Filed by Rusoro Mining Ltd.
Pursuant to Rule 425 under the
Securities Act of 1933, as amended
Subject Company: Gold Reserve Inc.
Commission File Number:
333-156117
Date: December 18, 2008
Suite 2164 1055
Dunsmuir Street, Four Bentall Centre
Vancouver, BC V7X 1B1
Tel: 604-632-4044 Fax:
604-632-4045 Toll Free 1 800-668-0091
Website: www.rusoro.com email: info@rusoro.com
RUSORO
TO DEFEND AGAINST GOLD RESERVES ATTEMPTS TO
DISENFRANCHISE
ITS OWN SHAREHOLDERS
December 18,
2008
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Trading Symbol (TSX-V):RML
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Vancouver, Canada Rusoro Mining Ltd. (TSX-V:RML) (Rusoro
or the Company) is pleased to announce that it is committed to defending the action
brought by Gold Reserve Inc. (Gold Reserve) so that Gold Reserves shareholders
and equity unitholders can consider Rusoros premium take-over bid (the Bid) on
its merits.
As of December 12, 2008 (the last trading day
before the Bid was announced), the Bid represented a value of C$1.08 per Gold
Reserve share, a premium of 140% on closing prices and 209% on the 30-day
volume weighted average prices, using Rusoros and Gold Reserves share prices
for the relevant trading days on the TSX Venture Exchange and Toronto Stock
Exchange, respectively.
In the statement of claim filed by Gold Reserve on December 16,
2008, Gold Reserve has set out its claims for, among other things, an
injunction restraining Rusoro from proceeding with the Bid to acquire the
shares and equity units of Gold Reserve.
To date, Gold Reserve has not brought a motion to obtain that relief and
has filed no evidence to support the allegations it has made. If successful in obtaining an injunction,
shareholders and equity unitholders of Gold Reserve would not be given the
opportunity to participate in the Bid. The
Company will work with its legal and financial advisors to vigorously defend
itself against all of the allegations made in Gold Reserves statement of claim
to ensure that Gold Reserve shareholders are not disenfranchised.
Andre
Agapov, CEO of Rusoro stated: The allegations made by Gold Reserve in their
claim against us are unfounded. This is simply a delaying tactic designed by
entrenched management to distract shareholders from our premium offer. Our
offer is based on Gold Reserves publicly available information. We have provided Gold Reserve shareholders
with a clear opportunity to participate in a gold production and growth company
with a proven record of turning around stalled assets in Venezuela. We will
work diligently to ensure that Gold Reserve shareholders have the opportunity to
consider our bid on its merits.
Rusoro has
been provided with a copy of a letter dated December 16, 2008 from its
financial advisor, Endeavour Financial International Corporation, to Gold
Reserve concerning certain of the allegations in Gold Reserves claim against
Endeavour Financial. The text of that
letter is copied in its entirety below.
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Rusoros financial
advisor is Endeavour Financial International Corporation, its Canadian legal
counsel are Blake, Cassels & Graydon LLP and Anfield, Sujir, Kennedy &
Durno and its US legal counsel are Gersten Savage LLP and Dorsey &
Whitney LLP.
ON BEHALF OF THE BOARD
Andre Agapov
Chief Executive Officer
Text of
letter sent from Endeavour Financial to Gold Reserve
December 16, 2008
Gold Reserve Inc.
926 W. Sprague Avenue
Suite 200
Spokane, WA
USA 99201
By Fax: +1 509 623 1634
And email: rjtimm@goldreserveinc.com
Attention: Rockne J. Timm, CEO
Dear Sirs,
We write in response to your
letter of December 14, 2008.
That letter is substantively
incorrect. I draw your attention to the following.
·
Gold Reserve Inc. (GRZ) engaged Endeavour Financial International
Corporation (EF) in October 2004 to carry out a debt mandate and an
equity/M&A mandate. GRZ terminated the equity/M&A mandate in September 2007.
The debt mandate continued until GRZ first suspended and then, in October 2008, terminated,
its relationship with the four banks who had agreed to arrange the debt.
This termination effectively extended to terminate the debt mandate as these
were the four banks with whom EF had been engaged to work. The terms of
the mandates expressly recognized that EF had other clients whose interests
might conflict with GRZs.
·
In August 2008 EF approached GRZ on behalf of Rusoro with an offer
for a combination of the two companies. GRZ refused the offer. GRZ
did not make any objection to EFs role as Rusoros adviser. After that
meeting GRZ ceased paying the fees that it owed to EF in connection with the
debt mandate.
·
EF has complied with its obligations under its engagement letter with
GRZ and, in particular, the EF team that advised Rusoro with respect to the bid
did not rely on any confidential information.
Rusoro has informed us that the offer was based solely on publicly
available information.
·
GRZs press release of 15 December 2008 violates the Disclosure of
Engagement term of the EF/GRZ mandate letter of 19 September 2007.
Pursuant to the Termination clause of that letter the mandate is terminated.
In short: EF has not violated any
duty to GRZ; Rusoros bid is not based on any information in respect of
which GRZ has a confidentiality interest; and GRZ management has known for
months that EF is advising Rusoro and complained, for the first time, only when
Rusoro advised that it would make a bid.
We note your press release of
todays date in respect of an action in the Ontario Superior Court of Justice
against us and against Rusoro. We will
vigorously defend this action to ensure that your shareholders are provided
with the opportunity to consider Rusoros bid on its merits.
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Rusoros bid makes available to
the shareholders of GRZ the option of seeing Brisas developed by GRZs current
management team or by Rusoros. GRZs efforts appear to be focused on
stopping the bid irrespective of what is in the best interests of the GRZ
shareholders. If your board has
determined that the bid is inadequate, that case should be made to the
shareholders themselves, rather than attempting to prevent the shareholders
from making the determination.
We are disappointed that GRZ is
making false accusations against Endeavour for the purpose of distracting the
shareholders from the fact that they have the opportunity to tender their
shares at a very large premium to the market value that incumbent management
has achieved for them.
Sincerely,
Bill Koutsouras
Director, Executive Vice
President & CFO
CC:
Andre Agapov, Rusoro CEO
* * *
* * * * *
For further information,
please contact:
George Salamis, President
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Ross Gatensbury, Investor
Relations
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Tel: +1 604 632 4044
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Tel: +1 604 632 4044
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Email:
gsalamis@rusoro.com
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Email: gates@rusoro.com
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ANY
QUESTIONS OR REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE
COMPANYS INFORMATION AGENT:
North American Toll Free Number:
1-
888-605-7615
Banks and Brokers call collect: 1-212-806-6859
Cautionary Note Regarding Forward-Looking
Statements
This
press release, the Take-Over Bid and Circular, including the schedules attached
therein, the pro forma consolidated financial statements of the Company, and
some of the material incorporated by reference into the Circular, contain
certain forward-looking information and forward-looking statements, as defined
in applicable securities laws (collectively referred to as
forward-looking statements
). Forward-looking statements include possible
events, statements with respect to possible events, the proposed transaction,
related litigation, the business, operations and financial performance and
condition of each of Rusoro and Gold Reserve and the proposed combined company,
the future price of gold, the estimation of mineral reserves and resources, the
realization of mineral reserve and resource estimates, the timing and amount of
estimated future production, costs of production, expected capital
expenditures, costs and timing of the development of new deposits, success of
exploration, development and mining activities, permitting time lines, currency
fluctuations, requirements for additional capital, government regulation of
mining operations, environmental risks, unanticipated reclamation expenses,
title disputes or claims, and limitations on insurance coverage. The words plans, expects, is expected, scheduled,
estimates, forecasts, intends, anticipates, or believes, or
variations of such words and phrases or statements that certain actions, events
or results may, could, would, might, or will be taken, occur and
similar expressions identify forward looking statements.
Forward-looking
statements are necessarily based upon a number of estimates and assumptions
that, while considered reasonable by Rusoro as at the date of such statements,
are inherently subject to significant business, economic, social, political and
competitive uncertainties and contingencies and other factors that could cause
actual results or events to differ materially from those projected in the
forward-looking statements. The
estimates and assumptions of Rusoro contained or incorporated by reference in
the Circular which may prove to be incorrect,
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include,
but are not limited to, (1) that Rusoro will be successful in acquiring
100% of the outstanding Gold Reserve
Equity
, (2) that all required third party regulatory and governmental
approvals to the Take-Over Bid will be obtained and all other conditions to
completion of the transactions will be satisfied or waived, (3) there
being no significant disruptions affecting operations, whether due to labour
disruptions, supply disruptions, power disruptions, damage to equipment or
otherwise; (4) permitting, development, expansion and power supply
proceeding on a basis consistent with Rusoros current expectations; (5) permitting
and development proceeding on a basis consistent with Rusoros current
expectations; (6) the exchange rate between the Canadian dollar, the
Venezuelan Bolivar and the U.S. dollar being approximately consistent with current
levels; (7) certain price assumptions for gold; (8) prices for and
availability of natural gas, fuel oil, electricity, parts and equipment and
other key supplies remaining consistent with current levels; (9) production
forecasts meeting expectations; (10) the accuracy of Rusoros current
mineral reserve and mineral resource estimates; and (11) labour and materials
costs increasing on a basis consistent with Rusoros current expectations.
Known and unknown factors
could cause actual results or events to differ materially from those projected
in the forward-looking statements. Such
factors include, but are not limited to, risks related to litigation;
fluctuations in the currency markets; fluctuations in the spot and forward
price of gold or certain other commodities (such as diesel fuel and
electricity); changes in interest rates; disruption to the credit markets and
delays in obtaining financing; inflationary pressures; risks arising from
holding derivative instruments (such as credit risk, market liquidity risk and
mark-to-market risk); changes in national and local government legislation,
taxation, controls, regulations and political or economic developments in
Canada, Venezuela or other countries in which Rusoro does or may carry on
business; business opportunities that may be presented to, or pursued by
Rusoro, Rusoros ability to successfully integrate acquisitions; operating or
technical difficulties in connection with mining or development activities;
actual results of exploration activities; the possibility of cost overruns or
unanticipated expenses; employee relations; the speculative nature of gold
exploration and development, including the risks of obtaining and renewing
necessary licenses and permits; the impact of Venezuelan law on Rusoros operations;
diminishing quantities or grades of reserves; adverse changes in our credit
rating; contests over title to properties, particularly title to undeveloped
properties; and the occurrence of natural disasters, hostilities, acts of war
or terrorism. In addition, there are
risks and hazards associated with the business of gold exploration, development
and mining, including environmental hazards, industrial accidents, unusual or
unexpected formations, pressures, cave-ins, flooding and gold bullion losses
(and the risk of inadequate insurance, or inability to obtain insurance, to
cover these risks). The following
factors, amongst others, related to the business combination of Rusoro and Gold
Reserve could cause actual results to differ materially from forward-looking
statements, including those contained in the Circular: the Rusoro shares issued
in connection with the Take-Over Bid may have a market value lower than
expected; the business of Rusoro and Gold Reserve may not be integrated
successfully or such integration may be more difficult, time-consuming or
costly than expected; and the expected combination benefits from the
combination of Rusoro and Gold Reserve may not be fully realized or not
realized within the expected time frame.
All of the forward-looking statements made in the Circular are qualified
by these cautionary statements and those made in the Circular itself. These factors are not intended to represent a
complete list of the factors that could affect Rusoro and the combination of
Rusoro and Gold Reserve. Additional
factors are noted elsewhere in the Circular and in the documents incorporated
by reference therein. Although Rusoro
has attempted to identify important factors that could cause actual results or
events to differ materially from those described in forward-looking statements,
there may be other factors that could cause results or events not to be as
anticipated, estimated or intended.
There can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ materially from
those anticipated in such statements.
Accordingly, undue reliance should not be placed on forward-looking
statements. Rusoro undertakes no
obligation to update publicly or otherwise revise any forward-looking
statements or the foregoing list of assumptions or factors, whether as a result
of new information or future events or otherwise, except as may be required in
connection with a material change in the information disclosed in the Circular
or as otherwise required by law.
MORE
INFORMATION AND WHERE TO FIND IT:
This press release does not constitute an offer to
buy or an invitation to sell, any of the securities of Rusoro or Gold Reserve.
Such an offer may only be made pursuant to a registration statement and
prospectus filed with the U.S. Securities and Exchange Commission (the SEC)
and an offer to purchase and circular filed with Canadian securities regulatory
authorities. Rusoro has filed with the
SEC a Registration Statement on Form F-10, a Tender Offer Statement on Schedule
TO and other documents and information, and expects to mail an Offer and
Circular (which is filed as an exhibit to the Registration Statement and Tender
Offer Statement) to Gold Reserve shareholders and equity unitholders
(collectively, the Equityholders) concerning the Offer and the proposed
combination of Rusoro and Gold Reserve. GOLD RESERVE EQUITYHOLDERS ARE URGED TO
READ THE REGISTRATION STATEMENT, THE TENDER OFFER STATEMENT AND OFFER AND
CIRCULAR AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE
THEY CONTAIN IMPORTANT INFORMATION. Investors and Gold Reserve Equityholders
may obtain the documents free of charge at the SECs website, www.sec.gov. In
addition, documents filed with the SEC by Rusoro are available free of charge
from Rusoro. You should direct requests for documents to the Corporate
Secretary, Rusoro Mining Ltd., Suite 2164, 1055 Dunsmuir Street, Vancouver,
British Columbia V7X 1B1, telephone (604) 632-4044.
The TSX Venture Exchange has not
reviewed and does not take responsibility for the adequacy or accuracy of this
release.
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