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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 June 30, 2000
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 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):
Forward Looking Statements
The information presented in or incorporated by reference in this interim
financial report includes both historical information and "forward-looking
statements" (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 "Exchange Act"))
relating to the future results of Gold Reserve Inc. (the "Company"), which
involve risks and uncertainties. Except where the context indicates otherwise,
"Company" means Gold Reserve Inc., its predecessor Gold Reserve Corporation and
subsidiaries.
Numerous factors could cause actual results to differ materially from those in
the forward-looking statements, including without limitation the following
risks:
- actual reserves could vary considerably from estimates presently made,
- volatility of metals prices and estimated metal production,
- concentration of operations and assets in Venezuela,
- regulatory, political and economic risks associated with Venezuelan
operations,
- inability to obtain adequate funding for future development of the Brisas
property,
- dependence upon the abilities and continued participation of key
employees,
- other uncertainties normally incident to the operation and development of
mining properties.
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 interim financial report that would
warrant any modification of any forward-looking statement made in this document
or other documents filed periodically with securities regulators.
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.
Operations Overview
The Company's Brisas property, a gold and copper deposit, is located in the
Kilometer 88 mining district in the State of Bolivar, southeastern Venezuela.
Exploration and development activities on the property commenced in 1992 and
have included over 165,000 meters of drilling. The Brisas property is presently
estimated to contain a mineral resource of 9.9 million ounces of gold and
approximately 1.13 billion pounds of copper (based on 0.5 gram per tonne gold
equivalent cut- off), which is contained within an area approximately 1,900
meters long and 500 to 900 meters wide. The mineralization continues for an
unknown distance down dip to the west and to the north and has also been
intersected below the current mineralized resource.
Reserve Estimate Audits
The extensive data compiled by the Company, which serves as the basis of its
pre-feasibility report, has been closely scrutinized by Behre Dolbear &
Company, Inc. ("Behre Dolbear") and a number of other consultants. Behre
Dolbear initially audited the Company's data collection procedures in 1997,
completed an additional audit of the Company's modeling and reserve methodology
in 1998 and subsequently verified the reserve estimates in early 1999.
The results of the audits determined that the technical data collection
procedures used by the Company meet or exceed accepted industry standards; the
assay laboratories utilized provided reliable and acceptable results; the
database compiled by the Company is of a quality appropriate for utilization in
a reserve study suitable for obtaining financing; the estimating techniques used
by the Company were an accurate representation for the reserves; the drill hole
spacing was sufficient to generate future estimates of proven and probable
reserves; the database was correct and reliable; the reserve risk for the
project is low and there is upside potential for additional reserves at the
Brisas property because the mineralization can be extrapolated with quite high
confidence beyond the current drilling in the down dip direction and to the
north.
Mineral Resource Estimates
The mineral resource based on 0.5 gold equivalent cut-off grade is summarized
in the following tables:
Measured Indicated Inferred Total
- --------------------------------------------------------------------------------------------------------------
Au Eq
Cutoff Au Cu Au Cu Au Cu Au Cu
Grade kt (g/t) (%) kt (g/t) (%) kt (g/t) (%) kt (g/t) (%)
- --------------------------------------------------------------------------------------------------------------
0.50 221,042 0.805 0.111 145,028 0.690 0.155 40,103 0.733 0.110 406,173 0.757 0.127
==============================================================================================================
Measured** Indicated** Inferred** Total**
- --------------------------------------------------------------------------------------------------------------
Au Eq
Cutoff Au Cu Au Cu Au Cu Au Cu
Grade oz. lb. oz. lb. oz. lb. oz. lb.
- --------------------------------------------------------------------------------------------------------------
0.50 5.721 541.0 3.217 495.7 0.945 97.3 9.883 1,134.0
==============================================================================================================
** in millions
Reserve Estimate
Reserve estimates have been prepared in accordance with the appropriate
reporting requirements of applicable Canadian Securities Commissions and
calculated using $300 per ounce of gold and $0.80 per pound of copper (at
$3.30/tonne revenue cutoff). The most current estimates are as follows:
Reserve Au Cu Waste Total
tonnes Au grade Cu grade ounces pounds tonnes tonnes Strip
Class (thousands) (g/t) (%) (thousands) (thousands) (thousands) (thousands) Ratio
- ---------------------------------------------------------------------------------------------------
Proven 187,443 0.814 0.119 4,906 491,841
Probable 47,411 0.682 0.205 1,040 214,309
- ---------------------------------------------------------------------------------------------------
Total 234,854 0.787 0.136 5,946 706,150 383,912 618,766 1.63
===================================================================================================
Outlook
The proposed mining facility is presently estimated to cost between $350 and
$400 million and process an estimated 55,000 tonnes per day, yielding an
average annual production of approximately 362,000 ounces of gold and 46
million pounds of copper, over a mine life of 13 years. The plan for the
development of the property as it presently exists includes on-site copper
processing utilizing an autoclave for pressure oxidation of the concentrates
followed by a series of leaching sequences to recover the copper and gold.
Implementation of this process would eliminate significant transportation costs
for the copper gold concentrates to an off-site smelter resulting in improved
Brisas project economics. Construction of the proposed mining facility is
expected to take approximately 18 to 24 months.
Current cost estimates (U.S.Dollars), in accordance with the Gold Institute
guidelines, result in cash operating costs of $153 per ounce of gold net of
copper revenues (using $300 per ounce gold, $0.90 per pound copper and on-site
copper processing). Total after-tax costs are estimated at $243 per ounce of
gold (including operating costs (net of copper revenues), working capital,
initial capital and life of mine capital less sunk costs). Estimated cost per
ounce of gold is determined net of copper revenues. The price of copper is a
significant factor in determining net production costs. For example, every $0.10
per pound change in the price of copper results in a corresponding change in the
project's cash and total costs of $13 per ounce of gold.
Management continues to focus on obtaining permits, securing additional process
facility sites, developing infrastructure and waste deposition. Additional
metallurgical testing, geotechnical and hydrological investigations,
negotiations related to such things as electrical power supply and development
and condemnation drilling will occur as a part of the completion of the final
feasibility study. The ultimate Brisas project economics and processing
facility design are subject to the results of the final feasibility study. The
completion of the final feasibilty and the timing of future development of the
property will be dictated by, among other issues, future metals market
conditions. An estimated additional $3 to $5 million will be spent for
completion of the final feasibility study.
Financial Overview
You are urged to refer to the December 31, 1999 audited consolidated financial
statements. The notes contained in the annual financial statements also apply
to these interim financial statements at June 30, 2000 and are not repeated
herein. The financial information given in the accompanying unaudited financial
statements reflects all normal, recurring adjustments which, in the opinion of
management, are necessary for a fair presentation for the periods reported.
(All amounts are stated in U.S. Dollars).
The total financial resources of the Company, cash plus current and non-
current marketable securities (primarily consisting of highly liquid US treasury
and agency obligations), decreased $1.66 million from December 31, 1999 to
approximately $18.0 million as of June 30, 2000.
June 30, December 31,
2000 1999
- -----------------------------------------------------------------
Cash and equivalents $ 4,404,566 $ 4,377,521
Marketable securities - current 10,052,294 9,884,909
Marketable securities - non-current 3,493,562 5,350,417
- -----------------------------------------------------------------
$ 17,950,422 $ 19,612,847
=================================================================
Estimated corporate expenditures for 2000, excluding interest income of
approximately $1 million, are expected to approximate $3.5 million. Of this
amount approximately $1.4 million is expected to be spent directly on the
Brisas property primarily for the future completion of a final feasibility
study and related activities. The remaining planned expenditures relate to
corporate management of the Brisas property, exploration activities other than
on the Brisas property and general corporate activities. Management anticipates
that its combined cash and investment position will be sufficient to cover
estimated operational and capital expenditures (excluding estimated mine
construction costs) beyond 2001.
Future construction costs and development expenses, and the cost of placing the
Brisas property or additional future properties into production, if warranted,
are expected to be financed by a combination of the sale of additional common
stock, bank borrowings or other means. Management does not plan to raise funds
through the sale of equity or debt in the near future. Whether and to what
extent additional or alternative financing options are pursued by the Company
depends on a number of important factors, including the price of gold,
management's assessment of the financial markets, the potential acquisition of
additional properties or projects and the overall capital requirements of the
consolidated corporate group.
Consolidated net loss for the three and six months ended June 30, 2000 amounted
to $234,858 and $778,539 or $0.01 and $0.03 per share compared to consolidated
net loss of $299,243 and $1,195,233 or $0.01 and $0.05 per share for the same
periods in 1999. Other income (interest) decreased primarily as a result of
lower levels of cash and investments. Expenses for the three and six month
periods ended June 30, 2000 decreased over the prior periods primarily as a
result of various cost reduction measures undertaken by the Company.
Certain reclassifications of the 1999 financial statements have been made to
conform with the 2000 presentation. These reclassifications had no effect on the
net loss or accumulated deficit as previously reported.
As of July 31, 2000, the Company had the following shares, equity units and
share options outstanding:
- ------------------------------------------------------------
Class A common 21,835,383
Equity units* 1,285,817
Options to purchase Class A common shares 3,253,240
- ------------------------------------------------------------
* 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.
CONSOLIDATED BALANCE SHEET
June 30, 2000 and December 31, 1999 (unaudited)
June 30, December 31,
U.S. Dollars 2000 1999
- ------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 4,404,566 $ 4,377,521
Marketable securities 10,052,294 9,884,909
Deposits, advances and other 356,624 346,834
Accrued interest 120,913 171,732
------------ ------------
Total current assets 14,934,397 14,780,996
Property, plant and equipment, net 44,203,297 43,374,065
Marketable securities 3,493,562 5,350,417
Other 1,249,957 1,295,014
------------ ------------
Total assets $ 63,881,213 $ 64,800,492
============ ============
LIABILITIES
Current Liabilities:
Accounts payable and accrued expenses $ 282,849 $ 320,214
Note payable - KSOP 184,419 184,419
------------ ------------
Total current liabilities 467,268 504,633
Minority interest in consolidated
subsidiaries 1,015,239 992,587
------------ ------------
Total liabilities 1,482,507 1,497,220
------------ ------------
SHAREHOLDERS' EQUITY
Serial preferred stock,
without par value - -
Common shares and equity units,
without par value 102,067,298 102,067,298
Less, common shares held
by affiliates (403,331) (403,331)
Accumulated deficit (38,954,815) (38,176,276)
KSOP debt (310,446) (184,419)
------------ ------------
Total shareholders' equity 62,398,706 63,303,272
Total liabilities and ------------ ------------
shareholders'equity $ 63,881,213 $ 64,800,492
============ ============
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three and Six Months Ended June 30, 2000 and 1999
(unaudited)
Three Months Ended Six Months Ended
U.S. Dollars 2000 1999 2000 1999
OTHER INCOME
Interest $ 290,456 $ 305,951 $ 554,269 $ 592,069
---------- ---------- ---------- ------------
EXPENSES
General and administrative 299,264 280,230 562,957 1,010,888
Technical services 111,972 142,110 227,133 346,194
Corporate communications 55,829 68,669 112,635 146,409
Legal and accounting 18,354 18,647 51,885 61,634
Foreign currency loss 26,718 40,501 64,869 85,242
Reorganization - 38,738 - 108,714
Loss on sale of marketable
securities - - 283,507 -
Interest 3,511 5,218 7,170 11,083
Minority interest in net
income of consolidated
subsidiaries 9,666 11,081 22,652 17,138
---------- ---------- ---------- ------------
525,314 605,194 1,332,808 1,787,302
---------- ---------- ---------- ------------
Net loss $ (234,858) $ (299,243) $ (778,539) $ (1,195,233)
========== ========== ========== ============
Net loss per share -
basic and diluted $ (0.01) $ (0.01) $ (0.03) $ (0.05)
========== ========== ========== ============
Weighted average common
shares outstanding 23,101,200 22,731,200 23,101,200 22,731,022
========== ========== ========== ============
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 2000 and 1999
(unaudited)
U.S. Dollars 2000 1999
Cash Flows from Operating Activities:
Net loss $ (778,539) $(1,195,233)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 21,812 20,607
Amortization of premium (discount) on
marketable securities (59,468) 30,042
Foreign currency loss 64,869 85,242
Minority interest in net income of
consolidated subsidiaries 22,652 17,138
Net loss on sale of marketable securities 283,507 -
Changes in current assets and liabilities:
Net decrease (increase) in current assets (84,998) 170,834
Net increase in current liabilities (37,365) (157,784)
----------- -----------
Net cash used by operating activities (567,530) (1,029,154)
----------- -----------
Cash Flows from Investing Activities:
Proceeds from the sale and maturity of
marketable securities 9,607,312 6,000,000
Purchase of marketable securities (8,141,881) (3,348,000)
Purchase of property, plant and equipment (915,913) (1,605,521)
Other 45,057 52,347
----------- -----------
Net cash provided by investing activities 594,575 1,098,826
----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of common shares - 9,984
----------- -----------
Net cash provided by financing activities - 9,984
----------- -----------
Change in Cash and Cash Equivalents:
Net increase in cash and cash equivalents 27,045 79,656
Cash and cash equivalents - beginning of period 4,377,521 2,848,189
----------- -----------
Cash and cash equivalents - end of period $ 4,404,566 $ 2,927,845
=========== ===========
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
August 14, 2000