GOLD RESERVE CORP, DEF 14A, 1995-03-28

GOLD RESERVE CORP
DEF 14A, 1995-03-28
MINING & QUARRYING OF NONMETALLIC MINERALS (NO FUELS)

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

GOLD RESERVE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

GOLD RESERVE CORPORATION
1940 SEAFIRST FINANCIAL CENTER
SPOKANE, WASHINGTON 99201
TELEPHONE: (509) 623-1500

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
<PAGE>
GOLD RESERVE CORPORATION
----------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
ON MAY 19, 1995
---------------------

TO: THE SHAREHOLDERS OF GOLD RESERVE CORPORATION

The annual 1995 meeting of shareholders of GOLD RESERVE CORPORATION (the
"Company") will be held at the Yakima Valley Room of the Spokane Convention
Center, West 334 Spokane Falls Boulevard, Spokane, Washington, on Friday, May
19, 1995, at 10:00 a.m., local time, for the following purposes:

(1) To elect six members to the board of directors of the Company to hold
office until the next annual meeting of shareholders or until their
successors are elected and have qualified;

(2) To consider and approve a plan of exchange whereby each issued and
outstanding share of the common stock of Gold Reserve Aruba and Glandon
held by persons other than the Company would be exchanged for common
stock of the Company;

(3) To consider and approve adjustments to the exercise prices of certain
options granted under the Company's 1992 Stock Option Plan;

(4) To consider and approve an amendment to the Company's 1994 Incentive
Stock Option Plan increasing the number of shares of common stock
available for issuance pursuant to the exercise of options granted
thereunder to 2,000,000 shares or 10% of the number of shares of common
stock from time-to-time outstanding, whichever is less;

(5) To ratify the selection of Coopers & Lybrand L.L.P. as the Company's
independent auditor for the year ended December 31, 1995 and any interim
period; and

(6) To conduct any other business as may properly come before the meeting or
any adjournment thereof.

Shareholders of record at the close of business on April 7, 1995 are
entitled to vote at the annual meeting and any adjournment(s) or postponement(s)
thereof. Whether or not you plan to attend the annual meeting, please sign, date
and return the enclosed proxy in the reply envelope provided. The prompt return
of your proxy will assist us in preparing for the meeting.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ A. DOUGLAS BELANGER

A. Douglas Belanger, SECRETARY
<PAGE>
GOLD RESERVE CORPORATION
----------------

PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 19, 1995

---------------------

This proxy statement is furnished in connection with the solicitation of
proxies by the board of directors of GOLD RESERVE CORPORATION, a Montana
corporation (the "Company"), for the 1995 annual meeting of shareholders of the
Company to be held at 10:00 a.m., local time, on Friday, May 19, 1995, and any
adjournment thereof. These proxy materials were first mailed to shareholders on
or about April 14, 1995.

The annual meeting will be held in the Yakima Valley Room of the Spokane
Convention Center, West 334 Spokane Falls Boulevard, Spokane, Washington. The
principal executive offices of the Company are located at 1940 Seafirst
Financial Center, Spokane, Washington 99201.

PURPOSE OF MEETING

The specific proposals to be considered and acted upon at the annual meeting
are summarized in the enclosed Notice of Annual Meeting of Shareholders. Each of
the proposals is described in more detail in subsequent sections of this Proxy
Statement.

VOTING RIGHTS AND SOLICITATIONS

The Company's common stock is the only type of security entitled to vote at
the annual meeting. If you were a shareholder of record of common stock of the
Company at the close of business on April 7, 1995 (the "record date"), you may
vote at the annual meeting. On all matters requiring a shareholder vote at the
annual meeting, excluding the election of directors, each shareholder is
entitled to one vote, in person or by proxy, for each share of common stock of
the Company recorded in his or her name. With respect to the election of
directors, each shareholder is entitled to cumulate his or her votes, meaning
that such shareholder can multiply the number of shares owned by the number of
board positions to be filled (of which there are six), and allocate such votes
for all or as many director-nominees as he or she may designate.

On the record date, the number of shares of common stock of the Company
outstanding or deemed outstanding pursuant to presently exercisable options and
warrants (including 557,608 shares of common stock held by Great Basin, MegaGold
and Stanco, each of which is a majority-owned subsidiary of the Company) was
21,763,509. The number of outstanding shares of common stock of the Company
eligible to be voted at the annual meeting at such date was .

Pursuant to the Montana Business Corporation Act and the Company's bylaws,
the affirmative vote of the holders of a majority of the shares present at the
annual meeting, in person or by proxy, is required to elect directors (Item 1)
and to approve Items 2, 4 and 5. As is discussed elsewhere in this Proxy
Statement, certain holders of the Company's common stock will abstain from
voting with respect to Item 3.

Abstentions and broker non-votes will be treated as present for purposes of
obtaining a quorum with respect to all matters to be considered at the annual
meeting, but will not be counted for or against any of the proposals to be voted
upon at the meeting.

If you are unable to attend the annual meeting, you may vote by proxy. The
enclosed proxy card is solicited by the board of directors of the Company and
when returned, properly completed, will be voted as you direct on your proxy
card. If the card is returned with no instructions on how the shares are to be
voted, shares represented by such proxies will be voted FOR approval of Items 1
through 5.
<PAGE>
You may revoke or change your proxy at any time before it is exercised at
the annual meeting. To do this, send a written notice of revocation or another
signed proxy bearing a later date to the secretary of the Company at its
principal executive office. You may also revoke your proxy by giving notice and
voting in person at the annual meeting.

COSTS OF SOLICITATION

The cost of soliciting proxies will be borne by the Company. In addition,
the Company will reimburse brokerage firms, custodians, nominees and fiduciaries
for their expenses in forwarding solicitation material to beneficial owners.
Proxies may also be solicited personally or by telephone or telegram by certain
of the Company's directors, executive officers and regular employees, who will
not receive additional compensation therefor. The total cost of proxy
solicitation, including legal fees and expenses incurred in connection with the
preparation of this Proxy Statement, is estimated to be $25,000.

THE COMPANY AND SUBSIDIARIES

Unless the context requires otherwise, the term the "Company" used
throughout this Proxy Statement refers to Gold Reserve Corporation and the
following subsidiaries: Compania Aurifera Brisas del Cuyuni, C.A. ("Brisas");
Gold Reserve de Venezuela, C.A. ("GLDRV"); Compania Minera Unicornio, C.A.
("Unicorn"); Great Basin Energies, Inc. ("Great Basin"); MegaGold Corporation
("MegaGold"); Gold Reserve Holdings A.V.V. ("GR Holdings"); Gold Reserve de
Aruba A.V.V. ("Gold Reserve Aruba"); G.L.D.R.V. Aruba A.V.V. ("GLDRV Aruba");
Glandon Company A.V.V. ("Glandon"); GoldenLake A.V.V. ("GoldenLake"); Stanco
Investments A.V.V. ("Stanco"); and Mont Ventoux A.V.V. ("Mont Ventoux").

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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of April 7, 1995, the names of, and number
of shares beneficially owned by, persons known to the Company to own more than
five percent (5%) of the Company's common stock; the names of, and number of
shares beneficially owned by each director and executive officer of the Company;
and the number of shares beneficially owned by, of all directors and executive
officers as a group. At such date, the number of shares of common stock of the
Company outstanding or deemed outstanding pursuant to presently exercisable
options and warrants (including 557,608 shares of common stock held by Great
Basin, MegaGold and Stanco, each of which is a majority-owned subsidiary of the
Company) was 21,763,509.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
(ALL DIRECT UNLESS
NAME AND ADDRESS OF OWNER (1) OTHERWISE NOTED) PERCENT OF CLASS
- ------------------------------------------------------------- -------------------- -------------------
<S> <C> <C>
Rockne J. Timm............................................... 733,502(2) 3.4%
1940 Seafirst Financial Center
Spokane, Washington 99201
A. Douglas Belanger.......................................... 559,683(3) 2.6%
1940 Seafirst Financial Center
Spokane, Washington 99201
Patrick D. McChesney......................................... 147,262(4) less than 1.00%
1940 Seafirst Financial Center
Spokane, Washington 99201
Hobart Teneff................................................ 867,129(5) 4.0%
1940 Seafirst Financial Center
Spokane, Washington 99201
J.C. Potvin.................................................. 100,000(6) less than 1.00%
One Toronto Street, Suite 709
Toronto, Ontario
Canada M5C 2V6
James H. Coleman............................................. 102,000(7) less than 1.00%
3700, 400 Third Avenue
Calgary, Alberta
Canada T2P 4H2
Robert A. McGuinness......................................... 45,833(8) less than 1.00%
1940 Seafirst Financial Center
Spokane, Washington 99201
Albert K.F. Wu............................................... 16,134(9) less than 1.00%
6541 Lime Street
Vancouver, British Columbia
Canada V6P 5V7
All directors and executive
officers as a group (8 persons)............................. 2,571,543 11.8%

Great Basin Energies, Inc. (10).............................. 374,192 1.7%
1940 Seafirst Financial Center
Spokane, Washington 99201
Stanco Investments A.V.V..................................... 58,333 less than 1.00%
West 818 Riverside Avenue, Suite 530
Spokane, Washington 99201
</TABLE>

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<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
(ALL DIRECT UNLESS
NAME AND ADDRESS OF OWNER (1) OTHERWISE NOTED) PERCENT OF CLASS
- ------------------------------------------------------------- -------------------- -------------------
<S> <C> <C>
MegaGold Corporation (11).................................... 125,083 less than 1.00%
1940 Seafirst Financial Center
Spokane, Washington 99201
TVX Gold Inc. (12)........................................... 2,000,000 9.2%
Canada Trust Tower, Suite 4300
161 Bay Street
Toronto, Ontario M5J 2S1
<FN>
- ------------------------
(1) The positions of those owners who are directors or executive officers of
the Company are set out at pages 5 and 6 of this Proxy Statement.

(2) Includes 185,000 shares issuable under presently exercisable options. See
also pages 7 through 9 of this Proxy Statement.

(3) Includes 160,000 shares issuable under presently exercisable options. See
also pages 7 through 9 of this Proxy Statement.

(4) Includes 75,000 shares issuable under presently exercisable options.

(5) Includes 100,000 shares issuable under presently exercisable options.

(6) Includes 100,000 shares issuable under presently exercisable options.

(7) Includes 100,000 shares issuable under presently exercisable options.

(8) Excludes 56,667 shares issuable under options. See also pages 7 through 9
of this Proxy Statement.

(9) Excludes 11,918 shares issuable under options.

(10) Mr. Timm and Mr. Belanger are the President and Vice President,
respectively, of Great Basin Energies, Inc., and disclaim beneficial
ownership of such shares.

(11) Mr. Timm and Mr. McChesney are the Vice President and Secretary-Treasurer,
respectively of MegaGold Corporation, and disclaim beneficial ownership of
such shares.

(12) Pursuant to a Schedule 13D dated January 19, 1995, Marwood International
Ltd., a wholly-owned subsidiary of TVX Gold Inc., owns 1,500,000 shares of
common stock of the Company and warrants for the purchase of an additional
500,000 shares.
</TABLE>

DIRECTORS AND EXECUTIVE OFFICERS

The names, ages, business experience (for at least the last five years) and
positions of the directors and executive officers of the Company as of April 7,
1995 are set out below. The Company's board of directors presently consists of
six members. All directors presently serve until the next annual meeting of the
Company's shareholders or until their successors are elected and qualified.
Officers are

4
<PAGE>
appointed by the board of directors. There are no family relationships among
these officers, nor any arrangements or understandings between any officer and
any other person pursuant to which the officer was elected.

<TABLE>
<CAPTION>
NAME AND POSITION AGE BUSINESS EXPERIENCE
- --------------------------------- --- -------------------------------------------------------------------------
<S> <C> <C>
Rockne J. Timm 49 Mr. Timm joined the Company in March 1984 as Treasurer and a Director,
President, Chief Executive and became President and Chief Executive Officer in August 1988. He was
Officer and Director a Director of Neptune Resources Inc. and its successor, Northwest Gold
Corp., from 1987 to 1993, and served as a financial officer, Vice
President of Finance, Treasurer and Chief Financial Officer of Pegasus
Gold Inc. from 1981 to 1987. Mr. Timm is also President and a Director
of Great Basin Energies, Inc., the Vice President and a Director of
MegaGold Corporation, and a director and executive officer of each of
the Company's foreign subsidiaries. He is a certified public accountant.
A. Douglas Belanger 41 Mr. Belanger became Executive Vice President in August 1988 and Secretary
Executive Vice President, in June 1993. He also serves as Vice President and a Director of Great
Secretary and Director Basin Energies, Inc., as a director and executive officer of each of the
Company's foreign subsidiaries and as a Director of Logue-McDonald
Automation, Inc. Mr. Belanger served as Vice President for Corporate
Affairs of Pegasus Gold Inc. from April 1982 to June 1987.
Patrick D. McChesney 45 Mr. McChesney was Chief Financial Officer from August 1988 until June
Director 1993, and was also Vice President of Finance until March 1993. Since
July 1987, Mr. McChesney's principal occupation has been as President of
Logue-McDonald Automation, Inc. He is also Secretary/Treasurer and a
Director of MegaGold Corporation. From 1983 through June 1987, Mr.
McChesney was Controller of Pegasus Gold Inc. Mr. McChesney is a
certified public accountant.
Hobart Teneff 75 Mr. Teneff became a Director in August 1992, and was previously a
Director Director and President of the Company from 1975 through August 1988.
From June 1976 until February 1987, Mr. Teneff was affiliated with
Pegasus Gold Inc. as its President and Chief Executive Officer.
J.C. Potvin 42 Mr. Potvin became a Director in November 1993 and is also a Director,
Director Chairman and Chief Executive Officer of Tiomin Resources Inc., and a
Director, President and Chief Executive Officer of Pangea Goldfields
Inc. Prior to becoming a Director, Mr. Potvin was Senior Gold Mining
Analyst, a Vice President and a Director of Nesbit Burns Inc. (formerly
Burns Fry Ltd.) a major Canadian investment dealer. Mr. Potvin resides
in Toronto, Ontario.
</TABLE>

5
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION AGE BUSINESS EXPERIENCE
- --------------------------------- --- -------------------------------------------------------------------------
<S> <C> <C>
James H. Coleman 43 Mr. Coleman became a Director in February 1994 and is a senior partner of
Director the law firm of Macleod Dixon of Calgary, Alberta, counsel to the
Company. He is also a director of Ranchman's Resources Ltd., Total
Resources (Canada) Limited, Minven Inc., Energold Mining Ltd., Acce
Environmental Inc. and Anadime Corp., and from 1989 to 1993, was a
director of Northwest Gold Corp. Mr. Coleman resides in Calgary,
Alberta.
Robert A. McGuinness 39 Mr. McGuinness became Vice President of Finance in March 1993 and Chief
Vice President of Finance Financial Officer in June 1993. During the previous three years, Mr.
and Chief Financial Officer McGuinness was Vice President of Finance for Millisat Holdings
Incorporated. Prior to 1990, Mr. McGuinness served as a financial
officer for several domestic and internationally-based companies
specializing in electronics and biotechnology. Mr. McGuinness is a
certified public accountant.
Albert K.F. Wu 48 Mr. Wu became Vice President of Planning in February 1993. Mr. Wu has
Vice President of Planning been Treasurer of Orvana Minerals Corp., a mineral exploration company
listed on the Toronto Stock Exchange, since 1990, and since 1989 has
been Assistant Secretary of T&H Resources Ltd., a mineral exploration
company also listed on the Toronto Stock Exchange. From 1982 to 1990,
Mr. Wu was Assistant Secretary of Pegasus Gold Inc. Mr. Wu is also
President of Albert Wu and Associates, a private consulting company, and
is a Certified Management Accountant in Canada. He resides in Vancouver,
British Columbia.
</TABLE>

SECTION 16(A) REPORTING OBLIGATIONS. Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "Commission"). Such persons are required by Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file.

Based solely on its review of copies of reports made pursuant to Section
16(a) of the Exchange Act and related regulations, the Company believes that
during the year ended December 31, 1994, all filing requirements applicable to
its directors, executive officers and 10% shareholders were satisfied.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table discloses compensation
received by the Company's chief executive officer, executive vice president and
secretary, and vice president of finance

6
<PAGE>
and chief financial officer for the years ended December 31, 1994, 1993 and
1992. No executive officer's salary and bonus, other than that of the chief
executive officer, exceeded $100,000 for such years.

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ---------------------------------------------
---------------------------------- DOLLAR VALUE OF SECURITIES
OTHER ANNUAL RESTRICTED STOCK UNDERLYING LTIP ALL OTHER
EXECUTIVE OFFICER YEAR SALARY BONUS COMPENSATION (1) AWARDS (2) OPTIONS/SARS (3) PAYOUTS COMPENSATION (4)
- ----------------------- ---- ------- ------- ---------------- ---------------- ---------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rockne J. Timm 1994 $72,000 $ -- $33,362 $-- $85,000 $ -- $--
President and Chief 1993 72,000 -- 29,502 -- 85,000 -- 10,828
Executive Officer 1992 63,000 -- 29,428 81,945 85,000 -- 9,184
A. Douglas Belanger 1994 60,000 -- 27,028 -- 75,000 -- --
Executive Vice 1993 60,000 -- 30,040 -- 75,000 -- 9,606
President and 1992 52,500 -- 40,964 53,510 175,000 -- 9,287
Secretary
Robert A. McGuinness 1994 65,000 -- 15,412 -- 65,000 -- --
Vice President of 1993 48,125 -- 9,881 -- 50,000 -- --
Finance and Chief 1992 -- -- -- -- -- -- --
Financial Officer
<FN>
- ----------------------------------
(1) During 1994, 1993 and 1992 the Company paid additional compensation to the
named executive officers for services performed on the Company's behalf in
Venezuela. Such additional compensation was determined by multiplying the
period of time each such officer was in Venezuela during the year by 60% of
such officer's salary for such period.

(2) Such restricted stock awards consist of: in the case of Mr. Timm, 104,370
shares of common stock granted in 1992 at a value, as of the date of grant,
of $0.785 per share; and in the case of Mr. Belanger, 77,551 shares of
common stock granted in 1992 at a value, as of the date of grant, of $0.690
per share. All such shares are vested as of the date of grant. None of such
shares are restricted as to the payment of dividends if, as and when
declared by the board of directors of the Company.

(3) Consists of the number of shares of common stock of the Company issuable to
the named executive officers pursuant to options held at the end of each
reported period. For information concerning the value of the unexercised
portion of such options at December 31, 1994, see the table appearing at
page 9 of this Proxy Statement.

(4) Consists of the dollar value of common stock of the Company purchased by
the Company's combined 401(k) salary reduction plan and employee stock
ownership plan, known as the Gold Reserve KSOP Plan, and allocated to the
account of each named executive officer. The Company contributed $25,000,
to the plan for each of the 1993 and 1992 plan years. No contributions to
the plan were made by any of the named executive officers during such
years. No shares of common stock were allocated to the plan accounts of the
named executive officers during 1994. During 1993, 12,375 shares and 10,978
shares of common stock were allocated to the plan accounts of Mr. Timm and
Mr. Belanger, respectively. During 1992, 36,735 shares and 37,146 shares of
common stock were allocated to the respective plan accounts of such
executive officers. Such shares were acquired by the plan at a cost of
$0.875 per share in 1993 and $0.25 per share in 1992. In December of 1994,
the plan acquired an additional 20,000 shares of common stock at a cost of
$6.18 per share. At December 31, 1994, the Gold Reserve KSOP Plan held an
additional 45,000 unallocated shares of common stock of the Company.
</TABLE>

OPTIONS GRANTED IN 1994. The following table provides information on
options granted during the year ended December 31, 1994 to the named executive
officers of the Company.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
NUMBER OF PERCENT OF TOTAL OPTION OPTION TERM (4)
OPTIONS OPTIONS GRANTED TO EXERCISE EXPIRATION ----------------------
EXECUTIVE OFFICER GRANTED (1) EMPLOYEES (2) PRICE (3) DATE AT 5% AT 10%
- ------------------------------------ ----------- ------------------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert A. McGuinness 15,000 4.9% $ 6.00 1/14/04 $ 56,601 $ 143,437
Vice President of Finance and Chief
Financial Officer
<FN>
- ------------------------
(1) Options granted during the year ended December 31, 1994 were authorized
pursuant to the Company's 1994 Stock Option Plan and are intended to
qualify under Section 422A of the Internal Revenue Code of 1986, as
amended. 5,000 of such options were fully vested as of their respective
grant dates, and are exercisable for shares of common stock of the Company,
at the exercise prices set forth in the table, for a period of ten years,
measured from the respective grant dates.
</TABLE>

7
<PAGE>
<TABLE>
<S> <C>
(2) During the year ended December 31, 1994, the Company granted options for
the purchase of 304,800 shares of common stock to eligible participants
under its incentive stock option plans.

(3) The exercise price of such options was $11.25 as of the date of grant, but
was reduced by the board of directors, subject to shareholder approval, to
$6.00 on August 17, 1994. See Item 3 of this Proxy Statement.

(4) The potential realizable value of the options has been calculated according
to prescribed regulations, and assumes the market price of the underlying
common stock appreciates in value from the date such options were granted
until the expiration date of the options, at the specified annual
compounded rates. Insofar as such appreciation in potential realizable
value is based on the market price prevailing at the time such options were
granted (which is also the exercise price of the options), the foregoing
table does not set forth the value of the unexercised portion of such
options at December 31, 1994. Such value, measured as the difference
between the closing sales price of the common stock of the Company at such
date and the exercise price of the options, is set forth on the table
appearing on the following page.
</TABLE>

OPTION EXERCISES AND OPTION VALUES. The following table provides
information on options exercised during the year ended December 31, 1994 by the
named executive officers of the Company and the value of such officers'
unexercised options at December 31, 1994.

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN THE MONEY
SHARES ACQUIRED VALUE OPTIONS AT OPTIONS AT
EXECUTIVE OFFICER ON EXERCISE REALIZED DECEMBER 31, 1994 (1) DECEMBER 31, 1994(2)
- ----------------------------------------- --------------- --------- --------------------- --------------------
<S> <C> <C> <C> <C>
Rockne J. Timm -- -- 85,000 $ 711,875
President and Chief
Executive Officer
A. Douglas Belanger -- -- 75,000 628,125
Executive Vice President
and Secretary
Robert A. McGuinness -- -- 65,000 544,375
Vice President of Finance
and Chief Financial Officer
<FN>
- ------------------------
(1) All such options were presently exercisable at December 31, 1994 with the
exception of 21,667 options held by Mr. McGuinness.

(2) At December 31, 1994, the closing sales price of the common stock of the
Company, as reported by The Nasdaq Stock Market, was $8.38. The potential
realizable value of such unexercised options at December 31, 1993 is
measured by the difference between the closing sales price of the Company's
common stock at such date and the exercise price of such options.
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Company's
compensation program was jointly administered during 1994 by an executive
remuneration committee, described below, and by the compensation committee of
the board of directors of the Company, composed of Mr. Coleman and Mr. Potvin.
The primary function of the executive remuneration committee during the year was
to review and evaluate the fairness of the recommendations of management and the
compensation committee of the board for awards of equity-based compensation to
the Company's executive officers and directors pursuant to the Company's stock
option plans. The function of the compensation committee of the board in respect
of such compensation matters during the year was to evaluate the Company's
performance and the performance of its executive officers, and to determine and
approve the cash compensation and equity-based compensation of such executive
officers, taking into account the views of the executive remuneration committee.
One member of the executive remuneration committee, Mark D. Bantz, is also the
president and a director of MegaGold Corporation, a subsidiary of the Company.

8
<PAGE>
DIRECTORS' COMPENSATION. Directors of the Company who are not otherwise
compensated by the Company receive varying amounts of compensation, depending on
their arrangements with the Company. Mr. McChesney and Mr. Potvin were
compensated on an hourly basis during the year ended December 31, 1994, and
received aggregate compensation during the year of $1,855 and $1,692,
respectively. Mr. Teneff was compensated at the rate of $4,000 per month and
received aggregate compensation of $48,000 during the year. Mr. Coleman was not
separately compensated for services rendered to the Company as a director,
although the law firm of Macleod Dixon, of which he is a partner, was paid
$440,000 during the year for legal services rendered on behalf of the Company.
In addition, Mr. Coleman was granted options during the year to purchase 50,000
shares of common stock, exercisable at the price of $6.00 per share. See Item 3
of this Proxy Statement.

DESCRIPTION OF INCENTIVE STOCK OPTION AND EMPLOYEE STOCK OWNERSHIP
PLANS. The Company currently maintains three stock option plans, the 1985 Stock
Option Plan, the 1992 Stock Option Plan and the 1994 Stock Option Plan. All
plans provide for the issuance of incentive stock options intended to qualify
under Section 422A of the Internal Revenue Code of 1986, as amended (the
"Code"), and options that are not qualified under the Code. Key individuals of
the Company and its subsidiaries, including officers and directors who are also
employees, are eligible to receive grants of options under the plans. All
options are exercisable at prices equivalent to the mean of the high and low
sales prices of the common stock, as reported by the Nasdaq Stock Market and the
TSE as of the date of grant.

At April 7, 1994, all options had been granted under the 1985 and 1992 Stock
Option Plans. At such date, options for the purchase of 73,334 shares and
806,494 granted under the 1985 and 1992 plans remained unexercised.

At April 7, 1995, options for the purchase of 815,200 shares of common stock
were available for grant under the 1994 Stock Option Plan. The board of
directors of the Company has approved an increase in the number of shares of
common stock available for grant pursuant to the 1994 Stock Option Plan, to the
lesser of 2,000,000 shares or 10% of the number of shares of common stock from
time-to-time outstanding, and is seeking shareholder approval of such increase
at the annual meeting. See Item 4 of this Proxy Statement.

The Company's incentive stock option plans are jointly administered by the
executive remuneration committee, management and the compensation committee of
the board. During 1994, the primary function of the executive remuneration
committee was to review and evaluate the fairness of the recommendations of
management and the compensation committee of the board concerning proposed
grants to directors and executive officers of the Company.

The Company also maintains a combined 401(k) salary reduction plan and
employee stock ownership plan, known as the Gold Reserve KSOP Plan, for the
benefit of eligible employees of the Company and its subsidiaries. The plan can
and has invested in common stock of the Company through Company-guaranteed
loans. During 1994 and 1992, the plan purchased 20,000 shares and 53,571 shares
of common stock from the Company, respectively, at then-prevailing market
prices, for consideration of $123,760 and $50,000, respectively. No shares of
common stock of the Company were purchased during 1993. Such shares were
allocated to participants' accounts based on the contributions by the Company or
the participants during the plan year and the prices at which such shares were
purchased by the plan. (Information concerning the number of shares of common
stock of the Company allocated to the plan accounts of the named executive
officers of the Company is set forth in note 2 to the Summary Compensation Table
appearing at page 7 of this Proxy Statement.) The terms of the plan permit
investment in approved securities other than the Company's common stock, and
allow plan participants to self-direct the investment of their account. To date,
the plan's sole investment has been common stock of the Company.

The salary reduction component of the plan, which has not been utilized to
date, enables eligible employees of the Company and its subsidiaries to invest
in common stock of the Company or other approved securities purchased by the
plan, limited by contributions to the plan by the Company or the

9
<PAGE>
employee during the year. The employee stock ownership component of the plan,
which has been utilized, is intended to qualify under Sections 421 and 423 of
the Code, and was established to provide eligible employees an opportunity to
purchase common stock of the Company.

Contributions to the plan are limited in each year to (i) the total amount
of salary reduction the employee elected to defer during the year (which is
limited to 10% of such employee's compensation during the year, or such amount
as is established by law), (ii) a matching contribution from the Company equal
to 50% of any salary reduction the employee elected to defer during the year,
(iii) special contributions by the Company equal to a percentage of the
employee's compensation during the year and (iv) discretionary contributions by
the Company determined in each year by the Company. The plan is available to all
eligible employees of the Company or subsidiaries who have been employed for a
period in excess of one year and who have worked at least 480 hours during the
year in which any allocation is to be made. Employer and employee contributions
to the plan are limited to 25% of salary, and distributions from the plan are
not permitted before the participating employee reaches the age of 59 1/2,
except in the case of death, disability, termination of employment by the
Company or financial hardship.

Shareholder approval of the Gold Reserve KSOP Plan was obtained at the
annual meeting of shareholders held on July 22, 1994, for the purposes of
qualifying the plan pursuant to Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act") and the policies of the TSE.

COMPOSITION OF THE EXECUTIVE REMUNERATION COMMITTEE. The executive
remuneration committee of the Company consists of three individuals, two of whom
are not affiliated, directly or indirectly, with the Company and one of whom
(Mark D. Bantz) is the president and a director of MegaGold, which is a
majority-owned subsidiary of the Company. The names and addresses, ages and
business experience (for at least the past five years) of the members of the
committee are set forth in the following table:

<TABLE>
<CAPTION>
NAME AND ADDRESS AGE (1) BUSINESS EXPERIENCE
- ----------------------------------- ----------- ---------------------------------------------------------
<S> <C> <C>
Wesley L. Delaney 46 Mr. Delaney is a certified public accountant and has been
East 30 Indiana a principal of the firm of Brown & Delaney for at least
Spokane, Washington 99207 the past five years. He is also a director of Winnstar
Foods, Inc., a privately-held food processing company
with headquarters in Oredale, New Jersey. Mr. Delaney
graduated from Seattle University in 1971 with a degree
in accounting.
Gregory B. Lipsker 44 Mr. Lipsker is a practicing securities and business
Parkade Plaza attorney with the firm of Workland, Witherspoon, Riherd
Spokane, Washington 99201 & Brajcich in Spokane, and has been a member of the
Washington State Bar Association since 1977. He is also
a member of the Spokane Citizens Advisory Review Panel,
a director of the West Central Community Center, and
director and president of Spokane Sports Unlimited, a
non-profit corporation. Mr. Lipsker also presently
serves as an interim director of Metaline Mining and
Leasing Corporation and Cimarron-Grandview Group, Inc.,
both of which are inactive corporations.
</TABLE>

10
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE (1) BUSINESS EXPERIENCE
- ----------------------------------- ----------- ---------------------------------------------------------
<S> <C> <C>
Mark D. Bantz 47 Mr. Bantz is a practicing business, mining and securities
West 316 Boone lawyer in Spokane, and has been a member of the
Spokane, Washington 99202 Washington State Bar Association since 1977. From 1977
to 1979, he was an assistant prosecutor in the Whatcom
County (Washington) Prosecuting Attorney's Office, and
since 1989, he has been the president and a director of
MegaGold Corporation, a subsidiary of the Company.
<FN>
- ------------------------
(1) As of April 7, 1995.
</TABLE>

Prior to June 1993, no member of the executive remuneration received any
compensation or other remuneration from the Company or any affiliate of the
Company for work performed on the Company's behalf. Beginning in June 1993, the
Company paid each member of the committee for each meeting attended and each
interim telephonic meeting in which the member participated, at hourly rates
normally charged by such members in their respective professions. The executive
remuneration committee generally meets at least once each quarter.

No member of the executive remuneration committee owned any shares of the
common stock of the Company at April 7, 1995, with the exception of Mr. Bantz.
Mr. Bantz is the beneficial owner of 2,800 shares of common stock of the Company
held by him as custodian for the benefit of his minor children under the
Washington Uniform Transfers to Minors Act. In addition, Mr. Bantz owns 138,500
shares of MegaGold, 37,500 shares of Glandon and 37,500 shares of Gold Reserve
Aruba, each of which is a subsidiary of the Company, and, together with his
spouse, owns an additional 5,500 shares of common stock of the Company.

Members of the executive remuneration committee fulfill an advisory function
and serve at the discretion of the board of directors for the limited purpose of
advising the board on executive compensation matters. They are neither employees
nor agents of the Company. Members of the executive remuneration committee do
not have the authority to make decisions regarding the amount of compensation
paid to executive officers or employees of the Company, whether in cash or in
the form of equity-based compensation, but are authorized and empowered to
conduct such investigation as is necessary to advise the board of the fairness
of such matters. In discharging their duties, members of the executive
remuneration committee are expected to exercise the same degree of care and
judgment as is exercised by the compensation committee of the board of
directors. If consistent with the indemnification provisions of the Montana
Business Corporation Act and the Company's bylaws, the Company would undertake
to indemnify and pay the costs of defense of the executive remuneration
committee or any of its members who is successful in the defense of any claim
asserting lack of care or judgment, to the same extent indemnification is
afforded to directors and executive officers of the Company.

COMBINED REPORT OF THE EXECUTIVE REMUNERATION COMMITTEE AND THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS. The Company applies a consistent
compensation philosophy to all employees, including senior management. This
philosophy is premised on the belief that the Company's performance is the
result of coordinated efforts directed toward common objectives.

COMPENSATION PHILOSOPHY AND GOALS. The goal of the compensation program
is to attract, retain and reward employees and other key individuals who
contribute to the long-term success of the Company. Contributions are
largely measured subjectively, and are rewarded through cash and
equity-based compensation vehicles. The Company historically has not paid
competitive cash salaries to its executive officers and employees, owing to
a lack of cash resources, and has instead rewarded its executive officers
and employees through stock options and restricted stock awards.

11
<PAGE>
The Company believes that employees and executive officers should be fairly
rewarded for sustained performance. Accordingly, the Company evaluates the
extent to which strategic and business goals are met, and measures individual
performance, albeit subjectively, against development objectives and the degree
to which teamwork and Company objectives are promoted. The Company strives to
achieve a balance between the compensation paid to a particular individual and
the compensation paid to other employees and executives having similar
responsibilities within the Company. The Company also strives to ensure that
each employee understands the components of his or her salary, and the bases
upon which it is determined and adjusted.

ADMINISTRATION. During 1994, the Company's compensation program was jointly
administered by the executive remuneration committee, described above, which was
responsible for reviewing and evaluating the fairness of the recommendations of
the Company's board of directors for awards of equity-based compensation
pursuant to the Company's stock option plans, and by the compensation committee
of the board of directors of the Company, which was responsible for determining
the cash and cash equivalent salaries of the executive officers, taking into
account the views of the executive remuneration committee.

COMPENSATION VEHICLES. The Company has a simple compensation program
consisting of cash-and equity-based compensation. Cash compensation consists of
salary, which has generally been set at less than prevailing market rates. The
Company does not have an annual cash bonus plan.

Equity-based compensation has been the dominant component of the Company's
compensation program for the past several years, owing to previously limited
cash resources, and is designed to provide additional incentives to work to
maximize shareholder value. The Company maintains incentive stock option
programs which provide for the award of both qualified and nonqualified options,
and grants stock options periodically to persons eligible to participate in the
plans. The Company also allows all eligible employees to participate in stock
ownership through the Gold Reserve KSOP Plan.

CHIEF EXECUTIVE OFFICER'S COMPENSATION. No action was taken with respect to
the chief executive officer's compensation in 1994. As a consequence, Mr. Timm's
salary base remained unchanged during the year. His total salary reflected the
significant amount of time he was required to be in Venezuela during the year,
in connection with the prosecution and settlement of litigation concerning the
Company's most significant asset, the Brisas alluvial gold concession.

The Company has not developed specific quantitative or qualitative
performance measures or other specific criteria for determining the compensation
of its chief executive officer, primarily because it does not yet have a
producing mine or other operations from which such quantitative data can be
derived. As a consequence, the determination of the chief executive officer's
compensation in 1994 was largely subjective, and was based on the Company's
progress in addressing its more immediate concerns -- these being resolution of
the Brisas lawsuit, procurement of the veta concession on the Brisas property,
continued exploration of the Brisas concession and financing of the Company's
exploration and development activities.

The Company can be expected to develop quantitative, performance-oriented
compensation measures for its chief executive officer and all other executive
officers if its Venezuelan mining concessions are placed into production. The
Company expects that such measures will take into account standard means of
evaluating executive officer performance, such as revenues and earnings, the
market price of the Company's common stock, and the Company's relative success
in bringing its concessions into production and in acquiring additional mining
properties or concessions. Executive compensation levels can be expected to
increase in future years due to increased cash resources.

12
<PAGE>
The Company expects its equity-based compensation vehicles will be continued
in future years, but that they will be supplanted by increased cash compensation
to the Company's employees and executive officers due to increased cash
resources.

<TABLE>
<S> <C>
COMPENSATION COMMITTEE OF THE BOARD EXECUTIVE REMUNERATION COMMITTEE
OF DIRECTORS
J.C. Potvin Gregory B. Lipsker
James H. Coleman Wesley L. Delaney
Mark D. Bantz
</TABLE>

PERFORMANCE GRAPH. The following graph compares the five year cumulative
total return on an investment of $100 among the Company, The Nasdaq Stock Market
Index and the S&P Gold Index, assuming reinvestment of dividends received.
Cumulative total return is measured by the difference between the median high
and low bid prices of the Company's common stock, as reported by The Nasdaq
Stock Market, at the end and beginning of the measurement period.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C>
Company............................. 18 73 509 1,855 1,232
The Nasdaq Stock Market............. 85 136 159 181 177
S & P Gold Index.................... 88 72 67 123 99
</TABLE>

ITEM NO. 1 -- ELECTION OF DIRECTORS

At the annual meeting, six directors are to be elected. Unless authority to
vote is withheld on a proxy, proxies in the form enclosed will be voted for the
director-nominees identified below. If any nominee is not available for election
(a contingency which the Company does not now foresee), it is the intention of
the board of directors to recommend the election of a substitute nominee, and
proxies in the form enclosed will be voted for the election of such substitute
nominee unless authority to vote such proxies in the election of directors has
been withheld.

13
<PAGE>
NOMINEES TO THE BOARD OF DIRECTORS

<TABLE>
<CAPTION>
NAME POSITION HELD SINCE AGE
- ------------------------ ------------------------------------------ ----- ---
<S> <C> <C> <C>
Rockne J. Timm President, Chief Executive Officer and 1984 49
Director
A. Douglas Belanger Executive Vice President, Secretary and 1988 41
Director
Patrick D. McChesney Director 1988 --
Hobart Teneff Director 1992 --
J.C. Potvin Director 1993 --
James H. Coleman Director 1994 --
</TABLE>

BACKGROUND OF NOMINEES. The business experience for the past five years of
all nominees is set forth in the discussion of directors and executive officers,
at pages 5 and 6 of this Proxy Statement.

REQUISITE APPROVAL. The affirmative vote of a majority of the shares
present at the annual meeting, in person or by proxy, is required to elect
directors. Shareholders are entitled to cumulate their votes in voting for
directors.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE FOREGOING NOMINEES TO THE BOARD OF DIRECTORS.

14
<PAGE>
ITEM NO. 2 -- APPROVAL OF PLAN OF EXCHANGE

At the annual meeting, the shareholders will be asked to consider and
approve a plan of exchange whereby each issued and outstanding share of Gold
Reserve Aruba and Glandon held by persons other than the Company and GLDRV Aruba
would be exchanged for common stock of the Company. The purpose of this
transaction is to consolidate the ownership of Gold Reserve Aruba (and its
wholly-owned GLDRV subsidiary) and Glandon (and its wholly-owned Unicorn
subsidiary) into the Company, so that, upon completion of the exchange
transaction, Gold Reserve Aruba and Glandon will be wholly-owned subsidiaries of
the Company. In consequence of the exchange, if it is approved, the Company's
ownership interest in the Brisas concession will increase by 9%, from 91% (89.4%
on a fully-diluted basis) to 100%.

At April 7, 1995, there were 35,000,000 issued and outstanding shares of the
common stock of Gold Reserve Aruba, of which 26,250,000 shares were owned,
directly or indirectly, by the Company; 7,000,000 shares were owned by GLDRV
Aruba (an indirect, wholly-owned subsidiary of Glandon); 1,460,000 shares were
owned, beneficially or of record, by four directors of the Company; and 290,000
shares were held by nonaffiliates. At such date, there were 13,954,424 issued
and outstanding shares of the common stock of Glandon, of which 10,229,088
shares were owned by the Company; 1,351,356 shares were owned, beneficially or
of record, by four directors of the Company; 800,000 shares were owned by two
other affiliates of the Company; and 1,513,980 shares were owned by
nonaffiliates. In addition, at such date options for the purchase of 515,000
shares of Glandon held by the Company (the "Glandon Options") were held by
certain individuals, including options for the purchase of 72,857 shares held by
two executive officers of the Company. Such options are exercisable for a period
of five years, at prices ranging from $.03 to $1.50 per share.

The issued and outstanding shares of Gold Reserve Aruba and Glandon were
issued to their present holders during 1994 and 1995, in exchange for the shares
of GLDRV and Unicorn held by such persons, respectively. In addition, the
Glandon Options were acquired by the present holders in exchange for options for
the purchase of shares of Unicorn previously held by such persons. The interests
acquired by such persons in Gold Reserve Aruba and Glandon were identical to the
respective interests such persons held in GLDRV and Unicorn immediately prior to
such share exchange. The GLDRV and Unicorn shares exchanged for Gold Reserve
Aruba and Glandon shares by directors of the Company and certain companies
affiliated with the Company were acquired in 1992 and 1993, pursuant to various
transactions described below.

BACKGROUND OF THE GLDRV AND UNICORN PURCHASES. During 1992, certain
directors and former directors and executive officers of the Company were
permitted to purchase shares of the common stock of GLDRV and Unicorn, each of
which is a majority-owned subsidiary of the Company, in conjunction with the
initial capitalization of such companies, at $0.026 per GLDRV share and $0.03
per Unicorn share. In addition, during 1992 Great Basin was permitted to acquire
shares of common stock of Unicorn from the Company in exchange for the issuance
to the Company of its own shares, and in 1992 and 1993, Unicorn was permitted to
acquire shares of the common stock of GLDRV, from GLDRV, at $.03 per share.
Great Basin and Unicorn are both majority-owned subsidiaries of the Company. The
purchase or acquisition of such shares by these directors and affiliated
companies (the "Affiliated Companies") were "conflicting interest transactions"
within the meaning of the Montana Business Corporation Act, a matter not
recognized by members of the Company's board of directors at the time such
purchases or acquisitions were permitted. These transactions were subsequently
ratified by a majority of the disinterested shareholders of the Company at the
annual meeting of shareholders held on July 22, 1994. The options to purchase
shares of Unicorn (which have been converted into the Glandon Options) were
granted to employees and consultants of the Company for services.

As noted above, in 1994 and 1995 all of the shareholders of GLDRV and
Unicorn exchanged their shares in such companies for identical interests in Gold
Reserve Aruba and Glandon. In addition, the outstanding options for the purchase
of shares of Unicorn were exchanged for identical options for the

15
<PAGE>
purchase of shares of Glandon. The following table sets out the names and
shareholdings in Gold Reserve Aruba and Glandon of the directors and officers of
the Company and certain affiliated companies as of April 7, 1995.

<TABLE>
<CAPTION>
GOLD RESERVE ARUBA GLANDON
----------------------------- -----------------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF
DIRECTORS AND AFFILIATED COMPANIES SHARES OWNED CLASS SHARES OWNED CLASS
- ---------------------------------------------------------- --------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Rockne J. Timm............................................ 500,000(1) 1.29% 500,000(1) 3.22%
A. Douglas Belanger....................................... 480,000(2) 1.40% 400,000 2.87%
Patrick D. McChesney...................................... 50,000 0.10% 50,000 0.36%
Hobart Teneff............................................. 480,000 1.40% 451,356(3) 3.23%
Robert A. McGuinness...................................... -- -- 60,714(4) 0.36%
Albert K.F. Wu............................................ -- -- 12,143 (4) 0.07 %
All directors or executive officers as a group............ 1,460,000 4.17 % 1,424,213 10.11 %
Stanco.................................................... -- -- 700,000 5.02 %
Great Basin............................................... -- -- 100,000 0.70 %
Unicorn................................................... 7,000,000 20.00 % -- --
Total affiliate ownership................................. 8,460,000 24.17 % 2,224,213 15.85 %
--------------- ----- --------------- -----
--------------- ----- --------------- -----
<FN>
- ------------------------
(1) Includes fifty thousand (50,000) shares of both Gold Reserve Aruba and
Glandon transferred to, and owned by, Mr. Timm's daughters.

(2) Such shares are held in an irrevocable trust for the benefit of Mr.
Belanger's two children, and beneficial ownership thereof is disclaimed by
Mr. Belanger.

(3) Includes 21,356 shares acquired by Mr. Teneff in a private placement, at
the price of $1.00 per share and 30,000 shares, valued at $1.00 per share,
received in exchange for Mr. Teneff's interest in a diamond cutting and
polishing partnership.

(4) Represents options to acquire shares of Glandon from the Company at prices
ranging from $0.67 to $1.50 per share.
</TABLE>

PROPOSED PLAN OF EXCHANGE. The board of directors of the Company has
adopted and approved a plan of exchange whereby, subject to shareholder approval
at the annual meeting, each issued and outstanding share of common stock of Gold
Reserve Aruba (being the GLDRV stock formerly held by the minority shareholders)
and each issued and outstanding share of common stock of Glandon (being the
Unicorn stock formerly held by the minority shareholders) -- other than shares
of Gold Reserve Aruba and Glandon held by the Company, and shares of Gold
Reserve Aruba held by GLDRV Aruba -- would be exchanged for shares of the common
stock of the Company. The share exchange, if adopted, would eliminate the
minority ownership interests in Gold Reserve Aruba and Glandon, and cause Gold
Reserve Aruba and Glandon (and their respective wholly-owned subsidiaries, GLDRV
and Unicorn) to become, directly or indirectly, wholly-owned subsidiaries of the
Company. As a consequence of the exchange, if it is approved by the
shareholders, the Company's ownership interest of the Brisas concession would
increase by 9%, from 91% (89.4% on a fully-diluted basis) to 100%. In the view
of the board of directors, such exchange would also simplify the Company's
structure and holdings, facilitate its effectuation of corporate action by Gold
Reserve Aruba and Glandon (and the corporate action of GLDRV and Unicorn), and
more clearly illustrate the extent of the directors' and other affiliates'
ownership interests in the Company.

TERMS AND CONDITIONS OF PLAN OF EXCHANGE. Pursuant to the plan of exchange,
each issued and outstanding share of Gold Reserve Aruba and Glandon will be
exchanged for such number of shares of common stock of the Company as is
determined by multiplying the number of shares of Gold Reserve Aruba and Glandon
held by the exchanging shareholders by exchange ratios determined by reference
to the implied valuation methodology described in the following section of this
Proxy Statement.

16
<PAGE>
Options to purchase common shares of the Company will be exchanged for the
options to purchase 515,000 shares of Glandon from the Company, based on the
same ratio as used to exchange those shares held by the minority shareholders of
Glandon.

FAIRNESS OPINION OF INDEPENDENT FINANCIAL ADVISOR. Lancaster Financial
Corp. ("Financial Advisor") was engaged on behalf of the Company by Messrs.
Potvin and Coleman (the "Independent Committee"), two disinterested directors of
the Company appointed by the Board of Directors to review and consider the plan
of exchange, to provide an opinion as to the fairness of the plan of exchange to
the shareholders of the Company, the shareholders of Gold Reserve Aruba other
than the Company and GLDRV Aruba and the shareholders of Glandon other than the
Company. The Financial Advisor will receive a fee of Cdn. $75,000 for its
services and will be reimbursed for its reasonable out-of-pocket expenses. In
addition, the Company has agreed to indemnify the Financial Advisor in certain
circumstances.

The Financial Advisor is a specialized investment bank with offices in
Toronto, Calgary and New York that provides corporate and government financial
advice and services, engages in trading and merchant banking and offers
discretionary money management services. Prior to selecting the Financial
Advisor to provide the fairness opinion, the Independent Committee inquired as
to the Financial Advisor's capabilities, expertise and independence under the
circumstances. The Financial Advisor is not an insider, associate or affiliate
of the Company or any of its affiliates. The Financial Advisor's compensation is
not dependent on success-oriented fees nor does the Financial Advisor have any
understandings, commitments or agreements with the Company or any of its
affiliates or associates with respect to future business dealings. The Financial
Advisor has not acted as underwriter or advisor of the Company or any of the
subsidiaries in the past 24 months.

Pursuant to its engagement, the Financial Advisor has provided to the
Independent Committee an opinion that the plan of exchange is fair, from a
financial point of view, to the holders of common stock of the Company, to the
holders of common stock of Gold Reserve Aruba other than the Company and GLDRV
Aruba and to the holders of common stock of Glandon other than the Company. (A
copy of the Financial Advisor's opinion is set forth in Exhibit A to this proxy
statement.) In preparing this opinion, the Financial Advisor reviewed and relied
upon public and other information relating to the business, operations and
financial performance of the Company, with particular emphasis on the Brisas
concession, and such other market, technical and industry information and such
other analyses and reports the Financial Advisor considered relevant and
appropriate in the circumstances. The Financial Advisor assumed that the
information, data, advice, opinions and representations provided to it by the
Company were complete and accurate in all respects. The Financial Advisor was
given open access to information and personnel of the Company and no limitation
was put on the Financial Advisor's review.

For the purposes of its opinion, the Financial Advisor defined value as fair
market value, which in turn is defined as the highest price available in an open
and unrestricted market between informed, prudent parties acting at arm's length
and under no compulsion to act, expressed in the terms of money or money's
worth. For purposes of determining the value of the shares of common stock of
Gold Reserve Aruba and Glandon (as a result of its 20% interest in Gold Reserve
Aruba) to be surrendered in the exchange, the Financial Advisor considered the
value which is attributed to Gold Reserve Aruba in the market capitalization of
the Company, a discounted cash flow methodology and a total capitalization per
ounce of reserves approach. The Financial Advisor also considered the carrying
value of the Company and the fact that no prior valuations of the Brisas
concession had been conducted. Of these valuation approaches, the Financial
Advisor concluded that the implied valuation approach -- namely, the value
attributed to Gold Reserve Aruba and Glandon in the market capitalization of the
Company -- was the most reliable measure of value under the circumstances. With
respect to the value of the common stock of the Company, the Financial Advisor
concluded that the most reliable measure of value is the value of such stock as
reflected on the TSE.

17
<PAGE>
The exchange ratios under the plan of exchange will be established using an
implied market valuation of the Brisas concession, which is the Company's most
significant asset. This implied market valuation, in turn, will be used to
establish the value of the minority shares of Gold Reserve Aruba and Glandon.
The implied market valuation of the Brisas concession will be based on the total
stock market value of the Company, which will be calculated by multiplying (i)
the total number of outstanding shares of common stock of the Company on a
fully-diluted basis by (ii) the average of the daily closing prices of the
common stock on the TSE during the twenty trading days up to and including May
18, 1995 (or the midpoint of the closing bid and asked prices of the common
stock on days when shares of the common stock do not trade). The noon Bank of
Canada U.S.$/Cdn.$ exchange rate on May 18, 1995 will be used to convert the
average trading price to U.S. dollars. Based on an average trading price of
$6.00 per share during this period, the total stock market value of the Company
will be $117,500,000. The respective values of Gold Reserve Aruba and Glandon
will be derived therefrom under the plan of exchange in the following manner.

Based on the average trading price of $6.00 per share, the Company's total
market value of $117,500,000 is first reduced by the net value of the
identifiable assets and liabilities of Gold Reserve Corporation, other than its
interest in the Brisas concession (which is held through its direct and indirect
holdings in Gold Reserve Aruba and Glandon), which is approximately $31,754,000.
The remaining market value amount of approximately $85,766,000 is considered to
represent the market's appraisal of the value of the Company's approximate 90%
interest (89.4% on a fully-diluted basis) in the Brisas concession. This
remaining market value amount of approximately $85,766,000 is then divided by
the Company's interest in the Brisas concession to arrive at 100% of the implied
value of the Brisas concession, or approximately $95,572,000.

The resulting implied market value of the Brisas concession of approximately
$95,572,000 is first reduced by approximately $1,135,000 (representing Glandon's
identifiable net assets and liabilities, other than its interest in the Brisas
concession), and the remaining $94,437,000 is then allocated to Gold Reserve
Aruba, from which approximately $30,108,000, representing approximately
$22,500,000 relating to the settlement of the Brisas litigation and
approximately $7,600,000 in general intercompany obligations to Gold Reserve
Corporation, is deducted. The resulting $64,329,000 is the implied value of Gold
Reserve Aruba and its subsidiaries on a net assets basis after payment of debt.

Glandon's ownership of Gold Reserve Aruba is 20%, which represents a value
of approximately $12,866,000 ($64,329,000 times 20%). The implied market value
of Glandon and its subsidiaries is then determined to be $10,966,000, which is
the sum of its identifiable net assets (other than its interest in Gold Reserve
Aruba) of approximately $1,135,000, plus the value of its 20% interest in Gold
Reserve Aruba of approximately $12,866,000, less intercompany obligations to
Gold Reserve Corporation of approximately $3,035,000.

In order to determine the value of the shares of common stock of the Company
to be issued to minority shareholders of Gold Reserve Aruba and Glandon under
the plan of exchange, and to complete the calculation of the exchange ratios,
the same twenty day average trading price of the Company's common stock used to
determine the value of Gold Reserve Aruba and Glandon, described above, will be
used. Therefore, assuming that an average trading price of $6.00 per share is
used to determine the implied value of Gold Reserve Aruba and Glandon, the
shares of common stock of the Company to be issued under the plan of exchange
will also be valued at $6.00 per share.

The following table sets forth information concerning the implied market
valuation of the Company and the exchange ratios under the plan of exchange that
would result, based on an average trading price of $6.00 per share of the common
stock of the Company.

18
<PAGE>
GOLD RESERVE CORPORATION:

<TABLE>
<S> <C>
Shares of common stock outstanding (1)....................... 19,586,675
Assumed twenty day average share price....................... $6.00
Market capitalization of the Company......................... 117,520,050
Less the value of identifiable Gold Reserve Corporation
assets, other than its interest in the Brisas concession and
Glandon (2)................................................. (31,754,357)
-------------
Value ascribed to Gold Reserve Corporation's interest in the
Brisas concession........................................... 85,765,693
Total value ascribed to Brisas concession.................... $ 95,571,801
-------------
-------------
</TABLE>

GOLD RESERVE ARUBA:

<TABLE>
<S> <C>
Total value of Brisas concession............................. $ 95,571,801
Inter-company debt owed to Gold Reserve Corporation (3)...... (30,108,070)
Value of identifiable net assets of Glandon.................. (1,135,000)
-------------
Value of equity of Gold Reserve Aruba........................ $ 64,328,731
-------------
-------------
Minority interest in Gold Reserve Aruba...................... 3,216,437
Number of shares of Gold Reserve Corporation issued in
exchange for minority interests of Gold Reserve Aruba....... 536,073
Exchange ratio............................................... 0.306
</TABLE>

GLANDON:

<TABLE>
<S> <C>
Value of Glandon's 20% interest in Gold Reserve Aruba........ $ 12,865,746
Value of identifiable net assets of Glandon.................. 1,135,000
Inter-company debt owed to Gold Reserve Corporation.......... (3,034,806)
-------------
Value of equity of Glandon................................... $ 10,965,940
-------------
-------------
Minority interest in Glandon................................. 3,112,189
Number of shares of Gold Reserve Corporation issued in
exchange for minority interests of Glandon.................. 516,698
Exchange ratio............................................... 0.1310
<FN>
- ------------------------
(1) Fully-diluted.

(2) Based on estimates of value of such assets utilizing book values,
acquisition costs and other industry-specific judgments.

(3) Includes $22,512,500 related to the settlement of the Brisas litigation.
</TABLE>

The following table sets forth, for illustrative purposes only, the implied
value of the Brisas concession and the number of shares of common stock of the
Company issuable in exchange for the minority interests of Gold Reserve Aruba
and Glandon under the plan of exchange. The information set forth in the table
is based on a variety of assumed prices of the common stock of the Company and
should not be considered to be a representation of the prices at which such
shares may trade. The exchange ratios to be applied pursuant to the plan of
exchange, and the number of shares of common stock of the Company that will be
issued to the minority shareholders of Gold Reserve Aruba and Glandon will be
based on (i) the average of the daily closing prices of the common stock on the
TSE during the twenty trading days up to and including May 18, 1995 (or the
midpoint of the closing bid and asked prices of the common stock on days when
shares of the common stock do not trade), which may differ from the prices set
forth in the table, and (ii) the last reported consolidated financial position
of the Company.

19
<PAGE>

<TABLE>
<CAPTION>
GOLD RESERVE ARUBA GLANDON
-------------------------------------------------------------- --------------------------------------------------
RATIO OF RATIO OF
COMPANY COMPANY COMPANY
COMPANY SHARES FOR SHARES SHARES FOR
VALUATION OF SHARES GOLD IMPLIED VALUATION EXCHANGED GOLD
IMPLIED MARKET MINORITY INTEREST EXCHANGED FOR RESERVE MARKET OF MINORITY FOR RESERVE
ASSUMED AVERAGE VALUE OF GOLD IN GOLD RESERVE MINORITY ARUBA VALUE OF INTEREST IN MINORITY ARUBA
SHARE PRICE RESERVE ARUBA ARUBA INTEREST SHARES GLANDON GLANDON INTEREST SHARES
- --------------- -------------- ------------------ ------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 6.00 $ 64,328,731 $ 3,216,437 536,073 0.3063 $10,965,940 $3,112,189 518,698 0.131
$ 7.00 $ 86,509,134 $ 4,325,457 617,922 0.3531 $15,402,021 $4,371,171 624,453 0.158
$ 8.00 $109,175,126 $ 5,458,756 682,345 0.3899 $19,935,219 $5,657,716 707,214 0.179
$ 9.00 $132,281,110 $ 6,614,056 734,895 0.4199 $24,556,416 $7,356,382 817,376 0.196
$ 10.00 $155,261,003 $ 7,763,050 776,305 0.4436 $29,152,395 $8,733,202 873,320 0.209
</TABLE>

TRANSFERABILITY OF SHARES BEING ISSUED. The issuance of shares of common
stock of the Company to the minority shareholders of Gold Reserve Aruba and
Glandon who consent to the exchange will be effected pursuant to the exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act") afforded by Section 4(2) thereof and Rule 506 of
Regulation D adopted thereunder, and Rule 701 adopted thereunder. Minority
shareholders of Gold Reserve Aruba and Glandon will receive a copy of this Proxy
Statement (or at least this Item 2) and a copy of the Company's annual report on
Form 10-K for the year ended December 31, 1994, and will be given a period of 30
days, following the date such materials are first delivered, within which to
consent or withhold their consent to the exchange. The Company expects to
deliver such materials to the minority shareholders promptly following the
annual meeting, assuming shareholder approval of the exchange has been obtained.

The shares of common stock of the Company will be "restricted securities"
within the meaning of regulations promulgated under the Securities Act of 1933,
as amended (the "Securities Act") and will not be transferable by the holders
thereof unless such shares are subsequently included in an effective
registration statement under the Securities Act, or unless such transfers are
effected pursuant to an exemption from the registration requirements of the act.
Once such consents to the exchange have been obtained, however, the Company will
seek to include the shares of common stock of the Company issued in the
exchange, together with possible additional shares of common stock held by other
shareholders of the Company, including certain affiliates, in a registration
statement under the Securities Act.

RECOMMENDATION OF THE BOARD OF DIRECTORS. The directors of the Company,
including its two disinterested directors, Mr. Coleman and Mr. Potvin, recommend
approval of the exchange. In making their recommendation, the directors have
considered, and have relied upon, the opinion of Lancaster Securities regarding
the exchange rate and the bases therefor, and have also again considered the
circumstances existing at the time the GLDRV and Unicorn shares were issued to
the directors and the Affiliated Companies.

REQUISITE APPROVAL. Approval of the exchange requires the affirmative vote
of a majority of the shares of common stock of the Company present at the annual
meeting, in person or by proxy.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL OF THE PLAN OF EXCHANGE.

ITEM NO. 3 -- ADJUSTMENT OF OPTION EXERCISE PRICES

At the annual meeting, the shareholders will be asked to consider and
approve adjustments to the exercise prices of certain incentive stock options
granted during 1993 and 1994 to certain directors and executive officers under
the Company's 1992 Stock Option Plan. The effect of the modifications will be to
lower the exercise prices of the options to align them with current market
prices for the Company's common stock, and thereby make them a more attractive
compensation device for the directors and executive officers who hold them.

20
<PAGE>
Options for the purchase of a total of 213,800 shares of common stock of the
Company are subject to the modification proposal. The following table sets
forth, as of April 7, 1995, the names of the directors and executive officers of
the Company holding a portion of such options, the exercise prices of the
options fixed as of the date of grant, and the proposed modified exercise
prices. The closing sales price per share of the Company's common stock at April
7, 1995, as reported on The Nasdaq Stock Market, was $ .

<TABLE>
<CAPTION>
ORIGINAL ADJUSTED
SHARES EXERCISE EXERCISE
NAME OF OPTIONEE GRANTED GRANT DATE PRICE PRICE
- -------------------------------- ------- ----------------- -------- --------
<S> <C> <C> <C> <C>
James H. Coleman................ 50,000 February 25, 1994 $ 9.45 $6.00
Robert A. McGuinness............ 15,000 January 14, 1994 $ 11.25 $6.00
J.C. Potvin..................... 75,000 November 23, 1994 $ 15.25 $6.00
Albert K.F. Wu.................. 2,000 January 14, 1994 $ 11.25 $6.00
</TABLE>

REQUISITE APPROVAL. Pursuant to TSE policy, approval of the repricing of
incentive stock options granted to directors or executive officers of the
Company requires the affirmative vote of a majority of the shares of common
stock of the Company present at the annual meeting, in person or by proxy, held
by disinterested holders. For purposes of the proposal disinterested holders
shall mean all of the shareholders of the Company except the holders identified
in the preceding table and such holders' associates (which are defined generally
to mean relatives, a spouse, certain similarly related persons and partners, and
companies in which the holder owns or controls more than 10% of the voting
shares. As of the record date for the annual meeting, the disinterested holders
of the common stock of the Company owned approximately 18,829,950 shares
beneficially or of record, constituting approximately 99% of the common stock of
the Company at such date. The remainder of the shares of common stock of the
Company otherwise eligible to vote at the annual meeting were owned beneficially
or of record by the identified holders at such date, and will abstain from
voting with respect to Item 3.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL OF THE REPRICING PROPOSAL.

ITEM NO. 4 -- INCREASE IN NUMBER OF OPTIONS AVAILABLE FOR GRANT
UNDER 1994 STOCK OPTION PLAN

At the annual meeting, the shareholders will be asked to consider and
approve an amendment to the Company's 1994 Stock Option Plan increasing the
number of shares of common stock issuable pursuant to the exercise of options
granted thereunder from 900,000 shares to the lesser of 2,000,000 or 10% of the
number of shares of common stock of the Company from time-to-time outstanding.

The board of directors believes such increase is necessary in order to
provide an adequate number of options for grant to current and future employees
and consultants, including directors and executive officers of the Company, and
additional personnel the Company anticipates it will hire during the next
several years in conjunction with its continuing exploration and development
efforts on the Brisas concession and its other exploration activities. As is
reported elsewhere in this Proxy Statement, 317,700 shares remain available for
grant pursuant to options under the plan at April 7, 1995.

REQUISITE APPROVAL. Approval of the proposed increase requires the
affirmative vote of a majority of the shares of common stock of the Company
present at the annual meeting, in person or by proxy.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL OF THE INCREASE IN OPTIONS AVAILABLE FOR GRANT UNDER THE
PLAN.

21
<PAGE>
ITEM NO. 5 -- RATIFICATION OF INDEPENDENT AUDITOR

The firm of Coopers & Lybrand L.L.P., independent certified public
accountants, has been selected by the Board of Directors to serve as the
independent auditor of the Company for the year ended December 31, 1995 and any
interim period. The firm is experienced in auditing and advising public
companies engaged in mining and related activities, and has served as auditor of
the Company since 1992. Representatives of the firm of Coopers & Lybrand L.L.P.
will be present at the annual meeting to respond to questions of the
shareholders.

Ratification by the shareholders of the Company's independent auditor is not
required under the Montana Business Corporation Act. The Board of Directors
believes, however, that the selection of an auditor is an important matter and
that the shareholders of the Company are entitled to approve or disapprove the
Board's choice of auditor through ratification. The affirmative vote of a
majority of the issued and outstanding shares of common stock present at the
annual meeting, in person or by proxy, is required to ratify the selection of an
auditor. If the Board of Directors' selection is not ratified, the Board will
determine whether the auditor should be replaced.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE RATIFICATION OF COOPERS & LYBRAND L.L.P.
AS THE COMPANY'S INDEPENDENT AUDITOR.

CONCLUSION

It is important that proxies be returned promptly. Shareholders are
requested to vote, sign, date and promptly return the proxy in the enclosed
self-addressed envelope.

The board of directors knows of no other matters which may be presented for
shareholder action at the annual meeting. If other matters do properly come
before the meeting, it is intended that the persons named in the proxies will
vote on such proposals according to their best judgment.

A COPY OF FORM 10-K, THE ANNUAL REPORT FILED BY THE COMPANY WITH THE
SECURITIES AND EXCHANGE COMMISSION, IS ENCLOSED HEREWITH. ADDITIONAL COPIES OF
THE FORM 10-K CAN BE OBTAINED FREE OF CHARGE FROM THE COMPANY BY REQUESTING SUCH
REPORT IN WRITING TO: MS. JULIE LANGENHEIM, GOLD RESERVE CORPORATION, 1940
SEAFIRST FINANCIAL CENTER, SPOKANE, WASHINGTON 99201.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ A. DOUGLAS BELANGER

A. Douglas Belanger, SECRETARY

22
<PAGE>
APPENDIX A

PROPOSED PLAN OF EXCHANGE

The board of directors of the Company has adopted and approved a plan of
exchange whereby, subject to shareholder approval at the annual meeting, each
issued and outstanding share of common stock of Gold Reserve Aruba (being the
GLDRV stock formerly held by the minority shareholders) and each issued and
outstanding share of common stock of Glandon (being the Unicorn stock formerly
held by the minority shareholders) -- other than shares of Gold Reserve Aruba
and Glandon held by the Company, and shares of Gold Reserve Aruba held by GLDRV
Aruba -- would be exchanged for shares of the common stock of the Company of
equivalent value. The share exchange, if adopted, would eliminate the minority
ownership interests in Gold Reserve Aruba and Glandon, and cause Gold Reserve
Aruba and Glandon (and their respective wholly-owned subsidiaries, GLDRV and
Unicorn) to become, directly or indirectly, wholly-owned subsidiaries of the
Company. As a consequence of the exchange, if it is approved by the
shareholders, the Company's ownership interest of the Brisas concession would
increase by 9%, from 91% (89.4% on a fully-diluted basis) to 100%. In the view
of the board of directors, such exchange would also simplify the Company's
structure and holdings, facilitate its effectuation of corporate action by Gold
Reserve Aruba and Glandon (and the corporate action of GLDRV and Unicorn), and
more clearly illustrate the extent of the director's and other affiliates'
ownership interests in the Company.

TERMS AND CONDITIONS OF PLAN OF EXCHANGE

Pursuant to the plan of exchange, each issued and outstanding share of Gold
Reserve Aruba and Glandon will be exchanged for such number of shares of common
stock of the Company as is determined by multiplying the number of shares of
Gold Reserve Aruba and Glandon held by the exchanging shareholders by exchange
ratios determined by reference to the implied valuation methodology described
herein. Pursuant to the plan of exchange, options to purchase common shares of
the Company will be exchanged for the options to purchase 515,000 shares of
Glandon from the Company based on the same ratio as used to exchange those
shares held by the minority shareholders of Glandon.

The exchange ratios under the plan of exchange will be established using an
implied market valuation of the Brisas concession, which is the Company's most
significant asset. This implied market valuation, in turn, will be used to
establish the value of the minority shares of Gold Reserve Aruba and Glandon.
The implied market valuation of the Brisas concession will be based on the total
stock market value of the Company, which will be calculated by multiplying (i)
the total number of outstanding shares of common stock of the Company on a
fully-diluted basis by (ii) the average of the daily closing prices of the
common stock on the TSE during the 20 trading days up to and including May 18,
1995 (or the midpoint of the closing bid and asked prices of the common stock on
days when shares of the common stock do not trade). The noon Bank of Canada
US$/C$ exchange rate on May 18, 1995 will be used to convert the average trading
price to US dollars. Based on an average trading price of $6.00 per share during
this period, the total stock market value of the Company will be $117,500,000.
The respective values of Gold Reserve Aruba and Glandon will be derived
therefrom under the plan of exchange in the following manner.

Based on the average trading price of $6.00 per share, the Companys total
market value of $117,520,000 is first reduced by the net value of the
identifiable assets and liabilities of Gold Reserve Corporation, other than its
interest in the Brisas concession (which is held through its direct and indirect
holdings in Gold Reserve Aruba and Glandon), which is approximately $31,754,000.
The remaining market value amount of approximately $85,766,000 is considered to
represent the market's appraisal of the value of the Company's approximate 90%
interest (89.4% on a fully-diluted basis) in the Brisas concession. This
remaining market value amount of approximately $85,766,000 million is then
divided by the Company's interest in Brisas the concession to arrive at 100% of
the implied value of the Brisas concession, or approximately $95,572,000.

A-1
<PAGE>
The resulting implied market value of the Brisas concession of approximately
$95,572,000 is first reduced by approximately $1,135,000 million (representing
Glandon's identifiable net assets and liabilities, other than its interest in
the Brisas concession), and the remaining $94,437,000 is then allocated to Gold
Reserve Aruba, from which approximately $30,108,000, representing intercompany
obligations to Gold Reserve Corporation, is deducted. The resulting $64,329,000
million is the implied value of Gold Reserve Aruba and its subsidiaries on a net
assets basis after payment of debt.

In order to determine the value of the shares of common stock of the Company
to be issued to minority shareholders of Gold Reserve Aruba and Glandon under
the plan of exchange, and to complete the calculation of the exchange ratios,
the same 20 day average trading price of the Company's common stock used to
determine the value of Gold Reserve Aruba and Glandon, described above, will be
used. Therefore, assuming that an average trading price of $6.00 per share is
used to determine the implied value of Gold Reserve Aruba and Glandon, the
shares of common stock of the Company to be issued under the plan of exchange
will also be valued at $6.00 per share.

GOLD RESERVE CORPORATION:

<TABLE>
<S> <C>
Shares of common stock outstanding (1)....................... 19,586,675
Assumed 20 day average share price........................... $6.00
Market capitalization of the company......................... 117,520,050
Less the value of identifiable Gold Reserve Corporation
assets, other than its interest in the Brisas concession and
Glandon (2)................................................. (31,754,357)
-------------
Value ascribed to Gold Reserve Corporation's interest in the
Brisas concession........................................... 85,765,693
Total value ascribed to Brisas concession.................... $ 95,571,801
-------------
-------------
</TABLE>

GOLD RESERVE ARUBA:

<TABLE>
<S> <C>
Total value of Brisas concession............................. $ 95,571,801
Intercompany debt owed to Gold Reserve Corporation (3)....... (30,108,070)
Value of identifiable net assets of Glandon.................. (1,135,000)
-------------
Value of equity of Gold Reserve Aruba........................ $ 64,328,731
-------------
-------------
Minority interest in Gold Reserve Aruba...................... $ 3,216,437
Number of shares of Gold Reserve Corporation issued in
exchange for minority interests of Gold Reserve Aruba....... 536,073
Exchange ratio............................................... 0.306
<FN>
- ------------------------

(1) Fully-diluted.

(2) Based on estimates of value of such assets utilizing book values,
acquisition costs and other industry-specific judgments.

(3) Includes $22.5 million Brisas litigation settlement costs payable to Gold
Reserve Corporation
</TABLE>

A-2
<PAGE>
GLANDON:

<TABLE>
<S> <C>
Value of Glandon's 20% interest in Gold Reserve Aruba........ $ 12,865,746
Value of identifiable net assets of Glandon.................. 1,135,000
Intercompany debt owed to Gold Reserve Corporation........... (3,034,806)
-------------
Value of equity of Glandon................................... $ 10,965,940
-------------
-------------
Minority interest in Glandon................................. $ 3,112,189
Number of shares of Gold Reserve Corporation issued in
exchange for minority interests of Glandon.................. 516,698
Exchange ratio............................................... 0.1310
</TABLE>

The following table sets forth, for illustrative purposes only, the implied
value of the Brisas concession and the number of shares of common stock of the
Company issuable in exchange for the minority interests of Gold Reserve Aruba
and Glandon under the plan of exchange. The information set forth in the table
is based on a variety of assumed prices of the common stock of the Company and
should not be considered to be a representation of the prices at which such
shares may trade. The exchange ratios to be applied pursuant to the plan of
exchange, and the number of shares of common stock of the Company that will be
issued to the minority shareholders of Gold Reserve Aruba and Glandon will be
based on the average of the daily closing prices of the common stock on the TSE
during the 20 trading days up to and including May 18, 1995 (or the midpoint of
the closing bid and asked prices of the common stock on days when shares of the
common stock do not trade) and the last reported consolidated financial position
of the Company, which may differ from the results set forth in the table.

<TABLE>
<CAPTION>
GOLD RESERVE ARUBA
----------------------------------------------------------
RATIO OF
VALUATION OF COMPANY COMPANY
MINORITY SHARES SHARES
ASSUMED IMPLIED MARKET INTEREST IN EXCHANGED FOR FOR
AVERAGE SHARE VALUE OF GOLD GOLD RESERVE MINORITY GOLD RESERVE
PRICE RESERVE ARUBA ARUBA INTEREST ARUBA SHARES
- -------------- -------------- ------------ ------------- -------------
$ $ $
<S> <C> <C> <C> <C>
6.00 64,328,731 3,216,437 536,073 0.3063
7.00 86,509,134 4,325,457 617,922 0.3531
8.00 109,175,126 5,458,756 682,345 0.3899
9.00 132,281,110 6,614,056 734,895 0.4199
10.00 155,261,003 7,763,050 776,305 0.4436
</TABLE>

<TABLE>
<CAPTION>
GLANDON
------------------------------------------------------------
COMPANY RATIO OF
VALUATION OF SHARES COMPANY
ASSUMED IMPLIED MARKET MINORITY EXCHANGED FOR SHARES
AVERAGE SHARE VALUE OF INTEREST MINORITY FOR
PRICE GLANDON IN GLANDON INTEREST GLANDON SHARES
- -------------- -------------- ------------ ------------- ---------------
$ $ $
<S> <C> <C> <C> <C>
6.00 10,965,940 3,112,189 518,698 0.131
7.00 15,402,021 4,371,171 624,453 0.158
8.00 19,935,219 5,657,716 707,214 0.179
9.00 24,556,416 7,356,382 817,376 0.196
10.00 29,152,395 8,733,202 873,320 0.209
</TABLE>

A-3
<PAGE>
APPENDIX B

[letterhead of Lancaster Financial Corp.]

[March [ - ], 1995]

Independent Committee of the Board of Directors of Gold Reserve Corporation; and
Shareholders of Gold Reserve Corporation; and
Shareholders of Gold Reserve de Aruba A.V.V.
Shareholders of Glandon Company A.V.V.; and
c/o Gold Reserve Corporation
1940 Seafirst Financial Centre
Spokane, Washington
U.S.A. 99201

Dear Sirs:

We understand that the Board of Directors of Gold Reserve Corporation ("Gold
Reserve" or the "Company") is proposing a plan of exchange as described in
Appendix A (the "Proposal") whereby each outstanding share of common stock of
the Company's subsidiaries Glandon Company A.V.V. ("Glandon") and Gold Reserve
de Aruba, A.V.V. ("Gold Reserve Aruba") held by persons other than the Company
or its subsidiary G.L.D.R.V. Aruba A.V.V. ("GLDRV Aruba"), would be exchanged
for shares of common stock of the Company. In the event the Proposal is approved
by the Company's shareholders, and the minority shareholders of Gold Reserve
Aruba and Glandon consent to the exchange, the Company will directly and
indirectly own 100% of the common stock of Gold Reserve Aruba and Glandon.

Shares of Gold Reserve Aruba and Glandon will be exchanged for common shares
of Gold Reserve on the basis of exchange ratios which will be determined based
upon:

the average of the daily closing prices of the common shares of Gold
Reserve on the Toronto Stock Exchange (the "TSE") during the 20 trading
days to and including the day immediately preceding the day of the
meeting of shareholders of the Company to be held to approve the Proposal
(or the mid point of the closing bid and ask prices on days when the
common shares of Gold Reserve do not trade) and the noon Bank of Canada
US$/C$ exchange rate on the day immediately preceding the day of such
meeting; and

the last publicly reported consolidated financial position of Gold
Reserve.

We have been asked to provide an opinion to the Independent Committee of the
Board of Directors of Gold Reserve (the "Committee") and to the shareholders of
Gold Reserve, Gold Reserve Aruba and Glandon, as to the fairness from a
financial point of view of the Proposal to the holders of common shares of Gold
Reserve, to the holders of common stock of Gold Reserve Aruba other than Gold
Reserve and GLDRV Aruba (an indirect wholly-owned subsidiary of Glandon), and to
the holders of common stock of Glandon other than Gold Reserve.

Lancaster Financial Corp. ("Lancaster") is a specialized investment bank
with offices in Toronto, Calgary and New York that provides corporate and
government financial advice and services, engages in trading and merchant
banking and offers discretionary money management services. The opinion
expressed herein is the opinion of Lancaster and the form and content hereof
have been approved for release by a committee of its Board of Directors, the
members of which have extensive experience in merger, acquisition, divestiture,
valuation, fairness opinion and capital market matters.

B-1
<PAGE>
Lancaster is not an insider, associate or affiliate of Gold Reserve, Gold
Reserve Aruba or Glandon and is not an advisor to any person or company other
than the Committee with respect to the Proposal.

Lancaster was given open access to information and personnel of Gold Reserve
and no limitation was put on Lancaster's scope of review. In preparing this
opinion, Lancaster has reviewed and relied upon public and other information
related to the business, operations and financial performance of the Company,
with particular emphasis on the Brisas property, and such other financial,
market, technical and industry information and such other analyses and reports
as we considered relevant and appropriate in the circumstances.

We have assumed that the information, data, advice, opinions and
representations provided to us by or on behalf of the Company are complete and
accurate in all respects. In accordance with the terms of our engagement, we
have not independently verified the completeness and accuracy of the same. We
have not made an independent engineering evaluation of the Brisas project or
other assets of Gold Reserve.

We assumed that all conditions precedent to the completion of the Proposal
can be satisfied in due course, and that all consents, permissions, exemptions
or orders of relevant regulatory authorities will be obtained, without adverse
condition or qualification. Our opinion is based on economic, monetary and
market conditions existing on the date hereof.

Our conclusions as to the fairness of the Proposal were based on our review
of the Proposal taken as a whole rather than on any particular element of the
Proposal. This opinion is given as of the date hereof and we disclaim any
undertaking or obligation to advise any person of any change in any fact or
matter impacting on our opinion which may come or be brought to our attention
after the date thereof. We reserve the right to change, modify or withdraw this
opinion in the event that there is any change in any fact or matter impacting on
our opinion after the date hereof. However, we assume no obligation to update
this opinion.

For the purposes of this opinion Lancaster has defined value as fair market
value, which in turn is defined as the highest price available in an open and
unrestricted market between informed, prudent parties, acting at arm's length
and under no compulsion to act, expressed in terms of money or money's worth.

For the purposes of determining the value of the common shares of Gold
Reserve Aruba and Glandon, Lancaster considered the value which is attributed to
Gold Reserve Aruba and Glandon in the market capitalization of Gold Reserve, a
discounted cash flow methodology and a total capitalization per ounce of
reserves approach. Of the valuation approaches considered, in our opinion the
implied valuation approach is the only logical one in the circumstances. The
value of subsidiary companies can be deduced from the stock market value of Gold
Reserve by deducting external assets net of liabilities. With respect to the
valuation of the common shares of Gold Reserve which are to be issued in
exchange for the minority interests in Gold Reserve Aruba and Glandon, in our
view the most reliable measure of value is the value of the Company's common
shares as traded on the TSE.

In reviewing and applying the results of the valuation approaches adopted,
we also took into consideration the carrying value of Gold Reserve, the fact
that no prior valuations have been carried out on the Brisas property and the
prior marketing efforts designed to solicit proposals for the purchase of Gold
Reserve or its interest in the Brisas property.

For the purposes of this Fairness Opinion, we have determined that the
Proposal will be fair from a financial point of view to the holders of common
shares of Gold Reserve, to the holders of common

B-2
<PAGE>
stock of Gold Reserve Aruba other than Gold Reserve and GLDRV Aruba and to the
holders of common stock of Glandon other than Gold Reserve, if the values of the
Glandon and Gold Reserve Aruba shares are determined based upon:

the market capitalization of Gold Reserve using the average of the daily
closing prices of the common shares of Gold Reserve on the TSE during the
20 trading days to and including the day immediately preceding the day of
the meeting of shareholders of the Company to be held to approve the
Proposal (or the mid point of the closing bid and ask prices on days when
the common shares of Gold Reserve do not trade) and the noon Bank of
Canada US$/C$ exchange rate on the day immediately preceding the day of
such meeting; and

the last publicly reported consolidated financial position of Gold
Reserve;

using the approach set out in Appendix A and if the Gold Reserve shares are
issued at this 20 day average price.

Based upon and subject to the foregoing, we are of the opinion that the
Proposal is fair, from a financial point of view, to the holders of common
shares of Gold Reserve, to the holders of common stock of Gold Reserve Aruba
other than Gold Reserve and GLDRV Aruba and to the holders of common stock of
Glandon other than Gold Reserve.

Yours very truly,

/s/ Lancaster Financial Corp.
LANCASTER FINANCIAL CORP.

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