Spokane Journal of Business

Court reaffirms ruling favoring Gold Reserve Inc.

Venezuela still on hook for roughly $750 million

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The U.S. District Court for the District of Columbia has entered a default judgment against the Venezuelan government to confirm the $740 million award granted last September to Gold Reserve Inc.

The Spokane-based mine exploration company is seeking to collect the court-awarded compensation for the company’s primary mining property in that South American country. 

On March 27, Gold Reserve filed a petition with the U.S. court seeking to confirm the award rendered by an international, three-member tribunal. The court entered a default judgment against Venezuela, following its failure to file an appearance within the prescribed period.

The tribunal, called the International Center for Settlement of Investment Disputes of the World Bank, handed down the original decision against Venezuela on Sept. 22, 2014, after hearing the case in accordance with the provisions of the Canada-Venezuela Bilateral Investment Treaty. Gold Reserve is incorporated in Canada, but has its executive offices in downtown Spokane. 

After the confirmation was rendered, the next step for Gold Reserve was to serve the Venezuelan government with the petition. The Venezuelan government then had 60 days to respond with any arguments against the petition. 

The Venezuelan Foreign Ministry refused service of the documents until 2015 when it issued a letter on January 26, contesting the validity of the service, raising irrelevant objections to service, contends Gold Reserve President Doug Belanger.

“It’s another delay tactic,” Belanger contends. “When they acknowledged receipt they tried to say the service was faulty. This is another example of Venezuela being dilatory in its actions toward the payment of the award.”

On March 30, Belanger says, Gold Reserve filed a response to the objections, and he says that matter will be decided by a judge in the near future.

Belanger says Gold Reserve is committed to pursuing the collection of the award, which amounts to about $750 million as it accrues interest at the rate of 2 percent per annum. He says the company will continue its collection efforts in a systematic and methodical way until Venezuela honors its international obligations and pays the award. 

“Ultimately, they’re going to have to pay. It never goes away,” Belanger says. 

Gold Reserve’s primary business for more than 16 years has been the Brisas gold-and-copper project in Venezuela.  

The company spent $300 million developing the Brisas project to the construction stage before its termination by Venezuela. The company originally was seeking about $1.928 billion plus interest, or about $2.3 billion in all. The company has spent more than $22 million in legal fees to argue the case and to follow up after it was awarded $740 million last September, six years after the company first filed the claim.

The award represents $713 million for the fair market value of the project, $22.3 million for interest on the award since April 2008, and $5 million for reimbursement of legal and technical costs expended by Gold Reserve, the company says.

Payment of the award was due in September 2014, immediately following the decision. The award accrues interest at the rate of Libor, a benchmark rate that some of the world’s leading banks charge each other for short-term loans, plus 2 percent per annum during the court proceedings. 

Gold Reserve’s common shares trade in the U.S. through an over-the-counter exchange, OTCQB, under the symbol GDRZ, as well as under the symbol GRV on the TSX Venture Exchange, a Canadian stock exchange for emerging companies.

Judith  Spitzer
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Reporter Judith Spitzer covers technology, mining, agriculture, and wood products for the Journal. A vintage-obsessed antique collector in her off hours, Judith worked as a journalist in Colorado and Oregon before joining the Journal.

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