Gold Reserve rejects Rusoro takeover letter
ANDY HOFFMAN







Gold Reserve Inc., which has seen its share price decimated by the revocation of a gold mining permit in Venezuela, rejected a takeover proposal yesterday from Rusoro Mining Ltd. valuing the company at about $90-million.


Based in Spokane, Wash., and headed by Canadian Doug Belanger, Gold Reserve has been trying to put its 10-million-ounce Brisas gold project into production for more than 15 years.


The company, which trades on the Toronto Stock Exchange, was dealt a severe blow in May, when the Hugo Chavez government rescinded a construction permit to build the mine, which, in addition to gold, is believed to contain 1.4 billion pounds of copper.


With Gold Reserve's stock down 71 per cent this year, rival Rusoro, a Vancouver company which has had surprising success mining in Venezuela, sent a letter to Gold Reserve's directors last week outlining a potential takeover offer.


Rusoro, which is traded on the TSX Venture Exchange, suggested two of its shares would be offered for each Gold Reserve share.


"A combination of our two companies will confirm to the market that Venezuela is, and always has been, open for business and that our projects have the full support of the Venezuelan authorities," stated the letter, dated Aug. 21.


In an interview yesterday, Mr. Belanger, Gold Reserve's president, pointed out that the Rusoro offer, worth about $90-million, comes at a time when the company has roughly $105-million in cash.


"They sent us a letter, the board looked at it and talked with our advisers and we rejected it. It's basically a market offer. It's inadequate. It's an offer worth less than the current cash we have," Mr. Belanger said.


Despite the company's troubles in Venezuela, he said Gold Reserve is not for sale. It is, however, open to considering proposals that would maximize shareholder value.


George Salamis, the president of Rusoro, which is controlled by Russia's Agapov family and operates the Choco 10 gold mine in Venezuela, declined to comment.


In addition to Brisas, Gold Reserve is also developing the nearby Choco 5 exploration property.


GOLD RESERVE (GRZ)


Close: $1.58 up 10cents


RUSORO MINING (RML)


Close: 80cents cents, unchanged