meeting of Shareholders
June 2, 2005
REPORT OF VOTING RESULTS
Section 11.3 National Instrument 51-102 - Continuous Disclosure Obligations
June 2, 2005
Common Shares represented at the meeting 22,053,636 or 62%
Total outstanding (Class A and Class B) Common Shares
as at record date: 35,807,216
The matters voted upon at the Meeting and the results of the voting were
as follows:
General Business Outcome of Vote Votes For Votes Withheld
1. Election of Directors
The election of
Rockne J. Timm,
A. Douglas Belanger,
James P. Geyer,
James H. Coleman,
Patrick D. McChesney,
Chris D. Mikkelsen, and
Jean Charles Potvin
as directors. FOR 21,482,074 571,562
2. Appointment of Auditor
The appointment of
PricewaterhouseCoopers LLP
as auditor until the close
of the next annual meeting
or until a successor is
appointed. FOR 22,364,953 40,768
Special Business Outcome of Vote Votes For Votes Against
3.Amendment to increase
the number of Common
Shares subject to the
Plan by 800,000. FOR 14,433,609 5,327,099
4.The issuance of 75,000
Class A common shares for
purchase by the KSOP Plan FOR 18,435,868 1,634,802
For additional information please see the Circular dated April 14, 2005.
June 10, 2005
/s/ Robert A. McGuinness
Vice President Finance and CFO