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Rusoro Mining upholds offer for Gold Reserve despite rejection

Rusoro Mining Ltd is upholding its offer for Gold Reserve Inc and dismissed the latter’s rejection of the approach as being opportunistic, financially inadequate and significantly undervaluing the company.
Gold Reserve on December 31 2008 filed a motion in the Ontario Superior Court of Justice seeking an injunction to restrain Rusoro Mining Ltd from proceeding with its unsolicited offer of December 15, 2008.

Rusoro said the 3-for-1 shares offer remains open, and Gold Reserve shareholders are free to tender their shares to the bid at any time prior to the expiry of midnight at the end of January 21 2009.

Rusoro said it 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 its “premium offer”.  It called “unfounded” allegations made by Gold Resource which include attacks on the bid as well as Rusoro's financial and operating record.

Gold Reserve’s claim that the bid was not a premium bid is untrue, Rusoro said. As of December 12, it represented a value of CDN$1.08 per Gold Reserve share, a premium of 140 percent on the closing prices and 209 percent 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 January 2 2009, the bid represented a value of CDN$2.04 per Gold Reserve share.

Gold Reserve hired a litigation accounting firm to attack Rusoro's financial statements. Rusoro said it is confident that it has provided all required financial disclosure in its public filings, adding Gold Reserve's litigation firm made no allegation that Rusoro's financial statements do not comply with Canadian or US accounting requirements.

Rusoro further dismissed Gold Reserve’s challenge to Rusoro's ability to operate in Venezuela by implying that Rusoro does not have a constructive working relationship with the Venezuelan authorities. Since commencing operations, the Rusoro team has repeatedly demonstrated its ability to operate successfully in Venezuela by being able to restart the Choco 10 and Isidora mines shortly after acquisition after they had been effectively shut down as a result of both permitting and labour issues.

Rusoro also established 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.

Gold Reserve’s claim that Rusoro has material information regarding Gold Reserve's Choco 5 property as a result of trespass is unfounded, it said, adding it completed limited condemnation drilling on Choco 5 in the summer of 2008, in accordance with established practices between the two companies.

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,” Agapov added.