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: January 14,
2009
RUSORO
MINING LTD.
OFFER TO
PURCHASE
all of the
outstanding shares of
GOLD
RESERVE INC.
Information Agent Line
North American Toll Free Number:
1- 888-605-7615
Banks and Brokers call collect:
1-212-806-6859
Brief
Special Instructions to Call Centre Representatives
DO NOT DEVIATE FROM THE SCRIPT OR OFFER ANY PERSONAL
COMMENT
.
This script has been reviewed by the client and/or
their legal advisers and must be adhered to strictly. You must not provide what you think may be
the answer. All answers must be based on
publicly available information and more importantly, DO NOT OFFER ANY OPINION
or give advice, as this could be in breach of the law.
Type of Offer
: Hostile Offer
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RUSORO
MINING LTD.
OFFER TO
PURCHASE
all of the
outstanding shares of
GOLD
RESERVE INC.
The offer
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Rusoro Mining Ltd. (
Rusoro
or the
Offeror
) has made an offer (the
Offer
) to purchase all of the issued and
outstanding Class A common shares (the
Gold Reserve Shares
) of Gold Reserve Inc. (
Gold Reserve
) and all of the issued and outstanding
equity units (the
Gold Reserve Equity
Units
and together with the Gold Reserve Shares, the
Gold Reserve Equity
) of Gold Reserve, and including any
Gold Reserve Equity that may become issued and outstanding after the date of
this Offer but prior to the Expiry Time upon the conversion, exchange or
exercise of any securities of Gold Reserve (other than SRP Rights) that are convertible
into or exchangeable or exercisable for Gold Reserve Equity, together with
the associated rights (the
SRP Rights
)
issued under the Shareholder Rights Plan of Gold Reserve.
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Offered Consideration
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3 Rusoro Shares for each Gold Reserve Share or Gold
Reserve Equity Unit.
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Expiry time
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12:00 MIDNIGHT EASTERN TIME, AT THE
END OF JANUARY 21, 2009.
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Listing
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Gold Reserve Shares
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Toronto Stock Exchange (
TSX
)
and the New York Stock Exchange Alternext US LLC (
NYSE
Alternext
) under the symbol GRZ.
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Rusoro Shares
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TSX Venture Exchange (
TSX-V
) under the symbol RML.
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Manner of Acceptance
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Registered
The Offer may be accepted by Gold Reserve
Equityholders by delivering certificates representing the Gold Reserve Equity
that is being deposited, together with a duly completed and signed Letter of
Transmittal to the offices of the Depositary specified in the Letter of
Transmittal at or before the Expiry Time.
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Alternatively, Gold Reserve Equityholders may,
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(i)
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accept the offer by following the procedures for
book-entry transfer established by CDS Clearing and Depository Services Inc.
and Depository Trust Company; or
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(ii)
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follow the procedure for guaranteed delivery.
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For additional questions on how to complete the
LT, refer Gold Reserve Equityholders to the Depositary.
Beneficial
Gold Reserve
Equityholders whose Gold Reserve Equity is registered in the name of an investment
dealer, stock broker, bank, trust company or other nominee should contact that
nominee for assistance if they wish to accept the Offer.
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Depositary
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Computershare Investor Services Inc. @
Toll Free (North America):
1-800-564-6253 or Overseas: 1-514-982-7555
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3
Q&A
*Currency
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Unless
otherwise indicated, all references to $ or dollars in the Offer and
Circular refer to United States dollars and all references to Cdn.$ in this
Offer and Circular refer to Canadian dollars.
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1
. Who
is offering to buy my Gold Reserve Shares or Gold Reserve Equity Units?
Rusoro
Mining Ltd. (
Rusoro
or the
Offeror
).
Rusoro
is a company principally engaged in the exploration, mining and processing of
gold in Venezuela. Rusoro is a British
Columbia, Canada, company and its Rusoro Shares are listed on the TSXV under
the symbol RML.
See Section 1
of the Circular, as amended to date, Rusoro starting on pp. 8 & 42
2. What is Rusoro
proposing?
Rusoro
is offering to purchase all of the issued and outstanding Gold Reserve Shares
and Gold Reserve Equity Units, which is referred to collectively, as the
Gold Reserve Equity
, subject to
the terms and conditions set forth in the Offer and Circular.
3. What would I
receive in exchange for my Gold Reserve
Equity
?
For
each Gold Reserve Share or Gold Reserve Equity Unit you hold and validly tender
in accordance with the terms of the Offer and do not subsequently withdraw,
Rusoro is offering
3 Rusoro Shares
.
4. Will fractional Rusoro Shares be issued in
the Offer?
No. Rusoro
will not issue fractional Rusoro Shares.
Instead, where a Gold Reserve Equityholder is to receive Rusoro Shares
as consideration under the Offer and the aggregate number of Rusoro Shares to
be issued to such Gold Reserve Equityholder would result in a fraction of a Rusoro
Share being issuable, the number of Rusoro Shares to be received by such Gold
Reserve Equityholder will either be rounded up (if the fractional interest is
0.5 or more) or rounded down (if the fractional interest is less than 0.5) to
the nearest whole number.
5. Is the
offer being made for securities other than the Gold Reserve Equity?
The
Offer is not being made for any Gold Reserve Options, Gold Reserve Notes or
other rights to acquire Gold Reserve Shares.
Any
holder of such securities who wishes to accept the Offer must, to the extent
permitted by the terms thereof and applicable law, fully exercise or convert
such securities sufficiently in advance of the Expiry Time of the Offer in
order to obtain Gold Reserve Shares that may be deposited in accordance with
the terms of the Offer.
4
6.
Why should I accept the offer?
·
Compelling Premium.
On December 12, 2008, which is the last trading day prior to the
date on which Rusoro announced the Offer, the closing price of the Gold Reserve
Shares listed on the TSX was Cdn.$0.45 and on the NYSE Alternext was $0.39. The
volume-weighted average price of the Gold Reserve Shares on the TSX for the 30
trading days ended December 12, 2008 was Cdn.$0.436 and on the NYSE
Alternext was $0.330. Based on the closing price of the Rusoro Shares on the
TSX-V on December 12, 2008, the Offer represents a premium of
approximately 140% over the closing price of the Gold Reserve Shares on the TSX
on the same date. Based on the volume-weighted average price of the Rusoro
Shares on the TSX-V for the 30 trading days ended December 12, 2008, the
Offer represents a premium of approximately 209% over the volume-weighted
average price of the Gold Reserve Shares on the TSX for the same period. The current value of the Rusoro offer is
equal to 3 times the current Rusoro share price, or
C$ based on the
closing price of Rusoro on the TSX-V on
,
2009.
[NB: must be calculated as per updated
Rusoro price].
·
Immediate Production.
Rusoro has produced in excess of 100,000 attributable gold ounces in
2008 from its existing proven and probable reserves. Rusoro expects to increase this production
rate in 2009.
·
World Class Reserve and Resource Base.
The Combined Company would have 12.2 million
ounces of proven and probable gold reserves.
Measured and indicated resources, inclusive of reserves, would total
18.9 million ounces of gold. The
Combined Company would also have additional resources of 9.3 million inferred
gold ounces. In addition, the Brisas
Project contributes 1.4 billion pounds of copper in proven and probable
reserves.
·
Ongoing Participation in Brisas.
Based on the Offered Consideration, Gold
Reserve Equityholders would collectively own approximately 30.4% of the
Combined Company on an issued share basis.
·
Opportunity to Consolidate the KM88 Region.
Rusoro has proven itself as a Venezuelan gold
consolidator through the successful acquisition of both Gold Fields Choco 10
mine and Heclas Isidora mine. Rusoro
will look to further consolidate the world-class KM88 Region in Bolivar State,
Venezuela.
·
Established Relationship with the Venezuelan Government.
Rusoro has established the first mixed
enterprise joint venture of its kind with the Venezuelan government in the
mining industry by agreeing to form a joint venture over the Isidora gold
mining assets that Rusoro recently acquired from Hecla.
·
Concrete Synergies
.
The combination of Rusoro and Gold Reserve will not only produce
corporate synergies through the rationalization of head offices, regulatory
filing requirements and executive teams, the strictly Venezuelan location of
all material operations will enable the Combined Company to optimize in-country
operations as well. Gold Reserves Choco
5 property is adjacent to Rusoros Choco 10 mine and Gold Reserves Brisas
property is 10 kilometres south of Rusoros Yuruan property, all in Bolivar
State, Venezuela. Rusoro expects to
reduce duplicated in-country costs while optimizing operations including
drilling, the use of construction and mining equipment, ore processing
opportunities as well as regulatory and logistical requirements surrounding
imports and permitting.
·
Full Exposure to Gold
Price.
Based on Gold Reserves
publicly available information, none of the gold production of the Combined
Company is hedged.
·
Tax Efficient Structure
.
The Offer has been structured as
an all-share offer that will allow certain Gold Reserve Shareholders who tender
to the Offer to do so on a tax efficient basis.
Canadian resident Gold Reserve Shareholders may receive Rusoro Shares on
a tax-deferred basis under Canadian tax roll-over treatments. Subject to the Passive Foreign Investment
Company rules, U.S. resident Gold Reserve Shareholders may also receive
tax-deferral treatment if the Offer is a qualified reorganization under U.S.
federal tax law.
5
·
Optimization and Consolidation Opportunities
.
If the Offer is
accepted and Rusoro acquires all of the outstanding Gold Reserve Equity, Rusoro
intends to: (a) expedite its
development and expansion plans at its Choco 10 mine and Increible 6 project; (b) identify
opportunities to optimize the development of Gold Reserves Choco 5 project
which is adjacent to Rusoros Choco 10 mine; (c) obtain the requisite
development permits in respect of the Brisas project in order to recommence
construction in a timely manner; and (d) discuss further consolidation
opportunities in the KM88 region of Venezuela with the Venezuelan
government. As mentioned, Gold Reserves
Choco 5 property is adjacent to Rusoros Choco 10 mine and Gold Reserves
Brisas property is 10 km south of Rusoros Yuruan property.
·
Ability to deliver results in Venezuela.
Since commencing Venezuelan
operations, Rusoro has been able to:
·
Develop
an extensive land package with 2.0 million proven and probable gold ounces in
reserves, plus a resource, inclusive of reserves, of 7.1 million measured and
indicated gold ounces. Rusoro also has
an additional 7.1 million ounces of gold in inferred resources;
·
Permit
and develop its San Rafael/El Placer project operations which are expected to
reach commercial production in 2010;
·
Restart
the Choco 10 mine acquired from Gold Fields after it had been effectively shut
down as a result of both permitting and labour issues;
·
Restart
the Isidora mine operations acquired from Hecla after it had been effectively
shut down as a result of both permitting and labour issues.
Refer to the Circular starting
on pp.9 and 44, as amended to date, for complete information. See also Rusoros recent press releases
describing Rusoros positive operating results in the fourth quarter of 2008,
including:
·
the successful turn-around of the Choco 10 asset acquired at the end of
November 2007, reaching record quarterly production (38,868 ounces of
gold) in 4Q 2008 and record low cash costs (US$358 per ounce) for the same
period.
·
confirmation that the Ministry of Basic Industries and Mining (MIBAM)
in Venezuela has approved the study for
the Companys Increible 6 Gold Project including the technical, financial, and
environmental merits of the Project, a further step in implementing Rusoros
production growth strategy.
7. How many Rusoro
Shares could be issued pursuant to the Offer?
Rusoro expects to issue approximately 170,696,373
million Rusoro Shares based on the number of Gold Reserve Shares and Gold
Reserve Equity Units outstanding as at November 12, 2008 and assuming that
all of the Gold Reserve Shares and Gold Reserve Equity Units outstanding as at November 12,
2008 are acquired upon completion of the Offer and any Subsequent Acquisition
Transaction, and assuming none of the
holders of Gold Reserve Options elect to exercise their Gold Reserve Options
and none of the holders of Gold Reserve Notes elect to convert their Gold
Reserve Notes in advance of the successful completion of the Offer.
8. Will my ownership
and voting rights as a shareholder of the c
ompany created by the combination of Rusoro and Gold Reserve
be the same as my ownership and voting rights
as a shareholder of Gold Reserve?
As noted above, Rusoro expects to issue approximately
170,696,373 million Rusoro Shares in connection with the Offer, which would
result in there being a total of approximately 561,474,319 million Rusoro
Shares outstanding (based on the number of Rusoro Shares outstanding as at December 12,
2008), with Gold Reserve Equityholders holding approximately 30.4% of the
Rusoro Shares on an issued basis.
6
Each Gold Reserve Share
and Gold Reserve Equity Unit carries the right to one vote at meetings of Gold
Reserve Shareholders. Each Rusoro Share
carries the right to one vote at meetings of Rusoro Shareholders.
9. Is the offer subject to any
conditions?
The
Offer is subject to several conditions, some of the most important of which are
as follows:
·
there
being validly deposited under the Offer and not withdrawn at the Expiry Time,
Gold Reserve Shares representing not less than 66
2/3
% of the total outstanding Gold Reserve
Shares and Gold Reserve Equity Units representing not less that 66
2/3
% of the total outstanding Gold Reserve
Equity Units (in each case calculated on a fully-diluted basis);
·
the
execution, in form and substance reasonably satisfactory to Rusoro, of a
supplemental indenture with respect to the Gold Reserve Notes which excludes
the Offer and any Subsequent Acquisition Transaction from the definition of a Fundamental
Change (as such term is defined in Section 15.01(a) of the Indenture
for the Gold reserve Notes, between Gold Reserve and The Bank of New York); and
·
the
Shareholder Rights Plan being waived, invalidated or cease traded.
Refer
to the offer Circular, as amended to date, starting on pp. 10 & 25 for
a complete list of conditions.
10. When
will take-up and payment for deposited Gold Reserve Equity occur?
If the
conditions of the Offer are satisfied or waived, and if Rusoro consummates the
Offer and takes up your Gold Reserve Equity, you will receive the Rusoro Shares
issued as consideration for the Gold Reserve Equity tendered to the Offer
promptly
after the Expiry Time
.
11.
Will I have to pay any fees or commissions if I accept the offer?
If you
are the registered owner of your Gold Reserve Equity and you tender your Gold
Reserve Equity directly to the Depositary, you will not have to pay brokerage
fees or incur similar expenses.
If you
own your Gold Reserve Equity through a broker or other nominee and your broker
tenders the Gold Reserve Equity on your behalf, your broker or nominee may
charge you a fee for doing so. You
should consult your broker or nominee to determine whether any charges will
apply.
12.
Will I be able to withdraw previously tendered Gold Reserve Equity?
Yes.
You may withdraw Gold Reserve Equity previously tendered by you at any time
(i)
before
Gold Reserve Equity deposited under the Offer is taken up by Rusoro under the
Offer,
(ii)
if
your Gold Reserve Equity has not been paid for by Rusoro within three business
days after having been taken up, and
(iii)
in
certain other circumstances.
Refer to
the Circular, as amended to date, starting on pp.12 & 38 for more
details and instructions on how to withdraw.
13. Will I be able to
trade the Rusoro Shares I receive?
Yes,
you will be able to trade the Rusoro Shares that you receive under the Offer.
7
Statutory
exemptions allow such trading in Canada and upon Rusoros registration
statement on Form F-10 filed with the SEC becoming effective in the United
States, and Rusoros satisfaction of any required Blue-Sky state filings within
the United States, non-affiliates will be able to trade their Rusoro Shares
received under the Offer in the United States.
In connection with the Offer, Rusoro has applied to list on the TSX-V
the Rusoro Shares offered to Gold Reserve Equityholders pursuant to the Offer. The Rusoro Shares will not be listed on a
U.S. stock exchange.
14. If I decide not to
tender, how will my Gold Reserve
Equity
be affected?
If
Rusoro takes up and pays for the Gold Reserve Equity validly tendered, Rusoro
currently intends to take such action as is necessary, including effecting a
Subsequent Acquisition Transaction, to acquire any Gold Reserve Equity not
tendered. It is Rusoros current
intention that the consideration to be offered for Gold Reserve Equity under
such Subsequent Acquisition Transaction will be the same consideration offered
under the Offer.
Refer to
the Offer Circular, as amended to date, starting on pp.12 & 66 for
more details.
15.
Will Gold Reserve continue as a public company?
If, as
a result of the Offer and any subsequent transaction, the number of holders of
Gold Reserve Shares is sufficiently reduced, Gold Reserve may become eligible
for termination of registration, and cease to be a reporting issuer in Canada
and/or the United States. The rules and
the regulations of the TSX and the NYSE Alternext could also, upon the
consummation of the Offer and/or a subsequent transaction, lead to the
delisting of the Gold Reserve Shares from such exchanges. To the extent permitted by applicable law,
Rusoro intends to delist the Gold Reserve Shares from the TSX and the NYSE
Alternext and, where applicable, to cause Gold Reserve to cease to be a public
company.
16. If the Offer is successful will the Board of
Directors and Management of Gold Reserve Change?
Yes. If the Offer is successful it is anticipated
that the current management of Rusoro will manage Gold Reserve in place of Gold
Reserves current management and that the Gold Reserve Board of Directors will
be replaced by nominees of Rusoro.
17. What
are the tax consequences of the offer?
The Offer has been
structured as an all-share offer that will allow certain Gold Reserve
Shareholders who tender to the Offer to do so on a tax efficient basis. Canadian resident Gold Reserve Shareholders
may receive Rusoro Shares on a tax-deferred basis under Canadian tax roll-over
treatments. Subject to the Passive
Foreign Investment Company rules, U.S. resident Gold Reserve Shareholders may
also receive tax-deferral treatment if the Offer is a qualified reorganization
under U.S. federal tax law.
You
should consult your own tax advisors to determine the particular tax
consequences of tendering to the Offer.
Also
refer to the offer Circular, as amended to date, starting on pp.5 & 72
18. Will I get more value for my Gold Reserve
shares if Gold Reserves elects to go to international arbitration over the loss
of its Las Brisas preliminary construction permit?
Gold Reserve has
indicated in its Directors Circular dated December 30, 2008 that in order
to maximize value for its assets, it may seek remedies under Venezuelas
domestic legal system or through arbitration under bi-lateral investment
treaties. Both approaches are often long
and complicated without certainty of success or of exacting payment from the
Venezuelan government. Rusoro believes
it would not be
8
prudent to think of
either as a quick or easy way of delivering shareholder value, if at all. While each case proceeds on its own merits,
as an example, Vannessa Ventures Ltd. (now called Infinito Gold Ltd.) is
disputing ownership of and mining rights over the Las Cristinas gold project in
Venezuela. In November 2001,
Vannessa announced in a press release that its mining lease had been rescinded
by Corporacion Venezolana de Guayana (CVG, a decentralized Venezuelan
autonomous entity responsible for the development and administration of the
Guyana region of Venezuela) and the Venezuelan government. Vannessa subsequently filed several legal
actions, and then formally commenced an international arbitration process in July 2004
(2 ½ years later). By August 2008,
only a decision on jurisdiction had been reached almost 7 years from the time
the mining license was rescinded and 4 years from the time the arbitration
process commenced. A potentially lengthy
arbitration process still lies ahead of Infinito.
19. How
does the Gold Reserve v. Endeavour and Rusoro litigation affect the bid? Can I still tender my shares?
Endeavour and Rusoro are
taking every legal measure to defend themselves against the allegations made by
Gold Reserve. Both Rusoro and Endeavour
believe that the allegations have no merit and that Gold Reserves attempt to
prohibit Rusoro from moving forward with the offer will fail. The bid remains open
and Gold Reserve shareholders remain free to tender their shares to the
offer. In the event Gold Reserve
succeeds in obtaining an injunction which prohibits Rusoro from moving forward
with the offer, any shares tendered will be returned to the shareholders.
9
Machine
Messages
1
st
Round
Machine Message
Mr/Mrs/Miss <holder
name>, Im calling from Georgeson on behalf of
Rusoro Mining Ltd. We are following up on important materials
that were recently mailed to you regarding Rusoro Mining Ltd.s offer to acquire your Class A common
shares or equity units of Gold Reserve Inc.
Please call us back toll free (9AM to 11PM Eastern Time) as soon as
possible at, 1-888-605-7615. When calling, please refer to your reference
# in this matter, <insert Georgeson #>. Thank you very much for your time
and we look forward to speaking with you.
2
nd
Round Machine Message
Mr/Mrs/Miss <holder
name>, Im calling from Georgeson on behalf of
Rusoro Mining Ltd. to remind you that it has offered to acquire
your Class A common shares or equity units of Gold Reserve Inc. If you have not yet deposited your Gold
Reserve Equity under the offer or if you have not yet contacted your broker or
other nominee regarding this offer, the expiry time is
12:00 MIDNIGHT EASTERN TIME ON JANUARY 21, 2009
.
To ensure your Gold Reserve Equity is deposited in time, please follow the
directions on your letter of transmittal or contact your broker or other
nominee as soon as possible. Please
call us back toll free (9AM to 11PM Eastern Time) at 1-888-605-7615 as soon as possible. Thank you for your time and we look forward
to speaking with you.
10
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