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
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GOLD RESERVE CORPORATION
(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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 11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] 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.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
GOLD RESERVE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
June 16, 1998
TO: THE SHAREHOLDERS OF GOLD RESERVE CORPORATION
The 1998 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 16, 1998, at 10:00 a.m., local time, for the
following purposes:
1) To elect seven members to the Board of Directors of the Company to
hold such positions until the next annual meeting of shareholders
or until their successors are elected and have qualified;
2) To approve the purchase of shares of the Company's common stock,
no par value per share, by the Company's combined 401(k) Salary
Reduction Plan and Employee Stock Ownership Plan;
3) To ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent auditor for the year ended December 31, 1998
and any interim period; 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 7, 1998 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/ Mary E. Smith, Secretary
Spokane, Washington
April 27, 1998
<PAGE>
GOLD RESERVE CORPORATION
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 16, 1998
This Proxy Statement is furnished in connection with the solicitation
of proxies by the board of directors ("Board of Directors" or "Board")
of GOLD RESERVE CORPORATION, a Montana corporation (the "Company"),
for the 1998 Annual Meeting of Shareholders of the Company to be held
at 10:00 a.m., local time, on June 16, 1998, and any adjournment
thereof. Proxy materials were first mailed to shareholders on or about
April 27, 1998.
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 601 W. Riverside, Suite 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, no par value per share (the "Common
Stock"), is the only security entitled to vote at the annual meeting.
If you were a shareholder of record of Common Stock at the close of
business on April 7, 1998 (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 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 seven), and allocate such votes for all or as many director-
nominees as he or she may designate.
On April 7, 1998, the number of outstanding shares of Common Stock
eligible to be voted at the annual meeting was 22,974,143.
Under Item 1, the seven nominees receiving the highest number of
affirmative votes of a majority of the shares of Common Stock present
at the annual meeting, in person or by proxy, shall be elected to the
Board of Directors. Pursuant to the requirements of the Toronto Stock
Exchange ("TSE") on which the Common Stock is listed for trading, the
affirmative vote of the majority of the shares of Common Stock present
at the annual meeting, in person or by proxy, held by disinterested
persons is required to approve Item 2. As is explained elsewhere in
<PAGE>
this Proxy Statement, certain executive officers of the Company (who
owned an aggregate of 862,392 shares of Common Stock as of the record
date, representing approximately 3.8% of the shares eligible to vote
at the annual meeting) will conditionally vote with respect to Item 2.
Pursuant to the Montana Business Corporation Act and the Company's
Bylaws, the affirmative vote of the holders of a majority of the
shares of Common Stock present at the annual meeting, in person or by
proxy, is required to approve 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 the election of the nominees listed on
the proxy, FOR the approval of Items 2 and 3, and in the discretion of
the proxies as to Item 4.
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 or by 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
representatives of the Company, including directors, executive
officers and other 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 $30,000.
THE COMPANY AND SUBSIDIARIES
Unless the context indicates 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 the following
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.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 1998 (i) the names of,
and number of shares of Common Stock beneficially owned by, persons
known to the Company to own more than five percent (5%) of the Common
Stock; (ii) the names of, and number of shares of Common Stock
beneficially owned by, each director and Named Executive Officer
(defined below) of the Company; and (iii) the number of shares
beneficially owned by all directors and executive officers as a group.
Security Ownership of Management
--------------------------------
<TABLE>
<CAPTION>
Beneficial Percent of
Name of Owner(2),(3),(4) Title Ownership(1) of Class
------------------------- -------------------------------------- ------------ ----------
<S> <C> <C> <C>
Rockne J. Timm President and Chief Executive Officer 957,240 4.1%
A. Douglas Belanger Executive Vice President and Director 752,657 3.2%
James P. Geyer Senior Vice President and Director 100,625 *
Robert A. McGuinness Vice President of Finance and Chief 198,510 *
Financial Officer
James H. Coleman Director 166,084 *
Patrick D. McChesney Director 137,357 *
Chris D. Mikkelsen Director 82,583 *
Jean Charles Potvin Director 115,417 *
All directors and executive officers as a group (11 persons) 2,599,095 10.6%
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Blue Grotto Trading Ltd.(5) 1,198,400 5.2%
</TABLE>
______________
* Less than 1%
(1) Includes for each individual shares issuable pursuant to
presently exercisable options for Common Stock as of the record
date or options exercisable within 60 days of the record date as
follows: Named Executive Officers Mr. Timm, 480,208; Mr.
Belanger, 411,549; Mr. Geyer, 95,625; Mr. McGuinness, 161,258;
Directors Mr. Coleman, 151,250; Mr. McChesney, 97,702; Mr.
Mikkelsen, 64,583; Mr. Potvin, 112,084; Unnamed Executive
Officers Ms. Smith, 25,708; Mr. Stewart, 21,956; and Mr.
Kehmeier, 38,958.
(2) Mr. Timm, Mr. Belanger, Mr. Coleman, Mr. McGuinness, Mr.
Mikkelsen and Ms. Smith are directors and/or officers of Great
Basin, which owns 391,161 shares of Common Stock or 1.7% of the
outstanding shares of Common Stock of the Company. The foregoing
individuals own 6.6%, 4.0%, 1.7%, 0.6%, 0.9% and 0%,
respectively, of the outstanding common stock of Great Basin and
may be deemed indirectly to have an interest in the Company
through their respective management positions and/or ownership
interests in Great Basin. Each of the foregoing individuals
disclaims any beneficial ownership of the Common Stock of the
Company owned by Great Basin.
<PAGE>
(3) Mr. Timm, Mr. Belanger, Mr. McChesney, Mr. Coleman, Mr.
McGuinness, Mr. Mikkelsen and Ms. Smith are directors and/or
officers of MegaGold, which owns 125,083 shares of Common Stock
or 0.5% of the outstanding Common Stock of the Company. The
foregoing individuals own 6.5%, 6.3%, 2.1%, 2.8%, 0.8%, 1.4% and
0%, respectively, of the outstanding common stock of MegaGold and
may be deemed indirectly to have an interest in the Company
through their respective management positions and/or ownership
interests in MegaGold. Each of the foregoing individuals
disclaims any beneficial ownership of the Common Stock of the
Company owned by MegaGold.
(4) Excludes for each Named Executive Officer or Director shares held
by independent trustees for the benefit of minor children as
follows: Mr. Timm 59,341 shares of Common Stock held under the
Uniform Gift to Minors Act; Mr. Belanger 164,863 shares of
Common Stock for the Belanger Family Trust; Mr. McChesney 24,921
shares of Common Stock for the McChesney Family Trust; and Mr.
McGuinness 1,318 shares of Common Stock for the Anne Morgan
McGuinness Trust. Each of the foregoing individuals disclaims any
beneficial ownership of Common Stock of the Company held by
trustees for his minor children. The trustee holding the shares
for Mr. Timm's minor child is Chris Mikkelsen, who is also a
director of the Company. Mr. Mikkelsen disclaims beneficial
ownership of such shares of Common Stock.
(5) Shares held by Carlson & Co SA (BVI) located at 2121 Ponce de
Leon Blvd. #950, Coral Gables, Florida.
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Board of Directors presently consists of seven members.
All directors presently serve until the next annual meeting of the
Company's shareholders or until their successors are elected and have
qualified. Officers are appointed by the Board of Directors. The
following sets forth certain information regarding the nominees for
election to the Company's Board of Directors and the Company's
executive officers.
ROCKNE J. TIMM
President and Chief Executive Officer and Director 52
Mr. Timm became Treasurer and a 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 and 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 and MegaGold, and
a director and an executive officer of each of the Company's foreign
subsidiaries. Mr. Timm is a certified public accountant and resides in
Spokane, Washington.
<PAGE>
A. DOUGLAS BELANGER
Executive Vice President and Director 44
Mr. Belanger became Executive Vice President in August 1988 and was
Secretary from June 1993 through December 1996. He also serves as Vice
President and a director of Great Basin and MegaGold, and a director
and an 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 Spokane, Washington.
PATRICK D. MCCHESNEY
Director 48
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. and, since March 1996, Mr. McChesney
has served as President of LMO Test Systems, Inc. He is also a
director of MegaGold. 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.
JEAN CHARLES POTVIN
Director 45
Mr. Potvin became a director in November 1993 and since 1993 has also
been a director and 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, 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 47
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. Mr. Coleman has
been with his law firm since 1974. He is also a director of Total
Resources (Canada) Limited, McCarthy Corporation plc, Minven Inc.,
Energold Mining Ltd., Parys Mountain Mines Ltd., ENVIROX, Net Shepherd
Inc., Pangea Goldfields, 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 is also a director
of Great Basin and MegaGold. Mr. Coleman resides in Calgary, Alberta.
<PAGE>
JAMES P. GEYER
Senior Vice President and Director 45
Mr. Geyer became Senior Vice President in January 1997 and a director
in June 1997. He has also been a director of Wheaton River Minerals
since 1998. During the previous 10 years, Mr. Geyer was employed by
Pegasus Gold Corporation, most recently as Vice President of
Operations. Mr. Geyer has 24 years experience in underground and open
pit mining and has held various engineering and operations positions
with AMAX and ASARCO. Mr. Geyer has a Bachelor of Science degree in
mining engineering from the Colorado School of Mines. Mr. Geyer
resides in Spokane, Washington.
CHRIS D. MIKKELSEN
Director 46
Mr. Mikkelsen became a director in June 1997 and has been a principal
in the accounting firm of McDirmid, Mikkelsen & Secrest, P.S., since
1976. He is a certified public accountant with an extensive background
in providing operational and tax advice to a wide variety of clients
and businesses. Mr. Mikkelsen is also a director of Great Basin and
MegaGold. Mr. Mikkelsen resides in Spokane, Washington.
ROBERT A. MCGUINNESS
Vice President of Finance and Chief Financial Officer 42
Mr. McGuinness became Vice President of Finance in March 1993 and
Chief Financial Officer in June 1993. Mr. McGuinness is also Vice
President of Finance and Chief Financial Officer of Great Basin and
MegaGold. During the previous three years, Mr. McGuinness was Vice
President of Finance for Millisat Holdings Incorporated. Prior to
1990, Mr. McGuinness served as the 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.
RICHARD J. KEHMEIER
Vice President of Exploration - 50
Mr. Kehmeier became Vice President of Exploration in November 1996.
During the previous three years, Mr. Kehmeier was a geological
consultant to the mining industry. Mr. Kehmeier was Vice President of
Exploration for Atlas Corporation from 1990 to 1993. Prior to that
time, Mr. Kehmeier worked for Atlas in various field and management
positions. Mr. Kehmeier has a Bachelor of Science and a Master of
Science in geological engineering and geology from the Colorado School
of Mines. He has over 28 years of experience in mining and
exploration. He resides in Spokane, Washington.
<PAGE>
MARY E. SMITH
Vice President of Administration and Secretary - 45
Ms. Smith became Vice President of Administration and Secretary in
January 1997. During the previous 16 years, she was employed by
Pegasus Gold Corporation in several administrative positions and most
recently as Manager of Compensation and Benefits for Pegasus Gold
Corporation. Ms. Smith is also the Vice President of Administration
and Secretary for Great Basin and MegaGold. She resides in Colbert,
Washington.
DOUGLAS E. STEWART
Vice President Project Development 46
Mr. Stewart became Vice President of Project Development in April
1997. During the previous six years, Mr. Stewart was employed by
Pegasus Gold Corporation, most recently as General Manager of the
Florida Canyon Mine. Mr. Stewart has over 23 years experience in the
mining industry that includes various management positions with FMC
Corporation, Getty Oil Minerals Division, Consolidated Coal Company
and AMAX Coal Company. Mr. Stewart has a Bachelor of Science degree in
mining engineering from South Dakota School of Mines and Technology.
Mr. Stewart resides in Lone Tree, Colorado.
Section 16(a) Beneficial Ownership Reporting Compliance.
--------------------------------------------------------
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, 1997, all
filing requirements applicable to its directors, executive officers
and 10% shareholders were satisfied except for newly elected director,
Chris D. Mikkelsen. Mr. Mikkelsen was elected a director of the
Company on June 5, 1997 and the Company filed Mr. Mikkelsen's initial
Form 3 pursuant to Section 16(a) on June 23, 1997. Mr. Mikkelsen's
Form 3 should have been filed by June 16, 1997.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company, which met nine times during
1997, has delegated some of its authority to three committees of the
Board. These are the Executive Committee, the Compensation Committee
and the Audit Committee. The Board of Directors does not maintain a
nominating committee. During 1997, all of the directors attended 75%
or more of the meetings of the Board of Directors and Committees on
which they served.
<PAGE>
The Executive Committee, which is comprised of Rockne Timm (Chair), A.
Douglas Belanger and James Coleman, meets in person or by phone on a
monthly basis. The Executive Committee manages and directs the
business affairs of the Company between Board meetings, except for
those matters assigned to the Compensation and Audit Committees.
The Compensation Committee, which met four times during 1997, consists
of Chris Mikkelsen (Chair) and JC Potvin. The Compensation Committee
has responsibility with respect to approving and advising the full
Board of Directors on compensation matters involving officers of the
Company.
The Audit Committee, which met once during 1997, consists of James
Coleman (Chair), Patrick McChesney and Chris Mikkelsen. The Audit
Committee recommends to the Board a firm of independent certified
public accountants to audit the annual financial statements, discusses
with the auditors and approves in advance the scope of the audit,
reviews with the independent auditors the financial statements and
their audit report, reviews management's administration of the system
of internal accounting controls, and reviews the Company's procedures
relating to business ethics. The Audit Committee reports to the Board
on its activities and findings. In accordance with the recommendation
of the Audit Committee, the firm of Coopers & Lybrand L.L.P., has been
appointed by the Board of Directors as independent certified public
accountants to examine the financial statements of the Company for the
year ending December 31, 1998. A representative of Coopers & Lybrand
L.L.P. is expected to be present at the stockholders' meeting; this
individual will have an opportunity to make a statement and will be
available to respond to appropriate questions.
Compensation of Directors
-------------------------
The Company has not developed specific criteria for determining the
compensation of its directors, primarily because it does not yet have
a producing mine or other operations from which such quantitative data
can be derived. The determination of director compensation in 1997 was
largely subjective, and was based on the Company's progress in
addressing its more immediate business concerns and the need to
reasonably remunerate directors for time spent addressing such issues.
Individuals who served as a director of the Company prior to June 5,
1997, each received compensation in the amount of $20,000 in 1997 for
services rendered as a director, with the exception of Mr. Coleman who
received $40,000. Mr. Coleman is a member of the Executive and Audit
Committees. Mr. Coleman's more active involvement in the affairs of
the Company is reflected in the higher compensation he received. Non
employee directors, Mr. McChesney, Mr. Potvin, Mr. Mikkelsen and
Mr. Coleman were granted options during the year to purchase 32,500,
32,500, 25,000 and 65,000 shares of Common Stock, respectively, under
the Company's Equity Incentive Plan. Consistent with the Board of
Directors intent to have both directors and management hold shares of
the Company, the compensation paid to the Directors pursuant to their
duties as directors was utilized by each director to exercise
previously granted stock options to purchase common stock of the
Company.
<PAGE>
Directors of the Company received no additional compensation for
serving on the Board committees or for attendance at Board of
Directors or Board committee meetings.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
The Compensation Committee currently consists of Messrs. Mikkelsen and
Potvin. During fiscal 1997, no member of the Compensation Committee
had any relationship requiring disclosure under the applicable rules
and regulations of the Commission.
Certain Relationships and Related Transactions
----------------------------------------------
Mr. Coleman also serves as Canadian legal counsel for the Company.
During 1997, the Company incurred expenses in addition to Mr.
Coleman's compensation as a director of approximately $252,000 for
legal services performed by the director and his firm Macleod Dixon,
in which he is Chairman and a partner. At December 31, 1997,
approximately $112,000 of these fees are included in accounts payable
and accrued expenses in the Company's consolidated financial
statements.
COMPENSATION COMMITTEE Report on Executive Compensation
Administration
--------------
The Company's compensation program was administered during 1997 by the
Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee"), composed of Mr. Mikkelsen and Mr. Potvin.
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,
approve cash and equity-based compensation of such executive officers
and submit such approvals to the full Board of Directors for
ratification. Compensation matters relating to the directors were
administered by the full Board.
Compensation Philosophy and Goals.
----------------------------------
The goal of the compensation program is to attract, retain and reward
employees and other key individuals who contribute to both the
immediate and the long-term success of the Company. Contributions are
largely measured subjectively, and are rewarded through cash and
equity-based compensation vehicles.
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
<PAGE>
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 basis upon which it is determined and adjusted.
Compensation Vehicles.
----------------------
The components of executive compensation are as follows:
BASE SALARY. The administration of the program requires the
Compensation Committee to review annually the base salary of each
executive officer of the Company and consider various factors,
including individual performance; experience; time in position; future
potential; responsibility; and the executive's current salary in
relation to the executive salary range at other mining companies.
These factors are considered subjectively and none are accorded a
specific weight.
BONUSES. In addition to base salary the Compensation Committee from
time-to-time recommends to the Board payments of discretionary bonuses
to executives and selected employees. Such bonuses are based on the
same criteria and determined in a similar fashion as described above.
Bonuses paid to executives in 1997 are included in the Summary
Compensation Table and were used by such executives to exercise
options to purchase Common Shares of the Company.
EQUITY. The Company maintains the 1997 Equity Incentive Plan (the
"1997 Plan") that provides for the periodic awards of qualified and
non-qualified options, stock appreciation rights and restricted stock
to eligible participants. The Company also allows all eligible
employees to participate in stock ownership through the 401(K) Salary
Reduction and Employee Stock Ownership Plan (the "KSOP Plan"). The
Compensation Committee from time-to-time recommends to the Board of
Directors grants of options to executives and selected employees. In
addition, the Compensation Committee annually determines the
contribution by the Company to the KSOP Plan for allocation to
individual participants. Participation in the KSOP Plan by individual
employees, including officers, is governed by the terms of the KSOP
Plan.
Stock Option Exchange Program
-----------------------------
In November 1997, the Board of Directors initiated a review to
determine the need for a stock option exchange program. The review
included an evaluation of the motivation and retention value of the
Company's current equity incentive plans as it relates to outstanding
stock option grants held by option plan participants which includes
directors, officers, employees and advisors. As of March 31, 1998,
approximately 75% (2,661,223 stock options out of a total 3,552,075
stock options) of outstanding stock options to purchase common shares
of the Company were "underwater" with exercise prices in excess of
the current market value per share.
<PAGE>
The Board of Directors' evaluation was prompted by the substantial
decline in the Company's stock price from a 52 week high of
approximately $9.50 (May 1997) to a low of approximately $1.80
(December 1997) and most recently approximately $3.00 per share.
Concurrent with the Company's share price decline, The Toronto Stock
Exchange Gold Index comprised of thirty-one gold companies
representing a cross section of gold companies traded on the exchange
experienced a 40% decline. The Board of Directors' concluded that,
based on a number of factors, a long-term and pervasive, industry-wide
correction outside the control of management had occurred in the
market valuation of gold stocks. As a result, options granted under
the equity incentive plan were no longer achieving the Company's
original objectives which is to advance the interests of the Company
and its subsidiaries and promote continuity of management by
encouraging and providing key employees, directors and consultants
with the opportunity to acquire an equity interest in the Company and
to participate in the increase in shareholder value as reflected in
the growth in the price of the shares of the Company's Stock. In
addition, the plan objective is to enable the Company to attract and
retain the services of key employees, directors, and consultants upon
whose judgment, interest, skills, and special effort the successful
conduct of its operations is largely dependent.
The Board of Directors further concluded that it was in the best
interest of the Company to implement the stock option exchange program
by re calibrating the risk-reward mechanism inherent in the Company's
incentive plans, thereby creating an incentive where, in the case of
"underwater" options, little or none now exist. On March 23, 1998, the
Board of Directors, after five months of evaluation and review
approved the stock option exchange program. Under the program, current
Directors, Officers, Employees and Advisors were permitted to exchange
all of their "underwater" options for new options on a one-for-one
basis. The exchange program affects approximately 2.6 million options
(with an average original exercise price of $6.60 per share) out of a
total of 3.5 million options which will be exchanged for new options
with exercise prices of between $3.00 and $4.50. Approximately eighty-
eight percent of the total outstanding options were exchanged for new
options priced at $3.75 per share.
Pursuant to the exchange program, approximately 2.3 million options
held by directors, officers and key employees with an average original
exercise price of $6.65 per share were cancelled and re-issued at a
40% premium over the fair market value per share as of the date the
Board of Directors approved the stock option exchange program or $3.75
per share. In addition, the vesting schedule of all exchanged stock
options held by directors, officers and key employees/advisors were
modified as follows: no stock options issued pursuant to the exchange
program vest or are exercisable prior to May 23, 1998; twenty five
percent of all exchanged options which were vested prior to the
exchange will no longer be vested or immediately exercisable, but will
re-vest over two years at fifty percent per year; and the term of all
exchanged options will be reduced from ten years to five years.
Tabular disclosure pursuant to the required 10-year option repricing
schedule will be included in the 1999 proxy statement, as the exchange
program was implemented in 1998.
<PAGE>
Chief Executive Officer's Compensation
--------------------------------------
Mr. Timm's salary base was $195,000. He also received a cash bonus of
$40,000 pursuant to his duties as President and CEO of the Company and
received compensation of $20,000 pursuant to his duties as a director
during 1997. Consistent with all other directors and executive
officers, Mr. Timm utilized the amounts paid as bonus as well as
compensation received pursuant to his duties as a director to exercise
options to purchase Common Shares of the Company.
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 1997 was largely
subjective, and was based on the Company's progress in addressing its
more immediate concerns, procurement of the veta concession on the
Brisas property, continued exploration of the Brisas concession,
financing of the Company's exploration and development activities, and
identifying and analyzing new corporate opportunities.
The Company may 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 Common Stock,
and the Company's relative success in bringing its concessions into
production and in acquiring additional mining properties or
concessions. The Company expects its equity-based compensation
vehicles will be continued in future years, supplemented by cash
compensation to the Company's employees and executive officers.
It is the Compensation Committee's belief that, in light of current
compensation levels of the Company's executive officers, the Company
will not be affected by the provisions of Section 162(m) of the Code,
which limits the deductibility of certain executive compensation.
Therefore, the Compensation Committee has not adopted a policy as to
compliance with the requirements of Section 162(m).
Compensation Committee of the Board of Directors
s/ Chris D. Mikkelsen
s/ Jean Charles Potvin
<PAGE>
Performance Graph
-----------------
The following graph compares the five year cumulative total return on
an investment of $100 between 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 closing prices of the Common Stock, as reported by The
NASDAQ Stock Market, at the beginning and end of the measurement
period.
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Gold Reserve Corporation $100 $364 $242 $161 $273 $104
The NASDAQ Stock Market 100 115 112 159 195 240
S & P Gold Index 100 183 148 167 165 109
Executive Compensation
Summary Compensation Table
--------------------------
The following table sets forth the summary of compensation paid or
accrued during fiscal years 1995-1997 to the Company's Chief Executive
Officer and each of the other executive officers of the Company who
earned in excess of $100,000 in fiscal year 1997 (the "Named Executive
Officers").
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------------------------------
Annual Compensation Securities
---------------------- Underlying All Other
Executive Officer Year Salary Bonus(5) Options/SAR(1) Compensation(2)
------------------------- ---- --------- --------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
ROCKNE J. TIMM 1997 $195,000 $ 60,000(3) 535,500 $30,000
President and Chief 1996 165,000 56,700 390,500 30,000
Executive Officer 1995 150,000 45,000 185,000 30,000
DOUGLAS BELANGER 1997 175,000 50,000(3) 473,955 30,000
Executive Vice 1996 132,000 43,200 353,500 30,000
President 1995 120,000 38,000 160,000 30,000
JAMES P. GEYER(4) 1997 168,509 44,063 190,000 --
Senior Vice President 1996 -- -- -- --
1995 -- -- -- --
ROBERT A. MCGUINNESS 1997 120,000 25,000 208,205 30,000
Vice President of 1996 93,000 28,925 120,985 25,160
Finance and Chief 1995 74,938 25,313 150,985 21,658
Financial Officer
</TABLE>
<PAGE>
________________
1. Consists of the number of shares of Common Stock 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, 1997, see
"Option Exercises and Option Values."
2. Consists of the dollar value of Common Stock purchased under the
Company's combined 401(k) salary reduction and employee stock
ownership plan and allocated to the account of each Named
Executive Officer during 1997, 1996 and 1995, respectively, as
follows: Mr. Timm, 5,960 shares, 5,581 shares, 4,880 shares; Mr.
Belanger, 5,960 shares, 5,581 shares, 4,880 shares; and Mr.
McGuinness, 5,960 shares, 4,681 shares, 3,523 shares.
3. Includes $20,000 compensation earned pursuant to Named Executive
Officers' duties as a director. See "Director's Compensation."
4. Mr. Geyer became an executive officer of the Company in February
1997.
5. Amounts used to exercise previously granted options to purchase
Common Stock of the Company.
Options Granted in 1997
-----------------------
The following table provides information on options granted during the
year ended December 31, 1997, to the Named Executive Officers of the
Company.
<PAGE>
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Percent of Annual Rates of Stock
Securities Total Options Price Appreciation
Underlying Granted to Option Exercise for Option Term(2)
Options Employees Price Per Expiration -----------------------
Executive Officer Granted(1) in 1997 Share(3) Date at5% at10%
------------------------------- ---------- ------------- --------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
ROCKNE J. TIMM 100,000 6.5% $7.56 1/31/07 $ 475,444 $1,204,869
President and Chief 55,000 3.6% 6.00 8/1/07 207,535 525,935
Executive Officer
A. DOUGLAS BELANGER 80,000 5.2% 7.56 1/31/07 380,355 963,895
Executive Vice President 45,000 2.9% 6.00 8/1/07 169,802 430,310
JAMES P. GEYER 160,000 10.4% 8.81 1/16/07 886,741 2,247,177
Senior Vice President 30,000 2.0% 6.00 8/1/07 113,201 286,874
5,000 0.3% 2.88 12/17/07 9,040 22,910
ROBERT A. MCGUINNESS 60,000 3.9% 7.56 1/31/07 285,267 722,922
Vice President of Finance 30,000 2.0% 6.00 8/1/07 113,201 286,874
and Chief Financial Officer
</TABLE>
(1) Options granted during the year ended December 31, 1997, for the
purchase of 1,535,000 shares of Common Stock were authorized
pursuant to the Company's 1997 Equity Incentive Plan and are
intended to qualify under Section 422 of the Code. In the case of
Mr. Timm and Mr. Belanger, all such options were fully vested at
the date of grant. In the case of Mr. Geyer and Mr. McGuinness,
shares vest ratably over two years. Options are exercisable for
shares of Common Stock, at the exercise prices set forth in the
table, for a period of 10 years, measured from the respective
grant dates.
(2) 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. As a result,
the foregoing table does not set forth the value of the
unexercised portion of such options at December 31, 1997. The
value of such options at December 31, 1997, measured as the
difference between the closing sales price of the Common Stock at
such date, which was $3.625, and the exercise price of the
options, is set forth in the right hand column of the table
titled "Option Exercises and Option Values" below.
(3) Fair market value at date of grant.
<PAGE>
Option Exercises and Option Values
----------------------------------
The following table provides information on options exercised during
the year ended December 31, 1997 by the Named Executive Officers of
the Company and the value of such officers' unexercised options at
December 31, 1997.
<TABLE>
<CAPTION> Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares December 31, 1997(2) December 31, 1997(3)
Acquired Value --------------------------- ---------------------------
Executive Officer on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
----------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ROCKNE J. TIMM
President and
Chief Executive Officer 10,000 $ -- 535,500 -- $203,060 --
A. DOUGLAS BELANGER
Executive Vice President 4,545 -- 473,955 -- 178,060 --
JAMES P. GEYER
Senior Vice President 5,000 3,438 42,500 147,500 3,750 --
ROBERT A. MCGUINNESS
Vice President of Finance and
Chief Financial Officer 2,780 -- 141,955 66,250 -- --
</TABLE>
____________
(1) The value realized is measured by the difference between the
closing sales price of the Common Stock at the date of exercise
and the exercise price of such options, but does not reflect
shares, if any, which were not sold by such individuals after
exercise.
(2) All such options were presently exercisable at December 31, 1997
with the exception of 66,250 and 147,500 options held by Mr.
McGuinness and Mr. Geyer, respectively.
(3) At December 31, 1997, the closing sales price of the Common
Stock, as reported by The NASDAQ Stock Market, was $3.6250. The
potential realizable value of such unexercised options at
December 31, 1997 is measured by the difference between the
closing sales price of the Common Stock at such date and the
exercise price of such in-the-money options.
<PAGE>
Equity Incentive Plan
---------------------
The Company's 1997 Plan provides for the issuance of up to 2,000,000
shares of Common Stock through the grant of both "incentive stock
options" and "non statutory options" under the Internal Revenue Code
of 1986, as amended (the "Code"), to purchase Common Stock, stock
appreciation rights ("SARs"), or up to 500,000 shares of restricted
stock. Key employees of the Company and its subsidiaries are eligible
to receive grants under the 1997 Plan. An incentive option may be
exercised during the lifetime of the optionee only by the optionee. At
such optionee's death an option or any part thereof may only be
transferable by such optionee's will or by the laws of descent and
distribution. Any non statutory option granted under the 1997 Plan may
be transferred to the extent provided by the Board of Directors or a
committee of the Board of Directors. Transfer of a non statutory
option shall not affect the applicability of the original terms of the
optionee's option agreement. The Board of Directors or a committee of
the Board is responsible for the administration of the 1997 Plan.
Options, SARs and restricted stock granted under the 1997 Plan are
generally granted at prices equivalent to the closing sales price or
the United States Dollar equivalent of the closing sales price of the
Common Stock on the day immediately preceding the grant date, as
reported on the exchange on which the majority of the Common Stock was
traded over the last 12 months. This includes the TSE, The Nasdaq
SmallCap Market or, in the event the Company lists its shares in the
future, a national U.S. securities exchange. As of March 31, 1998,
options for the purchase of 556,814 shares of Common Stock remained
available for grant under the 1997 Plan and options for the purchase
of 3,552,075 shares of Common Stock (including options issued under
previous plans) had been granted but were unexercised. No SARs or
restricted stock have been granted to date.
The Company has terminated its 1985 Stock Option Plan, 1992 Stock
Option Plan and 1994 Stock Option Plan (the predecessor stock option
plans to the 1997 Plan, collectively, "Plans") as it relates to future
option grants however, options issued pursuant to such Plans and still
outstanding will continue to be governed by the respective provisions
of such Plans. Any shares subject to options previously issued under
such Plans that as a result of forfeiture to the Company become
subject to re issuance shall be reissued and administered pursuant to
the 1997 Plan.
The Company also maintains the KSOP Plan for the benefit of eligible
employees of the Company. The KSOP Plan consists of two components a
salary reduction component (401(k)) and stock ownership component
(ESOP) and is available to all eligible employees of the Company who
have been employed for a period in excess of one year and who have
worked at least 1000 hours during the year in which any allocation is
to be made. The KSOP Plan generally invests in Common Stock of the
Company through Company-guaranteed loans. The salary reduction
component of the KSOP Plan has not been utilized to date.
<PAGE>
The employee stock ownership component of the KSOP Plan is intended to
qualify under Sections 421 and 423 of the Code. Total employer and
employee annual contributions to an employee participating in both the
401(k) and ESOP components of the KSOP Plan are limited to the lesser
of 25% of salary or $30,000. Generally, contributions to the 401(k)
component of the KSOP 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. Distributions from the KSOP
Plan are not permitted before the participating employee reaches the
age of 59, except in the case of death, disability, termination of
employment by the Company or financial hardship.
The Company recorded expense in 1997, 1996 and 1995 related to KSOP
plan contributions of $167,473, $150,000, and $92,247 which equates to
the allocation of 30,482, 24,400 and 35,864 shares to participant
accounts, respectively. As of March 31, 1998, 102,599 shares of Common
Stock remain unallocated to plan participants.
Employee Loans
--------------
The Company from time to time makes loans to employees, including
executives. The loans do not exceed $50,000 and bear interest at the
minimum required by tax regulations. At December 31, 1997, the Vice
President Finance had an outstanding loan of $50,000, bearing interest
at 5.2% and secured by a second mortgage on his home.
Employment Contract and Termination Agreements
----------------------------------------------
The Company has an employment agreement with James P. Geyer, its
Senior Vice President. Subject to certain exceptions, the term of the
agreement is for two years commencing February 4, 1997 and continues
under the provisions of the agreement until terminated. The agreement
provides for an immediate benefit to Mr. Geyer (the "employee") upon
termination by the Company without "Cause" (as that term is defined in
the agreement), or for termination by Mr. Geyer of his employment for
"Good Reason" (as that term is defined in the contract which can
include events occurring following a change-in-control) or upon the
death or disability of the employee. The agreement provides that the
employee will receive a lump sum amount equal to 24 months' salary
upon termination for other than cause including termination for Good
Reason. If the employee dies or is disabled, compensation equal to
three months' salary will be paid. The agreement also provides that
following termination other than for cause, including termination for
Good Reason, other benefits, such as life and health insurance, will
be continued for a period of 12 months or until replaced by benefits
of a similar nature by a new employer.
<PAGE>
ITEM NO. 1. ELECTION OF DIRECTORS
At the annual meeting, seven 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
<TABLE>
<CAPTION>
Director
Name Position Held Since Age
--------------------- ---------------------------------- -------- ---
<S> <C> <C> <C>
Rockne J. Timm President, Chief Executive Officer
and Director 1984 52
A. Douglas Belanger Executive Vice President and
Director 1988 44
James P. Geyer Senior Vice President and Director 1997 45
Patrick D. McChesney Director 1988 48
Jean Charles Potvin Director 1993 45
James H. Coleman Director 1994 47
Chris D. Mikkelsen Director 1997 46
</TABLE>
REQUISITE APPROVAL. The seven nominees receiving the highest number of
affirmative votes of a majority of the shares of Common Stock present
at the annual meeting, in person or by proxy, shall be elected to the
Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOREGOING
NOMINEES TO THE BOARD OF DIRECTORS.
<PAGE>
ITEM NO. 2. APPROVAL OF THE PURCHASE OF COMMON STOCK BY THE COMBINED
401(k) SALARY REDUCTION AND EMPLOYEE STOCK OWNERSHIP PLAN ("KSOP
PLAN")
At the annual meeting, the shareholders will be asked to approve, for
the purposes of TSE policy limitations, the purchase of 100,000 shares
of Common Stock by the KSOP Plan. Important information concerning the
limited purpose and effect of the proposal is set forth below.
The Board of Directors, on December 15, 1997 and March 17, 1998,
authorized the purchase of an additional 50,000 shares of Common Stock
by the KSOP Plan (100,000 Common Shares total) at a price of $3.00 per
share, which represents an at market purchase in the case of the
December 15, 1997 transaction and a 16% premium over the market price,
in the case of the March 17, 1998 transaction.
Qualification of the foregoing purchase of additional shares of Common
Stock by the KSOP Plan pursuant to the policies of the TSE will enable
the Company to allocate the shares, pursuant to the employee stock
ownership component of the plan, to executives officers or other
insiders in compliance with the TSE's limitations on awards to such
persons pursuant to share compensation arrangements. At the present
time, 2,599 of the previously approved shares of Common Stock remain
available for allocation by the KSOP Plan.
REQUISITE APPROVAL. Approval of Item 2 for the purpose of qualifying
the stock purchase by the KSOP Plan in compliance with TSE policy
limitations will require the affirmative vote of the holders of a
majority of the shares of Common Stock present at the annual meeting,
in person or by proxy, held by persons who are not executive officers
of the Company. Based on information available to the Company, as of
the record date 862,392 shares of Common Stock were held by persons
who were ineligible to vote for such purpose. Accordingly, approval of
the KSOP Plan purchase for such purpose will require the affirmative
vote of the holders of at least a majority of the remaining 22,111,751
shares of Common Stock outstanding at such date held by persons who
were eligible to vote for such purpose.
The foregoing notwithstanding, in the event the purchase of the shares
of Common Stock by the KSOP Plan is otherwise approved by the holders
of at least a majority of the issued shares of Common Stock present at
the annual meeting, in person or by proxy, but less than a majority of
its disinterested shareholders, it will be deemed approved but will
remain subject to the policy limitations of the TSE with respect to
the number of shares of Common Stock that may be allocated to
directors and executive officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PURCHASE
OF COMMON STOCK FOR THE COMBINED 401(k) SALARY REDUCTION AND EMPLOYEE
STOCK OWNERSHIP PLAN.
<PAGE>
ITEM NO. 3. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANT
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, 1998 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.
REQUISITE APPROVAL. 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.
<PAGE>
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder desiring to present a proposal to the shareholders at
the 1999 Annual Meeting of Shareholders, which currently is expected
to be scheduled in May 1999, must transmit such proposal to the
Company so that it is received by the Company at its principal
executive offices on or before December 16, 1998. All such proposals
should be in compliance with applicable Securities and Exchange
Commission regulations.
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, INCLUDING
AUDITED FINANCIAL STATEMENTS, 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 FROM INVESTOR
RELATIONS, GOLD RESERVE CORPORATION, 601 W. RIVERSIDE, SUITE 1940,
SPOKANE, WASHINGTON 99201. THE ANNUAL REPORT DOES NOT CONSTITUTE A
PART OF THE PROXY SOLICITATION MATERIALS.
BY ORDER OF THE BOARD OF DIRECTORS
s/ Mary E. Smith, Secretary
Spokane, Washington
April 27, 1998
<PAGE>
