Gold Reserve updates Brisas NI 43-101 Report



    SPOKANE, WA, March 25 /CNW/ - Gold Reserve Inc. (TSX: GRZ - AMEX:  GRZ)
announced the completion of a CSA National Instrument 43-101 Report prepared
by Pincock, Allen and Holt updating the Brisas gold copper resource and
reserve estimates, capital and operating costs, and current project economics.
The Company and SNC-Lavalin Inc. (SNC), the project's EPCM contractor, updated
the capital costs for the NI 43-101 Report.
    The Report utilizes $600 per ounce gold and $2.25 per pound copper for
the base-case economic model, resulting in cash operating costs (net of copper
byproduct credits) of $120 per ounce of gold. Total costs including cash
operating costs, exploitation taxes, initial capital costs (excluding sunk
cost), and sustaining capital costs are estimated at $268 per ounce of gold.
Initial capital costs are currently estimated to be $731 million excluding
working capital, critical spares and initial fills of approximately
$53 million. All amounts are in U.S. dollars.
    Doug Belanger, President of Gold Reserve stated, "We are very pleased
with the results of this Report. Most notable is that estimated capital costs
have only increased 14% from $638 million to $731 million. Considering that
25% of the increase in capital costs is due to project scope changes such as
increasing the SAG mill size from 36 feet to 38 feet, the capital cost
increase at Brisas is not as dramatic as the increases that the industry has
recently been experiencing. This is a result of SNC's detailed engineering
being 75% complete and the majority of the project's external infrastructure
already in place. In addition, orders for long lead items have been placed for
the gyratory crusher, pebble crushers, SAG and ball mills, mill motors, and
initial construction equipment. As a result, the Brisas Project continues to
demonstrate low projected operating costs, robust economics at conservative
metal prices, excellent leverage and significant value at current metal
prices. At gold prices of $900 per ounce and copper prices of $3.50 per pound,
cash operating costs would be negative ($49) per ounce and total costs would
be $117 per ounce (excluding sunk cost)."
    The current operating plan assumes an open pit mine containing proven and
probable reserves of approximately 10.2 million ounces of gold and 1.4 billion
pounds of copper in 483 million tonnes of ore grading 0.66 grams of gold per
tonne and 0.13% copper, at a revenue cutoff grade of $3.54 per tonne using a
gold price of $470 per ounce and a copper price of $1.35 per pound. The
operating plan anticipates utilizing conventional truck and shovel mining
methods with the processing of ore at full production of 75,000 tonnes per
day, yielding an average annual production of 457,000 ounces of gold and
63 million pounds of copper over an estimated mine life of approximately
18.25 years. The strip ratio (waste to ore) is estimated at 2.24:1.
    The more important conclusions contained in the 2008 NI 43-101 Report
compared to the 2006 NI 43-101 Report are summarized below.

    
    Proven & Probable Reserve - 2008 43-101 Report
    -------------------------------------------------------------------------
                            Au      Au      Au        Cu               Cu
    Reserve    Tonnage    Grade   Grams   Ounces    Grade    Cu      pounds
     Category  (000's)     g/t   (000's)  (000's)      %   Tonnes (000,000's)
    -------------------------------------------------------------------------
    Proven     237,657     0.71  168,865    5,429     0.12  291,570      643
    -------------------------------------------------------------------------
    Probable   245,050     0.61  149,288    4,800     0.14  338,545      746
    -------------------------------------------------------------------------
    Total Ore  482,707     0.66  318,153   10,229     0.13  630,115    1,389
    -------------------------------------------------------------------------
    Strip ratio (waste to ore) - 2.24:1
    -------------------------------------------------------------------------
    Based on Internal Cutoff Using Revenue of $3.54/tonne ($470/oz Au,
    $1.35/lb Cu).


    Proven & Probable Reserve - 2006 43-101 Report
    -------------------------------------------------------------------------
                            Au      Au      Au        Cu               Cu
    Reserve    Tonnage    Grade   Grams   Ounces    Grade    Cu      pounds
     Category  (000's)     g/t   (000's)  (000's)      %   Tonnes (000,000's)
    -------------------------------------------------------------------------
    Proven     226,252     0.69  156,517    5,032     0.12  272,376      600
    -------------------------------------------------------------------------
    Probable   258,398     0.64  166,628    5,357     0.13  334,397      737
    -------------------------------------------------------------------------
    Total Ore  484,649     0.67  323,145   10,389     0.13  606,773    1,338
    -------------------------------------------------------------------------
    Strip ratio (waste to ore) - 1.96:1
    -------------------------------------------------------------------------
    Based on Internal Cutoff Using Revenue of $3.04/tonne ($400/oz Au,
    $1.15/lb Cu)


    Key Economic Parameters and Results                 2008            2006
    -------------------------------------------------------------------------
    Mill Through-Put Range (tonnes per day)  75,000 - 68,000          70,000

    Metallurgical Recovery
      Plant Recovery - Gold                              83%             83%
      Plant Recovery - Copper                            87%             87%
      Net Payable Metal - Gold                           82%             81%
      Net Payable Metal - Copper                         83%             83%

    Life of Mine Production (payable metals)
      Gold (million ounces)                             8.35            8.41
      Copper (million pounds)                          1,156           1,113

    Average Annual Production
      Gold (ounces)                                  457,000         456,000
      Copper (million pounds)                             63              60

    Mine Life (years)                                  18.25            18.5


    Initial Capital Cost ($million)(1)                  2008(2)         2006
    -------------------------------------------------------------------------
    Mine                                            $   59.0        $   76.6
    Mill                                               314.7           241.5
    Infrastructure                                      67.8            65.8
    Tailings management facility                        38.3            23.8
    Owner's Costs                                       63.4            55.6
    Pre-Stripping                                       16.7            18.3
    Indirect Costs (includes EPCM and Camp)            127.6            97.0
    Contingency                                         43.8            59.4
    -------------------------------------------------------------------------
    Total Initial Capital                           $  731.3        $  638.0
    -------------------------------------------------------------------------

    (1) A value added tax (VAT) of approximately US$54 million is not
        included in the current or previous capital cost estimates as it is
        expected to be exonerated and/or recovered pursuant to Venezuelan tax
        regulations. However, all IRR, NPV and total cost calculations
        include a recovered VAT and sustaining capital.
    (2) Capital costs were developed by SNC and Gold Reserve and detailed
        engineering is approximately 75% complete. Initial capital costs
        exclude working capital, critical spares and initial fills of
        approximately $53 million. Life-of-mine sustaining capital
        requirements are estimated at $269 million.


    Base Case Economics                                 2008            2006
    -------------------------------------------------------------------------

    Metal Prices
    Gold per ounce                                  $    600        $    470
    Copper per pound                                $   2.25        $   1.80

    Cash Operating Cost Per Ore Tonne
    Mining and Dewatering                           $   2.68        $   2.08
    Processing                                          3.00            2.59
    General and Administrative                          0.43            0.42
    Transport and Freight                               0.43            0.34
    Smelting and Refining                               1.08            1.02
    -------------------------------------------------------------------------
    Total cash operating cost per tonne             $   7.62        $   6.45
    -------------------------------------------------------------------------

    Cost Per Ounce of Gold
    Cash Operating Costs(1)                         $    120        $    126
    Exploitation Tax                                      22              16
    Capital Cost (initial, sustaining and sunk)          135             111
    -------------------------------------------------------------------------
    Total Costs (including sunk costs)(1)           $    277        $    253
    -------------------------------------------------------------------------
    Total Cost (excluding sunk costs)(1)            $    268        $    245
    -------------------------------------------------------------------------

    Pre-Tax
      Internal Rate of Return(2)                       20.5%           15.4%
      Net Present Value (NPV)
        @ 0 % discount (billions)                $   2.77        $   1.91
        @ 5 % discount (billions)                $   1.29        $   0.78
    -------------------------------------------------------------------------

    (1) Net of copper by-product credit of $2.25 and $1.80 per pound for 2008
        and 2006, respectively.
    (2) The 2008 and 2006 after-tax IRR is 15.0% and 11.4%, respectively.


    Brisas Project Gold and Copper Price Sensitivity

                                                   Pre-Tax
                         Cash              -------------------------
                      Operating   Total              NPV      NPV
    Metal Prices       Cost per  Cost per          @ 0%  @ 5%  Payback
     Gold and Copper   Ounce(1)  Ounce(2)  IRR%(3) millions millions Years(4)
    -------------------------------------------------------------------------
    $900 Au/$3.50 Cu      ($ 49)    $117    38.1%   $6,534   $3,408      2.8
    $800 Au/$3.25 Cu      ($ 21)    $141    33.7%   $5,501   $2,826      3.2
    $700 Au/$2.75 Cu       $ 50     $205    27.5%   $4,137   $2,058      4.0
    $600 Au $2.25 Cu       $120     $268    20.5%   $2,772   $1,289      5.3
    $500 Au $1.75 Cu       $190     $331    12.2%   $1,412    $ 523      7.9
    -------------------------------------------------------------------------
    (1) Net of copper by-product credit.
    (2) Net of copper credit and excluding sunk costs.
    (3) The after-tax IRR is 15.0% using $600 gold and $2.25 copper.
    (4) Payback years relates to recovery of equity invested as the financial
        model has been prepared on an after tax, un-leveraged equity only
        basis.


    Initial Capital Cost Variance (2008 versus 2006)

    The initial capital cost for the Brisas Project is currently estimated to
be $731 million compared to the previous estimate of $638 million. The primary
variances are as follows:

    -   Mine costs decreased $17.6 million mostly due to lengthening the pre-
        production period from 9 months to 17 months which coincides with the
        construction period significantly reducing the amount of equipment
        required for pre-stripping. This decrease was partially offset by
        escalation in equipment prices.

    -   Mill costs increased $73.2 million primarily due to increasing the
        size of the SAG mills, an increase in steel quantity and prices and
        an escalation in equipment prices. The largest mill cost variances
        are as follows:

        -  Flotation and grinding cost increased $49.2 million which includes
           $23 million for increasing the diameter of the SAG mills from 36'
           to 38' and approximately $10 million related to increased price of
           the SAG mill motors.
        -  Costs related to cyanide destruction increased $5.2 million.
        -  Reagent facilities cost increased $5.2 million.
        -  Compressed air and water utilities increased $3.0 million.

    -   Tailings management facility cost increased $14.5 million due to
        additional earthworks as a result of increased hauls for suitable
        construction material.

    -   Owner's cost increase is $7.8 million mostly due to an increase in
        site earthworks costs and additional environmental/social program
        costs.

    -   EPCM cost increased $18.4 million due to additional work, management
        support for extended work period, procurement efforts and increases
        in currency exchange rates.

    -   Contingency costs decreased $15.6 million due to placing orders on
        long lead items, advanced-staged project engineering, increased
        estimation accuracy and receipt of vendor and contractor bids for
        most project equipment and services.


    Operating Costs Variance (2008 versus 2006)

    Total cash operating costs are currently estimated at $7.62 per ore tonne
compared to the previous estimate of $6.45 per ore tonne. The primary
variances are as follows:

    -   Mining costs increased $0.60 to $2.68 per tonne. The increase is
        primarily due to price escalations in explosives, operating supplies,
        tire costs and an increase due to the change in the strip ratio
        resulting from geotechnical pit slope studies conducted over the last
        16 months.

    -   Processing costs increased $0.40 to $3.00 per tonne. The increase is
        primarily due to price escalation of reagents, liners and grinding
        media, and electrical demand and rate changes. The electrical rate
        increased 5 percent to approximately $0.031 per kwh.

    -   Transportation and freight costs increased $0.09 to $0.43 per tonne
        due to increased ocean vessel transportation costs for the gold-
        copper concentrate.

    -   Smelting and refining costs increased $0.04 to $1.08 per tonne. These
        costs are based on 2006 negotiated smelter terms, which incorporate a
        sliding scale dependent on metal prices. The cost increase is due to
        the price participation cost resulting from increased copper metal
        price.
    


    Preparation of the updated CSA National Instrument 43-101 Report

    Pincock, Allen and Holt (PAH) was retained by Gold Reserve Inc. to
prepare a new 43-101 Report for the Brisas Project in accordance with the
Canadian Securities Act National Instrument 43-101. The revised Report
includes the results of various studies that have been completed since the
January 2005 Brisas Project Feasibility Study and the October 2006 NI 43-101
Report. The resource and reserve estimates were conducted in accordance with
the Standards for Disclosure for Mineral Projects, Form 43-101F1 and Companion
Policy 43-101CP dated December 23, 2005. The Company and SNC developed the
capital costs for the new Report.
    The updated financial model was prepared on an un-leveraged (equity only)
basis, provided for depreciation and amortization on a straight line and units
of production basis, assumed a 34% Venezuelan corporate income tax rate, and
excluded an inflation allowance.
    Previous work by PAH on the Brisas Project includes the preparation and
or review of the resource model, mine plans, resource and reserve estimates,
and economic model for the 2005 Brisas Project Feasibility Study and the
October 2006 NI 43-101 Report. In 2007 PAH updated the resource grade models
to improve the local grade estimates based on recommendation by independent
technical reviews. Also, in 2007 Tetra Tech, Inc. (Tetra Tech) completed a
slope stability analysis incorporating oriented core techniques to update
recommendations for the open pit slope parameters. Marston & Marston Inc.
(Marston) used the PAH resource model and Tetra Tech slope recommendations to
develop a new mine design, production schedule and reserve estimate.
    The Qualified Personnel for the March 2008 NI 43-101 Report are Susan
Poos, Richard Lambert, and Richard Addison, all registered professional
engineers, and Barton Stone, a professional geologist. This news release has
been reviewed by the Qualified Personnel at PAH and Marston.
    The 43-101 Report will be available to the public at www.sedar.com and
www.sec.gov, as well as, the Company's website at www.goldreserveinc.com
within 45 days of the date of this release.

    On Behalf of the Board of Directors
    Gold Reserve Inc.
    A. Douglas Belanger, President

    Gold Reserve Inc. is a Canadian company, currently developing its Brisas
gold/copper project in Southeastern Venezuela. The Company currently has
$133 million in cash and investments. Before full construction can proceed,
the Company must obtain all required permits, authorizations and adequate
financing.

    Certain statements included herein, including those that express
management's expectations or estimates of our future performance concerning
the Brisas Project or the Choco 5 Exploration Project, constitute
"forward-looking statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that, while
considered reasonable by management at this time, are inherently subject to
significant business, economic and competitive uncertainties and
contingencies. We caution that such forward-looking statements involve known
and unknown risks, uncertainties and other risks that may cause the actual
financial results, performance, or achievements of Gold Reserve Inc. to be
materially different from our estimated future results, performance, or
achievements expressed or implied by those forward-looking statements.
Numerous factors could cause actual results to differ materially from those in
the forward-looking statements, including without limitation, concentration of
operations and assets in Venezuela; corruption and uncertain legal
enforcement; requests for improper payments; regulatory, political and
economic risks associated with Venezuelan operations (including changes in
previously established legal regimes, rules or processes); the ability to
obtain or maintain the necessary permits or additional funding for the
development of the Brisas Project; in the event any key findings or
assumptions previously determined by us or our experts in conjunction with our
2005 bankable feasibility study (as updated or modified from time to time)
significantly differ or change as a result of actual results in our expected
construction and production at the Brisas Project (including capital and
operating cost estimates); risk that actual mineral reserves may vary
considerably from estimates presently made; impact of currency, metal prices
and metal production volatility; fluctuations in energy prices; changes in
proposed development plans (including technology used); our dependence upon
the abilities and continued participation of certain key employees; and risks
normally incident to the operation and development of mining properties. This
list is not exhaustive of the factors that may affect any of the Company's
forward-looking statements. Investors are cautioned not to put undue reliance
on forward-looking statements. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by this notice. The Company disclaims
any intent or obligation to update publicly these forward-looking statements,
whether as a result of new information, future events or otherwise.





For further information:

For further information: Internet - www.goldreserveinc.com; Investor
Information, Rubenstein Investor Relations, Tim Clemensen, (212) 843-9337,
tclemensen@rubensteinir.com; Company Contact, A. Douglas Belanger, President,
926 W. Sprague Ave., Suite 200, Spokane, WA, 99201, USA, Tel. (509) 623-1500,
Fax (509) 623-1634

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