Rusoro Mining Ltd. (TSX VENTURE: RML) ("Rusoro" or the "Company")
is pleased to confirm that, in spite of continued defensive tactics
by Gold Reserve Inc. ("Gold Reserve"), Rusoro is committed to
providing Gold Reserve shareholders the opportunity to consider
Rusoro's bid for 100% of the shares of Gold Reserve (the "Bid") on
its merits. The Bid was launched on December 15, 2008, it remains
open, and Gold Reserve shareholders are free to tender their shares
to the bid at any time prior to the Bid expiry time of midnight at
the end of January 21, 2009.
Andre Agapov, CEO of Rusoro stated, "We have proven our ability
to acquire, rationalize, turn-around, and operate previously
struggling assets in Venezuela and we are excited to have the
opportunity to apply our experience to Gold Reserve's projects for
the benefit of Gold Reserve and Rusoro shareholders. We will work
very hard to make sure Gold Reserve shareholders are not prevented
by their own management team from having the opportunity to
consider our premium bid. We have just completed a positive quarter
of operations at both our Choco 10 and Isidora mines and will be
providing an update on our operations shortly. Having only acquired
the Choco 10 mine in November 2007 and the Isidora mine in July
2008, both of which had been shut down by their previous owners due
to labour and permitting issues, my congratulations go to our
operational teams who have done an outstanding job in an incredibly
short timeframe."
On December 30, 2008, Gold Reserve filed a court application for
an injunction that, if granted, would prevent the Gold Reserve
shareholders from considering the Bid. Rusoro will vigorously
defend itself against all of the allegations made in Gold Reserve's
injunction application to ensure that Gold Reserve shareholders
have the opportunity to accept our premium offer.
Also on December 30, 2008, the Gold Reserve board of directors
issued their response circular (the "GRZ Circular") in connection
with the Bid. In the GRZ Circular, Gold Reserve made unfounded
allegations including attacks on the Bid as well as Rusoro's
financial and operating record. By way of example:
- Gold Reserve claims that the Bid was not a premium bid. This
is untrue. 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 the 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 the Toronto Stock Exchange respectively. Based
on Rusoro's closing price on the TSX Venture Exchange on Friday,
January 2, 2009, the Bid represented a value of C$2.04 per Gold
Reserve share.
- Gold Reserve hired a litigation accounting firm to attack
Rusoro's financial statements. Rusoro is confident that it has
provided all required financial disclosure in its public filings.
Gold Reserve's litigation firm made no allegation that Rusoro's
financial statements do not comply with Canadian or U.S. accounting
requirements. Furthermore, this litigation firm went to great
lengths to confirm that Rusoro had prepared its statements in
accordance with Canadian Generally Accepted Accounting Principles
("GAAP"). Rusoro also reconciled its relevant financials to U.S.
GAAP for the benefit of Gold Reserve's U.S. shareholders.
- Gold Reserve hired a technical consulting firm to attack
Rusoro's technical disclosure. However, this consulting firm's
principal conclusion was that Rusoro may have overstated its
contained ounces of gold by approximately 114,000 ounces due to the
amount of mining Rusoro has completed since the last
reserve/resource update. This amount is approximately 1.6% of
Rusoro's measured and indicated resources (inclusive of reserves)
of 7.1 million ounces of gold and Rusoro does not believe this
change is material.
- Gold Reserve claims that calculating the pro-rata ownership of
Gold Reserve shareholders in a combined company on an issued share
basis (which would be 30.4%) is misleading. Alternatively, Gold
Reserve suggests that on a fully-diluted basis the pro-rata
ownership of Gold Reserve shareholders would decrease to 22%. For
this dilution to occur, US$80 million in debt would be eliminated
from Rusoro's balance sheet and an additional US$425 million in
cash would be generated for the combined company, at an average
price of C$3.58 per Rusoro share (using the noon Bank of Canada
exchange rate on January 2, 2009 of C$1.2107/US$).
- Gold Reserve challenges Rusoro's ability to operate in
Venezuela by implying that Rusoro does not have a constructive
working relationship with the Venezuelan authorities. This claim is
unfounded. Since commencing operations, the Rusoro team has
repeatedly demonstrated its ability to operate successfully in
Venezuela by being able to:
-- Restart the Choco 10 mine shortly after its acquisition after
it had been effectively shut down as a result of both permitting
and labour issues;
-- Restart the Isidora mine shortly after its acquisition after
it had been effectively shut down as a result of both permitting
and labour issues;
-- Permit and develop its San Rafael/El Placer project
operations which are expected to reach commercial production in
2010;
-- Establish the first mixed enterprise joint venture of its
kind with the Venezuelan government in the mining industry
regarding the Isidora gold mining assets as part of its
acquisition;
-- Resolve and duly settle the legacy legal proceedings
instigated by Ferrominera del Orinoco in 2004 against, Promotora
Minera de Venezuela S.A. ("PMV"). These proceedings were initiated
before PMV was part of the Rusoro group. Rusoro acquired PMV as of
November 30, 2007. This action was formally abandoned on July 6,
2008, the legal proceedings were terminated on September 24, 2008
and, as a result, PMV's 95% ownership in the Choco 10 operations is
no longer under dispute.
- Gold Reserve claims that Rusoro has material information
regarding Gold Reserve's Choco 5 property as a result of trespass.
This claim is unfounded. Rusoro completed limited condemnation
drilling on Gold Reserve's Choco 5 property in the summer of 2008,
in accordance with established practices between the two companies.
Condemnation drilling is drilling for the purpose of confirming
that no mineral resources are present in a certain area, and in
this case, Rusoro wanted to confirm that no gold was in the area of
a proposed pit wall. As expected, the condemnation drilling showed
the rock to be barren. Rusoro communicated this fact to Gold
Reserve.
- Finally, Gold Reserve implies that Rusoro does not have the
operating ability to bring value to shareholders. This claim is
unfounded. Rusoro recently acquired both the Choco 10 and Isidora
mines, has restarted them both from problems that plagued their
previous owners, reported record amounts of ore processed through
the Choco 10 mill in November 2008, reported record low combined
cash costs at the Choco 10 and Isidora mines of US$385/ounce for
November 2008, and will be releasing an update in respect of the
positive 4Q 2008 operations at both Choco 10 and Isidora
shortly.
Rusoro has worked diligently in preparing the Bid with its
Canadian and U.S. legal advisors (Blake, Cassels & Graydon LLP,
Anfield, Sujir, Kennedy & Durno, Gersten Savage LLP and Dorsey
& Whitney LLP), its financial advisor (Endeavour Financial
International Corporation), its technical consultants (Micon
International and Scott Wilson Roscoe Postle), its accounting
advisor (Deloitte & Touche LLP) and its external auditors
(Grant Thornton LLP and Espineira, Sheldon Y Asociados aka
PricewaterhouseCoopers Venezuela). Rusoro intends to continue to
vigorously defend and overcome any distracting tactics as they may
arise so that Gold Reserve shareholders can consider the Bid for
themselves.
ON BEHALF OF THE BOARD
Andre Agapov, Chief Executive Officer
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 has mailed 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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