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, 2003
GOLD RESERVE INC.
Commission file number 000-30102
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):
GOLD RESERVE INC.
June 30, 2003
Interim Financial Report
U.S. Dollars
Forward Looking Statements
The information presented or incorporated by reference in this interim
report, including managements discussion and analysis of financial condition
and results of operations, contains 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)). 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 the risk
that actual reserves may vary considerably from estimates presently made,
the impact of currency, metal prices and metal production volatility, the
concentration of operations and assets in Venezuela, the regulatory,
political and economic risks associated with Venezuelan operations, our
ability to obtain additional funding for future development of the Brisas
property, our dependence upon the abilities and continued participation of
certain key employees, and the risks normally incident to the operation and
development of mining properties.
The words "believe," "anticipate," "expect," "intend," "estimate," "plan,"
"assume," "positioned," "may," "will," "could" and other similar expressions
that are predictions of or indicate future events and future trends which 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 report 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 our Company 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
regulatory agencies, which can be viewed on-line at www.sec.gov,
www.sedar.com or at the Company's website, www.goldreserveinc.com.
Additionally, you can request a copy directly from the Company.
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. The in-pit mineral reserves on the Brisas property utilizing the
Cominco Engineering Services Limited (CESL) process and a traditional smelter
process for treating copper concentrates are estimated at 7.5 million ounces
of gold and approximately 1.1 billion pounds of copper and 6.6 million
ounces of gold and approximately 764 million pounds of copper, respectively.
The identified mineralization is contained within an area approximately
1,900 meters long and 500 to 900 meters wide and continues for an unknown
distance down dip to the west, to the north and south and below the current
mineralized deposit.
Based on previous reserve estimates, the anticipated mining and processing
facility was to 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. 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. Construction of a mining facility
at the Brisas property is estimated to cost approximately $353 million
(including working capital of approximately $19.5 million). Construction of
a mining facility, if warranted, would take 18 to 24 months.
The feasibility study will update the pre-feasibility cash operating and
total costs per ounce for the revised reserve estimates. Utilizing
previously completed reserve estimates that were based on Gold Institute
guidelines and the assumptions included in the pre-feasibility study, cash
operating costs were estimated at $153 per ounce of gold (using $300 per
ounce gold, $0.90 per pound copper and on-site copper processing) and total
after-tax costs are estimated at $243 per ounce of gold (including operating
costs, working capital, initial capital and life of mine capital less sunk
costs).
Estimated cost per ounce of gold is determined net of copper revenues.
Brisas Project Development
During the first quarter of 2003, MEM (Ministry of Energy and Mines) approved
an operating plan for the alluvial and hardrock ore and project
infrastructure for the Brisas project. Based on this operating plan, the
Company is preparing an updated and expanded EIS for the larger project. The
Brisas project is located in the Imataca Forest Reserve ("Imataca") within an
area previously set aside for mining. In 1997 the Supreme Court issued a
preventive measure that no new mining concessions or rights could be granted
in the Imataca. Subsequent to the Supreme Court order, MEM granted the
Company the hardrock exploitation concession based on the fact that Brisas
is located in the area previously approved for mining within the boundary of
the Imataca. Prior to the granting of the hardrock concession and subsequent
to the Supreme Court order, the Company had submitted to MEM and MARNR
(Ministry of Environment) several concession and permit applications related
to the Brisas project. These applications are currently pending the
resolution of the Imataca matter. Exploitation activities are typically
required to commence within two years from the approval of the operating
plan, but MEM representatives have indicated that any delay in the
resolution of the Imataca matter further delays any obligation required of
the concession and/or contract holder. MEM and MARNR are presently holding
public meetings and have indicated that the Imataca issue is expected to be
resolved during the next six months.
In March 2003, Behre Dolbear & Company, Inc. (Behre Dolbear) of Denver,
Colorado commenced a mine reserve analysis for the Company's Brisas
gold/copper project. This study was completed in August 2003 and included
separate reserve analysis for the CESL process, as well as, a conventional
smelter process case. The results of the reserve analyses, which are
discussed elsewhere in this document, are expected to be utilized in the
completion of the final feasibility study. Behre Dolbear also recommended
that the Company complete additional drilling which could potentially expand
the mineral reserves.
In May 2003, a mining contractor was engaged to extract a bulk sample from
the Brisas gold/copper project for a large scale CESL test. The contractor
is currently sinking a shaft in the hardrock mineralization to extract a
sample of approximately 750 tonnes. The material will be processed into a
gold-copper concentrate at SGS Lakefield Research Limited in Canada and then
be transported to CESL in Vancouver. This test is designed to provide the
necessary data to complete the CESL portion of the final feasibility study.
The immediate advantage of the CESL process is an improved return on payable
metal and elimination of significant transportation costs for the gold-copper
concentrate to an out-of-country smelter.
In addition to these activities, environmental studies as well as permitting
are required to complete the final feasibility study. Management is
currently evaluating Behre Dolbear's recommendation regarding additional
drilling at the Brisas property. If the Company proceeds with additional
drilling, management does not anticipate a significant delay in completion
of the feasibility study. In the near future management also expects to
circulate a request for proposal to select an engineering firm for the
Brisas project. The need for and the timing of these activities are subject
to, among other things, the results of the CESL test, typical environmental
and regulatory permits as well as the scheduling of third party consultants
and contractors and any additional information required by third parties for
the completion of the feasibility study. Management anticipates that the final
feasibility study will be completed in 2004.
Reserve Estimate Audits
The mineral reserve and resource estimates set forth in this document have
been prepared by management in accordance with the disclosure requirements
of applicable Canadian and U.S. Securities Commissions. The definitions
related to reserves, used herein, are pursuant to Canadian National
Instrument 43-101; Standards of Disclosure for Mineral Projects, which
management believes are substantially the same as those definitions used in
the U.S. Securities and Exchange Commission Industry Guide 7.
Behre Dolbear & Company, Inc. ("Behre Dolbear") have audited the Brisas data
compiled by the company. Behre Dolbear concluded from their audits that:
technical data collection procedures met or exceeded accepted industry
standards; assay laboratories provided reliable and acceptable results; and
the compiled database was of a quality appropriate for utilization in a
mineral reserve study suitable for obtaining financing. Further, Behre
Dolbear has advised Gold Reserve that it has an adequate basis for supporting
the estimated mineral reserves at the Brisas project in accordance with
Canadian National Instrument 43-101, Standards of Disclosure for Mineral
Projects as well as the standards contained in the U.S. Securities and
Exchange Commission Industry Guide 7.
Mineral Reserve Estimate
CESL PROCESS
The Brisas property in-pit mineral reserve estimate utilizing the CESL
process for treating copper concentrate is estimated to contain
approximately 328.5 million tonnes with an average grade of 0.708 grams of
gold per tonne and 0.15% copper with a waste to ore ratio of 1.80:1. The
reserve was calculated using an average gold and copper price of $325 per
ounce and $0.85 per pound, respectively. The August 2003 mineral reserve is
summarized in the following tables:
Reserve Au Cu Waste Total
tonnes Au grade Cu grade ounces pounds tonnes tonnes Strip
Class (thousands) (g/t) (%) (thousands) (millions) (thousands) (thousands) Ratio
- -----------------------------------------------------------------------------------------------
Proven 224,174 0.770 0.132 5,547 650
Probable 104,288 0.575 0.188 1,928 433
- -----------------------------------------------------------------------------------------------
Total 328,462 0.708 0.150 7,475 1,083 591,722 920,184 1.80
===============================================================================================
TRADITIONAL SMELTER PROCESS
The Brisas property in-pit mineral reserve estimate utilizing a traditional
smelter process for treating copper concentrate is estimated to contain
approximately 256.6 million tonnes of mineral reserves with an average
grade of 0.805 grams of gold per tonne and 0.135% copper with a waste to ore
ratio of 2.19:1. The reserve was calculated using an average gold and copper
price of $325 per ounce and $0.85 per pound, respectively. The August 2003
mineral reserve is summarized in the following tables:
Reserve Au Cu Waste Total
tonnes Au grade Cu grade ounces pounds tonnes tonnes Strip
Class (thousands) (g/t) (%) (thousands) (millions) (thousands) (thousands) Ratio
- -----------------------------------------------------------------------------------------------
Proven 193,685 0.841 0.124 5,237 528
Probable 62,930 0.694 0.170 1,404 236
- -----------------------------------------------------------------------------------------------
Total 256,615 0.805 0.135 6,641 764 562,579 819,194 2.19
===============================================================================================
Mineral Resource Estimates
CESL PROCESS
The Brisas property, using the CESL process for treating copper concentrates,
is estimated to contain a measured and indicated mineral resource of 9.89
million ounces of gold and approximately 1.4 billion pounds of copper (based
on 0.4 gram per tonne gold equivalent cut-off). The August 2003 measured and
indicated mineral resource for the CESL process, which includes the mineral
reserve, is summarized in the following tables:
Measured/Indicated
(kt= 1,000 tonnes) Measured Indicated Combined
- ----------------------------------------------------------------------------------------------
Au Eq
Cutoff Au Cu Au Cu Au Cu
Grade kt (g/t) (%) kt (g/t) (%) kt (g/t) (%)
- ----------------------------------------------------------------------------------------------
0.40 273,013 0.73 0.119 194,573 0.557 0.16 467,586 0.658 0.136
==============================================================================================
Measured/Indicated
(millions) Measured Indicated Combined
- ----------------------------------------------------------------------------------------------
Au Eq
Cutoff Au Cu Au Cu Au Cu
Grade oz. lb. oz. lb. oz. lb
- ----------------------------------------------------------------------------------------------
0.40 6.405 717 3.484 687 9.889 1,404
==============================================================================================
The inferred mineral resource for the CESL process (based on 0.4 gram per
tonne equivalent cut-off) is estimated at 93.1 million tonnes of 0.56 grams
gold per tonne and 0.14 percent copper, or 1.67 million ounces of gold and
282 million pounds of copper.
TRADITIONAL SMELTER PROCESS
The Brisas property, using a traditional smelter process for treating copper
concentrates, is estimated to contain a measured and indicated mineral
resource of 9.5 million ounces of gold and approximately 1.2 billion pounds
of copper (based on 0.4 gram per tonne gold equivalent cut-off). The August
2003 measured and indicated mineral resource for a traditional smelter
process, which includes the mineral reserve, is summarized in the following
tables:
Measured/Indicated
(kt= 1,000 tonnes) Measured Indicated Combined
- ----------------------------------------------------------------------------------------------
Au Eq
Cutoff Au Cu Au Cu Au Cu
Grade kt (g/t) (%) kt (g/t) (%) kt (g/t) (%)
- ----------------------------------------------------------------------------------------------
0.40 252,227 0.769 0.117 162,264 0.625 0.155 414,491 0.712 0.132
==============================================================================================
Measured/Indicated
(millions) Measured Indicated Combined
- ----------------------------------------------------------------------------------------------
Au Eq
Cutoff Au Cu Au Cu Au Cu
Grade oz. lb. oz. lb. oz. lb
- ----------------------------------------------------------------------------------------------
0.40 6.233 649 3.258 554 9.491 1,203
==============================================================================================
The inferred mineral resource for the smelter process (based on 0.4 gram per
tonne equivalent cut-off) is estimated at 77.2 million tonnes of 0.64 grams
gold per tonne and 0.12 percent copper, or 1.58 million ounces of gold and
205 million pounds of copper.
Financial Overview
Overview
We prepare our consolidated financial statements in U.S. Dollars in
accordance with accounting principles generally accepted in Canada. The
Company has not recorded revenue or cash flow from mining operations and has
experienced losses from operations for each of the last five years, a trend we
expect to continue until the Brisas property is fully developed and put into
production. The information contained herein should be read in conjunction
with the Company's consolidated financial statements, included herein.
Venezuela has experienced high levels of inflation during the last several
years and has also most recently experienced political instability and civil
unrest (including a national work stoppage and a number of civil
disturbances), fuel shortages, currency and exchange controls, and a decline
in industrial output and foreign investment. Despite this political and
economic turmoil, we have not experienced any significant adverse impact on
our operations in Venezuela nor have we curtailed our investment activities
in the country. However, our future operations and investments in Venezuela
could be adversely affected by continued political instability and civil
unrest, as well as, exchange controls, currency fluctuations, political
instability, changes in mining laws or regulations, taxation, judicial
decisions and laws or policies of Venezuela and the United States affecting
trade, investment, taxation and other factors.
The total financial resources of the Company, cash plus current and
non-current marketable securities, decreased $1.2 million from December 31,
2002 to approximately $11.3 million as of June 30, 2003 (unaudited):
June 30, December 31,
2003 2002
- ---------------------------------------------------------------------------
Cash and equivalents $ 2,098,703 $ 1,584,632
Marketable securities - current 8,476,820 10,945,768
Marketable securities - non-current 769,837
- ---------------------------------------------------------------------------
$ 11,345,360 $ 12,530,400
===========================================================================
Consolidated net loss for the three and six months ended June 30, 2003
amounted to $715,181 and $1,264,869 or $0.03 and $0.05 per share compared to
consolidated net loss of $978,667 and $1,604,984 or $0.04 and $0.07 per share
for the same periods in 2002. The decrease in net loss from the comparable
six-month period results primarily from a decrease in foreign currency loss.
The Company had no significant financing transactions and no significant
investing activities during the six months ended June 30, 2003, other than
investments in marketable securities, which, on a net basis, totaled
approximately $1.7 million in sales and maturities of marketable securities.
Planned corporate expenditures for 2003, excluding the amounts that may be
expended for the completion of the feasibility study on the Brisas property
and other exploration as noted below, are estimated at $3.0 million.
Interest and investment income for 2003 is projected to be approximately $0.7
million.
We expect the activities related to the completion of final
feasibility and engineering to cost approximately $7 million. Although we
hope to complete the final feasibility in 2004, the timing of these
activities are subject to, among other things, typical environmental and
regulatory permits as well as the scheduling of third party consultants and
contractors. As a result, we cannot say with certainty when the final
feasibility study will be completed.
As of August 28, 2003, the Company held approximately $11 million in cash and
investments. In the near- term management believes that current cash and
investment balances are sufficient to allow the Company to fund its
activities through 2004. The timing and extent of additional funding depends
on a number of important factors, including the actual timetable and scope
of our 2003-2004 work plan, our assessment of the financial markets, our
share price and the price of gold and copper. Development of the Brisas
property, as presently proposed in the Brisas preliminary feasibility study,
is estimated to cost $353 million over an 18 to 24 month construction
period. The ultimate design and cost of the plant and associated
expenditures are subject to the results of a final feasibility study and
would be expected to vary to some degree from original estimates. Future
development of the Brisas property is dependent upon, among other things,
the price of gold and copper, obtaining adequate financing, and obtaining
the appropriate environmental and operating permits. Management can provide
no assurances that it will be able to acquire the required significant
additional financing that will be needed, if and when, construction on the
Brisas project commences. Failure to raise the required funds will impede the
Company's ability to construct and operate the Brisas project and would, in
the long-term, have a material adverse effect on the Company.
The Bolivar/Dollar exchange rate ended 2002 at Bs. 1,403 to the Dollar, up
Bs. 645 (85%) from December 2001. In February 2002, a free-floating exchange
rate system was established, with the Venezuelan Central Bank acting as the
main foreign currency seller. During the first quarter of 2003, the exchange
rate was fixed at Bs. 1,600 to the Dollar.
As of August 28, 2003, the Company had the following shares, equity units and
share options issued:
Class A common 22,996,158
Equity units* 1,289,980
Options to purchase Class A common shares 3,491,624
*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 SHEETS
June 30, 2003 (unaudited) and December 31, 2002
June 30, December 31,
U.S. Dollars 2003 2002
- -------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 2,098,703 $ 1,584,632
Marketable securities 8,476,820 10,945,768
Deposits, advances and other 358,023 348,798
Accrued interest 85,259 148,893
- -------------------------------------------------------------------------------
Total current assets 11,018,805 13,028,091
- -------------------------------------------------------------------------------
Property, plant and equipment, net 46,127,020 46,144,396
Marketable securities 769,837
Other 603,664 670,036
- -------------------------------------------------------------------------------
Total assets $ 58,519,326 $ 59,842,523
===============================================================================
LIABILITIES
Current Liabilities:
Accounts payable and accrued expenses $ 277,073 $ 350,261
- -------------------------------------------------------------------------------
Total current liabilities 277,073 350,261
Minority interest in consolidated subsidiaries 1,095,101 1,080,241
- -------------------------------------------------------------------------------
Total liabilities 1,372,174 1,430,502
SHAREHOLDERS' EQUITY
Serial preferred stock, without par value
Common shares and equity units,
without par value 102,498,071 102,498,071
Less, common shares held by affiliates (674,598) (674,598)
Accumulated deficit (44,611,537) (43,346,668)
KSOP debt (64,784) (64,784)
- -------------------------------------------------------------------------------
Total shareholders' equity 57,147,152 58,412,021
- -------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 58,519,326 $ 59,842,523
===============================================================================
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 and Six Months Ended June 30, 2003 and 2002 (unaudited)
Three Months Ended Six Months Ended
U.S. Dollars 2003 2002 2003 2002
- -------------------------------------------------------------------------------
OTHER INCOME
Interest $140,899 $137,975 $321,699 $310,179
Gain (loss) on sale of
marketable securities (7,723) 11,800 (4,248)
- -------------------------------------------------------------------------------
140,899 130,252 333,499 305,931
EXPENSES
General and administrative 367,053 329,478 604,679 544,920
Technical services 305,130 348,891 626,085 703,761
Corporate communications 96,236 91,450 197,297 156,872
Legal and accounting 70,997 70,153 98,177 91,164
Foreign currency loss 11,062 263,714 57,270 402,022
Minority interest in net income
of consolidated subsidiaries 5,602 5,233 14,860 12,176
- -------------------------------------------------------------------------------
856,080 1,108,919 1,598,368 1,910,915
- -------------------------------------------------------------------------------
Net loss $(715,181) $(978,667) $(1,264,869) $(1,604,984)
===============================================================================
Net loss per share $(0.03) $(0.04) $(0.05) $(0.07)
===============================================================================
Weighted average common
shares outstanding 23,492,776 23,217,776 23,492,776 23,216,649
===============================================================================
CONSOLIDATED STATEMENTS OF DEFICIT
For the Six Months Ended June 30, 2003 and 2002 (unaudited)
U.S. Dollars
Deficit, December 31, 2002 $ (43,346,668)
Net loss (1,264,869)
- ------------------------------------------------------------
Deficit, June 30, 2003 $ (44,611,537)
============================================================
Deficit, December 31, 2001 $ (40,338,546)
Net loss (1,604,984)
- ------------------------------------------------------------
Deficit, June 30, 2002 $ (41,943,530)
============================================================
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three and Six Months Ended June 30, 2003 and 2002 (unaudited)
Three Months Ended Six Months Ended
U.S. Dollars 2003 2002 2003 2002
- ------------------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net loss $(715,181) $(978,667) $(1,264,869) $(1,604,984)
Adjustments to reconcile
net loss to net cash
used by operating activities:
Depreciation 11,072 13,889 22,377 35,308
Amortization of premium on
marketable securities 18,930 26,287 45,218 42,476
Foreign currency loss 11,062 263,714 57,270 402,022
Minority interest in net income
of consolidated subsidiaries 5,602 5,233 14,860 12,176
Net (gain) loss on sale
of marketable securities 7,723 (11,800) 4,248
Shares issued for compensation
and KSOP 30,000 30,000
Changes in non-cash working capital:
Net decrease (increase) in deposits,
advances and accrued interest 41,434 (46,657) 54,409 (62,388)
Net (decrease) in accounts payable
and accrued expenses (32,001) (40,030) (73,188) (72,981)
- ------------------------------------------------------------------------------------------
Net cash used by operating activities (659,082) (718,508) (1,155,723) (1,214,373)
- ------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Proceeds from the sale and maturity
of marketable securities 2,400,000 4,609,777 4,851,300 7,213,252
Purchase of marketable securities (1,045,515) (5,171,610) (3,185,607) (7,126,610)
Purchase of property, plant
and equipment (2,004) (5,692) (5,001) (5,692)
Other (22,693) 66,920 9,102 99,802
- ------------------------------------------------------------------------------------------
Net cash provided (used) by
investing activities 1,329,788 (500,605) 1,669,794 180,752
- ------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from the issuance of
common shares 2,160
- ------------------------------------------------------------------------------------------
Net cash provided by financing activities 2,160
- ------------------------------------------------------------------------------------------
Change in Cash and Cash Equivalents:
Net increase (decrease) in cash
and cash equivalents 670,706 (1,219,113) 514,071 (1,031,461)
Cash and cash equivalents -
beginning of period 1,427,997 5,952,317 1,584,632 5,764,665
- ------------------------------------------------------------------------------------------
Cash and cash equivalents -
end of period 2,098,703 $ 4,733,204 $ 2,098,703 $ 4,733,204
==========================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
Selected Notes To Consolidated Financial Statements For the Six Months Ended
June 30, 2003 and 2002 (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 June 30, 2003, and the results of operations and the cash flows for the
six months ended June 30, 2003 and 2002. The results of operations for the
six months ended June 30, 2003 and 2002 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 2002 annual report.
2. Geographic Segments
Net Loss for the Three and Six Months Ended June 30, 2003 and 2002
Three Months Ended Six Months Ended
2003 2002 2003 2002
- ------------------------------------------------------------------------
United States 363,531 370,856 630,988 588,213
Venezuela 351,650 607,811 633,881 1,016,771
- ------------------------------------------------------------------------
Consolidated $ 715,181 $ 978,667 $ 1,264,869 $ 1,604,984
========================================================================
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 603,641 options remaining for
future grants at June 30, 2003. Share option transactions for the six months
ended June 30, 2003 and 2002 are as follows:
2003 2002
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
- -----------------------------------------------------------------------
Options outstanding at
beginning of period 3,368,549 $ 0.80 3,421,950 $ 0.81
Options exercised (3,000) $ 0.72
Options canceled (40,552) $ 1.33
Options granted 123,075 $ 1.56 15,500 $ 1.10
- -----------------------------------------------------------------------
Options outstanding at
end of period 3,491,624 $ 0.83 3,393,898 $ 0.80
=======================================================================
Options exercisable at
end of period 3,399,320 $ 0.81 3,290,066 $ 0.80
=======================================================================
Price Price
Range Range
Exercise price at
end of period $ 0.50 - $ 1.56 $ 0.50 - $ 1.50
Exercise price for
exercisable shares $ 0.50 - $ 1.56 $ 0.50 - $ 1.50
Effective January 1, 2002, the Company adopted the requirements of the new
Canadian Institute of Chartered Accountants standard concerning the
accounting for stock-based compensation. No compensation expense is
recognized if the exercise price of the stock options at date of grant is
equal to market value.
The Company elected not to adopt the fair value method of accounting for
stock options. Had the fair value method of accounting been followed the
company would have recorded additional compensation expense of $146,317 and
$12,993 for the six months ended 2003 and 2002, respectively. Proforma basic
and diluted net loss per share would have been $0.06 and $0.07 for the six
months ended June 30, 2003 and 2002, respectively.
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 28, 2003
