Gold Reserve Inc., of Spokane, has completed a $14.15 million (Cdn.) private placement to raise funds to develop further its Brisas gold deposit in Venezuela and to do a feasibility study on the mining operation it plans to launch there.


The company said that in the offering, it sold just over 4 million units for $3.50 (Cdn.) per unit. For 18 months, each unit can be converted into one share of Gold Reserves common stock and a warrant for one-half of an additional common share, with the additional shares priced at $5.25 (Cdn.) a share. Orion Securities Inc. and Sprott Securities Inc., both of Toronto, managed the offering.


Gold Reserve Executive Vice President Doug Belanger says the Spokane company will realize about $13.2 million (Cdn.) from the private placement after commissions and expenses and will use the funds to pay for additional drilling at the Brisas deposit and to complete whats called a bankable feasibility study. Such a study is intended to show potential lenders whether a mining operation would be financially sound.


Currently, Gold Reserve is working to select an engineering firm to do the study, and it expects that the study will be completed in the second or third quarter next year, Belanger says. The deposit is southeast of Puerto Ordaz, Venezuela.


Gold Reserve has been working for 12 years to develop its Brisas deposit. It has said its planning a mining operation there that would produce 362,000 troy ounces of gold and 46 million pounds of copper each year for 16 to 17 years. The company has estimated its cash cost in that operation at $153 (U.S.) per ounce of gold, after revenue from copper sales is taken into account. Including capital costs, the company estimates its total cost of mining at Brisas at $243 (U.S.) per ounce of gold, Belanger says. Gold Reserve has said it would cost $354 million (U.S.) to develop and equip a mine there.


Gold Reserves ability to proceed with the project has improved as gold prices have risen in recent months. In May 2000, gold fell to $275 (U.S.) per troy ounce on the spot market, and it dipped that low again in January 2002. Then, it rose, cresting at $393 an ounce recently before slipping to $370 on Tuesday.


Meanwhile the stocks of gold mining companies also have risen. Gold Reserves share price closed at $3.65 a share Monday, up from less than $1 a year ago. Its 52-week high as of Monday was $3.89, and its 52-week low was 88 cents.


In August, Gold Reserve upgraded its proven and probable reserves at Brisas to 7.5 million ounces of gold, up from 6.7 million ounces, and 1.1 billion pounds of copper, up from 870 million pounds.


Its one of the top five or six undeveloped gold deposits in the world, Belanger says. We have, on a per-share basis, almost the most gold of any company on earth, because we have so few shares, and we have a huge deposit.


Belanger says Gold Reserve hopes to add 500,000 to 1 million ounces of gold to the propertys reserves through the drilling it will fund with money from the private placement, which was completed Sept. 29. In August, Gold Reserve and Bolivar Gold Corp., of Toronto, agreed to explore jointly the Choco 5 deposit property north of the Brisas, but on Tuesday they announced that they had terminated that agreement. Belanger says Gold Reserve will explore Choco 5 on its own.