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 September 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):NA
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 Companys 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
==============================================================================================================
(millions) 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
==============================================================================================================
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
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.
The presently proposed mining facility is 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.
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 September 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 $2.0 million from December 31, 1999 to
approximately $17.5 million as of September 30, 2000.
September 30, December 31,
2000 1999
----------------------------------
Cash and equivalents $ 3,044,137 $ 4,377,521
Marketable securities - current 11,044,321 9,884,909
Marketable securities - non-current 3,493,663 5,350,417
------------ ------------
$ 17,582,121 $ 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,
managements 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 nine months ended September 30, 2000
amounted to $148,824 and $927,363 or $0.01 and $0.04 per share compared to
consolidated net loss of $300,150 and $1,495,383 or $0.01 and $0.07 per share
for the same periods in 1999. Expenses for the three and nine month periods
ended September 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 October 30, 2000, the Company had the following shares, equity units and
share options outstanding:
- ------------------------------------------------------------------------------
Class A common 21,868,383
Equity units* 1,252,817
Options to purchase Class A common shares 3,247,472
- ------------------------------------------------------------------------------
* 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
September 30, 2000 and December 31, 1999 (unaudited)
September 30, December 31,
2000 1999
U.S. Dollars -----------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 3,044,137 $ 4,377,521
Marketable securities 11,044,321 9,884,909
Deposits, advances and other 355,531 346,834
Accrued interest 67,389 171,732
---------- ----------
Total current assets 14,511,378 14,780,996
Property, plant and equipment, net 44,556,944 43,374,065
Marketable securities 3,493,663 5,350,417
Other 1,242,313 1,295,014
---------- ----------
Total assets $ 63,804,298 $ 64,800,492
========== ==========
LIABILITIES
Current Liabilities:
Accounts payable and accrued expenses $ 328,498 $ 320,214
Note payable - KSOP 184,419 184,419
--------- ---------
Total current liabilities 512,917 504,633
Minority interest in consolidated subsidiaries 1,025,249 992,587
--------- ---------
Total liabilities 1,538,166 1,497,220
--------- ---------
SHAREHOLDERS' EQUITY
Serial preferred stock, without par value - -
Common shares and equity units,
without par value 102,083,548 102,067,298
Less, common shares held by affiliates (403,331) (403,331)
Accumulated deficit (39,103,639) (38,176,276)
KSOP debt (310,446) (184,419)
---------- ----------
Total shareholders' equity 62,266,132 63,303,272
---------- ----------
Total liabilities and shareholders' equity $ 63,804,298 $ 64,800,492
========== ==========
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three and Nine Months Ended September 30, 2000 and 1999 (unaudited)
Three Months Ended Nine Months Ended
2000 1999 2000 1999
U.S. Dollars --------------------------------------------------
OTHER INCOME
Interest $ 290,047 $ 283,853 $ 844,316 $ 875,922
-------- -------- -------- --------
EXPENSES
General and administrative 242,416 264,263 805,373 1,275,151
Technical services 95,354 191,868 322,487 538,062
Corporate communications 46,677 68,350 159,312 214,759
Legal and accounting 16,009 12,474 67,894 74,108
Foreign currency loss 24,894 38,251 89,763 123,493
Reorganization - - - 108,714
Loss on sale of
marketable securities - - 283,507 -
Interest 3,511 2,722 10,681 13,805
Minority interest in
net income of
consolidated subsidiaries 10,010 6,075 32,662 23,213
-------- -------- --------- ----------
438,871 584,003 1,771,679 2,371,305
-------- -------- --------- ----------
Net loss $ (148,824) $ (300,150) $ (927,363) $(1,495,383)
======== ======== ========= ==========
Net loss per share
basic and diluted $ (0.01) $ (0.01) $ (0.04) $ (0.07)
======== ======== ========= ==========
Weighted average common
shares outstanding 23,113,679 22,748,123 23,106,731 22,736,744
========== ========== ========== ==========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2000 and 1999 (unaudited)
U.S. Dollars 2000 1999
----------------------------------
Cash Flows from Operating Activities:
Net loss $ (927,363) $ (1,495,383)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 35,417 31,666
Amortization of discount on
marketable securities (167,767) (8,082)
Foreign currency loss 89,763 123,493
Minority interest in net income of
consolidated subsidiaries 32,662 23,213
Net loss on sale of marketable securities 283,507 -
Other 3,500 -
Changes in current assets and liabilities:
Net (increase) decrease in current assets (30,381) 442,204
Net increase (decrease) in
current liabilities 8,284 (198,150)
---------------------------------
Net cash used by operating activities (672,378) (1,081,039)
---------------------------------
Cash Flows from Investing Activities:
Proceeds from the sale and
maturity of marketable securities 16,655,312 15,500,000
Purchase of marketable securities (16,073,710) (11,937,528)
Purchase of property, plant and equipment (1,295,309) (2,163,877)
Other 52,701 61,905
---------------------------------
Net cash provided (used) by
investing activities (661,006) 1,460,500
---------------------------------
Cash Flows from Financing Activities:
Proceeds from issuance of common shares - 28,744
---------------------------------
Net cash provided by financing activities - 28,744
---------------------------------
Change in Cash and Cash Equivalents:
Net increase (decrease) in
cash and cash equivalents (1,333,384) 408,205
Cash and cash equivalents -
beginning of period 4,377,521 2,848,189
---------------------------------
Cash and cash equivalents -
end of period $ 3,044,137 $ 3,256,394
---------------------------------
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
October 30, 2000
