Vancouver – Gold Reserve (GRZ-T, GRZ-X) has closed a US$164.2 million financing announced in early May, selling 12.8 million Class A shares at US$5.80 apiece as well as US$90 million worth of 5.5% senior subordinated convertible notes. Combined net proceeds are estimated to be US$154.8 million after underwriting fees and offering expenses.
An additional 1.92 million shares and US$13.5 million worth of convertible notes are still available through an over-allotment option valued at a further US$23.4 million.
Convertible notes were sold at US$1,000 per note with semi-annual cash interest of 5.5% per year. Each note is convertible into 132.626 common shares, representing an initial conversion price of US$7.54.
Gold Reserve can now begin construction at its major holding, the Brisas project in Venezuelas Bolivar State. A stones throw from Crystallex Internationals (KRY-T, KRY-X) Las Cristinas gold project, Brisas has proven and probable reserves of 485 million tonnes grading 0.67 gram gold per tonne and 0.13% copper, about 10.4 million contained oz. gold and 1.3 billion lbs. copper.
The company has already spent in excess of $100 million on property and mineral rights, equipment, and exploration. Construction of the mine itself, which company president Doug Belanger estimates will take 30 months and roughly $638 million, was stalled until the Venezuelan Ministry approved the Brisas Environmental and Social Impact Assessment. That approval came through in late March, sending Gold Reserves share price from $5.10 to $7.75.
Gold Reserve plans to develop a conventional open-pit mine to process 70,000 tonnes of ore per day, resulting in average annual production of 456,000 oz. gold and 60 million lbs. copper. The mine is expected to operate for 18.5 years.
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