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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec.
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 011:
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 June 7, 1996
TO: THE SHAREHOLDERS OF GOLD RESERVE CORPORATION
The 1996 annual 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 June 7, 1996 at 9:00 a.m., local time, for the
following purposes:
(1) To elect five members to the board of directors of the Company to
hold such position until the next annual meeting of shareholders
or until their successors are elected and have qualified;
(2) To ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent auditor for the year ended December 31,
1996 and any interim period;
(3) To approve the proposed issuance of common stock of Great Basin
Energies, Inc. and MegaGold Corporation to affiliates of the
Company; and
(4) 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 10, 1996 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 June 7, 1996
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 1996 annual meeting of
shareholders of the Company to be held at 9:00 a.m., local time, on
June 7, 1996, and any adjournment thereof. These proxy materials were
first mailed to shareholders on or about May 1, 1996.
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 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 10, 1996 (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
five), 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 options
presently exercisable and warrants was 23,814,955. The number of
outstanding shares of common stock of the Company eligible to be voted
at the annual meeting at such date was 20,622,825.
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).
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.
<PAGE>
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 3. As
discussed elsewhere in this Proxy Statement, certain holders of the
Company's common stock will abstain from voting with respect to
Item 3.
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, telegram or facsimile by certain of the
Company's directors, executive officers and other employees, who will
not receive additional compensation therefor. The Company also intends
to use the services of Allen Nelson & Co. to assist in the
solicitation of proxies. 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 $15,000.
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 majority-owned subsidiaries: Great Basin Energies, Inc.
("Great Basin"); MegaGold Corporation ("MegaGold"); and wholly-owned
subsidiaries Compania Aurifera Brisas del Cuyuni, C.A. ("Brisas");
Gold Reserve de Venezuela, C.A. ("GLDRV"); Compania Minera Unicornio,
C.A. ("Unicorn"); Gold Reserve Holdings A.V.V.; Gold Reserve de Aruba
A.V.V.; G.L.D.R.V. Aruba A.V.V.; Glandon Company A.V.V.; GoldenLake
A.V.V.; Stanco Investments A.V.V.; and Mont Ventoux A.V.V.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------
The following table sets forth as of May 1, 1996 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 options
presently exercisable and warrants (including 693,362 shares of common
stock held by Great Basin, MegaGold and Stanco, each of which is a
majority-owned subsidiary of the Company, 1,442,130 shares subject to
options exercisable within 60 days and 1,750,000 common share purchase
warrants) was 23,814,955.
<PAGE>
<TABLE>
<CAPTION>
Name of Owner Beneficial Ownership (1) Percent of Class
- ---------------------- ------------------------- ----------------
<S> <C> <C>
Rockne J. Timm 886,491(5) 3.7%
A. Douglas Belanger 728,022(5) 3.1%
Patrick D. McChesney 138,262(5) *
Jean Charles Potvin 116,667 *
James H. Coleman 142,000 *
Robert A. McGuinness 83,481(5) *
Albert K.F. Wu 27,614 *
- ---------------------- ------------------------- ----------------
All directors and
executive officers as
a group (7 persons) 2,122,537 8.9%
====================== ========================= ================
Great Basin Energies,
Inc.(2) 391,161 1.6%
MegaGold Corporation(3) 125,083 *
Stanco Investments
A.V.V(4). 177,118 *
BlueGrotto Trading Ltd. 1,250,000 5.2%
CDS & Co 4,528,910 19.0%
Cede & Co. 9,451,724 39.7%
* Less than 1%
(1) Includes common shares subject to options exercisable within 60 days of May 1, 1996 as
follows: Mr. Timm 375,000 shares, Mr. Belanger 340,000 shares, Mr. McChesney 72,152
shares, Mr. Potvin 116,667 shares, Mr. Coleman 131,666 shares, Mr. McGuinness 68,295
shares and Mr. Wu 12,349 shares.
(2) Mr. Timm, Mr. Belanger and Mr. McGuinness are officers and/or directors of Great Basin
Energies, Inc. Mr. Timm and Mr. Belanger own 4.4% and 0.4%, respectively, of the
outstanding shares of Great Basin Energies, Inc. and may be deemed indirectly to have an
interest in the Company through their respective interest in Great Basin Energies, Inc.
Mr. Timm, Mr. Belanger and Mr. McGuinness disclaim any beneficial ownership of common
shares of the Company owned by Great Basin Energies, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(3) Mr. Timm, Mr. Belanger, Mr. McChesney and Mr. McGuinness are officers and/or directors of
MegaGold Corporation. Mr. Timm, Mr. Belanger and Mr. McChesney own 1.2%, 0.8% and 1.0%,
respectively, of the outstanding shares of MegaGold Corporation and may be deemed
indirectly to have an interest in the Company through their respective interest in
MegaGold Corporation. Mr. Timm, Mr. Belanger, Mr. McChesney and Mr. McGuinness disclaim
any beneficial ownership of common shares of the Company owned by MegaGold Corporation.
(4) Company shares owned by Stanco Investments A.V.V. are held in escrow and are voted by the
escrow agent.
(5) Excludes for each of the named executive or director shares held by adult children and
their dependents or by independent trustee for the benefit of minor children as follows:
Mr. Timm 101,482 shares, Mr. Belanger 164,863 shares, Mr. McChesney 26,921 shares and Mr.
McGuinness 1,818 shares. Mr. Timm, Mr. Belanger, Mr. McChesney and Mr. McGuinness disclaim
any beneficial ownership of common shares of the Company held by their relatives.
</TABLE>
<PAGE>
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 May 1, 1996 are set out below. The Company's board of
directors presently consists of five 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
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.
Rockne J. Timm, President and Chief Executive Officer and
Director - 50
- ---------------------------------------------------------
Mr. Timm became Treasurer and Director in March 1984, and became
President and Chief Executive Officer in August 1988. He was a
Director of Neptune Resources Inc. and its successor, Northwest Gold
Corp., from 1987 to 1993, Vice President of Finance, Treasurer and
Chief Financial Officer of Pegasus Gold Inc. from 1981 to 1987. Mr.
Timm is also President and Director of Great Basin Energies, Inc.,
Vice President and Director of MegaGold Corporation, and a director
and executive officer of each of the Company's foreign subsidiaries.
Mr. Timm is a certified public accountant and resides in Spokane,
Washington.
A. Douglas Belanger, Executive Vice President, Secretary
and Director - 42
- --------------------------------------------------------
Mr. Belanger became Executive Vice President in August 1988 and
Secretary in June 1993. He also serves as Vice President and Director
of Great Basin Energies, Inc., a Vice President of MegaGold
Corporation, and director and executive officer of each of the
Company's foreign subsidiaries Mr. Belanger served as Vice President
for Corporate Affairs of Pegasus Gold Inc. from April 1982 to June
1987. Mr. Belanger resides in Twin Lakes, Idaho.
Patrick D. McChesney, Director - 46
- -----------------------------------
Mr. McChesney was Vice President of Finance until March 1993 and was
Chief Financial Officer from August 1988 until June 1993. Since July
1987, Mr. McChesney's principal occupation has been as President of
Logue-McDonald Automation, Inc. He is also 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 and resides in Spokane, Washington.
<PAGE>
Jean Charles Potvin, Director - 43
- ----------------------------------
Mr. Potvin became a Director in November 1993 and is also 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 Nesbitt Burns Inc.
(formerly Burns Fry Ltd.) a major Canadian investment dealer.
Mr. Potvin resides in Toronto, Ontario.
James H. Coleman, Director - 45
- -------------------------------
Mr. Coleman became a Director in February 1994 and is a senior partner
and Chairman of the Executive Committee of the law firm of Macleod
Dixon of Calgary, Alberta, counsel to the Company. He is also a
Director of Total Resources (Canada) Limited, McCarthy Corporation
plc, Minven Inc., Energold Mining Ltd., Parys Mountain Mines Ltd.,
AACE Environmental Inc., Q-Zar Inc. and Anadime Corp. From 1989 to
1993 he was a Director of Northwest Gold Corp. and from 1988 to 1995
was a Director of Ranchmen's Resources Ltd.. Mr. Coleman resides in
Calgary, Alberta.
Robert A. McGuinness, Vice President of Finance and Chief
Financial Officer - 40
- ---------------------------------------------------------
Mr. McGuinness became Vice President of Finance in March 1993 and
Chief Financial Officer in June 1993. Mr. McGuinness is also Secretary
of Great Basin Energies, Inc. and MegaGold Corporation. During the
previous three years, Mr. 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 and resides in Spokane,
Washington.
Albert K.F. Wu, Vice President of Planning - 49
- -----------------------------------------------
Mr. Wu became Vice President of Planning in February 1993. Mr. Wu was
Treasurer of Orvana Minerals Corp., a mineral exploration company
listed on the Toronto Stock Exchange, from 1990 to 1995, 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.
<PAGE>
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, 1995, all filing requirements applicable
to its directors, executive officers and 10% shareholders were
satisfied.
<PAGE>
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
and chief financial officer for the years ended December 31, 1995,
1994 and 1993.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
- ------------------------------------------------------------- ------------------------------------------------------
Dollar
Value of
of Re- Securities
Other Annual stricted Underlying
Executive Officer Year Salary Bonus Compensation Awards Options/SAR(1) Payouts Compensation(2)
- -------------------- ---- -------- --------- ------------ -------- -------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rockne J. Timm 1995 $150,000 $45,000 - - 185,000 $ - $ 30,000
President and Chief 1994 105,362 - - - 85,000 - 26,341
Executive Officer 1993 101,502 - - - 85,000 - 10,828
A. Douglas Belanger 1995 120,000 38,000 - - 160,000 - 30,000
Executive Vice 1994 87,028 - - - 75,000 - 21,757
President and 1993 90,040 - - - 75,000 - 9,606
Secretary
Robert A. McGuinness 1995 74,938 25,313 - - 150,985 - 21,658
Vice President of 1994 80,412 - - - 65,000 - 10,052
Finance and Chief 1993 58,006 - - - 50,000 - -
Financial Officer
(1) 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, 1995, see the
table appearing on the following page of this Proxy Statement.
(2) 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 during 1995, 1994 and 1993,
respectively, as follows: Mr. Timm- 4,880 shares, 10,241 shares, 12,375 shares; Mr. Belanger-
4,880 shares, 8459 shares, 10,978 shares; Mr. McGuinness- 3,523 shares, 3,908 shares, 0 shares.
</TABLE>
<page.
OPTIONS GRANTED IN 1995. The following table provides information on
options granted during the year ended December 31, 1995 to the named
executive officers of the Company.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent Annual Rates of Stock
of Total Price Appreciation for
Number of Options Option Option Term(3)
Options Granted to Exercise Expiration ---------------------
Executive Officer Granted (1) Employees (2) Price Date at 5% at 10%
- ----------------------------- ----------- ------------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Rockne J. Timm 100,000 10.95% 7.06 1/18/05 $444,000 $1,125,182
President and Chief
Executive Officer
A. Douglas Belanger 85,000 9.31% 7.06 1/18/05 377,400 956,405
Executive Vice
President and Secretary
Robert A. McGuinness 43,485 4.76% 7.06 1/18/05 193,073 489,286
Vice President of Finance 50,000 5.47% 5.38 12/29/05 169,173 428,717
and Chief Financial Officer
(1) Options granted during the year ended December 31, 1995 were authorized pursuant to the
Company's Stock Option Plans and are intended to qualify under Section 422A of the Internal
Revenue Code of 1986, as amended. In the case of Mr. Timm and Mr. Belanger all such options
were fully vested at date of grant. In the case of Mr. McGuinness 8,485 shares were fully
vested at date of grant and the remaining vest ratably over 2 years. Options 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.
(2) During the year ended December 31, 1995, the Company granted options for the purchase of
913,334 shares of common stock to eligible participants under its incentive stock option plans.
(3) 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, 1995. 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 following table.
</TABLE>
<PAGE>
OPTION EXERCISES AND OPTION VALUES. The following table provides
information on options exercised during the year ended December 31,
1995 by the named executive officers of the Company and the value of
such officers' unexercised options at December 31, 1995.
<TABLE>
<CAPTION>
Shares Number of Value of Unexercised
Acquired Value Unexercised Options at In-The-Money Options at
Executive Officer on Exercise Realized(1) December 31, 1995(2) December 31, 1995(3)
- -------------------------------- ----------- ----------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
Rockne J. Timm
President
and Chief Executive Officer - - 185,000 $383,200
A. Douglas Belanger
Executive Vice President
and Secretary - - 160,000 338,200
Robert A. McGuinness
Vice President of Finance and
Chief Financial Officer 7,500 $ 28,125 150,985 9,240
(1) The value realized is measured by the difference between the closing sales price of the
Company's common stock at the date of exercise and the exercise price of such options.
(2) All such options were presently exercisable at December 31, 1995 with the exception of 98,435
options held by Mr. McGuinness.
(3) At December 31, 1995, the closing sales price of the common stock of the Company, as reported
by The NASDAQ Stock Market, was $5.625. The potential realizable value of such unexercised
options at December 31, 1995 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 in-the-money options.
</TABLE>
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The
Company's compensation program was jointly administered during 1995 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.
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 are typically compensated on an hourly basis
for services rendered. During the year ended December 31, 1995, Mr.
McChesney, Mr. Potvin and Mr. Coleman were not separately compensated
for services rendered to the Company as a director, although the law
firm of Macleod Dixon, of which Mr. Coleman is a partner, was paid
$60,000 during the year for legal services rendered on behalf of the
Company. Mr. McChesney, Mr. Potvin and Mr. Coleman were granted
options during the year to purchase 25,000, 25,000 and 50,000 shares
of common stock, exercisable at the price of $7.06 per share,
respectively.
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 May 1, 1996, all options had been granted under the 1985 and 1992
Stock Option Plans. At such date, options for the purchase of 40,000
shares and 638,452 granted under the 1985 and 1992 plans remained
unexercised. At May 1, 1996, options for the purchase of 583,868
shares of common stock were available for grant under the 1994 Stock
Option Plan. The Company also maintains a combined 401(k) salary
reduction plan and employee stock ownership plan, known as the Gold
<PAGE>
Reserve KSOP Plan, for the benefit of eligible employees of the
Company and its subsidiaries. The plan invests in common stock of the
Company through Company-guaranteed loans. During 1995 and 1994, the
plan purchased 50,000 shares and 20,000 shares of common stock from
the Company, respectively, at then-prevailing market prices, for
consideration of $280,195 and $123,800, 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 during the plan year and the prices at which such shares
were purchased by the plan. 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 employee stock ownership component of the plan is intended to
qualify under Sections 421 and 423 of the Code. The salary reduction
component of the plan has not been utilized to date.
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.
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:
Wesley L. Delaney, Spokane, Washington - 47
- -------------------------------------------
Mr. Delaney is a certified public accountant and has for at least the
past five years been a principal of the firm of Brown & Delaney. 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.
<PAGE>
Gregory B. Lipsker, Spokane, Washington - 46
- --------------------------------------------
Mr. Lipsker is a practicing securities and business attorney with the
firm of Workland, Witherspoon, Riherd & 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.
Mark D. Bantz, Spokane, Washington - 48
- ---------------------------------------
Mr. Bantz is a practicing business, mining and securities lawyer in
Spokane, and has been a member of the 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.
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 May 1, 1996, with the exception of
Mr. Bantz. Mr. Bantz is the beneficial owner of 2,500 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 Great Basin and, together with his spouse, owns an
additional 5,300 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.
<PAGE>
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.
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 1995, 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 and
cash bonuses. 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.
<PAGE>
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
- --------------------------------------
Mr. Timm's salary base was increased to $150,000 and he received a
cash bonus of $45,000 during the year. 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 1995 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.
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.
COMPENSATION COMMITTEE OF EXECUTIVE REMUNERATION
THE BOARD OF DIRECTORS COMMITTEE
Jean Charles Potvin Gregory B. Lipsker
James H. Coleman Wesley L. Delaney
Mark D. Bantz
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.
<PAGE>
1990 1991 1992 1993 1994 1995
---- ---- ----- ------ ----- -----
Gold Reserve Corporation 100 400 2,800 10,200 6,775 4,500
The NASDAQ Stock Market 100 161 187 215 210 296
S & P Gold Index 100 81 76 139 112 126
ITEM NO. 1 - ELECTION OF DIRECTORS
At the annual meeting, five 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.
NOMINEES TO THE BOARD OF DIRECTORS
Name Position Held Since Age
- --------------------- -------------------------- ----- ---
Rockne J. Timm President, Chief Executive
Officer and Director 1984 50
A. Douglas Belanger Executive Vice President,
Secretary and Director 1988 42
Patrick D. McChesney Director 1988 46
Jean Charles Potvin Director 1993 43
James H. Coleman Director 1994 45
Background of Nominees. The business experience for the past five
years of all nominees is set forth in the section titled Directors and
Executive Officers 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. ---
ITEM NO. 2 - 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,
1996 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.
<PAGE>
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.
ITEM NO. 3 - APPROVAL OF PRIVATE OFFERING FOR CASH OF COMMON STOCK OF
GREAT BASIN AND MEGAGOLD TO AFFILIATES OF THE COMPANY
At the annual meeting, the shareholders will be asked to approve the
issuance of shares of common stock of Great Basin and MegaGold, both
majority-owned subsidiaries of the Company, to the Company, certain
affiliates of the Company and other employees of the Company in
private offerings of shares by both Great Basin and MegaGold in the
amount of approximately $750,000 and $700,000, respectively. As is
discussed below, the Company intends to acquire additional shares of
Great Basin and MegaGold, for cash, in private offerings proposed to
be conducted by each company in order to maintain its percentage
ownership interest in each company. Based on the presently
anticipated number of shares to be offered and sold by Great Basin and
MegaGold in these offerings, the Company will expend approximately
$450,000 and $425,000, respectively, to acquire such additional shares
from each of the subsidiaries.
The Company owns controlling interests in Great Basin Energies, Inc.
("Great Basin"), a Washington corporation organized in June of 1981,
and MegaGold Corporation ("MegaGold"), a Utah corporation organized in
December of 1984. As of the date of this Proxy Statement, the Company
owned 58% and 63% of the outstanding common stock of Great Basin and
MegaGold, respectively, and Great Basin and MegaGold, in turn, owned
1.9% and 0.6% of the outstanding common stock of the Company.
Neither Great Basin nor MegaGold is currently engaged in operations,
although both corporations are seeking to identify and acquire income-
producing assets. Management and the boards of directors of the
Company, Great Basin and MegaGold believe the private offerings of
shares to affiliates of the Company for cash is in the best interests
of each company to provide working capital to facilitate the
acquisition of income producing assets. In addition, the private
<PAGE>
offering will provide those individuals who are or will be responsible
for the anticipated future success of Great Basin and MegaGold with an
ownership interest in the subsidiaries. Management and the boards of
directors believe that such ownership interest will serve as a greater
incentive to such individuals than would cash compensation. As a
consequence of the Company's mining activities in Venezuela,
management has developed relationships with a number of individuals
and companies which may facilitate new business opportunities
involving the acquisition and exploitation of natural resources other
than gold, which, in its judgment, could be profitably pursued by
Great Basin and MegaGold. Neither the Company, Great Basin nor
MegaGold presently has any agreement understanding or arrangement with
any person regarding these natural resource opportunities, and it is
not expected that either Great Basin or MegaGold will be in a position
financially to enter into any such agreement until the capitalization
plans discussed below have been completed.
Management of Great Basin and MegaGold is presently comprised of
persons who are also directors or executive officers of the Company.
It is anticipated that such persons will continue to manage both
subsidiaries until such time as the proposed capitalization plans are
completed, income-producing assets have been acquired and additional
management personnel are recruited and employed. Although not
presently contemplated, the boards of directors of Great Basin and
MegaGold may each be expanded in conjunction with the proposed
capitalization plans in order to accommodate significant investors who
may desire board representation, directly or through their appointed
representatives, in conjunction with their investment.
Since all or substantially all of the Company's directors are expected
to participate in the private offering of shares of Great Basin and
MegaGold and is therefore deemed a "conflicting interest
transaction", approval by the disinterested holder's of a majority of
the Company's outstanding stock is required to be obtained at the
annual meeting pursuant to the Montana Business Corporation Act.
The Company acquired its interests in Great Basin and MegaGold, and
Great Basin and MegaGold acquired their respective interests in the
Company, in a series of transactions in late 1991 and early 1992, and
upon dissolution of U.S. Mining Limited Partnership, a Washington
limited partnership. U.S. Mining Limited Partnership was organized by
the Company and a number of other small mining companies in June of
1985 to consolidate their financial resources for mineral exploration
and development. The common stock of the Company held by Great Basin
and MegaGold is included in an effective registration statement under
the Securities Act of 1933, as amended, (the "Securities Act") for
future sale. Depending on market conditions, the boards of directors
of Great Basin and MegaGold intend to liquidate all or a portion of
this common stock during the next twelve months in order to build cash
reserves, in addition to the funds received from the private offering
of shares, which can be used to fund the acquisition of income
producing assets and as working capital.
<PAGE>
As previously noted, Great Basin's and MegaGold's assets are entirely
composed of their respective holdings of common stock of the Company.
Consequently, it can be anticipated that the common stock of these
subsidiaries will be valued, for purposes of the private placement, at
a price or prices based on the average closing price of the common
stock of the Company during the preceding 90 day period prior to the
date of issuance. Since the subsidiary shares will be issued in one
or more exempt transactions under the Securities Act, and upon
issuance will be restricted securities under the Act, it can be
anticipated that the issuance price will be discounted by as much as
25% to reflect certain restrictions and the absence of liquidity.
Based upon the closing sales price of the common stock of the Company
at April 23, 1996, the book values per outstanding share of common
stock of Great Basin and MegaGold at such date were approximately
$0.098 and $0.068, respectively. Book value per share was determined
by multiplying the closing sales price of the common stock of the
Company by the number of such shares held by each of Great Basin and
MegaGold net of applicable corporate income tax, and by dividing such
number by the number of outstanding shares of Great Basin and MegaGold
at such date. After giving effect to the aforementioned 25% discount,
the price or value at which shares of Great Basin and MegaGold would
be issued in the private offerings would be $0.074 and $0.051,
respectively.
The private offering of shares of common stock of the subsidiaries are
subject to the approval of the shareholders of the Company, Great
Basin and MegaGold. The boards of directors of Great Basin and
MegaGold anticipate the private sale of up to 11 million shares and 17
million shares, at approximately $.07 and $.05 per share, for total
consideration of approximately $750,000 and $700,000, respectively.
The actual shares issued may be less, but in any case, the Company
will not be diluted and will maintain its present ownership percentage
of Great Basin and MegaGold by participating in the private
placements. All or some of the officers and directors of the
Company: Rockne J. Timm, A. Douglas Belanger, Patrick D. McChesney,
Robert A. McGuinness, James A. Coleman and Jean Charles Potvin, a
number of employees of the Company as well as directors of Great Basin
and MegaGold: Robert Kistler and Mark Bantz, respectively are expected
to participate in the private offerings for cash. The number of
shares of Great Basin and MegaGold that may be purchased by each of
the named affiliates is not known as of the date of this Proxy
Statement and will not be known until the private offerings have
commenced and subscription agreements have been received and accepted
from such affiliates. Nonetheless, management of Great Basin and
MegaGold presently anticipate that such affiliates will purchase
approximately forty percent (40%) of the shares to be offered by Great
Basin and MegaGold. No material change in the affiliates beneficial
ownership in Great Basin and MegaGold is expected to occur as a result
of the private offering. The number of shares of Great Basin and
MegaGold owned by such affiliates as of the date of this Proxy
Statement is as follows: Mr. Timm 1,168,498 shares and 144,268 shares,
Mr. Belanger 100,000 shares and 100,000 shares, and Mr. McChesney
<PAGE>
75,000 shares and 119,266 shares, respectively. In addition, Mr.
Kistler owns 100,000 shares of Great Basin and Mr. Bantz owns 138,500
shares of MegaGold. Presently, Great Basin and MegaGold have
26,339,068 and 12,091,624 shares outstanding, respectively.
Since all or substantially all of the Company's directors are expected
to participate in the private offering of shares of Great Basin and
MegaGold and therefore deemed a "conflicting interest transaction",
approval by the disinterested holder's of a majority of the Company's
outstanding stock is required to be obtained at the annual meeting.
"Conflicting interest transactions" such as the private offering of
shares of Great Basin and MegaGold to the directors and executive
officers of the Company, Great Basin and MegaGold are not void but, if
unfair to the Company and its shareholders, may be enjoined or set
aside by the Company or its shareholders (or by Great Basin, MegaGold
or their respective shareholders) through legal action, or may give
rise to an action for damages. Pursuant to the Montana Business
Corporation Act (and the applicable provisions of the Utah Business
Corporation Act and the Washington Business Corporation Act which
govern Great Basin and MegaGold, respectively), such transactions can
be sheltered from any legal action seeking to enjoin or set them aside
through, among other procedures, ratification or approval of the
transactions by the disinterested holders of a majority of a company's
stock, or approval by a majority (though not less than two) of a
company's disinterested directors.
Approval by the disinterested holders of a majority of the outstanding
stock of Great Basin and MegaGold will also be required to be obtained
in order to shelter the private offerings from any legal action that
may be brought against such subsidiaries under the Utah Business
Corporation Act and the Washington Business Corporation Act,
respectively. By approving the private offering of the subsidiaries'
shares at the annual meeting, the shareholders of the Company will be
deemed to have authorized the Company to vote the shares of common
stock of Great Basin and MegaGold held by the Company in favor of the
private offerings at any annual or special meetings of the
subsidiaries called for the purpose of obtaining such approval. It is
expected that the boards of directors of Great Basin and MegaGold will
seek shareholder approval of the private offerings later this year.
If such private offerings are not ratified by the Company's
shareholders, the ownership of shares of the common stock of Great
Basin and MegaGold acquired in the private offerings will continue to
be recognized as valid until and unless a timely shareholder action is
successfully brought resulting in a determination that the
transactions were unfair to the Company and its shareholders. Such an
action, if asserted by a shareholder derivatively on behalf of the
Company, will become time-barred under the Montana Business
Corporation Act five years from the date of the respective
transactions (and will be similarly barred under the Utah and
Washington Acts with respect to Great Basin and MegaGold).
<PAGE>
Shareholder claims brought other than derivatively, with respect only
to any claimed loss to individual shareholders, could be subject to
the law of states other than Montana and to statutes of limitation
that could vary from state to state. Shareholder ratification will
foreclose the possibility that such private offerings can be enjoined
or set aside. Moreover, to the extent ratification of the
transactions is not obtained, approval by a shareholder of the
ratification proposal may be a defense to any action brought in the
name of such shareholder to enjoin, set aside or seek money damages
with respect to the transactions.
REQUISITE APPROVAL. Under the Montana Business Corporation Act,
ratification by the shareholders of such private offerings of shares
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 (i) the holders identified on the preceding page of
this Proxy Statement, and (ii) persons such as members of the
immediate families of such identified holders whose shares may be
deemed to be beneficially owned by the identified holders pursuant to
the Commission's rules. As of the record date for the annual meeting,
the disinterested holders of common stock of the Company owned
beneficially or of record approximately 93% of the issued 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 OF THE COMPANY BELIEVES THE TERMS OF THE
PRIVATE OFFERINGS OF SHARES OF GREAT BASIN AND MEGAGOLD FOR CASH ARE
FAIR, ENHANCE THE FINANCIAL POSITION OF THE SUBSIDIARIES AND ARE IN
THE BEST INTEREST OF THE COMPANY, BUT DUE TO THEIR PARTICIPATION IN
THE PRIVATE OFFERINGS AND THE PROVISIONS OF THE MONTANA BUSINESS
CORPORATION ACT MAKES NO RECOMMENDATION CONCERNING ITEM 3.
<PAGE>
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 THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS IS ENCLOSED WITH
THIS PROXY STATEMENT. COPIES OF THE COMPANY'S FORM 10-K WHICH HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION CAN BE OBTAINED FREE
OF CHARGE FROM THE COMPANY BY REQUESTING SUCH REPORT IN WRITING TO:
MS. JENNIFER SEMM, 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
<PAGE>
PROXY
ANNUAL MEETING OF SHAREHOLDERS OF GOLD RESERVE CORPORATION
June 7, 1996
The undersigned hereby constitutes and appoints Rockne J. Timm and/or
A. Douglas Belanger, the undersigned's attorney-in-fact and proxy to
vote all of the shares of common stock of Gold Reserve Corporation
(the "Company") owned of record by the undersigned on April 10, 1996
at the annual meeting of shareholders of the Company to be held on
June 7, 1996 or any adjournment(s) or postponement(s) thereof.
UNLESS OTHERWISE INDICATED, THE SHARES OF COMMON STOCK OWNED BY THE
UNDERSIGNED WILL BE VOTED FOR ELECTION OF THE DIRECTOR-NOMINEES (ITEM
1) AND FOR APPROVAL OF ITEM 2 and 3.
ITEM 1. ELECTION OF DIRECTORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
With respect to the election of the following director-nominees:
Rockne J. Timm A. Douglas Belanger
Jean Charles Potvin Patrick D.McChesney James H. Coleman
NOTE: To withhold authority to vote for a particular director-
nominee(s), strike a line through such director-nominee(s) name. If
you wish to cumulate your votes for a particular nominee or nominees,
check this box [ ] and indicate beside the name of each nominee the
number of votes you wish to cast for each.
ITEM 2. RATIFICATION OF AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Ratification of Coopers & Lybrand L.L.P. as the Company's independent
auditor for the year ending December 31, 1996 and any interim period.
ITEM 3. APPROVAL OF PROPOSED ISSUANCE OF COMMON STOCK OF GREAT BASIN
AND MEGAGOLD TO AFFILIATES OF THE COMPANY
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Approval of issuance of common stock of Great Basin and MegaGold to
affiliates of the Company.
DATED: _____________, 1995
__________________________________________
Signature of Shareholder
__________________________________________
Additional Signature, if Jointly Owned
