FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1997
GOLD RESERVE CORPORATION
------------------------
State Of Incorporation: Montana
Commission File Number: 1-8372
IRS Employer Identification No: 81-0266636
Address Of Principal Executive Offices: 601 West Riverside Ave.,
Suite 1940
Spokane, Washington 99201
Registrant's Telephone Number: (509) 623-1500
Securities registered pursuant to
Section 12(b) of the Act:
Title Of Each Class: Common Stock
Name Of Each Exchange On Which
Registered: NASDAQ SmallCap Market
The Toronto Stock Exchange
Securities registered pursuant to
Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period as the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes[X]
The number of shares of common stock outstanding at July 31, 1997 was
22,866,621.
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and December 31, 1996
(unaudited)
June 30, December 31,
1997 1996
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 20,663,841 $ 30,329,024
Investments:
Held-to-maturity securities 5,998,594 8,442,492
Accrued interest on investments 258,117 143,580
Deposits, advances and other 394,612 528,458
Litigation settlement held in escrow 4,500,000 4,500,000
------------ ------------
Total current assets 31,815,164 43,943,554
Property, plant and equipment, net 34,327,287 29,097,305
Investments:
Available-for-sale securities 122,504 119,504
Held-to-maturity securities 7,001,997 -
Other 1,081,920 611,204
------------ ------------
Total assets $ 74,348,872 $ 73,771,567
============ ============
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
CONSOLIDATED BALANCE SHEETS, CONTINUED
June 30, 1997 and December 31, 1996
(unaudited)
June 30, December 31,
1997 1996
------------ ------------
LIABILITIES
Current Liabilities:
Litigation settlement payable $ 4,500,000 $ 4,500,000
Accounts payable and accrued expenses 1,673,456 938,892
Note payable - KSOP 322,860 186,708
------------ ------------
Total current liabilities 6,496,316 5,625,600
Minority interest in consolidated
subsidiaries 956,431 952,571
------------ ------------
Total liabilities 7,452,747 6,578,171
------------ ------------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Serial preferred stock, without par value
Authorized: 1997...20,000,000
1996...10,000,000
Issued: none
Common stock, without par value
Authorized: 1997..480,000,000
1996... 40,000,000
Issued: 1997... 22,814,021
1996... 22,703,811
Outstanding: 1997... 22,332,977
1996... 22,222,767 101,677,277 100,952,778
Less, common stock held by affiliates (1,428,565) (1,428,565)
Unrealized gain on available-for-sale
securities 5,750 2,750
Accumulated deficit (33,035,477) (32,146,859)
KSOP debt guarantee (322,860) (186,708)
------------ ------------
Total shareholders' equity 66,896,125 67,193,396
------------ ------------
Total liabilities and shareholders'
equity $ 74,348,872 $ 73,771,567
============ ============
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 1997 and 1996
(unaudited)
Three Months Ended Six Months Ended
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Other Income:
Interest $ 533,238 $ 289,351 $ 967,729 $ 577,581
Foreign currency
gain (loss) 5,067 35,056 (20,299) (127,584)
Gain on sale of
available-for-
sale securities - - - 87,661
---------- ---------- ---------- ----------
538,305 324,407 947,430 537,658
---------- ---------- ---------- ----------
Expenses:
General and
administrative 433,720 213,310 952,139 634,649
Directors' and
officers'
compensation 201,175 97,500 651,029 403,000
Legal and accounting 118,554 53,705 196,726 172,732
Depreciation 11,697 9,181 23,271 17,547
Minority interest in
net gain (loss) of
consolidated
subsidiaries 5,577 (1,617) 3,860 (3,044)
Interest expense,
net of amount
capitalized 4,480 3,417 9,023 6,134
---------- ---------- ---------- ----------
775,203 375,496 1,836,048 1,231,018
---------- ---------- ---------- ----------
Net loss $ (236,898) $ (51,089) $ (888,618) $ (693,360)
========== ========== ========== ==========
Net loss per share $ (0.01) NIL $ (0.04) $ (0.03)
========== ========== ========== ==========
Weighted average
common shares
outstanding 22,138,273 20,099,154 22,298,493 20,089,586
========== ========== ========== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1997 and 1996
(unaudited)
1997 1996
----------- -----------
Cash Flows from Operating Activities:
Net loss $ (888,618) $ (693,360)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 23,271 17,547
Accretion of discount on held-to-
maturity securities (108,724) (212,482)
Foreign currency loss 20,299 127,584
Minority interest in net gain (loss)
of consolidated subsidiaries 3,860 (3,044)
Gain on sale of available-for-sale
securities - (86,286)
Changes in current assets and
liabilities:
Net decrease in current assets 19,309 197,605
Net increase in current
liabilities 734,564 802,737
----------- -----------
Net cash provided (used)
by operating activities (196,039) 150,301
----------- -----------
Cash Flows from Investing Activities:
Proceeds from maturities of held-to-
maturity securities 8,550,000 10,665,000
Purchase of held-to-maturity securities (12,999,375) (8,604,560)
Purchase of property, plant and equipment (5,273,552) (3,436,388)
Proceeds from sale of available-for-sale
securities - 123,936
Other (470,716) (174,909)
----------- -----------
Net cash used by investing
activities (10,193,643) (1,426,921)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of common shares 724,499 790,088
----------- -----------
Net cash provided by
financing activities 724,499 790,088
----------- -----------
Change in Cash and Cash Equivalents:
Net decrease in cash and cash equivalents (9,665,183) (486,532)
Cash and cash equivalents - beginning
of period 30,329,024 10,095,616
----------- -----------
Cash and cash equivalents - end of period $20,663,841 $ 9,609,084
=========== ===========
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY. Gold Reserve Corporation is an exploration-stage mining
company incorporated in the state of Montana in 1956 for the purpose
of acquiring, exploring and developing mining properties, and placing
them into production. The Company's principal asset is the Brisas
property, a gold/copper mineralized deposit located in southeastern
Venezuela and currently the subject of an exploration and development
program. A number of significant events must occur before commercial
production on the Brisas property can begin, including the
establishment of proven and probable reserves and obtaining the
hardrock (veta) mining title.
The Company's growth strategy is to develop proven and probable
reserves as well as mining and process operations by (i) the
successful development of proven and probable mining reserves at its
Brisas property, (ii) discovering new properties through its
exploration program, (iii) entering joint ventures with advanced
exploration properties and (iv) making selective property or corporate
acquisitions.
FINANCIAL INFORMATION. The December 31, 1996 balance sheet has been
derived from the Company's 1996 audited consolidated financial
statements. The notes to the consolidated financial statements as of
December 31, 1996 as set forth in the Company's 1996 Form 10-K,
substantially apply to these interim financial statements at June 30,
1997 and are not repeated here. The financial information given in
the accompanying unaudited financial statements reflects all normal,
recurring adjustments which, in the opinion of management, are
necessary for a fair presentation for the periods reported.
CONSOLIDATED FINANCIAL STATEMENTS. The Company's operations in
Venezuela are conducted through subsidiary corporations. The
consolidated financial statements include the accounts of the Company,
three Venezuelan subsidiaries, Gold Reserve de Venezuela, C.A.
(GLDRV), Compania Aurifera Brisas del Cuyuni, C.A. (Brisas), Compania
Minera Unicornio, C.A. (Unicorn), two domestic majority-owned
subsidiaries, Great Basin Energies, Inc. (Great Basin) and MegaGold
Corporation (MegaGold) and seven Aruban subsidiaries which were formed
to hold the Company's interest in its foreign subsidiaries or for
future transactions. All significant intercompany accounts and
transactions have been eliminated in consolidation. The Company's
policy is to consolidate those subsidiaries where majority control
exists and is other than temporary. Certain reclassifications of the
1996 consolidated financial statement balances have been made to
conform with the 1997 presentation. These reclassifications had no
effect on the net loss or accumulated deficit as previously reported.
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information presented in this quarterly report includes both
historical information and forward-looking information or statements,
as defined by the Private Securities Litigation Reform Act of 1995
(the "Act"). Examples of the latter include, without limitation,
statements regarding potential mineralization, exploration results,
and future plans and objectives of the Company, all of which involve
risks and uncertainties. In accordance with the Act, the Company
cautions that there can be no assurance that such statements will
prove to be accurate, and actual results and future events could
differ materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from the
Company's expectations are disclosed under the heading "Risk Factors"
and elsewhere in documents filed from time to time with the United
States Securities and Exchange Commission. All subsequent written and
oral forward-looking statements attributable to Gold Reserve or
persons acting on its behalf are expressly qualified in their entirety
by this notice.
Unless the context indicates otherwise, the terms "Brisas property" or
"Brisas mineralization" used throughout this report include: the
Brisas alluvial gold concession, the application for the mining title
to the gold, copper and molybdenum contained in the hardrock beneath
the alluvial gold concession, other mineralization applied for in the
alluvial material and other mineralized areas applied for contiguous
to the alluvial concession.
BRISAS PROPERTY. The Brisas property is located in the KM 88 mining
region of southeastern Venezuela in Bolivar State, approximately 300
kilometers (186 miles) by a paved highway southeast of Puerto Ordaz.
The property occupies a rectangular area of 2,500 meters (1.5) miles
north-south by 2,000 meters (1.25 miles) east-west or approximately
500 hectares (1,235 acres). The rocks identified on the Brisas
property consist of two major types of materials-saprolite/clay-rich
surface material occurring in the upper several meters of the property
and unweathered hard rock, andesite tuffs and volcanoclastics
extending below the saprolite/alluvial material at depth. Gold, copper
and molybdenum mineralization are found in both materials, and the
mineralization is open at depth.
BRISAS PROPERTY OWNERSHIP. The Company, through its wholly-owned
Venezuelan subsidiary, currently holds the mining title to the Brisas
alluvial gold concession which includes approximately 10% of the known
mineralization on the Brisas property. In addition, the Venezuelan
subsidiary has submitted applications for mining rights to the
Venezuelan Ministry of Energy and Mines ("MEM") for other
mineralization and areas identified as the Brisas property. In
particular, an application for the mining title for gold, copper and
molybdenum contained in the hardrock or veta (vein) beneath the near-
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
surface alluvial gold concession, representing approximately 90% of
the known mineralization on the Brisas property, is currently in the
final stages of issuance by MEM. The Company has been advised by MEM
that it has met all of the requirements to obtain the hardrock mining
title which is expected to be issued during 1997. While management is
not aware of any fact or circumstance that would prevent MEM from
granting the mining title to the Company, the process of obtaining a
mining title (concession) in Venezuela is lengthy and bureaucratically
complex and, as a result, the Company cannot predict with certainty
when the title will be formally granted.
BRISAS GOLD/COPPER MINERALIZED DEPOSIT. Extensive exploration and
development work, which has been on-going on the property since 1992,
has confirmed a gold and copper deposit of 7.3 million ounces of gold
and approximately 950 million pounds of copper. Drilling results
indicate the Brisas gold/copper mineralization is comprised of a
northern area characterized as a gold/copper deposit and a southern
area characterized as primarily a gold deposit as shown in the
following table:
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
<TABLE>
<CAPTION>
Copper Gold and Gold Equivalent (1)
---------------------- ---------------------------------
Gold Gold Avg.Grade/Tonne
Tonnes Ounces Pounds Equiv. Ozs. Ounces -------------------
Area (millions) (millions) (millions) (millions) (millions) (grams) (ounces)
----- ---------- ---------- ---------- ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
North 149.5 3.14 835 2.4 5.54 1.18 0.038
South 108.7 4.16 115 0.3 4.46 1.29 0.041
---------- ---------- ---------- ---------- ---------- ------- --------
Total 258.2 7.30 950 2.7 10.00 1.23 0.040
========== ========== ========== ========== ========== ======= ========
(1) Gold Equivalent Cutoff (.5 grams/tonne using $350/ ounce gold and
$1/pound copper)
One troy ounce of gold = 31.1034 grams of gold
</TABLE>
The mineralized deposit is comprised of a large lower-grade area with
higher-grade mineralization in certain areas and is over 1900 meters
in length and from 500 to 900 meters in width. The current deposit
consists of 258 million tonnes with an average grade of 0.88 grams
(0.028 ounces) per tonne gold and 0.17% copper and is defined by the
results of approximately 621 drill-holes totaling over 130,000 meters.
Drill spacing of the mineralized deposit is generally 50 meters
throughout the significantly mineralized trend, with 25 meters in
selected areas. The Brisas Gold/Copper mineralized deposit is on
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
strike and contiguous with the Placer Dome/Corporacion Venezolana de
Guayana ("CVG") Las Cristinas deposit to the north. Placer Dome/CVG
has announced a mineable reserve on its Las Cristinas property of more
than 9 million ounces of gold.
The Brisas gold/copper mineralized deposit does not yet qualify as a
commercially mineable ore body under standards promulgated by the U.S.
Securities and Exchange Commission and may so qualify only after a
comprehensive economic, technical and legal feasibility study has been
completed. As a result, the Company has not yet established either
proven or probable reserves on the Brisas property and no assurance
can be given that any such reserves will be established on the
property. A number of significant events, in addition to the
establishment of proven and probable reserves, must occur before
commercial production on the Brisas property can begin, these being
financing of anticipated mine development costs and the procurement of
all necessary regulatory permits and approvals, including the mining
title to the hardrock mineralization.
1997 BRISAS PROPERTY WORKPLAN. During the second quarter of 1997, the
Company completed a drill program of approximately 25,000 meters of
exploration and development drill holes. The drill-hole database was
revised and an update of the mineralized deposit, which now totals 7.3
million ounces of gold and 950 million pounds of copper, was announced
in June. In July 1997, the Company finalized its selection of an
independent engineering firm to complete the Brisas feasibility study.
Management expects that the engineering firm will complete a pre-
feasibility study during the fourth quarter of 1997 and deliver the
final feasibility study during the first half of 1998. In addition,
the Company commissioned an independent audit of its drilling,
sampling and assay procedures. Although the final report by the
consultant has not yet been completed, the independent consultant has
preliminarily confirmed that the Company's data collection procedures
meet or exceed industry standards.
During the second half of 1997, the Company plans to drill 6,000 to
10,000 meters of exploration and condemnation drill holes. Exploration
drilling will primarily be to the south and southeast of the current
delineated mineralized deposit. In addition to the exploration and
condemnation drilling, other activities will include permitting,
administration and the necessary work required to complete the Brisas
feasibility study. Various permitting required for the Brisas property
is ongoing and approval from MEM and the Ministry of Ambiente
(Environment) is expected to occur throughout 1998. Construction is
estimated to take approximately 18 months, with commissioning and
achievement of commercial production estimated to be completed during
2000.
The recovery plant is expected to be a conventional, gravity/
flotation/cyanidation facility with recovery rates for gold of 80%-85%
and copper of 70%-85%. Mining is to be completed using open-pit mining
methods. Final plant design, costs and construction schedules are
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
contingent upon, among other things, the timing of the issuance of the
mining title to the hardrock or veta material beneath the Brisas
alluvial gold concession, results of future drilling, completion of a
bankable feasibility study including the establishment of proven and
probable reserves and obtaining the appropriate environmental and
operating permits.
VENEZUELA. All of the Company's mining assets are presently
concentrated in Venezuela. Inflation, other economic conditions and
political and social turmoil have occurred in the past and may
continue in the future. Past economic, political and social conditions
have not adversely affected the Company's operations in Venezuela to-
date. Nevertheless, whether and to what extent current or future
economic, regulatory or political and social conditions may affect the
Company in the future cannot be predicted.
LIQUIDITY AND CAPITAL RESOURCES
INVESTING. During the three and six months ended June 30, 1997, the
Company expended approximately $3.0 and $5.5 million respectively, for
exploration and development of the Brisas August 5, 1997property. Over
these same periods, approximately 80 and 135 diamond drill holes were
completed for a total of 25,000 and 43,000 meters, respectively. As of
June 30, 1997, the Company had completed approximately 735 diamond and
auger drill holes (including 621 which define the current mineralized
deposit) approximating 135,000 meters and had expended approximately
$57 million associated with the Brisas property. The amounts expended
on the Brisas property are comprised of acquisition costs, capitalized
exploration and development costs and equipment expenditures of $34.5
million and litigation settlement costs of $22.5 million which were
expensed in 1994. Amounts recorded as property, plant and equipment
(capitalized exploration and development costs) include all costs
associated with the Brisas property, including personnel and related
administrative expenditures incurred in Venezuela, drilling and
related exploration costs, capitalized interest expenses and general
support costs related to the Brisas property.
The estimated development budget for the remainder of 1997 is
approximately $3.3 million. The Company's preliminary estimate of
future capital costs associated with the Brisas property, assuming a
twenty to twenty-five thousand tonne per day plant, is approximately
$150 million ($120 million for the plant and an additional $30 million
estimated for ancillary facilities, mining equipment and working
capital). The feasibility study will address the implementation of
both a twenty- to twenty-five thousand and a forty thousand tonne per
day plant. The ultimate design and capacity of the plant, however, is
still under consideration and is subject to the results of the final
feasibility study.
In addition to investment in property, plant and equipment, the
Company increased its net investment in held-to-maturity securities,
by approximately $4.5 million during the six months ended June 30,
1997. Investments in property, plant and equipment and held-to-
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
maturity securities accounted for the majority of the reduction in
cash and cash equivalents for the six month period ended June 30,
1997.
FINANCING. The Company has financed its general business and
exploration and development activities in Venezuela principally from
the sale of its common shares. Future acquisition costs and
exploration expenses, and the cost of placing the Brisas property or
additional future properties into production, if warranted, are
expected to be financed by a combination of the sale of additional
common shares, bank borrowings or other means. The Company routinely
evaluates the market for the Company's common shares and other
appropriate conditions for the possible sale of common stock to
finance its future activities and from time-to-time the Company
reviews potential financing activities with its investment bankers.
The Company has no current plans to issue additional common shares
other than in connection with the exercise of employee common stock
options but, may determine in the future that market conditions for
its common shares are appropriate and, as a result, issue additional
common shares during the next twelve months.
As of July 31, 1997, the Company held approximately $33 million in
cash and current and long-term held-to-maturity securities. The timing
and extent of additional financing options pursued by the Company will
depend on a number of important factors, including the results of
further exploration and development activities on the Brisas property,
the timing of the issuance of the mining title or concession to the
hardrock or veta mineralization located beneath the Brisas alluvial
concession, management's assessment of the financial markets, the
acquisition of additional properties or projects and the overall
capital requirements of the consolidated group. At this time,
management anticipates that its current cash and investment position
is adequate to cover estimated operational and capital expenditures
associated with the exploration and development of the Brisas property
into 1998.
RESULTS OF OPERATIONS
JUNE 30, 1997 COMPARED TO JUNE 30, 1996. Consolidated net loss for the
three and six months ended June 30, 1997 amounted to $236,898 and
$888,618 or $0.01 and $0.04 per share respectively, compared to
consolidated net loss of $51,089 and $693,360 or NIL and $0.03 per
share respectively, for the same periods in 1996. Other income for the
current six month period increased over the comparable period in 1996
due to increased interest income from higher average levels of
invested cash and decreased foreign currency loss due to less
depreciation of the Venezuelan currency, partially offset by a
decrease in gains from sales of available-for-sale securities. Other
income for the three months ended June 30, 1997 increased over the
comparable period in 1996 due to increased interest income partially
offset by a decrease in foreign currency gain. Operating expenses
during the three and six months ended June 30, 1997 increased from the
comparable periods in 1996 due to increases in general and
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
administrative expenses, directors' and officers' compensation and
legal and accounting expense. The principal reason for the increase in
operating expenses is the increased expense associated with the
addition of several new Company executives during the first quarter of
1997.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, Statement of Financial Accounting Standards No. 128
(SFAS 128), "Earnings per Share" was issued. SFAS 128 establishes
standards for computing and presenting earnings per share (EPS) and
simplifies the existing standards. SFAS 128 is effective for financial
statements issued for periods ending after December 15, 1997,
including interim periods and requires restatement of all prior-period
EPS data presented. The Company does not believe the application of
this standard will have a material effect on the presentation of its
loss per share disclosure.
PART II - OTHER INFORMATION
Item 1. NOT APPLICABLE.
Item 2. CHANGES IN THE RIGHTS OF THE COMPANY'S SECURITY HOLDERS.
At the 1997 annual meeting of shareholders a "Shareholder Rights Plan"
was voted upon and approved. The Rights Plan is intended to give
adequate time for shareholders of the Company to properly assess the
merits of a take-over bid without pressure and to allow competing bids
to emerge. The Rights Plan is designed to give the board of directors
time to consider alternatives to allow shareholders to receive full
and fair value for their common shares. One right is issued in
respect to each outstanding share. The rights become exercisable only
when a person, including any party related to it or acting jointly
with it, acquires or announces its intention to acquire 20 percent or
more of the Company's outstanding shares without complying with the
"permitted bid" provisions of the Rights Plan. Each right would, on
exercise, entitle the holder, other than the acquiring person and
related persons, to purchase common shares of the Company at a 50%
discount to the market price at the time.
Item 3. NOT APPLICABLE.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual meeting of Security Holders was held on Thursday, June 5,
1997 in Spokane, Washington. Matters 1 through 8 below were submitted
to a vote. Matter 1 and matters 4 through 8 required the affirmative
vote of a majority of the shares present at the annual meeting, in
person or by proxy, and were all approved. Matter 2 required the
affirmative vote, in person or by proxy, of the holders of a majority
of the shares of common stock outstanding as of the record date and
was not approved. Matter 3 required the affirmative vote, in person
or by proxy, of the holders of two-thirds of the shares of common
stock outstanding as of the record date and was not approved.
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
1. Election of Directors:
Nominee For Against Abstain
-------------------- ---------- --------- -------
Rockne J. Timm 11,035,898 2,895 438,826
A. Douglas Belanger 11,035,898 2,895 438,826
James P. Geyer 11,034,898 2,895 439,826
Jean Charles Potvin 11,034,898 2,895 439,826
Patrick D. McChesney 11,034,898 2,895 439,826
James H. Coleman 11,034,898 2,895 439,826
Chris D. Mikkelsen 11,034,898 2,895 439,826
2. Amendment to the Articles of Incorporation to reduce the quorum
required at shareholder meetings from a majority of all
outstanding shares to one-third of all outstanding shares:
For Against Abstain
---------- --------- -------
10,034,416 544,227 553,887
3. Amendment to the Articles of Incorporation to reduce the number of
votes necessary to approve a merger, share exchange, dissolution
or sale of the Company's assets out of the ordinary course of
business from two-thirds of the outstanding shares entitled to
vote, to a majority of the shares entitled to vote:
For Against Abstain
---------- --------- -------
9,977,520 491,071 562,170
4. Amendment to the Articles of Incorporation increasing the number
of authorized shares of capital stock from a total of 50,000,000
shares, to a total of 500,000,000 shares, of which 20,000,000
shares will be designated preferred stock:
For Against Abstain
---------- --------- -------
9,544,499 1,015,025 452,006
5. Approval of the Company's Shareholder Rights Plan:
For Against Abstain
---------- --------- -------
9,472,395 1,492,264 66,102
6. Approval of the Company's 1997 Equity Incentive Plan:
For Against Abstain
---------- --------- -------
9,430,242 309,343 483,932
<PAGE>
GOLD RESERVE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
7. Approval of the purchase of common stock by the combined 401(k)
Salary Reduction Plan and Employee Stock Ownership Plan:
For Against Abstain
---------- ------- -------
9,666,409 78,720 478,388
8. Ratification of Coopers & Lybrand L.L.P. as the Company's
independent auditor for the year ending December 31, 1997 and any
interim period:
For Against Abstain
---------- --------- -------
11,037,436 12,539 427,644
Item 5. NOT APPLICABLE.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibit 27 - Financial Data Schedule
b) There were no reports on Form 8-K for the quarter ended
June 30, 1997
SIGNATURE.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
GOLD RESERVE CORPORATION
By: s/ Robert A. McGuinness
----------------------------
Vice President - Finance
Chief Financial Officer
July 31, 1997
<PAGE>
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