Rusoro Mining Ltd. (TSX VENTURE: RML) ("Rusoro" or the "Company")
is pleased to announce that it is committed to defending the action
brought by Gold Reserve Inc. ("Gold Reserve") so that Gold
Reserve's shareholders and equity unitholders can consider Rusoro's
premium take-over bid (the "Bid") on its merits.
As of December 12, 2008 (the last trading day before the Bid was
announced), the Bid represented a value of C$1.08 per Gold Reserve
share, a premium of 140% on closing prices and 209% on the 30-day
volume weighted average prices, using Rusoro's and Gold Reserve's
share prices for the relevant trading days on the TSX Venture
Exchange and Toronto Stock Exchange, respectively.
In the statement of claim filed by Gold Reserve on December 16,
2008, Gold Reserve has set out its claims for, among other things,
an injunction restraining Rusoro from proceeding with the Bid to
acquire the shares and equity units of Gold Reserve. To date, Gold
Reserve has not brought a motion to obtain that relief and has
filed no evidence to support the allegations it has made. If
successful in obtaining an injunction, shareholders and equity
unitholders of Gold Reserve would not be given the opportunity to
participate in the Bid. The Company will work with its legal and
financial advisors to vigorously defend itself against all of the
allegations made in Gold Reserve's statement of claim to ensure
that Gold Reserve shareholders are not disenfranchised.
Andre Agapov, CEO of Rusoro stated: "The allegations made by
Gold Reserve in their claim against us are unfounded. This is
simply a delaying tactic designed by entrenched management to
distract shareholders from our premium offer. Our offer is based on
Gold Reserve's publicly available information. We have provided
Gold Reserve shareholders with a clear opportunity to participate
in a gold production and growth company with a proven record of
turning around stalled assets in Venezuela. We will work diligently
to ensure that Gold Reserve shareholders have the opportunity to
consider our bid on its merits."
Rusoro has been provided with a copy of a letter dated December
16, 2008 from its financial advisor, Endeavour Financial
International Corporation, to Gold Reserve concerning certain of
the allegations in Gold Reserve's claim against Endeavour
Financial. The text of that letter is copied in its entirety
below.
Rusoro's financial advisor is Endeavour Financial International
Corporation, its Canadian legal counsel are Blake, Cassels &
Graydon LLP and Anfield, Sujir, Kennedy & Durno and its US
legal counsel are Gersten Savage LLP and Dorsey & Whitney
LLP.
ON BEHALF OF THE BOARD
Andre Agapov, Chief Executive Officer
Text of letter sent from Endeavour Financial to Gold Reserve
December 16, 2008
Gold Reserve Inc.
926 W. Sprague Avenue
Suite 200
Spokane, WA
USA 99201
By Fax: +1 509 623 1634
And email: rjtimm@goldreserveinc.com
Attention: Rockne J. Timm, CEO
Dear Sirs,
We write in response to your letter of December 14, 2008.
That letter is substantively incorrect. I draw your attention to the
following.
- Gold Reserve Inc. ("GRZ") engaged Endeavour Financial International
Corporation ("EF") in October 2004 to carry out a debt mandate and an
equity/M&A mandate. GRZ terminated the equity/M&A mandate in September
2007. The debt mandate continued until GRZ first suspended and then, in
October 2008, terminated, its relationship with the four banks who had
agreed to arrange the debt. This termination effectively extended to
terminate the debt mandate as these were the four banks with whom EF had
been engaged to work. The terms of the mandates expressly recognized
that EF had other clients whose interests might conflict with GRZ's.
- In August 2008 EF approached GRZ on behalf of Rusoro with an offer for
a combination of the two companies. GRZ refused the offer. GRZ did not
make any objection to EF's role as Rusoro's adviser. After that meeting
GRZ ceased paying the fees that it owed to EF in connection with the
debt mandate.
- EF has complied with its obligations under its engagement letter with
GRZ and, in particular, the EF team that advised Rusoro with respect to
the bid did not rely on any confidential information. Rusoro has
informed us that the offer was based solely on publicly available
information.
- GRZ's press release of 15 December 2008 violates the Disclosure of
Engagement term of the EF/GRZ mandate letter of 19 September 2007.
Pursuant to the Termination clause of that letter the mandate is
terminated.
In short: EF has not violated any duty to GRZ; Rusoro's bid is not based
on any information in respect of which GRZ has a confidentiality
interest; and GRZ management has known for months that EF is advising
Rusoro and complained, for the first time, only when Rusoro advised that
it would make a bid.
We note your press release of today's date in respect of an action in
the Ontario Superior Court of Justice against us and against Rusoro. We
will vigorously defend this action to ensure that your shareholders are
provided with the opportunity to consider Rusoro's bid on its merits.
Rusoro's bid makes available to the shareholders of GRZ the option of
seeing Brisas developed by GRZ's current management team or by Rusoro's.
GRZ's efforts appear to be focused on stopping the bid irrespective of
what is in the best interests of the GRZ shareholders. If your board has
determined that the bid is inadequate, that case should be made to the
shareholders themselves, rather than attempting to prevent the
shareholders from making the determination.
We are disappointed that GRZ is making false accusations against
Endeavour for the purpose of distracting the shareholders from the fact
that they have the opportunity to tender their shares at a very large
premium to the market value that incumbent management has achieved for
them.
Sincerely,
"Bill Koutsouras"
Director, Executive Vice President & CFO
CC: Andre Agapov, Rusoro CEO
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE
COMPANY'S INFORMATION AGENT:
Georgeson
North American Toll Free Number: 1-888-605-7615
Banks and Brokers call collect: 1-212-806-6859
Cautionary Note Regarding Forward-Looking Statements
This press release, the Take-Over Bid and Circular, including
the schedules attached therein, the pro forma consolidated
financial statements of the Company, and some of the material
incorporated by reference into the Circular, contain certain
forward-looking information and forward-looking statements, as
defined in applicable securities laws (collectively referred to as
"forward-looking statements"). Forward-looking statements include
possible events, statements with respect to possible events, the
proposed transaction, related litigation, the business, operations
and financial performance and condition of each of Rusoro and Gold
Reserve and the proposed combined company, the future price of
gold, the estimation of mineral reserves and resources, the
realization of mineral reserve and resource estimates, the timing
and amount of estimated future production, costs of production,
expected capital expenditures, costs and timing of the development
of new deposits, success of exploration, development and mining
activities, permitting time lines, currency fluctuations,
requirements for additional capital, government regulation of
mining operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims, and limitations on insurance
coverage. The words "plans", "expects", "is expected", "scheduled",
"estimates", "forecasts", "intends", "anticipates", or "believes",
or variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might", or
"will be taken", "occur" and similar expressions identify forward
looking statements.
Forward-looking statements are necessarily based upon a number
of estimates and assumptions that, while considered reasonable by
Rusoro as at the date of such statements, are inherently subject to
significant business, economic, social, political and competitive
uncertainties and contingencies and other factors that could cause
actual results or events to differ materially from those projected
in the forward-looking statements. The estimates and assumptions of
Rusoro contained or incorporated by reference in the Circular which
may prove to be incorrect, include, but are not limited to, (1)
that Rusoro will be successful in acquiring 100% of the outstanding
Gold Reserve Equity, (2) that all required third party regulatory
and governmental approvals to the Take-Over Bid will be obtained
and all other conditions to completion of the transactions will be
satisfied or waived, (3) there being no significant disruptions
affecting operations, whether due to labour disruptions, supply
disruptions, power disruptions, damage to equipment or otherwise;
(4) permitting, development, expansion and power supply proceeding
on a basis consistent with Rusoro's current expectations; (5)
permitting and development proceeding on a basis consistent with
Rusoro's current expectations; (6) the exchange rate between the
Canadian dollar, the Venezuelan Bolivar and the U.S. dollar being
approximately consistent with current levels; (7) certain price
assumptions for gold; (8) prices for and availability of natural
gas, fuel oil, electricity, parts and equipment and other key
supplies remaining consistent with current levels; (9) production
forecasts meeting expectations; (10) the accuracy of Rusoro's
current mineral reserve and mineral resource estimates; and (11)
labour and materials costs increasing on a basis consistent with
Rusoro's current expectations.
Known and unknown factors could cause actual results or events
to differ materially from those projected in the forward-looking
statements. Such factors include, but are not limited to, risks
related to litigation; fluctuations in the currency markets;
fluctuations in the spot and forward price of gold or certain other
commodities (such as diesel fuel and electricity); changes in
interest rates; disruption to the credit markets and delays in
obtaining financing; inflationary pressures; risks arising from
holding derivative instruments (such as credit risk, market
liquidity risk and mark-to-market risk); changes in national and
local government legislation, taxation, controls, regulations and
political or economic developments in Canada, Venezuela or other
countries in which Rusoro does or may carry on business; business
opportunities that may be presented to, or pursued by Rusoro,
Rusoro's ability to successfully integrate acquisitions; operating
or technical difficulties in connection with mining or development
activities; actual results of exploration activities; the
possibility of cost overruns or unanticipated expenses; employee
relations; the speculative nature of gold exploration and
development, including the risks of obtaining and renewing
necessary licenses and permits; the impact of Venezuelan law on
Rusoro's operations; diminishing quantities or grades of reserves;
adverse changes in our credit rating; contests over title to
properties, particularly title to undeveloped properties; and the
occurrence of natural disasters, hostilities, acts of war or
terrorism. In addition, there are risks and hazards associated with
the business of gold exploration, development and mining, including
environmental hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and gold bullion losses
(and the risk of inadequate insurance, or inability to obtain
insurance, to cover these risks). The following factors, amongst
others, related to the business combination of Rusoro and Gold
Reserve could cause actual results to differ materially from
forward-looking statements, including those contained in the
Circular: the Rusoro shares issued in connection with the Take-Over
Bid may have a market value lower than expected; the business of
Rusoro and Gold Reserve may not be integrated successfully or such
integration may be more difficult, time-consuming or costly than
expected; and the expected combination benefits from the
combination of Rusoro and Gold Reserve may not be fully realized or
not realized within the expected time frame.
All of the forward-looking statements made in the Circular are
qualified by these cautionary statements and those made in the
Circular itself. These factors are not intended to represent a
complete list of the factors that could affect Rusoro and the
combination of Rusoro and Gold Reserve. Additional factors are
noted elsewhere in the Circular and in the documents incorporated
by reference therein. Although Rusoro has attempted to identify
important factors that could cause actual results or events to
differ materially from those described in forward-looking
statements, there may be other factors that could cause results or
events not to be as anticipated, estimated or intended. There can
be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
undue reliance should not be placed on forward-looking statements.
Rusoro undertakes no obligation to update publicly or otherwise
revise any forward-looking statements or the foregoing list of
assumptions or factors, whether as a result of new information or
future events or otherwise, except as may be required in connection
with a material change in the information disclosed in the Circular
or as otherwise required by law.
MORE INFORMATION AND WHERE TO FIND IT:
This press release does not constitute an offer to buy or an
invitation to sell, any of the securities of Rusoro or Gold
Reserve. Such an offer may only be made pursuant to a registration
statement and prospectus filed with the U.S. Securities and
Exchange Commission (the "SEC") and an offer to purchase and
circular filed with Canadian securities regulatory authorities.
Rusoro has filed with the SEC a Registration Statement on Form
F-10, a Tender Offer Statement on Schedule TO and other documents
and information, and expects to mail an Offer and Circular (which
is filed as an exhibit to the Registration Statement and Tender
Offer Statement) to Gold Reserve shareholders and equity
unitholders (collectively, the "Equityholders") concerning the
Offer and the proposed combination of Rusoro and Gold Reserve. GOLD
RESERVE EQUITYHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT,
THE TENDER OFFER STATEMENT AND OFFER AND CIRCULAR AND ANY OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY CONTAIN
IMPORTANT INFORMATION. Investors and Gold Reserve Equityholders may
obtain the documents free of charge at the SEC's website,
www.sec.gov. In addition, documents filed with the SEC by Rusoro
are available free of charge from Rusoro. You should direct
requests for documents to the Corporate Secretary, Rusoro Mining
Ltd., Suite 2164, 1055 Dunsmuir Street, Vancouver, British Columbia
V7X 1B1, telephone (604) 632-4044.
The TSX Venture Exchange has not reviewed and does not take
responsibility for the adequacy or accuracy of this release.
Contacts: Rusoro Mining Ltd. George Salamis President (604)
632-4044 or Toll Free: 1-800-668-0091 Email: gsalamis@rusoro.com
Rusoro Mining Ltd. Ross Gatensbury Investor Relations (604)
632-4044 or Toll Free: 1-800-668-0091 (604) 632-4045 (FAX) Email:
gates@rusoro.com Website: www.rusoro.com
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