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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 Quarter Ended March 31, 2006
Commission file number 001-31819
GOLD RESERVE INC.
Address of Principal Executive Offices:
926 West Sprague Avenue
Suite 200
Spokane, Washington 99201
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F. Form 20-F x Form 40-F.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): ___
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):
Forward Looking Statements
The information presented or incorporated by reference in this Form 6-K
contains both historical information and forward-looking statements
(including within the meaning of Section 27A of the United States
Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the United States Securities Exchange Act of 1934, as amended
(the "U.S. Exchange Act"). These forward-looking statements involve
risks and uncertainties, as well as assumptions that, if they never
materialize, prove incorrect or materialize other than as currently
contemplated, could cause the results of the Company and its
consolidated subsidiaries to differ materially from those expressed or
implied by such 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 Venezuela; corruption and
uncertain legal enforcement; requests for improper payments;
regulatory, political and economic risks associated with Venezuelan
operations (including changes in previously established legal regimes,
rules or processes); the ability to obtain or maintain the necessary
permits or additional funding for the development of the Brisas
Project; in the event any key findings or assumptions previously
determined by the Company or the Company's consultants in conjunction
with the feasibility study concerning the Brisas Project prepared in
2005 (as updated or modified from time to time) (the "Bankable
Feasibility Study") significantly differ or change as a result of
actual results in the Company's expected construction and production at
the Brisas Project (including capital and operating cost estimates);
risk that actual mineral reserves may vary considerably from estimates
presently made; impact of currency, metal prices and metal production
volatility; fluctuations in energy prices; changes in proposed
development plans (including technology used); the Company's dependence
upon the abilities and continued participation of certain key employees;
and risks normally incident to the operation and development of mining
properties. This list is not exhaustive of the factors that may affect
any of the Company's forward-looking statements.
Statements concerning reserves and mineral resource estimates may also
be deemed to constitute forward-looking statements to the extent that
they involve estimates of the mineralization that is expected to be
encountered if the property is developed, and in the case of mineral
reserves, such statements reflect the conclusion based on certain
assumptions that the mineral deposit can be economically exploited.
The words "believe," "anticipate," "expect," "intend," "estimate,"
"plan," "assume," "positioned," "may," "could" and other similar
expressions that are predictions of or indicate future events and
future trends that do not relate to historical matters, identify
forward-looking statements. Any such forward-looking statements are not
intended to give any assurances as to future results.
Investors are cautioned not to put undue reliance on forward-looking
statements, and should not infer that there has been no change in the
affairs of the Company since the date of this short form prospectus or
the documents incorporated by reference herein that would warrant any
modification of any forward-looking statement made in this document,
other documents filed periodically with securities regulators or
documents presented on the Company's website. All subsequent written
and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety
by this notice. The Company disclaims any intent or obligation to
update publicly these forward-looking statements, whether as a result
of new information, future events or otherwise. Investors are urged to
read the Company's filings with U.S. and Canadian securities regulatory
agencies, which can be viewed on-line at www.sedar.com or www.sec.gov.
Additionally, investors can request a copy of any of these filings
directly from the Company as described elsewhere herein.
Exhibits
The following are filed as exhibits to this Form 6-K:
Exhibit
Number Description
99.1 March 31, 2006 Interim Financial Report
99.2 Chief Executive Officer's certification of interim filings
99.3 Chief Financial Officer's certification of interim filings
SIGNATURE
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.
By: s/ Robert A. McGuinness
Vice President - Finance & CFO
May 15, 2006
Exhibit Index
Exhibit
Number Description
- -----------------------------------------------------------------------
EXHIBIT 99.1 March 31, 2006 Interim Financial Report To Shareholders
GOLD RESERVE INC.
March 31, 2006
Interim Financial Report to Shareholders
U.S. Dollars
Operations Overview
Brisas Project
The Company's primary mining asset, the Brisas Project, is a
gold/copper deposit located in the Kilometre 88 mining district of the
State of Bolivar in southeastern Venezuela. In 2005, the Company, with
the assistance of a number of independent consultants, completed a
Bankable Feasibility Study (the "Feasibility Study") for the Brisas
Project. Based on the conclusions contained in the Feasibility Study,
the board of directors approved proceeding with the financing and
construction of the mine.
The Brisas Project consists of the following: a 500-hectare land parcel
consisting of the Brisas alluvial concession and the Brisas hardrock
concession beneath the alluvial concession (the "Brisas concessions").
Together these concessions contain substantially all of the
mineralization identified in the Feasibility Study. The Brisas Project
also includes a number of other existing or pending applications for
concessions, alfarjetas (a land parcel not meeting the minimum size to
be considered as a concession), Corporacion Venezolana de Guayana
("CVG") work contracts, land use permits and easements, adjacent to or
near the Brisas concessions, totaling an estimated 13,000 hectares.
The Company's original Brisas Project operating plan was approved by
the Ministry of Energy and Mines (now the Ministry of Basic Industries
and Mines ("MIBAM")) in 2003 and, since that approval, the Company has
submitted to MIBAM a number of modifications in order to minimize
impact to the environment and optimize economics of the Brisas Project.
Contained within the approved operating plan are the existing or pending
applications for concessions, alfarjetas, CVG work contracts, land use
permits and easements, adjacent to or near the Brisas concessions
described above. These additional land parcels comprise the bulk of the
land required for the mining and milling facility and related
infrastructure contemplated in the Feasibility Study. A number of
these parcels are integral to the Company's proposed operating plan and
others may be necessary for future needs. Failure to obtain one or more
of these rights or properties could have a material adverse effect on
the Company.
In addition to the pending land use issues related to project
infrastructure needs, the Company has a number of permits and approvals
relating to the Brisas Project pending before MIBAM, the Venezuelan
Ministry of the Environment and Natural Resources ("MARN") and other
regulatory or government agencies. Most importantly, the Company must
obtain the Administrative Authorization to Affect Natural Resources for
Construction of Infrastructure and Exploitation of Alluvial and Vein
Deposits of Gold and Copper from MARN, which is issued in part based on
MIBAM's approval of the project operating plan as well as the Company's
Venezuelan Environmental and Social Impact Assessment (V-ESIA) which
has already been submitted. Receipt of this material permit is required
before the Company can commence construction and operation at the Brisas
Project. The Company requires significant financing to commence such
construction and any financing relating to the Brisas Project is
expected to be subject to the receipt of this material permit. The
Company's current financial plan is to seek the required financing
after the receipt of the material permit, although the financial plan
is subject to change with potential changes in the price of the Common
Shares and gold and copper prices.
The Company is dependent on the Venezuelan regulatory authorities
issuing the Company the required operational and land use permits
before it may begin construction on, and operate, the Brisas Project.
Obtaining these required permits is also necessary in order for the
Company to adequately identify and obtain suitable financing for the
Brisas Project. Further, the Company previously filed an administrative
protest with MARN with respect to a water diversion plan that includes a
structure to divert water proposed by a third party for a property
adjacent to the northern boundary of the Brisas Project, construction
of which could impair the Company's proposed set-back arrangement for
its northern boundary as described in the Company's original operating
plan which has already been approved by MIBAM. A number of these
pending items have been outstanding for some time. The resolution of
these pending issues may be further delayed or withheld for reasons
within or outside of the Company's control or in response to the
Company's lawful actions, including policy decisions of the Venezuelan
government or its regulators or agents that have no legal basis,
unexpected changes in laws or regulations, arbitrary decisions by
relevant officials, corruption, requests for improper payments,
favoritism towards other companies or persons or any other actions that
may result from the changing and uncertain regulatory environment with
respect to mining rights.
2005 Bankable Feasibility Study
In early 2005, the Company completed a Bankable Feasibility Study with
respect to the construction and operation of the Brisas Project, our
primary mining asset. Since the completion of the Feasibility Study
management has continued to update the inputs and assumptions contained
therein, but has not yet completed the required revisions to the
original Feasibility Study. As a result, the new reserve information
and revised initial capital estimates discussed below and future
updates to working capital, life of mine capital, equipment capital
costs, closure costs and environmental management plans for the project
which are now being updated are not considered in the information
related to the 2005 Feasibility Study. The analysis and revisions to
the Study are expected to be completed in the next several months.
Thereafter, the Company expects to provide an updated project economic
model for the Brisas Project.
In May 2005, Pincock, Allen & Holt of Denver, Colorado ("PAH")
calculated an updated mineral resource and reserve estimates (the "May
2005 mineral resource and reserve estimate") summarized in the tables
below in accordance with NI 43-101 for the Brisas Project. The updated
estimate for the Brisas Project contains a proven and probable mineral
reserve of approximately 10.1 million ounces of gold and 1.29 billion
pounds of copper in 446 million tonnes of ore grading 0.703 grams of
gold per tonne and 0.13% copper, at a revenue cutoff grade of $3.00 per
tonne.
In March 2006, the Company updated its estimate of initial capital
costs for the Brisas Project, which now totals approximately US$638
million compared to the capital cost estimate of $552 million contained
in the January 2005 Feasibility Study.
Based on the results set forth in the 2005 Feasibility Study, the
operating plan assumed a large open pit mine containing proven and
probable reserves of approximately 9.2 million ounces of gold and 1.2
billion pounds of copper in 414 million tonnes of ore grading 0.69
grams of gold per tonne and 0.13% copper, at a revenue cutoff grade of
$2.76 per tonne. The final pit was based on a shape produced by an
industry standard pit optimization software using a gold price of $350
per ounce and a copper price of $0.90 per pound. The study anticipated
that the Brisas Project at full production levels, utilizing
conventional truck and shovel mining methods and processing ore at
70,000 tonnes per day would yield an average annual production of
486,000 ounces of gold and 63 million pounds of copper over an
estimated mine life of approximately 16 years.
For purposes of economic analysis, the Feasibility Study assumed an
economic model base case utilizing $400 per ounce gold and $1.00 per
pound copper. At such prices, cash operating costs (net of copper
credits) were estimated at $154 per ounce of gold and total costs per
ounce, including operating costs and initial and sustaining capital,
were estimated to be $263 per ounce of gold. Initial capital costs to
construct and place the Brisas Project into production in the
Feasibility Study were estimated to be approximately $552 million
excluding value added taxes of 14% on approximately 80% of the capital
costs. Tax exonerations or tax payment holidays are available for
various taxes including value added taxes and import duty tax on the
initial capital costs. Management is in the process of preparing
applications for all available exonerations and expects to obtain such
exonerations prior to the construction of the project. As a result, the
cost of such taxes and import duties are not included in the initial
costs of the project. However, there can be no assurances that such
exonerations will be obtained, the result of which would be to increase
capital and operating costs.
Mineral Resource and Reserve Estimates Contained in the 2005
Feasibility Study.
Pincock Allen & Holt ("PAH") calculated the mineral resource and
reserve estimates contained herein, most recently reported upon in
February 2005 in accordance with CSA National Instrument 43-101, as
required by Canadian Securities regulatory authorities. We advise U.S.
investors that definitions contained in National Instrument 43-101
differ in certain respects from those set forth in the U.S. Securities
and Exchange Commission Industry Guide 7.
Brisas Feasibility Study Mineral Resource Estimate
Based on work completed by PAH for the Brisas Feasibility Study, using
an off-site smelter process for treating copper concentrates, the
Brisas Project is estimated to contain a measured and indicated mineral
resource of 10.97 million ounces of gold and approximately 1.4 billion
pounds of copper (based on 0.4 gram per tonne gold equivalent cut-off).
A glossary of terms used herein is contained in the appendix.
Cautionary Note to U.S. Investors concerning estimates of Measured and
Indicated Resources. This section uses the terms "measured" and
"indicated resource." We advise U.S. investors that while the terms
"measured" and "indicated resource" are recognized by Canadian
regulations, the U.S. Securities and Exchange Commission does not
recognize them. U.S. investors are cautioned not to assume that the
mineralization not already categorized as mineral reserves, will ever
be converted into reserves.
The February 2005 estimated measured and indicated mineral resource
utilizing an off-site smelter process is summarized in the following
table and includes the mineral reserve estimate shown in the following
section:
(kt=1,000 tonnes) Measured Indicated Measured and Indicated
Au Eq Au Cu Au Cu Au Cu
Cut-off Grade kt (gpt) (%) kt (gpt) (%) kt (gpt) (%)
- ---------------------------------------------------------------------------------------
0.40 217,883 0.700 0.118 284,941 0.662 0.132 502,824 0.678 0.126
- ---------------------------------------------------------------------------------------
(In Millions) Measured Indicated Measured and Indicated
Au Eq Au Cu Au Cu Au Cu
Cut-off Grade oz. lb. oz. lb. oz. lb.
- ---------------------------------------------------------------------------------------
0.40 4.905 566 6.066 827 10.971 1,393
- ---------------------------------------------------------------------------------------
The inferred mineral resource, based on an off-site smelter process
(0.4 gram per tonne gold equivalent cut-off), is estimated at 126.5
million tonnes containing 0.65 grams gold per tonne and 0.13 percent
copper. The mineral resource and gold equivalent (AuEq) cut-off is
based on $350 per gold ounce and $0.90 per pound copper. The qualified
persons involved in the property evaluation and resource and reserve
estimates were Raul Borrastero C.P.G., Susan Poos, P.E., Richard
Addison, P.E., and Rick Lambert, P.E. of PAH, and Brad Yonaka of Gold
Reserve.
Cautionary Note to U.S. Investors concerning estimates of Inferred
Resources. This section uses the term "inferred" resources. We advise
U.S. investors that while the term "inferred resource" is recognized by
Canadian regulations, the U.S. Securities and Exchange Commission does
not recognize such terms. An "inferred resource" has a great amount of
uncertainty as to its existence and its economic and legal feasibility.
Under Canadian disclosure rules, estimates of inferred mineral resources
may not form the basis of feasibility or pre-feasibility studies, except
in rare cases. U.S. investors are cautioned not to assume that part or
all of an inferred resource exists, is economically or legally mineable
or that all or any part of an inferred mineral resource will ever be
upgraded to a higher category.
Mineral Reserve Estimate Contained in the 2005 Feasibility Study
Based on work completed by PAH for the Brisas Feasibility Study, using
an off-site smelter process for treating copper concentrates, the
Brisas Project is estimated to contain a proven and probable mineral
reserve of approximately 9.2 million ounces of gold and 1.2 billion
pounds of copper.
The February 2005 estimated proven and probable mineral reserve
utilizing traditional flotation and off-site smelter processes is
summarized in the following table:
Reserve Au Cu Waste Total
tonnes Au Grade Cu Grade ounces pounds tonnes tonnes Strip
Class (millions) (gpt) (%) (thousands) (millions) (millions) (millions) Ratio
Proven 193.2 0.71 0.123 4,399 525
Probable 221.3 0.68 0.133 4,808 654
- ------------------------------------------------------------------------------------------------
Total 414.5 0.69 0.129 9,207 1,179 748.3 1,162.8 1.81
- ------------------------------------------------------------------------------------------------
The reserves disclosed above which are designated as commercially
viable are a part of the mineral resources estimate shown in the
previous section. Note that the mineral resources estimate does not
represent material that exists in addition to the mineral reserve.
The mineral reserve (within a pit design) has been estimated in
accordance with CSA National Instrument 43-101, using average recovery
rates for gold and copper of 83% and 87% respectively, metal prices of
U.S. $350 per ounce gold and U.S. $0.90 per pound copper with an
internal revenue cut-off of $2.76 per tonne. The qualified persons
involved in the property evaluation and resource and reserve estimates
were Raul Borrastero C.P.G., Susan Poos, P.E., Richard Addison, P.E.,
and Rick Lambert, P.E. of PAH, and Brad Yonaka of Gold Reserve.
May 2005 Updated Mineral Resource and Reserve Estimate
In May 2005 PAH calculated the updated mineral resource and reserve
estimates summarized in the table below in accordance with CSA National
Instrument 43-101. We advise U.S. investors that definitions contained
in National Instrument 43-101 differ in certain respects from those set
forth in the U.S. Securities and Exchange Commission Industry Guide 7.
The qualified persons involved in the property evaluation and resource
and reserve estimate were Raul Borrastero, C.P.G. and Susan Poos P.E.
of PAH and Brad Yonaka, Exploration Manager and Dan Thompson, Manager
Technical Services for Gold Reserve. This updated mineral resource and
reserve information is not considered in the results of the 2005
Feasibility Study discussed in this document.
Mineral Resource Estimate-May 2005
The Brisas Project is estimated to contain a measured and indicated
mineral resource of 12.4 million ounces of gold and approximately 1.6
billion pounds of copper (based on 0.4 gram per tonne gold equivalent
cut-off). A glossary of terms used herein is contained in the appendix.
Cautionary Note to U.S. Investors concerning estimates of Measured and
Indicated Resources. This section uses the terms "measured" and
"indicated resource." We advise U.S. investors that while the terms
"measured" and "indicated resource" are recognized by Canadian
regulations, the U.S. Securities and Exchange Commission does not
recognize them. U.S. investors are cautioned not to assume that the
mineralization not already categorized as mineral reserves, will ever
be converted into reserves.
The May 2005 estimated measured and indicated mineral resource
utilizing an off-site smelter process is summarized in the following
table:
(kt=1,000 tonnes) Measured Indicated Measured and Indicated
Au Eq Au Cu Au Cu Au Cu
Cut-off Grade kt (gpt) (%) kt (gpt) (%) kt (gpt) (%)
- -----------------------------------------------------------------------------------------
0.40 250,184 0.689 0.119 332,314 0.640 0.132 582,498 0.661 0.126
- -----------------------------------------------------------------------------------------
(In Millions) Measured Indicated Measured and Indicated
Au Eq Au Cu Au Cu Au Cu
Cut-off Grade oz. lb. oz. lb. oz. lb.
- ----------------------------------------------------------------------------------------
0.40 5.541 656 6.837 966 12.378 1,622
- ----------------------------------------------------------------------------------------
The inferred mineral resource, based on an off-site smelter process
(0.4 gram per tonne gold equivalent cut-off), is estimated at 129.0
million tonnes containing 0.594 grams gold per tonne and 0.122 percent
copper, or 2.46 million ounces of gold and 346 million pounds of
copper. The mineral resource estimate has been calculated in accordance
with CSA National Instrument 43-101. The mineral resource and gold
equivalent (AuEq) cut-off is based on $350 per gold ounce and $0.90 per
pound copper.
Cautionary Note to U.S. Investors concerning estimates of Inferred
Resources. This section uses the term "inferred" resources. We advise
U.S. investors that while the term "inferred resource" is recognized by
Canadian regulations, the U.S. Securities and Exchange Commission does
not recognize such terms. An "inferred resource" has a great amount of
uncertainty as to its existence and its economic and legal feasibility.
Under Canadian disclosure rules, estimates of inferred mineral resources
may not form the basis of feasibility or pre-feasibility studies, except
in rare cases. U.S. investors are cautioned not to assume that part or
all of an inferred resource exists, is economically or legally mineable
or that all or any part of an inferred mineral resource will ever be
upgraded to a higher category.
Mineral Reserve Estimate-May 2005
The Brisas Project is estimated to contain a proven and probable
mineral reserve of approximately 10.1 million ounces of gold and 1.29
billion pounds of copper as summarized in the following table:
Reserve Au Cu Waste Total
tonnes Au Grade Cu Grade ounces pounds tonnes tonnes Strip
Class (millions) (gpt) (%) (thousands) (millions) (millions) (millions) Ratio
Proven 206.9 0.726 0.125 4,829 570
Probable 239.3 0.683 0.136 5,255 720
- -------------------------------------------------------------------------------------------------
Total 446.2 0.703 0.131 10,084 1,290 963.8 1,410.0 2.16
- -------------------------------------------------------------------------------------------------
Note that the mineral resource estimate does not represent material
that exists in addition to the mineral reserve. The mineral reserve
estimate disclosed above which are designated as commercially viable
are included in and a part of the mineral resource estimates shown in
the previous section.
The mineral reserve (within a pit design) has been estimated in
accordance with CSA National Instrument 43-101, using average recovery
rates for gold and copper of approximately 83% and 87% respectively,
metal prices of U.S. $350 per ounce gold and U.S. $0.90 per pound
copper and an internal revenue cut-off of $3.00 per tonne.
Brisas Project Work To Date.
Considerable work has taken place to establish the Brisas project
mineral resource and reserve. Approximately US$100 million has been
expended (including costs capitalized and costs expensed in the period
incurred) on the Brisas Project since its acquisition by the Company in
1992. These costs include: property and mineral rights, acquisition
costs, equipment expenditures, litigation settlement costs and
extensive exploration costs including geology, geophysics and
geochemistry, approximately 890 drill holes or approximately 200,000
meters of core drilling, independent audits of our drilling, sampling,
assaying procedures and ore reserves methodology, environmental
baseline work/ socioeconomic studies, hydrology studies, geotechnical
studies, mine planning, advanced stage grinding and metallurgical test
work, tailings dam designs, milling process flow sheet designs, bench
scale testing of an on-site copper process and a Final Bankable
Feasibility Study.
With the completion of the Feasibility Study, management developed and
continues to execute a critical-path plan for obtaining required
permits (most notable the Administrative Authorization to Affect
Natural Resources for Construction of Infrastructure and Exploitation
of Alluvial and Vein Deposits of Gold and Copper), obtaining funding
and commencing construction. This effort includes the development and
implementation of project related contracts such as the engineering,
procurement and construction management contract, which was signed with
SNC-Lavalin Engineers & Constructors, Inc. and its affiliates
(collectively, "SNC Lavalin") in April 2006, as well as port
facilities, concentrate sales contracts, electricity and fuel supply
contracts, final permit approvals and a number of other agreements
related to the construction and operation of the Brisas project which
are in process. Concurrent with these activities, management is also
devoting substantial time and effort on obtaining financing for the
Brisas project.
Recent Brisas Developments
On January 4, 2006, the Company announced that the Government of
Venezuela through MARN, granted the Company's subsidiary additional
permits for the Company's continuing detailed engineering activities
related to the development of the Brisas Project. The permits are for
geotechnical drilling to support detailed engineering work related to
pit slope analysis, crusher design, process facility design, tailing
dam design, and overall site development for the Brisas Project.
On March 16, 2006, the Company announced that MARN had issued to the
Company's subsidiary the "Permit to Impact Natural Resources" for the
quarry on the Barbarita property, which is expected to provide
aggregate for the Company's adjacent Brisas Project. Aggregate is
required for the construction and operating phase of the Brisas
Project. The Barbarita property is located approximately 5 kilometres
from the Brisas Project site and near the planned mill site.
On April 24, 2006, the Company announced the completion of the initial
engineering definition phase of the Brisas Project and the signing of
the Engineering Procurement ("EP") and Construction Management ("CM")
contracts with SNC Lavalin. The scope of work for the contracts
includes detailed engineering, procurement and construction management
for the process, infrastructure, tailings and camp facilities as
further defined in the EP&CM contracts. Commencement of construction
activities at the Brisas Project will commence after receipt of the
Administrative Authorization to Affect Natural Resources for
Construction of Infrastructure and Exploitation of Gold and Copper
Deposits from MARN and after obtaining the necessary financing for
construction. The estimated cost of the EP contract is approximately
US$22.8 million and for the CM contract approximately US$16.3 million
for a total of approximately US$39.1 million. The Company has the right
to terminate for convenience such contracts at any time with notice and
upon payment to SNC Lavalin by the Company of any unpaid amounts that
have accrued under the terms of the contracts to the date of
termination plus the demobilization costs and expenses of SNC Lavalin.
Construction is estimated to take approximately 24 to 30 months from
date of commencement.
As noted above, in April 2006, the Company announced an updated
estimate of initial capital costs for the Brisas Project of
approximately US$638 million compared to the Feasibility Study initial
capital costs of US$552 million. Value added tax of 14% on
approximately 80% of the capital costs is not included in the current
or previous capital cost estimates as it is expected to be exonerated
and/or recovered pursuant to Venezuelan tax regulations.
2006 Brisas Work Plan
SNC Lavalin's scope of work under the EP and CM contracts includes
providing engineering services related to, and management of, the
construction of a 70,000 metric tonne per day hard rock ore copper
concentrator and related systems, a tailings dam, concentrate storage
and load-out facilities, the initial pit dewatering wells and support
facilities including mobile equipment shop, administration building,
communications and IT services, laboratory, maintenance facilities,
warehouse and employee and construction man camp. Pursuant to the EP
and CM contracts, SNC Lavalin is to also provide all services and
supplies necessary for commissioning and start-up of the project,
manage the health, safety and environmental plans and assure its
services and those of the trade contractors comply with commitments
from the I-ESIA, V-ESIA and local permit requirements.
Concurrent with SNC Lavalin's activities, management, with the
assistance of Endeavour Financial continues to focus on project
financing. Significant work has been completed in the evaluation and
design of the project financing and Endeavour has assisted the Company
in identifying and evaluating several sources of finance for the
project. The Company has received indicative term sheets reflecting
current funding requirements and market conditions, and structures
involving a mix of commercial finance, off-take finance, equipment
finance and multilateral agency finance and support. The Company has
also received initial expressions of interest from investment banks for
the equity portion of the project finance requirements, which would be
contingent upon the project debt being arranged.
Work on-site such as geo-tech drilling, road construction, condemnation
drilling and various planning activities will continue or commence, as
the case may be, along with the addition of various management and
staff positions as the Company receives the appropriate permits and
advances toward commencement of construction. Community assistance and
development programs are expected to continue and be expanded to
include programs to develop and initiate basic skills training for
construction in the Km 88 area. In addition, management is finalizing
contracts for the supply of electricity, gold/copper concentrate
smelting and port facilities.
Choco 5 Property
The Choco 5 property, a grass roots gold exploration target, is a 5,000
hectare concession located in the El Callao mining district in the State
of Bolivar, southeastern Venezuela. Since acquiring the property in
2000, the Company has invested approximately $600,000 on acquisition
and exploration costs. Exploration activities planned for 2006 are
estimated at $750,000 and will include further environmental
permitting, additional geologic mapping and reconnaissance,
comprehensive grid of soil geochemical sampling, geophysical testing of
established gold anomalies in the eastern sector of the property as well
as other identified targets, trenching and selective diamond drilling of
gold anomalies, and construction of access roads to facilitate the above
activities. The Company's exploration efforts will be managed out of its
office in the community of El Callao.
Financial Overview
Overview
The following discussion of financial position as of March 31, 2006 and
results of operations for the three months ended March 31, 2006 and 2005
are to be read in conjunction with the Company's unaudited consolidated
financial statements and related notes, included herein.
We prepare our consolidated financial statements in U.S. Dollars in
accordance with accounting principles generally accepted in Canada.
These financial statements together with the following management's
discussion and analysis, dated May 15, 2006, are intended to provide
investors with a reasonable basis for assessing the financial
performance of the Company as well as certain forward-looking
statements relating to the Company's potential future performance.
Additional information on the Company can be found in the Company's
Annual Information Form filed with Canadian Securities Regulators at
www.sedar.com and its Form 20F filed with the US Securities and Exchange
Commission at www.sec.gov.
The Company is engaged in the business of exploration and development
of mining projects and is presently focusing its financial resources on
its most significant asset, the Brisas project, and to a lesser extent
the exploration of its Choco 5 property, both located in Bolivar State,
Venezuela. The Company has no commercial production at this time. As a
result, the Company has not recorded revenue or cash flow from its
mining operations and has experienced losses from operations for each
of the last five years, a trend we expect to continue until the Brisas
project is fully developed and put into commercial production. The
Company has historically financed its operations through the sale of
common stock and other equity securities. Management expects the Brisas
project, if constructed, to be similarly financed along with project and
corporate debt financing.
As previously noted, the Company completed a Feasibility Study with
respect to the construction and operation of the Brisas project in
2005. In April 2006, the Company updated its estimated initial capital
costs for the Brisas Project to approximately US$638 million compared
to the Feasibility Study capital costs of US$552 million. In May 2005,
PAH calculated an updated mineral resource and reserve estimate (in
accordance with NI 43-101) for the Brisas Project containing a proven
and probable mineral reserve of approximately 10.1 million ounces of
gold and 1.29 billion pounds of copper in 446 million tonnes of ore
grading 0.703 grams of gold per tonne and 0.13% copper, at a revenue
cutoff grade of $3.00 per tonne.
The 2005 Feasibility Study discussed herein has not yet been updated
with the new reserve and initial capital data or working capital, life
of mine capital, equipment capital costs, closure costs and
environmental management plans for the project which are now being
updated. This analysis is expected to be completed in the next several
months. Thereafter, the Company expects to provide an updated project
economic model for the Brisas Project. The construction of the Brisas
project is expected to take approximately 24-30 months. The
commencement of construction is primarily dependant upon receiving the
required permits and obtaining sufficient financing which will continue
to be the Company's primary focus during 2006.
Venezuela has, at times, experienced high levels of inflation,
political and civil unrest and changes in and proposed changes in
regulatory regimens during the last several years. Despite these
matters, the Company, up to now, has not experienced any significant
adverse impact on its operations in Venezuela nor has the Company
curtailed its investment activities in the country. However, our
operations and investments in Venezuela could be adversely affected by
unforeseen political events and changes in legal, tax and regulatory
regimes in the future.
We are dependent on the Venezuelan regulatory authorities issuing the
Company certain required operational and land use permits relating to
the Brisas property before we may begin construction on, and operate,
the Brisas property. Obtaining these required permits is also necessary
in order for the Company to adequately identify and obtain suitable
financing for the Brisas Project. A number of these pending items have
been outstanding for a number of months. The resolution of these
pending issues may be further delayed or withheld for any number of
reasons outside of the Company's control or in response to the
Company's lawful actions, including policy decisions of the Venezuelan
government or its regulators or agents that have no legal basis,
unexpected changes in laws or regulations, arbitrary decisions by
relevant officials, requests for improper payments, favoritism towards
other companies or persons or any other actions that may result from
the changing and uncertain regulatory environment with respect to
mining rights.
To the best of our knowledge, all of our properties are in compliance
with the regulations and requirements of the agreements and our various
social, cultural and environmental programs in the immediate and
surrounding areas near Brisas are consistent with the government's
social agenda including the framework of Mission Piar, one of President
Chavez's social initiatives which includes the local small miners and
encompasses technical assistance and training to explore and minimize
the impact to the environment as well as their integration into the
formal economy. We enjoy a good working relationship with the MIBAM,
MARN and in general the Venezuelan Government and are committed to the
economic and social development of the Brisas project in a mutually
beneficial manner with the communities located near the project, the
people in Bolivar State, and the Bolivarian Republic of Venezuela.
References in this report to total cash costs per ounce (a non-GAAP
measure of performance) we believe enables certain investors to better
understand the Brisas project's potential profitability and ability to
generate operating cash flow. Non-GAAP measures do not have any
standardized meaning prescribed by Canadian and U.S. GAAP, and
therefore they may not be comparable to similar measures prescribed by
other companies. The data is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP, such as the
nearest comparable GAAP measure-total cost per ounce. Such measures are
not necessarily indicative of operating profit or cash flow from
operations as determined under GAAP.
Critical Accounting Estimates
Critical accounting estimates represent estimates that are highly
uncertain and changes in those estimates could materially impact our
financial statements. The significant accounting estimates contained in
the financial statements include: carrying value of the Brisas project;
mineral reserve and resource estimates and contingencies. Management
has discussed the development and selection of our critical accounting
estimates with the Company's Audit Committee.
Significant Accounting Policies
The Company's accounting policies are described in Note 1 of the
consolidated financial statements contained in the Company's 2005
Annual Information Form. The more significant accounting policies are
as follows:
Marketable Securities. Equity securities are carried at the lower of
cost and net realizable value. Corporate debt securities and U.S.
treasuries and agency obligations are carried at amortized cost.
Exploration and Development Costs. Exploration costs incurred in
locating areas of potential mineralization are expensed as incurred.
Exploration costs of properties or working interests with specific
areas of potential mineralization are capitalized at cost pending the
determination of a property's economic viability. Development costs of
proven mining properties not yet producing are capitalized at cost and
classified as property, plant and equipment. Property holding costs are
charged to operations during the period if no significant exploration or
development activities are being conducted on the related properties.
Upon commencement of production, capitalized exploration and
development costs will be amortized based on the estimated proven and
probable reserves benefited. Properties determined to be impaired or
that are abandoned are written-down to the estimated recoverable
amount. Carrying values do not necessarily reflect present or future
values.
Results of Operations
The Company's results of operation are a product of operating expenses,
primarily related to the development of the Brisas project, net of
investment income. Consolidated net income for the three months ended
March 31, 2006 amounted to $2,299,779 or $0.06 per share compared to
consolidated net loss of $2,123,523 or $0.05 per share for the same
period in 2005.
Other income for the three-month period ended March 31, 2006 increased
by $4,620,559 over the comparable period in 2005. The change was
primarily due to a significant non-recurring gain on sale of marketable
securities. Operating expense for the three months ended March 31, 2006
increased by $150,743 over the comparable period in 2005. The change
was primarily due to an increase in legal and accounting related to
ongoing corporate restructuring efforts and an increase in costs
related to technical services offset by reductions in general and
administrative expenses.
Selected Quarterly Financial Data
The Company recorded net income in the three month period ended March
31, 2006 as a result of a non-recurring gain on sale of marketable
securities. Operating expense during 2006 increased slightly from the
first quarter of 2005 mainly due to an increase in legal and accounting
expense. Prior to 2006, the quarterly results of operations shown below
are primarily a result of the increase in costs associated with the
development of the Brisas project. Specifically, the increases are
associated with the development and financing of the Brisas project,
coupled with compensation adjustments for existing officers, directors
and employees, costs associated with new hires, increased costs
associated with investor relations and the impact of implementing new
rules related to accounting for stock-based compensation.
Quarter ended 3/31/06 12/31/05 9/30/05 6/30/05 3/31/05 12/31/04 9/30/04 6/30/04
- ------------------------------------------------------------------------------------------------------------------
Other Income $4,826,080 $429,656 395,410 392,064 217,982 372,064 193,340 205,652
Net income (loss)
before tax 2,346,293 (3,343,377) 1,755,640) (1,803,271) (2,123,523) (1,970,437) (1,420,077) (880,107)
Per share 0.07 (0.10) (0.05) (0.05) (0.06) (0.07) (0.05) (0.03)
Fully diluted 0.07 (0.10) (0.05) (0.05) (0.06) (0.07) (0.05) (0.03)
Net income (loss) 2,299,779 (3,344,848) (1,755,640) (1,803,271) (2,123,523) (1,970,437) (1,420,077) (880,107)
Per share 0.06 (0.10) (0.05) (0.05) (0.06) (0.07) (0.05) (0.03)
Fully diluted 0.06 (0.10) (0.05) (0.05) (0.06) (0.07) (0.05) (0.03)
Measurement Uncertainty
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Substantially all of the Company's investment in property, plant and
equipment represents amounts invested in the Brisas project located in
Venezuela. See Management's Discussion and Analysis contained herein
and the Company's Annual Information Form for further discussion of
risk factors.
Management's capitalization of exploration and development costs and
assumptions regarding the future recoverability of such costs is
subject to among other things, the Company's current mineral reserves
which are based on engineering and geological estimates, gold and
copper prices, estimated plant construction and operating costs and the
procurement of all necessary regulatory permits and approvals. These
estimates could change in the future and this could affect the carrying
value and the ultimate recoverability of the amounts recorded as
property and mineral rights and capitalized exploration and development
costs.
The Company operates and files tax returns in a number of
jurisdictions. The preparation of such tax filings requires
considerable judgment and the use of assumptions. Accordingly, the
amounts reported could vary in the future.
Liquidity and Capital Resources
On May 3, 2006 the Company entered into an underwriting agreement with
a syndicate of underwriters comprised of Sprott Securities Inc. and RBC
Capital Markets and their affiliates in the U.S., as co-leads, pursuant
to which the underwriters have agreed to purchase 3,335,000 Class A
common shares of Gold Reserve at a price of Cdn.$9.00 per share,
representing aggregate gross proceeds to the Company of Cdn.$30,015,000
or approximately US $27,000,000. The Company also agreed to grant the
underwriters an over-allotment option, exercisable at any time, in
whole or in part, for a period of 30 days following the closing of the
offering, to purchase up to an additional 500,250 shares at a price of
Cdn.$9.00 per share. If the underwriters fully exercise the
over-allotment option, Gold Reserve will receive additional gross
proceeds of approximately Cdn.$4,500,000 or approximately US $
4,100,000. The transaction closed on May 15, 2006.
The Company's significant investing activities during the three months
ended March 31, 2006 included the sale or maturity of marketable
securities, on a net basis, of approximately $4.7 million and the
purchase of property, plant and equipment of approximately $3.7
million. The total financial resources of the Company, which includes
cash plus marketable securities, increased approximately $.083 million
from December 31, 2005 to approximately $22.3 million as of March 31,
2006.
As of the date of this report, the Company had the following shares,
equity units, warrants and share options issued:
Class A common 38,659,977
Equity units 1 1,085,099
Class A common share purchase warrants 2 2,680,500
Class A common share purchase options 3 3,066,575
1) An equity unit consists of one class B common share of Gold Reserve
Inc. and one class B common share of Gold Reserve Corporation. Equity
units are convertible into Class A common shares of Gold Reserve Inc.
on a one to one basis.
2) Consist of 2,680,500 Class A common share purchase warrants
exercisable for 2,680,500 Class A Common Shares, at Cdn $5.40 per share
and expiring in November 2006.
3) Exercisable at between $0.57 and $4.14 per share.
With the completion of the Feasibility Study in early 2005 and the
engagement of SNC Lavalin, our efforts continue to be focused primarily
on identifying suitable funding sources, completion of detailed project
engineering, development and implementation of project related
contracts such as port facilities, concentrate sales contracts,
electricity and fuel supply contracts, and a number of other agreements
related to the construction and operation of the Brisas project and
obtaining the required permits, most importantly, the Administrative
Authorization to Affect Natural Resources for Construction of
Infrastructure and Exploitation of Alluvial and Vein Deposits of Gold
and Copper from MARN. Initial capital expenditures required to put the
Brisas project into production as presently proposed by the Company, is
estimated to be approximately $638 million over a 24-30 month
construction period. Commencement of the construction of the Brisas
project is primarily dependant upon obtaining the required permits and
obtaining sufficient financing.
As of May 15, 2006 the Company held approximately $43 million in cash
and investments. In the near-term, management believes that cash and
investment balances are sufficient to enable the Company to fund its
pre-construction activities through 2007 (excluding substantial Brisas
project construction activities). The timing and extent of additional
funding or project financing, if any, depends on a number of important
factors, including, but not limited to the actual timetable of our
future work plans, our assessment of the financial markets, the
political, regulatory and economic conditions in Venezuela, our share
price and the price of gold and copper. Management provides no
assurances that it will be able to obtain the substantial additional
financing that will be needed to construct the Brisas project. Failure
to raise the required funds will mean the Company will be unable to
construct and operate the Brisas project.
CONSOLIDATED BALANCE SHEETS
March 31, 2006 (unaudited) and December 31, 2005
U.S. Dollars 2006 2005
ASSETS
Current Assets
Cash and cash equivalents $ 19,352,919 $ 19,370,252
Marketable securities 2,919,688 2,985,234
Deposits, advances and other 656,805 442,130
Total current assets 22,929,412 22,797,616
Property, plant and equipment, net 61,710,159 58,016,102
Other 1,264,524 1,141,154
Total assets $ 85,904,095 $ 81,954,872
LIABILITIES
Current Liabilities:
Accounts payable and accrued expenses $ 2,233,329 $ 1,187,565
Total current liabilities 2,233,329 1,187,565
Minority interest in
consolidated subsidiaries 1,110,564 1,129,541
Total liabilities 3,343,893 2,317,106
SHAREHOLDERS' EQUITY
Serial preferred stock, without par value
Common shares and equity units,
without par value 140,938,166 140,512,063
Less common shares held by affiliates (636,267) (674,598)
Stock options 2,025,760 1,867,537
Accumulated deficit (59,683,237) (61,983,016)
KSOP debt (84,220) (84,220)
Total shareholders' equity 82,560,202 79,637,766
Total liabilities and
shareholders' equity $ 85,904,095 $ 81,954,872
The accompanying notes are an integral part of the consolidated financial
statements.
Approved by the Board of Directors:
s/ Chris D. Mikkelsen s/ Patrick D. McChesney
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2006 and 2005 (unaudited)
U.S. Dollars 2006 2005
OTHER INCOME
Interest $ 199,629 $ 217,982
Gain (loss) on sale of
marketable securities 4,626,451 (12,461)
4,826,080 205,521
EXPENSES
General and administrative 1,122,183 1,318,688
Technical services 908,313 763,262
Corporate communications 149,800 149,290
Legal and accounting 253,132 6,283
Foreign currency (gain) loss 65,336 88,276
Minority interest in net income
(loss) of consolidated subsidiaries (18,977) 3,245
2,479,787 2,329,044
Net income (loss) before tax 2,346,293 (2,123,523)
Income tax 46,514
Net income (loss) $ 2,299,779 $ (2,123,523)
Net income (loss) per share $ 0.06 $ (0.06)
Weighted average common
shares outstanding 35,614,591 34,267,324
CONSOLIDATED STATEMENTS OF DEFICIT
For the Three Months Ended March 31, 2006 and 2005 (unaudited)
U.S. Dollars
Deficit, December 31, 2005 $ (61,983,016)
Net income 2,299,779
Deficit, March 31, 2006 $ (59,683,237)
Deficit, December 31, 2004 $ (52,955,734)
Net loss (2,123,523)
Deficit, March 31, 2005 $ (55,079,257)
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2006 and 2005 (unaudited)
U.S.Dollars 2006 2005
Cash Flows from Operating Activities:
Net income (loss) $ 2,299,779 $ (2,123,523)
Adjustments to reconcile net
income (loss) to net cash
used by operating activities:
Stock option compensation 193,925 197,181
Depreciation 28,460 19,424
Amortization of premium (discount) on
marketable securities (419) 3,226
Foreign currency loss 65,336 88,276
Minority interest in net income (loss)
of consolidated subsidiaries (18,977) 3,245
Net (gain) loss on sale of
marketable securities (4,626,451) 32,245
Shares issued for compensation 91,750 435,920
Changes in non-cash working capital:
Net (increase) decrease in deposits,
advances and accrued interest (214,675) 9,727
Net increase (decrease) in accounts
payable and accrued expenses 1,045,764 (624,560)
Net cash used by operating activities (1,135,508) (1,958,839)
Cash Flows from Investing Activities:
Proceeds from the sale and maturity of
marketable securities 6,159,725 1,679,006
Purchase of marketable securities (1,467,309) (500,000)
Purchase of property, plant and equipment (3,722,517) (858,769)
Other 51,443 (31,697)
Net cash provided by investing activities 1,021,342 288,540
Cash Flows from Financing Activities:
Proceeds from the issuance of common shares 96,833 2,327,926
Net cash provided by financing activities 96,833 2,327,926
Change in Cash and Cash Equivalents:
Net increase (decrease) in cash
and cash equivalents (17,333) 657,627
Cash and cash equivalents
- beginning of period 19,370,252 27,178,705
Cash and cash equivalents
- end of period $ 19,352,919 $ 27,836,332
The accompanying notes are an integral part of the consolidated financial
statements.
Selected Notes To Consolidated Financial Statements
For the Three Months Ended March 31, 2006 and 2005 (unaudited)
Expressed in U.S. Dollars
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in
Canada for interim financial information. Accordingly, they do not
include all of the information and footnotes required by accounting
principles generally accepted in Canada for complete financial
statements.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present
fairly the financial position of Gold Reserve Inc. and subsidiaries
(the Company) as of March 31, 2006, and the results of operations and
the cash flows for the three months ended March 31, 2006 and 2005. The
results of operations for the three months ended March 31, 2006 and
2005 are not necessarily indicative of the results to be expected for
the full year.
These financial statements follow the same accounting policies and
methods of their application as the most recent annual financial
statements and should be read in conjunction with the consolidated
financial statements including notes thereto included in the Company's
2005 annual report.
2. Geographic Segments
Net Income (loss) for the Three Months Ended March 31, 2006 and 2005
2006 2005
North America $ 3,027,591 $ (1,446,816)
South America (727,812) (676,707)
Consolidated $2,299,779 $ (2,123,523)
3. Share Option Plan:
The Company's Equity Incentive Plan (the Plan) allows for the granting
of common share purchase options to officers, directors and key
individuals for terms of up to ten years. The vesting period of options
ranges from immediately to up to three years. There were 367,587 options
remaining for future grants at March 31, 2006. Share option transactions
for the three months ended March 31, 2006 and 2005 are as follows:
2006 2005
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
Options outstanding at
beginning of period 3,148,844 1.36 3,316,374 $ 1.39
Options exercised (72,519) 1.34 (286,289) $ 1.00
Options canceled (3,500) 4.14 (90,000) $ 4.12
Options granted 250,000 $ 3.80
Options outstanding
at end of period 3,072,825 1.36 3,190,085 $ 1.54
Options exercisable
at end of period 2,492,997 1.21 2,767,084 $ 1.22
Price Price
Range Range
Exercise price at
end of period $0.57 - $ 4.14 $ 0.57 - $ 4.90
Exercise price for
exercisable shares $0.57 - $ 4.14 $ 0.57 - $ 4.14
Effective January 1, 2004, the Company adopted the new requirements of
the Canadian Institute of Chartered Accountants standard 3870 under
which the fair value method of accounting for stock options granted to
employees and directors is followed. Accordingly, compensation expense
was recorded on a retroactive basis to retained earnings to show the
effect of compensation expense associated with stock option grants to
employees and directors from January 1, 2002 to December 31, 2003,
which amounted to $419,101.
The Company recorded additional compensation expense of $193,125, and
$197,181 for stock options vested during the three months ended March
31, 2006 and 2005. During 2006, the expiration date of 1,755,250
options was extended from June 8, 2006 to December 31, 2006. No new
options were granted in 2006. The fair value of the options granted in
2005 was calculated using the Black-Scholes model assuming a weighted
average risk free interest rate of 3.8%, expected life of three years,
expected volatility of 103% and a dividend yield of nil.
4. Subsequent Event:
On May 3, 2006 the Company entered into an underwriting agreement with
a syndicate of underwriters comprised of Sprott Securities Inc. and RBC
Capital Markets and their affiliates in the U.S., as co-leads, pursuant
to which the underwriters agreed to purchase 3,335,000 Class A common
shares of Gold Reserve at a price of Cdn.$9.00 per share, representing
aggregate gross proceeds to the Company of Cdn.$30,015,000 or
approximately US $27,000,000. The Company also agreed to grant the
underwriters an over-allotment option, exercisable at any time, in
whole or in part, for a period of 30 days following the closing of the
offering, to purchase up to an additional 500,250 shares at a price of
Cdn.$9.00 per share. If the underwriters fully exercise the
over-allotment option, Gold Reserve will receive additional gross
proceeds of approximately Cdn.$4,500,000 or approximately US $
4,100,000. The transaction closed on May 15, 2006.
99.2 Chief Executive Officer's certification of interim filings
GOLD RESERVE INC.
Date: May 15, 2006
I, Rockne J. Timm, Chief Executive Officer, Gold Reserve Inc., certify
that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of Gold Reserve Inc., ("the issuer") for
the interim period ending March 31, 2006;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together
with the other financial information included in the interim filings
fairly present in all material respects the financial condition,
results of operations and cash flows of the issuer, as of the date and
for the periods presented in the interim filings; and
4. The issuer's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures for the
issuer, and we have:
a. designed such disclosure controls and procedures, or caused them to
be designed under our supervision, to provide reasonable assurance that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which the interim filings are being
prepared.
Signature:/S/Rockne J. Timm
Rockne J. Timm
Chief Executive Officer
99.3 Chief Financial Officer's certification of interim filings
GOLD RESERVE INC.
Date: May 15, 2006
I, Robert A. McGuinness, Chief Financial Officer, Gold Reserve Inc.,
certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of Gold Reserve Inc., ("the issuer") for
the interim period ending March 31, 2006;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together
with the other financial information included in the interim filings
fairly present in all material respects the financial condition,
results of operations and cash flows of the issuer, as of the date and
for the periods presented in the interim filings; and
4. The issuer's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures for the
issuer, and we have:
a. designed such disclosure controls and procedures, or caused them to
be designed under our supervision, to provide reasonable assurance that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which the interim filings are being
prepared.
Signature:/S/Robert A. McGuinness
Robert A. McGuinness
Chief Financial Officer