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Message: grz files, KRY next? Russians & Chavez need to negotiate in good faith!

grz files, KRY next? Russians & Chavez need to negotiate in good faith!

posted on Oct 21, 2009 06:50PM

Gold Reserve Inc. (NYSE-Amex: GRZ) (TSX: GRZ) today announced that it has filed a Request for Arbitration under the Additional Facility Rules of the International Centre for Settlement of Investment Disputes (“ICSID”) of the World Bank, in Washington D.C., against the Bolivarian Republic of Venezuela seeking compensation for the losses caused to the Company resulting from Venezuela’s violations of the Agreement between the Government of Canada and the Government of the Republic of Venezuela for the Promotion and Protection of Investments (“Canada-Venezuela Treaty”) in regard to the Company and its investments in Venezuela relating to the Brisas Project and the Choco 5 property in the Bolivar State of Venezuela.

As described in the Request for Arbitration, after enjoying years of support from the relevant Venezuelan authorities in developing its mining projects, investing nearly US$ 300 million in exploration and development, and developing the Brisas Project in particular to the threshold of production, the Company’s investments were unlawfully and effectively taken from it as a result of the decisions and actions taken, directed, and supported by the administration of President Hugo Chávez.

The wrongful and expropriatory acts by the Venezuelan Government include unreasonable delays by the Venezuelan Ministry of Environment (“MinAmb”) in completing the permitting process for the Brisas Project, MinAmb’s rescission of the March 2007 permit for the commencement phase of the Brisas Project for pretextual reasons, the announcement by President Chávez in January 2009 that the Government was taking over the Brisas Project, the denial by the Venezuelan Ministry of Mines (“MIBAM”) of the extension of the Brisas del Cuyuni alluvial gold concession for erroneous and pretextual reasons and in disregard of Venezuela’s mining law, and failing to maintain a fair, stable and transparent legal environment.

These and other actions have had the effect of denying the Company its right to fair and equitable treatment as required by the Canada-Venezuela Treaty, including protection against unlawful expropriation and treatment in accordance with international law. As a result of such treatment, the Company has suffered substantial loss and damage, including the value of the Company’s investments in Venezuela, which must be assessed but for Venezuela’s wrongful conduct and in view of the projected profitability of those investments, which is estimated to be

approximately US$ 5 billion. The Company will seek compensation in the arbitration for all of the loss and damage resulting from Venezuela’s wrongful conduct.

Douglas Belanger, President of Gold Reserve said, “Gold Reserve has been a dedicated and conscientious investor in Venezuela. In view of the Government’s actions, the Company consistently has sought to meet with the Government and hoped to reach an amicable resolution of the dispute. The Government’s actions, however, have resulted in significant loss to the Company and its shareholders and in view of the Government’s unwillingness to address these matters on an amicable basis, it became necessary to commence international arbitration as permitted under the Canada-Venezuela Treaty. While we are disappointed to have to proceed to arbitration, we are confident in our case.”

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