Gold Reserve cuts back on Brisas start-up production

Insisting that the transaction will not impact the start-up of the Brisas Gold project....

Insisting that the transaction will not impact the start-up of the Brisas Gold project in Venezuela,  Spokane’s Gold Reserve announced it will sell one SAG mill, two ball mills (35,000 tpd) and related motors currently being manufactured for Brisas.Gold Reserve placed the total value of the transaction at $43 million. The company will recover $18 million of progress payments and the purchase will assume the company’s remaining payment obligations related to the equipment of $25 million.In a news release, Doug Belanger, Gold Reserve President said, "The sale of this equipment reduces our near-term financial burden, but still allows us to initiate the Brisas Project to the extent current delays related to Brisas are resolved."We are continuing our support of various social, cultural, health and environmental programs in the immediate and surrounding areas near Brisas, further demonstrating our commitment to the Brisas Project, he added. "At the request of MinAmb and MIBAM, we have prepared a number of proposals over the past months to assist in responding to the government’s concerns related to mining in the Imataca Forest Reserve and the K-88 area. We continue to believe that the Brisas Project could be an active participant in facilitating the ultimate resolution to the issues identified by MinAmb and MIBAM. Subsequent to the completion of this transaction the company will hold cash and investments of approximately $120 million or over $2 per outstanding share.Last August Gold Reserve was approached by Canadian junior mining Rusoro Mining, which has a 50-50 joint venture with a subsidiary of the Venezuelan government, which includes the former Hecla Mining gold operation, La Camorra. Gold Reserve rejected Rusoro’s all-share offer, calling the bid inadequate and not in the best interest of Gold Reserve shareholders.Gold Reserve will continue its manufacturing commitment for one SAG mill and two balls mills, which will reduce capital costs and reduce daily through-put from 70,000 tpd to 35,000 tpd.